Expensive change

In today's WSJ, Change You'll Have to Pay For

Here's one "change" presidential candidate Barack Obama apparently believes in: higher prices. Witness his letter last week urging President George W. Bush not to submit the U.S.-South Korea free-trade agreement to Congress for ratification.

Mr. Obama's objection, as stated in his letter, is that the deal "would give Korean exports essentially unfettered access to the U.S. market and would eliminate our best opportunity for obtaining genuinely reciprocal market access in one of the world's largest economies." In other words, ordinary American consumers would get too good a deal.

For an idea of how good, look at automobiles, about which Mr. Obama professes particular concern. The free-trade agreement would eliminate America's 2.5% tariff on most Korean car imports. Even better, it would phase out the 25% tariff on pick-ups and light trucks. Overall, the Korean trade deal would boost the U.S. economy by $10 billion to $12 billion.

Mr. Obama thinks this benefit to U.S. consumers isn't worth the risk that South Korea might not live up to its promise to eliminate its own 8% tariff on U.S. autos and cut its bewildering array of nontariff barriers, such as arcane safety standards. This despite the fact that the deal includes enforcement provisions if Korea backtracks.

Obama's record?

On the record so far, Mr. Obama is the most protectionist U.S. presidential candidate in decades. In February he inserted a statement opposing the Korean trade deal into the Congressional record only days before securing the endorsement of the powerful Teamsters union. He also opposes the U.S.-Colombia pact, and he has called for rewriting Nafta – unilaterally if Canada and Mexico don't play along.

Unfortunately the repercussions for Latin America go well beyond prices for consumer goods here in the USA: Free trade is exactly what Colombia and the other countries in Latin America need to fight Chavez's Bolivarian revolution.

Obama's already said he's willing to talk without preconditions with Chavez and Cuba's regime. The rest of the Democrat party has already handed the Chavez rule. Don't expect things to goo well in Latin America if the Dems take the White House.



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A happy convergence: When shoes and economics meet

As frequent readers of this blog know, I was an economics major in college, I'm passionate about abolishing trade tariffs, and have an interest in shoes.

Well, imagine my delight when I saw this article at the Heritage Foundation:
Cut Shoe Tariffs to Help Low-Income Families

Excellent idea!

In this age of political strife, it is very good to see a bipartisan effort to make life easier for the poor. The Affordable Footwear Act (AFA) is such an effort. Introduced last month by Representatives Joe Crowley (D-NY), Kevin Brady (R-TX), and Nancy Boyda (D-KS), the AFA would repeal the disproportionate tariffs on shoe imports. High protectionist tariffs on inexpensive footwear hit the poor hardest, raising the price of a basic necessity. Congress should repeal the tariffs and help all Americans save a few dollars on their next pair of work boots, pumps, or sneakers.

Speaking of pumps, I was just mentioning that Steve Madden Women's Luvvy Pump in red patent, are a particularly good choice for the festivities.

But back to the article,

Shoes are the extreme case, with tariffs 10 times the average rate, and cheap sneakers face the highest tariffs the U.S. imposes on any manufactured good. These tariffs, magnified by retail markups and sales taxes, are included in the price families pay for shoes.

Footwear tariffs are simply a hidden, regressive tax on a household necessity. Their sole effect is to reduce the amount of income families have to spend on all other goods and services. This expense is most onerous for low-income families with children, who spend the largest share of their income on the necessities of life. The Affordable Footwear Act, which would eliminate cheap-shoe tariffs, is a straightforward way to help these families stretch their household budgets further.

The High Cost of Footwear Tariffs

Americans bought about 2.4 billion pairs of shoes last year.[1] China, Italy, Vietnam, Brazil, and Indonesia are the top suppliers.[2] The value of these shoes at the border was $19 billion, and the U.S. government collected footwear duties amounting to almost $1.9 billion on the shoes. While the average weighted U.S. tariff rate across all traded goods is 1.6 percent, tariffs on shoes begin at 8.5 percent for leather dress shoes, rise to 20 percent for running shoes, and peak at more than 60 percent for some grades of cheap sneakers.
...
Many tariffs are in place to protect American industries and jobs from international competition. But the shoe tariffs support virtually no domestic shoemaking and protect no U.S. manufacturing jobs, because America's footwear manufacturers today produce specialty and high value footwear, not the kinds of inexpensive shoes that make up the bulk of imports. The inexpensive shoes and sneakers with the highest tariffs have not been made in the United States since the 1970s.

Support the Affordable Footwear Act.

It's time to repeal the footwear tariff.



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Bloggers' call with Republican House Policy Chairman Thaddeus McCotter: "Free trade for free nations"

I was invited to a bloggers' conference call with Republican House Policy Chairman Thaddeus McCotter, along with several other bloggers. TechRepublican and Simple Country Girl blogged about it.

My question to him was on free trade and Latin America: since I firmly believe the best foreign aid the USA can provide developing countries is through free trade, and in view that the agreement with Peru just passed (the one with Colombia is still in the works), where do the Republican congressmen stand?

Congressman McCotter firmly believes in free trade with free nations. He explained that we shouldn't be trading with Communist China as we do now while they're killing their people. Trade with China imperils trade with Latin America and Africa while at the same time it distorts trade in the entire world. The US should have a consistent policy: "Free trade with free nations".

A policy I can certainly agree with.

UPDATE, Saturday 15 December
Betty Inclan tells me that Congressman McCotter has a You Tube page



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Sorry Colombia! Is now on line

Robert Mayer of Publius Pundit has just launched Sorry Colombia!

Why Are We Sorry?
On July 2, 2007, House Speaker Nancy Pelosi, Majority Leader Steny Hoyer, Ways and Means Committee Chairman Charles Rangel, and Ways and Means Trade Subcommittee Chairman Sander Levin issued a statement on Democrat trade policy rejecting a free trade agreement with our closest ally in Latin America, Colombia. According to them, it cannot be approved until "concrete evidence of sustained results on the ground in Colombia" regarding issues such as violence and corruption have been shown.

This is an apology to Colombians for the lies and incompetence of America's Congressional leaders, as well as a resource for the truth on Colombia's remarkable fight for normality.

In the spirit of Pelosi's Hoyer's and Rangel's Congressional idiocy, here's my picture:


Robert and I discussed Colombia and the FTA agreement in last Friday's podcast.

Previous post here.

Support Colombia with a Full Trade Agreement

UPDATED
Special podcast this afternoon at 3:30PM Eastern

Otto Reich, writing at Latin Business Chronicle, explains why:

The Government of Colombia should be applauded and rewarded by approving the Free Trade Agreement, ... so it can carry out more reforms and create more good jobs. By helping pacify the country, Plan Colombia is helping trade union members to have more jobs and better working conditions. By restoring the power of the state and the rule of law, President Uribe is promoting labor freedoms as well as other liberties.

However, Colombia Hurled Into The Cold - with a kiss

because there is some violence in a society that's been engulfed by war for 44 years, 46 million Colombians are to be denied the right to free trade with America for as long as it takes for Congress to be convinced it's over. That's Congress' idea of a solution. That'll fix 'em.

Colombia's President Responds to U.S. Democrats' Idiocy

The WSJ looks at this Trade Double-Cross (emphasis added)"

This unilateral high-handedness is even worse for the Colombia-U.S. trade pact, which Democrats seem prepared to kill outright. Colombia has been fighting the war on drugs for decades for the U.S., and suffering disproportionately for it. Popular President Álvaro Uribe, now in his second term, has reduced violence by almost every measure, including murder, terrorist attacks, robbery and kidnapping. But Mr. Uribe knows law enforcement is not the only answer to his nation's ills. He wants to boost the economy through trade so Colombia's poor, who are the most vulnerable to terrorism, can participate in democratic capitalism.

Good idea, right? Not to Democrats, who said Friday that they'll oppose the pact on human rights grounds until they "see concrete evidence of sustained results on the ground in Colombia." What Colombians think about their president and his policies is apparently meaningless. Mr. Uribe replied that he isn't interested in "a relationship wherein the U.S. is master and Colombia a slave republic"; good for him.
...
All of this suggests that the real goal of the Levin-Pelosi Democrats is to put an end to further trade expansion.

Very bad idea, Nancy.

Or, as Gateway Pundit put it, FARC You! Democrats Choose Terrorists Over Pro-US Colombia!

Update, Friday 6 July
Colombians are intent on turning their country around:

More than 1m protest kidnappings in Colombia
The size and scope of the demonstrations is unprecendented:

Hundreds of thousands of people protested in different cities from the Amazon jungle to the Caribbean city of Cartagena, to demand kidnap victims' liberation.

The country is coming together:

The demonstrators took to the streets in major cities and small towns throughout Colombia, demanding "freedom without conditions now" for the people being held hostage by guerrillas, right-wing paramilitary groups and criminal gangs.

Protests or moments of silence were also organized abroad by Colombian embassies and consulates in Poland, France, Brazil and New York.
Gateway Pundit has more.

Welcome, Instapundit readers.

More
Huge round-up with photos at Publius Pundit, who's starting A New Campaign in Support of Colombia

SPECIAL PODCAST THIS AFTERNOON 3:30PM Eastern
Monica Showalter of Investor's Business Daily, Robert Meyer of Publius Pundit, and Gateway Pundit talk about Colombia, the US Congress and the Free Trade Agreement in this afternoon's special podcast.
Join us!

One-Way U.S. Trade For Ecuador?, asks IBD

Ecuador's president, Rafael Correa, who wants to dissolve his country's Congress by an assembly with powers to rewrite the volatile nation's constitution, a la Hugo, is knocking at our door asking for free trade:

Presidents Rafael Correa of Ecuador and Evo Morales of Bolivia, are both running notoriously anti-American regimes. They have blasted the U.S. as a capitalist oppressor, and said their whole national mission is to slip its imperialist shackles. Needless to say, they've been no friend to the U.S. in the United Nations. Worse yet, they've forged alliances with some of America's worst enemies, like Iran and Cuba. They've also grown increasingly slack and obstructive in even fighting the drug war that plagues the entire Andean region. Morales has increased coca production by 8%, keeping the street price of cocaine steady even as Colombia's production falls 9%. Ecuador has emerged as a major drug transshipment point and money laundering center - something that is evident by its well-developed illegal immigrant smuggling routes to the U.S., which are the region's best. Ecuador has announced "irrevocably" that it will shut down a tiny U.S. military base at Manta port that tracks drug planes, in order to kick out the U.S. imperialists.

But in exchange for fighting the war on drugs, they've both been recipients of large amounts of U.S. aid in 2006 - $120 million in Bolivia's case and $500 million in Ecuador's. Along with this aid, which is both humanitarian and technical, they both have preferential "ATPDEA" trading privileges to sell their goods duty-free in the U.S. without having to reciprocate the favor to American firms.

With a setup like that, they can, in practical terms, reject and obstruct the idea of real free trade, which would ask them to open their markets to U.S. competition, as long as they retain their current trade privileges. Thus, America's generosity to them has provided a platform for them to condemn real free trade with impunity. But under the radar, they feverishly want a continuation of these one-way US trading privileges, which is why they're suddenly telling America they never really meant it about the 'imperialismo' charges and all that as the expiration beckons.

Investor's Business Daily has more:
Foreign Relations: Should the U.S. offer preferential trade privileges to hostile anti-American regimes that view them as cheap handouts? Offering nothing in return, Ecuador thinks so. We are less sure

The U.S. doesn't ask much from Ecuador. Sandwiched between Colombia and Peru, Ecuador has only provided a tiny "forward operating base" at the port of Manta, with 300 U.S. troops conducting aerial surveillance to keep Colombia's FARC Marxist narcoterrorists from bringing war to Ecuador as they have to their own country.

Instead of helping on that front, Ecuador now vows to shut down the Manta base and let the skies there go unpatrolled.

The Manta shutdown ends any rationale for APTDEA. So does Correa's refusal to recognize the FARC as a terrorist organization or to chase its operatives from Ecuadorean soil.

Worse, Ecuador has harassed Colombia with lawsuits as it tries to eradicate coca fields, making Colombia's war that much harder.

Read both.

In other, "Gimme, gimme!" news, Castro Says U.S. Must Change Its Cuba Policy `Unilaterally'.
But, is he still wearing his jogging suit?



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Two very different articles on Latin America from this week

While we were all fretting about the Iranian hostages, bamboo, and Nancy Pelosi's Hermes scarf, there were two very interesting articles on Latin America that are worth mentioning:

At Der Speigel, Peter H. Smith asks Are We Losing Latin America?

This question has been asked for over a century now, and Smith's not particularly insightful in his opening paragraph:

A new populism is rising across Latin America and Cuba faces what could be a tough transition period. After years of neglect, it's time for Europe and the United States to reengage a trans-Atlantic dialogue on Latin America.

For starters, while Smith accuses Pres. Bush of totally ignoring Latin America (an arguable point, to say the least), the EU's not just ignoring but actively neglecting the region, as Smith himself admits

Europe has been unable to grant much time or attention to Latin America. In May 2006 a summit meeting of EU and Latin American heads of state produced elegant declarations that were elegant declarations devoid of meaningful content. Participants solemnly affirmed that "we reiterate our commitment to continue promoting and strengthening our strategic bi-regional association as agreed in previous summits..." As summarized by one prominent newspaper, "A paralyzed Europe collides with a divided Latin America." The EU-Latin American summits were falling short of expectations. In recent years, the EU has undertaken few significant initiatives. The most notable activity resulted in FTAs with Mexico, in 1997, and Chile, in 2002. The 2006 summit also proclaimed the intention to negotiate a free trade agreement with Central America. In this case, as in the others, the principal goal would be to offset the preferential effects of bilateral FTAs with the United States. In the meantime, the much publicized idea of an FTA between the EU and Mercosur languished for lack of attention - and for lack of commitment on both sides. "To achieve success," as one observer noted, "the negotiation needs fresh air."

The EU's reiterated commitments to continue promoting and strengthening anything and everything, are for the great part reactions to the USA's bilateral free trade agreements with Latin American countries, among them,

• the Caribbean Basin Initiative of 1983
• the North American Free Trade Agreement (NAFTA) of 1992
• other free trade agreements (FTAs) with:
  Colombia
  Peru
  Central American nations,
  Dominican Republic,
  Chile,

and of course, Brazil.

Smith ignores completely Brazil's current negotiations with the USA both for bilateral trade and for extraterritorial alliances.

All of these are arguable points (not the least of which being that ignorance can be bliss), but the problem I have with Smith's article is that it views American interests in the region as bad

because they threaten to prejudice European economic interests

What about Latin America's economic interests?

Unfortunately the EU's economic interests are predicated on more regulation, more tariffs, more taxes, and more bureaucracy. IF (yes, a big "IF") the EU were serious about its own, and Latin America's, economic interests they would concentrate on how to abolish all trade tariffs and farm subsidies.

Which they will never do.

The US and Brazil, by the way, are currently accelerating the process of the DOHA global trade talks which has everything to do with tariffs.

The other article on Latin America is Alvaro Vargas Llosa's
Castro's Enemy: The Ethanol Alliance. As I have mentioned previously, the ethanol produced in Brazil is subject to a 54-cents-a-gallon US tarriff. Vargas Llosa correctly states

If the United States wants to boost ethanol consumption and reduce oil-dependency, it needs to make a simple decision -- eliminate its 54-cents-a-gallon tariff. Experts tell us that corn-based ethanol, the kind being produced in the United States, is eight times less efficient than Brazil's sugarcane version of the biofuel. Alessandro Teixeira, Brazil's point man for his country's ethanol strategy, insists that "we are the world leader, and if people really want to benefit from our ethanol industry, they have to embrace it in practice, not in theory.'' Precisely because corn is much less efficient than sugarcane, the U.S. has been able to replace only about 3 percent of its oil consumption despite a huge government biofuel program.

Vargas Llosa, however, is aware of the DOHA talks,

It is hard to see how the new ethanol alliance will boost the Doha Round of world trade talks, as some commentators are claiming. The principal stumbling block is the fact that developing countries are using American and European protectionism as an excuse to maintain their own barriers in areas such as services. The U.S. ethanol program already has caused an artificial rise in the price of cereals, giving new arguments to developing nations who want to blame the United States for impoverishing them.

Vargas Llosa ends with the real reason to worry about all this government intervention,

It makes me nervous when governments, rather than investors and consumers, decide what we should invest in and what we should consume. But if the ethanol partners want their grand schemes to have a chance at success, then they at least need to start by being consistent.

And that is the lesson of the day for all involved: Latin America, the EU, and the USA.

For more on Latin America and the USA, listen to last Monday's podcast with Monica Showalter.


(one side comment to the TCS article: Alvaro Vargas Llosa's correct last name is Vargas Llosa, not Llosa)

Look who's green with ethanol envy:

Castro hits out at US biofuel use

Cuban President Fidel Castro has strongly criticised the use of biofuels by the US, in his first article since undergoing surgery last year.

He said George W Bush's support for the use of food crops in fuel production would cause 3bn deaths from hunger.

The article in the Granma newspaper did not mention Mr Castro's health.

As the AP's Anita Snow puts it,

The article is written in the same kind of apocalyptic style Castro typically adopts when discussing the impact of U.S. international policies on developing nations.

(Anita also added, "and there was no reason to doubt he was the author." Val might disagree. But I digress.)

'Fidel' now tells us ethanol is sinister. Will the Left be repeating his line? You betcha.

For starters, Fidel is factually wrong:

As more and more corn grain is diverted to make ethanol, there have been public concerns about food shortages. However, ethanol made from cellulosic materials instead of corn grain, renders the food vs. fuel debate moot, according to research by a Michigan State University ethanol expert.

The findings, which are being presented by Bruce Dale today at the ACS meeting in Chicago show that,

"The evidence indicates that large-scale biofuel production will increase, not decrease, world food supplies by making animal feed production much more efficient," Dale said.

But never mind that.

The real reason Fidel thinks ethanol is sinister is because it is a threat to his Communist Revolucion, be it in Cuba, in Venezuela, or elsewhere. As a Cuban minister recently said, "in order for the revolution to survive, it needs the poor".

An ethanol boom in Latin America will create great wealth and prosperity, and is already attracting investment and trade in Central and South America and the Caribbean. As I mentioned in a recent post,

• Sugarcane is grown in many countries throughout the region
• Countries that do not produce sugarcane but have ethanol processing facilities are benefiting from being exempt of the onerous ethanol tariffs.
• "An ethanol boom in Latin America would also attract investment to rural areas and create lots of jobs.That might help to reduce the steady northward stream of illegal immigrants. It would certainly burnish America's image, and stem support for anti-American tub-thumpers such as Venezuela's Hugo Chávez. He has won friends throughout the region by selling oil cheaply. By sharing technology and promoting investment in ethanol, America would also be reducing Latin America's fuel bill. If it bought lots of ethanol from its neighbours, it would be providing them with a lucrative export of their own."

And that wealth won't be limited to Latin America: Just this week the World Bank is helping Brazil export ethanol technology to African countries such as Ghana, Angola (where Fidel tried to export his revolution by sending troops), and Mozambique.

On a more personal note, I'm sure Fidel must be particularly incensed that sugarcane is bringing wealth to the region, after he ruined the Cuban sugar industry.

As Fidel himself said,

The sinister idea of converting food into combustibles was definitively established as the economic line of foreign policy of the United States

And let's do it right, by abolishing all farm subsidies and tariffs.

Previous post on here.
----------------------------------------------
In a somewhat related topic, Alvaro Vargas Llosa explains
Why Perfect Totalitarianism Is Impossible:

The lesson of our time, a decade and a half after the fall of communism in Europe, is that the slow, almost geological, accumulation of little bits of heroism throughout society can bring down a totalitarian giant over time. These acts of heroism, both inside and outside the structure of power, constitute the best hope for countries in which governments continue to enslave millions of people today.

But even if these acts of silent heroism are not enough to cause all despots to come tumbling down, they are at least enough to keep the human spirit alive. That is a comforting thought.

Via Dr. Sanity, who today explores the economic interaction of humans.

Dr Sanity posts on Hugo

Dr. Sanity has a terrific post, THE IDEOLOGICAL RHYMES OF HUGO CHAVEZ
"History doesn't repeat itself, but it does rhyme." - attributed to Mark Twain

Is anyone surprised at this news?

One of the dissonant rhymes of history is at this moment taking place in Venezuela. If you listen closely, you will be able to hear the repugnant sounds of a familiar oppression in Hugo Chavez' "socialist paradise."

He is clamping down on the press; he is nationalizing all the industry; he is threatening jail to anyone who opposes him. Things are beginning to fall apart, so the solution for thugs like Chavez is to just get more control. As once was pointed out to Darth Vader in a similar context, I believe, "The more you tighten your grip, the more people will slip through your fingers."

Dr. Sanity is right on the money.

The only thing I disagree with is this,

Awash collectivist fervor, it won't be long before the Venezuelan people will begin to realize they have been conned by an expert.

While a significant number of Venezuelans realize they have been conned, and many are wanting to leave (so much so that Doral, an area of Miami, is now Doralzuela to the locals), Hugo's core constituency, which is found among the large underclass of what by all criteria should have been a rich country, will take a very long time, if ever, to wake up to reality.

Why?

First of all, they see Hugo as "people like us". While Hugo, unlike Lula of Brazil, didn't rise from the underclass, Hugo has convinced them that he is one of them.

The prior Venezuelan administrations failed to turn oil money into a means of developing its most valuable resource, its people. And the people know it.

Chavez also knows the power of nationalistic propaganda in Latin America, which goes hand-in-hand with anti-Americanism. It goes like this:

[Insert contry's name here] is THE country, and the USA wants to take over [Insert contry's name here]'s assets, and will invade.

In Venezuela's case there's the oil, so of course this feeds into the fallacy. That the USA borders with one of the largest, most prosperous, most resource-rich countries with one of the most educated populations in the world, a country which has oil, and that country is so sure that the USA's not going to invade that it, for all practical purposes doesn't have an army that amounts to much, would never cross the mind of the afflicted with anti-American paranoia.

Additonally, Latin American politics, not just Venezuelan politics, have traditionally been based in the politics of envy. Marxist ideology, with its belief that "the rich are rich because they make us poor" and many variations on this theme, is the mothers' milk of this mentality.

Then there's all-oout propaganda, and repression of dissenting views: Hugo is silencing dissenting views little by little

Meanwhile, the government has vastly expanded its own media holdings. It runs three national TV channels, as well as Telesur, an international news channel set up by Mr Chávez as an answer to CNN. It recently bought CMT, a small Caracas channel, to broadcast Telesur at home. It has pumped money and other resources into "alternative" and "community" media, most of which are dependent on the state and are unlikely to adopt a critical stance.

Mr Chávez this month relaunched his weekly "Hello President" programme as a 90-minute nightly radio show, with a TV version once a week. Promising "exclusives" in every edition, he used the first to announce a new decree against "hoarders and speculators" with six-year jail terms for offenders. He also regularly obliges all TV and radio stations to broadcast his rambling speeches live.

And let's not underestimate the power of never wanting to admit one is wrong. The more insecure a person, the more difficult it is for them to admit they are wrong. Hugo's constituency is not only psychologically insecure, but in most precarious economical and physical straits. For Hugo's core constituency to admit they are wrong would mean the collapse of all they hold dear, at least for now.

Meanwhile, Hugo continues with his arms race: Venezuela buys more arms than Iran and Pakistan

Venezuela has spent more than four billion dollars on arms purchase that include rifles, ships, helicopters and planes in the past two years. This transforms the country into a large weapons buyer, leaving behind big purchasers such as Iran and Pakistan.

What should the USA do? For starters, off-shore drilling, drilling in ANWAR, and encougaring conservation in the USA will decrease dependence on Venezuelan oil - the source of Hugo's riches.

Encouraging free trade with friendly Latin American countries, and abolishing all agricultural subsidies and tariffs in the trade with those countries will boost their economies and ours.

Hugo knows that prosperity is his enemy. Let's encourage prosperity, then.

Update: Chavenomics 101