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Cheese Wars and Strong Coffee

Americans will soon pay more for a precious piece of French Roquefort. The American government has as a last, petty gesture in its trade policy decided to raise tariffs on the product from 100 to 300 percent. This is part of a more general round of retaliatory tariffs in response to the ban the European Union maintains on beef produced with growth hormones. But it is clear that Roquefort has been targeted for political sensitivity, as the Independent writes:
There was a violent reaction in France when import duties were first raised on roquefort cheese 10 years ago. The small farmers' leader José Bové – then a roquefort producer – began his rise to international celebrity by attacking a McDonald's restaurant at Millau, near Roquefort, with mallets and a bulldozer in August 1999.
The main effect this will have is making Roquefort more exclusive. And, perhaps, something of a political statement among Michael Pollan fans and the like. I do hope the French embassy will react appropriately at societal events. If the new administration does not dial this back... Continue reading "Cheese Wars and Strong Coffee"

Farmers, Environmentalists and Anti-Americans

Due to pressure from Midwest farmers and agribusinesses, the United States has imposed a 54-cents-a-gallon tariff to prevent Americans from importing sugar ethanol from Brazil, writes Thomas Friedman in the NY Times (subscribers only):
Yes, you read all this right. We tax imported sugar ethanol, which could finance our poor friends, but we don't tax imported crude oil, which definitely finances our rich enemies. We'd rather power anti-Americans with our energy purchases than promote antipoverty.
However, he also mentions that the Brazilian government is considering the expansion of the ethanol industry, which "could destroy the cerrado, the Brazilian savannah, another incredibly species-rich area" like the Amazon. "No wonder environmental activists are holding a conference in Germany this fall about the impact of biofuels. I could see some groups one day calling for an ethanol boycott - a la genetically modified foods - if they feel biofuels are raping the environment." Friedman, however, thinks ethanol can be promoted and the environment protected at the same time, if all involved parties sit down early.

Sidewalk SUVs and Freedom Fries

•  The Wall Street Journal writes about "Sidewalk SUVs": "Motorized scooters for the disabled are finding a lucrative new market: People just sick of walking." Related: SUVs undermine US foreign policy

•  Superfrenchie, an interesting blog about "French-bashing America", writes that the "U.S. Congress surrenders!" based on a report in the Washington Times that the congressional cafeterias do not list French Fries as "Freedom Fries" anymore. Superfrenchie opines: "I'm not sure something ever made the U.S. look as foolish, petty, bigoted and intolerant than renaming French fries to Freedom Fries. By an act of Congress no less!"
More shocking news: "Germany Faces French Fries Fiasco", writes Deutsche Welle: "Farmers' representatives recently announced that Germany's fabulous summer did horrible things to Teutonic tubers. There's less of them -- about 20 percent are missing."

World Trade negotiations in crisis, EU punishes U.S., and wine deal

The negotiators at the World Trade Organization (WTO) failed to meet the April deadline to agree on ground rules for the liberalization of world markets for agricultural and industrial products. According to Oxford Analytica's op-ed in The Hill:
Progress in the Doha Round has consistently fallen short of even the most pessimistic expectations. Four years of talks in Geneva have provided the necessary technical basis for liberalization agreements, but key countries remain unwilling to make politically difficult choices necessary for progress. For example:
• The European Union's offer to cut tariffs that restrict its imports of agricultural goods is far below what the United States and other agricultural exporters are demanding.
• The United States for its part is reluctant to cut its subsidies to its own farmers.
• Major developing countries such as Brazil and India are resisting European Union and U.S. demands for big cuts in their import duties on  manufactured goods.
This triangular deadlock continues, with no indication of any imminent breakthrough. Almost the only noteworthy Doha development in the four months since WTO ministers met in Hong Kong and set the April deadline has been President Bush's apparent downgrading of the Doha Round by moving his very capable chief negotiator, U.S. Trade Representative Rob Portman, to other duties.
Likewise, the Washington Times opines:
If, as many observers argued, the Doha round on trade liberalization was on life support before highly regarded U.S. Trade Representative Rob Portman left last week to become White House budget director, it is hard to imagine what can be done to resuscitate trade negotiations now. (...) The political obstacles lined up to block an agreement in the United States pale compared to what confronts European negotiators and politicians in their homelands. If French President Jacques Chirac caved into the pressure from unions and student protesters over relatively minor reforms in France's labor law, imagine how quickly French nerve would collapse when Mr. Chirac or his successor is confronted by French farmers taken off the dole. Italy's political problems are equally daunting. With his political capital reduced, President Bush has apparently decided to cut his losses and toss the Doha failure on the heap next to Social Security reform and tax reform.
Oxford Analytica concludes that time is now "desperately short to complete the negotiations." While past trade negotiations have also been beset by crises and delays, the lack of a real commitment by many parties "makes the outcome increasingly doubtful." According to the Financial Times the US and European Union blamed each other for the setback:
Peter Mandelson, EU trade commissioner, accused the US of lacking realism on agriculture, while the US trade representative's office said it wished the EU would put the same energy into the negotiations as it did in finger-pointing.
The European Union on Monday imposed new tariffs on U.S. goods, because U.S. companies continue to benefit from the Byrd amendment. From the BBC:
The anti-dumping amendment lets US firms raise a levy from competitors' goods which it deems to be too cheap. The amendment was ruled illegal over a year ago and repealed in February, but US firms are expected to benefit from it for a further two years. This latest penalty brings the total extra tariffs imposed upon the US to $36.9m. Peter Mandelson - the EU trade commissioner - has said that while the trade dispute has been resolved, US firms are still receiving payments. (...) Since the Byrd amendment was passed in 2000, manufacturers in the metals and food businesses among others, have been the recipients of billions of dollars in payments.
Trade disputes should not be exaggerated. The IHT points out:
In a statement, the EU said the Byrd Amendment "has been a long-running irritant in the U.S.-EU trade relationship," but it added "that the huge bulk of EU-U.S. trade is trouble-free."
THE GOOD NEWS: A fine wine sometimes needs some time. After only 20 years of negotiations, the European Union and the United States signed a bilateral wine accord in March 2006, which will bring major benefits for EU wine producers, says the EU:
It will help EU winemakers to build on their current success in the US, which is by far the EU's largest export market. Annual EU wine exports to the US are worth more than 2 billion euros, around 40 percent of EU exports in terms of value. This agreement provides a clear demonstration that the US and the EU can resolve important and complex issues through bilateral negotiations and both sides are committed to doing so in the future.

EU rejects bold US proposal to cut farm subsidies; progress on "open skies"

World trade talks are getting hot and tense. The NY Times/International Herald Tribune criticizes the EU and Japan for rejecting the US proposal that

The United States would slash the allowable farm subsidies by 60 percent. In return, Europe and Japan would cut their subsidies by 83 percent - a higher percentage because countries in Europe, along with Japan, have higher subsidies.

Farm subsidies are a major burden for tax payers and the developing world:

The developed world funnels nearly $1 billion a day in subsidies to its own farmers, encouraging overproduction. That drives down prices and leaves farmers in poor nations unable to compete with subsidized products, even within their own countries. In recent years, American farmers have been able to dump cotton, wheat, rice, corn and other products on world markets at prices that do not begin to cover their cost of production, all because of politicians - and at the expense of American taxpayers. Europe's system is even worse: U.S. farm subsidies are equal to only a third of the European Union's.

The Washington Post's Paul Blustein opines that the global trade negotiations "appear to have reached their gravest moment since the collapse of a WTO meeting in Cancun, Mexico, two years ago" and blames primarily France for opposing the liberalizing of the EU's agricultural markets:

"We are now down to days," Agriculture Secretary Mike Johanns said. "If something isn't put together by the end of this month, then I do really believe that this Doha Round is in real jeopardy. Certainly the Hong Kong meeting would be in jeopardy."

Meanwhile Reuters reports progress on solving the transatlantic aviation disputes:

The European Union and the United States have agreed key elements of a first-stage deal on an "open skies" pact, the two sides said on Friday, paving the way for opening aviation markets on both sides of the Atlantic. The talks, which restarted on Monday after fizzling more than a year ago, aim to loosen restrictions that determine where airlines can fly, boost competition, and possibly ease ownership rules to make international mergers easier to execute.

How to pay for Katrina and Rita?

Update: The Red Cross has not received enough donations after Katrina, reports the Washington Post today:

The American Red Cross asked Americans to give more to help hurricane victims, saying the $853 million donated for Katrina is less than half what's needed. Rita will require even more.

Congress has not yet agreed on how to pay for the estimated $ 200 billion to rebuild the Gulf Coast after Katrina's destruction, but NASA proudly presented plans to spend $104 billion to return to the moon. While Rita's destructions will increase the federal bill and the debate about national spending priorities considerably, Katrina has, according to the Dallas Morning News, already

reopened the fiscal and social debate about how the nation can care for the poor and pay for the retirement of the baby boom generation while maintaining tax and economic policies that stimulate investment and growth. Those concerns, combined with worries about chronic budget deficits, have spurred lawmakers and lobbyists to dust off their favorite ideas on taxes, spending and pork.

Pressure to get out of Iraq intensifies as well.... Here are some of the proposals to pay for the rebuilding of the Gulf Coast:

Continue reading "How to pay for Katrina and Rita?"

The magic triangle: Europe, China and the U.S.

The leading neo-con magazine “The Weekly Standard” runs an article on transatlantic disagreements on free trade, airbus and agricultural subsidies, the US trade deficit.

The Europeans and the developing nations profess horror at the appointment of Paul Wolfowitz to head the World Bank. They say he doesn't know anything about development, but really worry that he knows too much: that loans to undemocratic kleptocracies might fatten Swiss bank accounts, but do little to fatten starving citizens of so-called developing countries. But Gerhard Schröder and his friends were reluctant to oppose the Wolfowitz appointment, lest they appear to be snubbing President Bush's recent friendly overtures. So they approved the appointment, and will seek a quid pro quo--the appointment of France's Pascal Lamy to fill the vacancy at the head of the World Trade Organization. Lamy is dedicated to the maintenance of the European Union's protectionist agricultural policy, which further enriches well-off French farmers at the expense of poor farmers in developing nations. If he is appointed, and spurns Bush's proposal to end both E.U. and U.S. export-inducing farm subsidies, the Doha round is doomed.