Trade

West braces for Shanghai shock as zero-Covid nightmare ends
Sudden flood of ships from world’s largest port risks unleashing a crippling wave of inflation

An increase in supply from Shanghai is going to increase inflation in consuming nations?

It could be just weeks before Shanghai – a manufacturing superpower, and home to the world’s biggest cargo port – returns to life.

Thrown back into lockdown by Beijing’s disastrous zero-Covid strategy, the city’s reopening will have far-flung consequences for the global economy.

Experts say Shanghai’s reopening may unleash a massive wave of pent-up demand, sending a sudden flood of ships and containers to ports in Europe and the US’s West Coast, which still haven’t recovered from the last round of disruption.

“There is a risk of a tsunami of cargo coming out of Shanghai that could make a bad situation worse,” says Simon Heaney, a supply chain researcher at Drewry, the maritime consultancy.

What?

On that gravity model of trade. It really isn’t geographic distance that matters, it’s economic distance.

For a decade “black gold” drew roughnecks and executives by the thousand to “Fort Mac” in northeastern Alberta. Some were paid a fortune to move dirt. Then the oil price crashed, a fire ripped through the town, Canada’s grubby oil was shunned by investors and assailed by environmentalists and wages fell.

OK, oil price falls, so oil town goes bust. So what?

Except it still pays to ship oil from Venezuela to Houston. From Saudi to Japan. Why doesn’t it pay to ship from Alberta to Toronto?

With too few pipelines, Alberta could not get its product to market.

It’s economic distance that matters – here, transport links – not geographic distance. At with point everyone’s got to redo their models about trade with the EU. Sure, we’re close geographically. But that’s not the determinant of the gravity model of trade, is it?

However, farmers’ leaders warned that if China restricted imports this could lead to the UK being inundated with meat produced at a lower cost than was possible in Britain because of enhanced animal welfare standards.

British folk made better off. If we allow this to catch on then where would we be?

But critics of the proposed agreement fear the zero tariffs and zero quotas deal that the government in Canberra is demanding would see British farmers and businesses undercut by Australian rivals, with concerns that cheap imports of beef and lamb could see demand for home-grown produce dwindle.

Ian Blackford MP, the SNP’s Westminster leader, has warned Scotland’s farmers and crofters would be disproportionately affected, with the country’s beef, dairy, sheep and grain sectors particularly at risk.

How ghastly that would be, that the British be made better off at the cost to a few porridge wogs.

Boris Johnson backs tariff-free trade with Australia
Agreement would be first deal since Brexit but farmers fear competition from cheap imports

Competition, yes.

Boris Johnson is prepared to offer Australia tariff-free access to British food markets despite warnings that it could put farmers out of business.

That’s how efficiency rises, those less so go bust.

Trade between the UK and France bounced back towards normal in March as firms adjusted to life after Brexit, according to analysis by French customs officials.

Imports from Britain climbed to 107pc of typical levels after taking Covid effects into account, the research found – with exports back at 96pc.

He said, however, that the investigation was continuing to ensure that the problems, described as a shortage of raw materials, were not a result of AstraZeneca allegedly favouring the UK’s order for 100m doses.

De Croo said: “AstraZeneca pointed to production issues at Seneffe. The federal medicines and health products agency has together with its European partners carried out checks at the site.

“It appears that there is a shortage of the raw materials needed to make the vaccines. The analysis of the situation there is still ongoing.

Love to know which raw materials. And what’s the hold up on them? Because allow it go go a level or two deeper and we end up back where home production just isn’t possible. Because at some level of detail the supply chain for anything and everything is the entire global economy.

What’s in a name? Plenty, when it comes to asafoetida or “devil’s dung”. The evil-smelling spice is a stink bomb that unquestionably lives up to its moniker. Inhalation at five paces can make someone with a blocked nose stagger back. It has to be stored away from other spices to prevent it overwhelming them. Just a smidgen can cure indigestion. Yet it is a staple in Indian cuisine, adding a certain subtle aroma, pungency and flavour. For the Jain community, whose religion forbids the use of onion and garlic, “hing”, as it is called in India, is a lifesaver for the flavour it adds. Hing is India’s answer to Japan’s umami.

Yet, until now, no one in India has grown the spice.

So, now some has been planted and Huzzah.

Although spice nationalism does sound like a pretty silly thing to be worrying about. Rather ignores the whole benefit of that trade thing….

Previously Indian cooks benefited from the labour of Afghans. Now they won’t. This is an advance how?

Brexit: No 10 startled by EU insistence that UK accept trade terms

Horrors!

Downing Street reacted in dismay as Emmanuel Macron led EU leaders in warning Boris Johnson that he must swallow the bloc’s conditions, in what appeared to be taken as a direct challenge to the British prime minister’s threat to walk out on the talks.

At a summit in Brussels, the EU proposed a further “two to three weeks” of negotiations but Europe’s heads of state and government offered Johnson little succour, demanding that he alone needed to “make the necessary moves to make an agreement possible”.

The intervention was evidently regarded as incendiary in No 10 as Johnson had said he would make a decision on Friday on whether there were grounds to continue the talks. In September, he had said that without agreement by the time of this summit the government would “move on” to focus on no-deal preparations.

This being how negotiations are done.

“Here’s our demands. Obey or no deal!”

“Well, if we could just clarify the details here?”

“Well, OK, we’ll change that little bit. But our demands, Obey!”

Somewhere around the 55th iteration of this the deal is done. Or, not, obviously. But that the “Obey!” bit has been done is about as remarkable as Boris or The Donald chasing totty.

When did Robert Kuttner get his trade policy from Pat Buchanan?

In the COVID crisis, her recent writings and tweets have been far more solicitous of the effect on the WTO than on the U.S. economy. In a recent tweet, Hillman declared, “Everyone needs to keep saying it again and again. Tariffs are taxes on imports paid by American importers and passed on to American consumers.”

Apparently this is something that Kuttner disagrees with.

In fact, tariffs are a policy tool, not good or evil per se. And in the coming negotiations over how to reset the U.S.-China relationship, tariffs can be used well, badly, or not at all.

Well, yes, they’re a tax upon imports, paid by Americans, which mean that Americans will buy fewer imports. What’s the difficulty with understanding this, Bobby?

The UK mandate keeps the NHS out of any deal and upholds British standards on food standards and animal welfare, meaning Britain will reject any attempt to sell chlorinated chicken or hormone-fed beef to the UK….

As with all such deals, it’s a list of where we’re not going to have free trade.

Britain should negotiate trade deals with individual US states as a backstop while Boris Johnson tries to seal a post-Brexit free trade agreement with America, a former trade secretary will say on Monday.

Liam Fox will point out that four US states – California, Texas, Florida and New York – would be members of the G20 if they were independent nations, and that many deals could be struck with states, rather than the US as a whole.

While tariffs on goods can only be negotiated by Washington, deals on services, which account for the majority of Britain’s transatlantic trade, can be sealed on a state level, unlocking billions of pounds of business for the UK economy.

Not really, no. The US Constitution means that the Feds are the people who deal with trade. It’s not so much the over the national borders thing, it’s the interstate trade that they’ve a lock on, the Commerce Clause.

They are serious about this too. Back when FDR was trying to screw things up with the New Deal a farmer decided he’d not like to submit to the Feds telling him how much wheat he could produce or not. So, he said it was only for his own consumption therefore bugger off.

The Feds argued, and the Supreme Court agreed, that if he didn’t grow it then he would buy from some other farmer. Who might be across state lines. That therefore made restrictions upon his growing his own wheat for his own consumption a matter of interstate trade and thus something the Feds got to regulate under the Commerce Clause.

Brits selling insurance in NYC is sufficiently different to get around that, is it?

Liz Truss, the new trade secretary, will promise to create up to 10 new tax-free zones at ports and airports in a move condemned by Labour as setting up tax havens and money-laundering opportunities along Britain’s coasts.
….
Those advising Truss on a new free port panel will include Eamonn Butler, the director of the rightwing, libertarian Adam Smith Institute, and Tom Clougherty, the head of tax at the Thatcherite thinktank the Centre for Policy Studies (CPS).

Tom, of course, used to be at the ASI. Thus does the march through the institutions continue.

As to the actual free ports – they’re really just large bonded warehouses and no one has been complaining about those.

Kim Jong-un, the North Korean leader, has condemned international sanctions on his country as the work of “hostile forces” to impede efforts to improve the living standards of his citizens.

That is pretty much what they are.

Ten years after the crash: have the lessons of Lehman been learned?
Our panel of writers considers what has changed – and what still needs to

OK, reasonable point for discussion.

Yanis Varoufakis:

Second, trade agreements must commit governments of poorer countries to minimum living wages for their workers.

Killing the ability of poor places to get richer makes the financial system safer, does it?

Umm, to rename it? There’s no news of anything other than very marginal changes, is there?

More
8. It’s all part of the “invisible government” that we take for granted. That’s why toryboy morons assume we can get rid of it. To them, these non tariff barriers are just protectionist devices cooked up by Brussels bureaucrats with nothing better to do.

1 reply 19 retweets 105 likes
Reply 1 Retweet 19 Like 105 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
9. So let us put this to the test shall we? If JRM thinks deregulation to African levels is right for the UK let him put his money where his mouth is. Let’s let him pick one, from three containers of baby milk, to feed the latest of his brood.

7 replies 28 retweets 111 likes
Reply 7 Retweet 28 Like 111 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
10. Then let’s lace one of them with powdered floor bleach and ask him to take the gamble. What then do you suppose the arsehole’s view on non-tariff barriers would be? I wonder.

1 reply 14 retweets 90 likes
Reply 1 Retweet 14 Like 90 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
11. And if you think I’m building a straw man here, here’s Tim Worstall of the ASI’s worldview. They really do think like that.

http://peterjnorth.blogspot.com/2017/02/the-freedom-to-die-horribly.html …

2 replies 17 retweets 56 likes
Reply 2 Retweet 17 Like 56 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
12. This is the mentality behind the Toryboy think tanks and BrexitCentral. They really genuinely don’t have the first clue. This is why they only talk about tariffs. Anything else is light years beyond their understanding.

2 replies 20 retweets 91 likes
Reply 2 Retweet 20 Like 91 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
13. You would think that think tanks claiming to represent commerce would have a better handle on this but in the end they are free market dogmatists who favour their own scripture over real world evidence. London free marketeers are cult.

1 reply 12 retweets 71 likes
Reply 1 Retweet 12 Like 71 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
14. What they don’t understand is how regulatory controls add value. Most trades in goods are not one of purchases. They are part of established value chains. Business wants to stay in business and its only fly by nights who want one off trades.

4 replies 28 retweets 89 likes
Reply 4 Retweet 28 Like 89 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
15. In this the essential element of any value chain is trust. Supermarkets can but with confidence if they can see that trusted institutions have certified produce – and that in turn is peace of mind for the consumer. It also reduces waste and improves quality.

1 reply 11 retweets 62 likes
Reply 1 Retweet 11 Like 62 Direct message

Pete North
‏

@PeteNorth303
22h22 hours ago
More
16. Trade analysts will often say that an FTA doesn’t necessarily reduce prices, but it does improve the quality of value chains and trade facilitation measures removing bureaucratic overheads increase the profitability. This is why we have regulatory harmonisation.

2 replies 15 retweets 65 likes
Reply 2 Retweet 15 Like 65 Direct message

Sigh.

Yep. I – we – agree that trade and business is a multiple iteration process. We all end up trading with those we trust. On the grounds of getting what we asked for. Without that powdered bleach, unless a box of powered bleach is what we actually asked for.

Which is why we don’t think that regulation by the bureaucracy is all that important. Because people do trade with those they trust, trust doing that job of regulation rather well. Regulation does have its merits, most certainly. If all are following it then it means that you can take a flyer on some supplier you don’t know, who doesn’t have a reputation nor track record. As long as new entrants can afford to meet the paperwork costs of the regulatory standards of course. But then it’s not entirely unknown for people to lie about having followed the regulations, so it’s less effective than it might be.

Note that this isn’t the view merely of some Tory Think Tank Boy. I supplied much of the world – for a decade – with its desires for one specific metallic element. As far as there was any international standard for the material I wrote it. The thing I was really selling was that I delivered what I said I would when I said I would. When I didn’t – mistakes happen – I corrected matters. That’s why I got repeat orders.

Quite, regulation matters, but who is doing the regulating? That trade works on the basis of trust means that trust – and verify! – works. The bureaucracy might be nice, might not, but it’s not necessary.

I did, in those metal days, have one intervention with that regulatory apparatus concerning international trade. A bloke in the US bureaucracy wanted a sworn statement that 10 kg of scandium oxide was not an animal product.

Most useful, that declaration, most useful to all concerned.

America’s International Trade Commission (ITC) overturned a decision to impose 292pc trade tariffs on the C-Series jets, which are being sold to US airline Delta.

The levies would have massively ramped up the cost of the 75 aircraft and likely caused Delta to cancel the contract.

But, in a surprise ruling, the ITC rejected a complaint brought by Boeing, voting 4-0 in favour of Bombardier.

The court rejected Boeing’s claims that it suffered injury in the case.

That ITC is less politically directed than I had thought.

The U.S. Commerce Department on Wednesday finalised steep anti-subsidy duties on Bombardier Inc’s CSeries jets, setting up the next round of a fierce international trade dispute between the United States and Canada.

The move announced by the department to impose duties of nearly 300 percent stems from a complaint by rival Boeing Co.

The company claimed Bombardier had been unfairly and illegally subsidised by the Canadian government, allowing the planemaker to dump its newest jetliner in the U.S. market below cost.

“Today’s decision validates Boeing’s complaints regarding Bombardier’s pricing in the United States, pricing that has harmed our workforce and U.S. industry,” Boeing said in a statement after the department decision.

Delta Air Lines, the second largest U.S. carrier by passenger traffic, has an order for 75 of the 100-to-150 seat CSeries jets.

Airbus now owns 50.1% of the Bombardier C Series. They will be assembled inside the US as a result.

Both Boeing and Wilbur Ross will be able to go fuck themselves.

Ideas contained within the so-called ‘Project After’ document including dropping all import tariffs and becoming a champion of free trade.