The Games We Choose To Play.

Brad DeLong today quotes from a piece from the Wall Street Journal (the rest being locked in pay per view) about yesterday’s WTO decision to uphold its earlier finding that US steel duties of up to 30%, imposed last year to protect US steel producers restructuring, are illegal because the US never proved that their industry had in fact been harmed by cheap steel imports and also because of a number of other, more legalistic, reasons.


Consequently, Pascal Lamy, EU trade commissioner, announced that the EU would impose up to $2.2 billion in sanctions should Washington not withdraw the tariffs within 35 days. One can certainly discuss the benefit of such retaliatory measures in general. But their specific nature is far more interesting, in my opinion. Especially given that the 2004 US electoral map was the main driving force behind the White House’s decision to impose the tariffs in the first place.


“To increase political pressure, many of the products targeted are produced in swing states that would be crucial to Mr. Bush’s re-election campaign next year. The White House is facing heavy political pressure in the dispute, especially from steel-producing states like Pennsylvania, West Virginia and Ohio, where campaigners want the tariffs kept in place. Representatives of industries that would be targeted by the EU’s sanctions, as well as big steel users in the U.S., have argued against the tariffs…” (from the WSJ ).

French farmers and American steelmakers – different continents, same problem? Or is there something particular about the global external effects of the US Electoral College?

28 thoughts on “The Games We Choose To Play.

  1. “French farmers and American steelmakers – different continents, same problem? Or is there something particular about the global external effects of the US Electoral College?”

    No, I wouldn’t blame the Electoral College as such. I think the problem is that Chirac and Bush are both spineless panderers who won’t hesitate to sacrifice larger points of principle for the sake of a few votes. Just look at how Chirac acted in the runup to Cancun, or how Bush managed to go against everything conservatism stands for in signing the “Farm Security and Rural Investment Act of 2002.” Perhaps the reason both men get along so poorly is that they are so much alike as politicians.

  2. Abiola,
    “Perhaps the reason both men get along so poorly is that they are so much alike as politicians.”

    Hmmm, true, neither are angels, but consider:

    Chirac has been involved at the top of French politics for several decades, including being elected and re-elected as President of France.

    Bush has likewise been involved at the top of American politics for decades. But as his father’s sycophant, not as a politician. He has outright won precisely one election as a politician.

    Perhaps the antagonism is more because the former is a world-class politician and knows it, while the latter isn’t, and knows it too.

  3. “Perhaps the reason both men get along so poorly is that they are so much alike as politicians”
    Yes indeed.

    According to the editorial of my newspaper (NRC-Handelsblad) yesterday the EU have got George dubya by the balls now: he agrees with the WTO-decision and faces election-problems in the states with steel-industry or he does not and faces sanctions through products that are mainly produced in other states that are of importance for his re-election!
    He might as well take a decision based on ideas instead of interests!
    BTW: compare this “influencing” of the US presidential elections with the attempts by a group called “theworldvotes” on which I commented here: http://www.fransgroenendijk.nl/comments.php?id=P149_0_1_0_C

  4. “Chirac a world class politician??
    based on what?”

    In his four decades of politics, he’s been prime minister twice, and elected president twice, in addition to having served in lesser ministries, and served as mayor of Paris (spare me the mock-outrage over his corruption; I’ve got twenty years of exposure to Chicago politics).

    I’d say from this list, it’s fairly clear that he knows both how to campaign for national office and has experience running a governnment.

    What’s your short-list of politicians whose election feats out-class Chirac’s ?

  5. “In his four decades of politics, he’s been prime minister twice, and elected president twice, in addition to having served in lesser ministries, and served as mayor of Paris”

    I’d say that this is only an indicator of the incestuous and self-perpetuating nature of France’s ruling class of Enarques. *Most* leading French politicians have been at the top forever, so it isn’t a mark of distinction for Chirac to also have done the same.

    “spare me the mock-outrage over his corruption”

    Sure, as long as all those who share your political sympathies spare us the faux-outrage over Bush and his “cronies”; or would refraining from conspiracy theories about Halliburton be too much ask of your side?

  6. As I’ve said earlier, many Republicans have been ambivalent about the steel tariffs. The Wall Street Journal article only serves to underscore this.

    But there’s nothing more Republicans could hope for than more open sentiments like Frans’ : ” the EU have got George dubya by the balls now”.

    Yes, bring it on. Show your foreign contempt. Let’s see how well that will play during an American election.

  7. I don’t know if Chirac and Bush are really very similar. Chirac is a political animal with an overriding hunger for power, who is not overburdened with a deep sense of ethics. He is a very forceful authoritarian character, and nobody is in any doubt that he is absolutely in charge of his party – he rams through bone-headed actions that make even loyal supporters cringe sometimes. He also has a large amount of personal charm and influence. He’s more like the bastard child of Bill Clinton and Margaret Thatcher.

    GW Bush, in contrast, has his agenda largely set *for* him. His speeches are carefully written for him by a team of trained publicists, while Chirac feels free to spontaneously open his mouth and put both feet in it any time the urge strikes him. Bush avoids unrehearsed encounters with the press and public, Chirac revels in them. People suspect Rove, Cheney, and the neo-con ‘cabal’ at the White House and in the Pentagon of being the prime movers and shakers behind the Bush Administration. Nobody doubts that Chirac wears the pants in his administration.

    Chirac would collide with anybody, I suspect. He has a great deal of personal charm and ebullience, but he’s also quite determined to get what he wants , and that makes for friction any time there is a conflict of interests.

  8. Markku:

    “Yes, bring it on. Show your foreign contempt. Let’s see how well that will play during an American election.”

    Frans Groenendijk is not running for election in the US. (Correct me if I’m wrong, Frans :-).

    (And please, please, do try to get rid of the enormous chip on your shoulder. Without exception, all your posts display the same anti-European fervour. While there’s nothing wrong with that sentiment per s?, if you’re trying to win hearts and minds you might also note that Frans is from the Netherlands, which has troops on the ground in Iraq and Afghanistan helping the US, and adjust your tone accordingly.)

  9. Yes, Bush may lose his re-election because of this (somehow i doubt it).
    But i don’t care really: if Europe take sanctions, the biggest loser is not Bush,
    it’s the European consumer. Gone are those delicous American vegetables.
    Politics trumps economics. Lamy isn’t much
    better then Bush when it comes to playing cynical political games.

  10. Ivan,
    “Politics trumps economics. Lamy isn’t much
    better then Bush when it comes to playing cynical political games.”

    While this does smell like we’re heading into Smoot-Haley territory; so long as everybody recognizes the WTO rules (and their consequences), there’s hope that we can extricate ourselves from a full-blown trade war.

  11. “Frans Groenendijk is not running for election in the US”
    In fact I am not even running for election in Europe at the moment 🙂 and certainly have very very little power in Europe.
    I don’t have George Dubya by his balls; I should not even want to.
    I wrote: “He might as well take a decision based on ideas instead of interests!” a little bit cynical -i should not do that, forgive me- but I really hope that he is following the free trade here.
    I hope the americans will not reelect Bush but i don’t hope that this will be caused by an action of the EU if he agrees with abolishing the support of US steel industry.

  12. Not exactly sure what Ivan means by ‘politics trumps economics’. Sanctions such as those proposed by the WTO are short-term economic sticks designed to discourage foolish, politically-motivated and economically idiotic decisiions such as the steel tariffs. Looks like the right thing to do from here.

  13. Markku

    Given the current situation in Iraq, I’m not sure that ‘bring it on’ has proved to be the most intelligent of phrases.

  14. “[…]if Europe take sanctions, the biggest loser is not Bush, it’s the European consumer. Gone are those delicous American vegetables.”

    What is “delicous”? if it should be “delicious”, then may I get to know what are these delicious vegetables? Most US produced vegetables are the most insipid staple they can’t avoid making.

    And let’s put thing right: it is the USA under Bush that have started playing politics.

    DSW

  15. Reuben, yes, I do agree you might have a point there, even though I feel that our understanding of what is really going on in Iraq has been tainted by ideologically-lopsided media.

    However, I do feel that Karl Rove and company will know exactly how to spin European vitriol against America into an advantage. Although I don’t believe that that was the primary reason for the tariffs, I do believe that they knew of the inevitable European reaction, and have been prepared to deal with it.

    Having said that, the tariffs still remain highly unpopular amongst many Republicans, and might be rescinded for wholly domestic political purposes.

    As to America’s agricultural tariffs (which also should be rescinded) no amount of criticism of those can blunt the fact that Europeans far outstrip the US in agri-trade protectionism. So on that note European criticism is completely hypocritical.

  16. Elliott: Chips on the shoulder? Perhaps it is jarring for Europeans, smug in their assumed cultural superiority, to hear the kinds of attacks directed at them that Americans have (pre 9/11) tolerated for decades. Let’s just say it’s a taste of your own medicine… or, rather: “we’re-not-critical-of-the-European-people, -just-the-policies-of-your-governments”.

    As to Dutch forces in Iraq and Afghanistan, well, it’s the least they can do, having enabled the slaughter of 7000+ Muslims in Bosnia a few years ago….

  17. My goodness Markku, you are an angry boy aren’t you? Speaking as an American who occasionally agrees with you on substantive issues, I find your anti-European anger to be a bit much. FWIW, I think your reflexive venom undercuts your arguments – much as, for instance, John Pilger’s nauseatingly repetitive anti-Americanism makes almost everything he says seem a product not of thought but of prejudice. I say this not to put you down, just as someone who frequently reads your posts and thinks you could get a bit more out of them.

  18. Markku
    “we’re-not-critical-of-the-European-people, -just-the-policies-of-your-governments”

    That’s OK, then. I was under the impression that when you said things like “show your foreign contempt” and “smug in their assumed cultural superiority” and “taste of your own medicine” you were making personal attacks on the readers of this forum out of sheer xenophobic spite. Glad to see that’s cleared up and I was wrong.

    “As to Dutch forces in Iraq and Afghanistan, well, it’s the least they can do, having enabled the slaughter of 7000+ Muslims in Bosnia a few years ago”

    Yep, that was a disastrous occurence for which the entire Dutch cabinet resigned. I don’t see what Iraq or Afghanistan have to do with making amends for Bosnia, though. How are Dutch troops in Iraq helping Bosnians?

  19. Elliott, Markku is not critical of eurogovernments, as long as no matter what the people that gave them power want is disregarded in favor of the USA.

    DSW

  20. Antoni,
    It’s indeed “delicious”. I don’t know if american vegetables are delicious. Maybe you’ve missed the irony here. But if they were i would love to eat them, and it’s not for Lamy to decide.
    The point is this: there is something wrong with a game where protectionism is retaliated by more protectionisme.
    And i really don’t care who started it. This time it’s Bush, another time Europe.

  21. Below is a transcript of Max Sawisky’s parody of the conservative reaction to the tariff discussions. It reads like one of Markku’s posts, but played for laughs:

    WORLD TRADE ORGANIZATION DISCUSSES RETALIATION FOR US VIOLATION OF INTERNATIONAL LAW. (Disassociated Press) November 11, 2003 — Transnational-progressivist bureaucrats of the European Union, meeting under the auspices of their neo-socialist front group, the World Trade Organization, plan their pending assault on the U.S. . . .

    Mr Liebfraumilcht: The case is clear. Like some con-man used car salesman, Herr Bush levied tariffs on steel to secure the loyalty of voters in Pennsylvania and West Virginia, in clear violation of WTO rules.

    Ms Beaujolais: He has violated and despoiled the honor of the principles of free trade. For this temerity, we must make him crawl like an escargot.

    Mr Sangria: Si. We have selected politically key industries — like textiles in North Carolina and citrus in Florida — upon which to levy huge fines.

    Mr Vinoverde: The textbooks say Portugal sells wine and Britain exports wool. But the Americans can’t export wool and can’t tell wine from bellywash. What can they export? Filthy music videos? Ha!

    Mr Retsina: Like that Senator, who always talks about having sex with dogs . . .

    Ms. Beaujolais: Rilly. They’re buying more of our wine than ever, after all that barking about boycotts.

    Mr Liebfraumilcht: Then we are agreed. America must humiliate itself. Bush and the U.S. Congress must get on their bellies and wriggle their way back to the WTO to beg forgiveness for violation of their own free trade doctrines. If not, they suffer the alternative humiliation of sending billions to Euro-socialist Germany and France! Meanwhile, even the Defense Department is preparing to give some contracts to foreign companies for Iraqi reconstruction. Either way, American capitalists will punish Bush for his crass abuse of trade policy and general incompetence. Comrades, let us toast!

    All: Arise, ye prisoners of starvation . . .

  22. Ivan,
    One country can’t force another to abide by their trade treaty. It can only unwind its participation in joint projects that would be mutually beneficial if implemented as agreed upon.

    From Calpundit, it looks as if the Bush administration will ‘cave’ on the Steel tariffs, but replace it with a slew of further WTO-violating measures.

  23. “Bush has likewise been involved at the top of American politics for decades. But as his father’s sycophant, not as a politician.”

    ‘Sycophant’? Is that code for ‘son’?

  24. “products that are mainly produced in other states”

    Actually I had a piece on Bonobo a couple of months back about the fact that the political and economic costs may well already be higher than the benefits. You see the Americans also use steel. So the steel using industries are paying the price.

    OTOH I also posted about how a solution may well be in sight: steel costs globally are rising rapidly as China prepares for the 2008 Olympics. The fact that this is only attributed to Olympic push emphasises just how far the full development of China and India can take prices of raw materials.

    At the same time we may be getting bogged down in a detail and missing the big picture: the terms of trade are about to turn against the majority of OECD countries as commodity prices go for a not very random walk upwards.

  25. Gaahhh.

    GUYS! Quit being such suckers. Don’t go to “Progressive” US media outlets for information about international trade!!!! Brits and Germans especially should be wiser about US business news, the Brit because that’s how the UK avoided a recession, and the German because NOT doing so is why Germany’s still in one. No US broker or businessman starts his day reading NTY or FT (Pearson, aka the Economist) or watching CNN or BBC (yeah, right). Wall Street Journal, BusinessWeek, and Bloomburg…

    Likewise, the only dependable way to get an idea of the truth of a story from US reportage is to watch or read both the Left wing version and the Right wing version, and to then believe NEITHER and consider the truth somewhere between the two poles. WSJ vs NYT. CNN/CBS vs Fox. And never ask a Leftie to recommend a Right wing paper, nor for a GOPer to say whether something is “typical of the Left”. Here’s the CATO (Libertarian) story on the Tariffs:

    “Eliminating Steel Tariffs Is a No-Brainer

    October 1, 2003

    Dan Ikenson is a trade policy analyst with the Cato Institute.

    The U.S. International Trade Commission has issued its mid-term report on the impact of the steel safeguard tariffs the president imposed in March 2002. Thanks to a biased crafting of the report’s executive summary, 150,000 steel workers are claiming vindication, saying the tariffs have helped them more than they have hurt American steel consumers and the economy. Fortunately, for the remaining 275 million of us, President George W. Bush can still revoke the tariffs.

    Clearly, the trade commission has an institutional predisposition to support the tariffs. It recommended the tariffs, so it would be indicting itself to conclude that the program has failed at considerable cost to the economy.

    The report is loaded with data that suggest steel-consuming industries have suffered substantially because of the tariffs. A quarter of steel users reported losing customers to overseas competitors, who had access to steel at lower world market prices. Almost a third reported that long-term contracts had been broken or modified by steel suppliers, who could suddenly obtain higher prices because of the tariffs. And about 40 percent indicated that employment would increase if the tariffs were terminated. These are indications of substantial harm.

    The trade commission downplays by citing the inverse of the numbers cited above. For instance, the executive summary says, “Most (steel-consuming firms) … reported that their customers did not shift to sourcing from foreign plants or facilities.”

    http://www.cato.org/research/articles/ikenson-031001.html

  26. Frans… The WTO penalty is $2.2 billion to the US to keep the (bad) Tariff. Neither W. Virginia nor Pennsylvania nor Bush has to pay that fine, it comes out of the Treasury in Washington. So yes, Bush successfully paid off PA and WV for the 2004 election, or more accurately, 600,000 Steel familiy votes, democrat in 2000, are now firmly for Bush, as well as Union members who appreciate the symbolism.

    At $2,200,000,000?? The annual Congressional budget is usually in the $2,500 billion range (horrifying to me as well), so I don’t think it likely that a … 1/10% GNP WTO fine would be safe for anyone in Germany or Brussels to go rushing up to grap the Presedential sack. Not with a couple hundred thousand Steelers behind him.

    For the general mood of the US electorate re the Parties, here’s the link to the “exit polls” and “actual results” (both) for the California election. Bush didn’t even campaign in Cali in 2000 because Gore had it locked up. In summer/fall 2004 Arnie will be campaigning non-stop in CA, look at these polls add the difference seen in projected versus actual electoral make up and voting patterns:

    http://www.cnn.com/ELECTION/2003/recall/pages/governor/

    California’s electorate is WAAAY Left of the rest of the US (except NY and MA). With Arnold and that return a year prior… and by making the Tariff play Bush probably locked down PA, WV, TN, KY, OH, and MI (which he lost in 2000). And has good odds in CA, and heavy odds in FL, and TX.

    You’re getting bombarded with frantic tales of Bush “Fascism” and horrors from the US Leftys because you’re better friends to them than the public. Even with their obviously optimistic polls the Democrats and bad Iraq news aren’t trumping the US recovery, and that, rather than Iraq, is what the election will be about.

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