mmt@dciem.UUCP (Martin Taylor) (12/13/84)
I'm not clear why submitting to Indonesian trade offset requirements
is a bow in the direction of freer trade. If Indonesia wants BC lumber,
isn't it reasonable they should buy it, rather than enforcing the
trade offset? (I'm not sure I'm using the technically correct word,
but it will do). As I understand the situation, many developing
countries will buy goods of certain kinds ONLY if the selling country
will in return buy unrelated goods that the developing country can't
otherwise easily sell. You can see their point, but it means that
the selling Government has to get into the act to persuade somebody
not the least interested in the primary deal (lumber) to buy something
they would not otherwise buy (textiles). Protection of the industry
producing the secondary product (textiles) is a separate issue that
may complicate the whole mess. If Indonesia wanted its offset in
something someone in Canada wanted to buy, matters would be easier.
I have mixed feelings about trade offsets. On the one hand they
increase the volume of world trade in a way that probably benefits
the country imposing the offset, and on the other they force Governments
into the position of brokers trying to find buyers for things that
may not have a reasonable market, in order that other people may
sell things that have a reasonable market.
--
Martin Taylor
{allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt
{uw-beaver,qucis,watmath}!utcsrgv!dciem!mmtacton@ubc-cs.UUCP (Donald Acton) (12/13/84)
In article <1271@dciem.UUCP> mmt@dciem.UUCP (Martin Taylor) writes: >I'm not clear why submitting to Indonesian trade offset requirements >is a bow in the direction of freer trade. I never said that Canada was required to buy Indonesian goods only that Indonesia wanted access to the Canadian market and that lack of this access resulted in the deal falling through. I recall that a while back Canada sold a CANDU reactor to either Rumania or Hungary. As part of the deal we were to take a trade offset in strawberries so the Canadian government does not have a policy of refusing deals just because trade offsets are involved. (If I were truly cynical I would suggest that the strawberries were accepted because Ontario doesn't produce a lot of strawberries so damn the rest of the country. :-) ) I, of course, don't support the idea of trade offsets just to secure a deal. I do believe in free trade and equal access to the market and if that was what was required to close the Indonesian deal then those actions should have been taken. If trade offsets were involved then they should have been evaluated to see if the total package was beneficial to the country instead of choosing the most politically expedient route. (Some of us might disagree on what constitutes being beneficial) >the selling Government has to get into the act to persuade somebody >not the least interested in the primary deal (lumber) to buy something >they would not otherwise buy (textiles). Protection of the industry >producing the secondary product (textiles) is a separate issue that >may complicate the whole mess. If Indonesia wanted its offset in >something someone in Canada wanted to buy, matters would be easier. Are you sure we don't want textiles? Perhaps the perceived lack of demand for this product is a result of the protection of the Canadian textile industry which results in artificially high prices for imported textiles. Donald Acton
mmt@dciem.UUCP (Martin Taylor) (12/14/84)
In connection with the increasing tendency of Third World countries to use trade offsets, I said: >>the selling Government has to get into the act to persuade somebody >>not the least interested in the primary deal (lumber) to buy something >>they would not otherwise buy (textiles). Protection of the industry >>producing the secondary product (textiles) is a separate issue that >>may complicate the whole mess. If Indonesia wanted its offset in >>something someone in Canada wanted to buy, matters would be easier. To which Donald Acton replied: > >Are you sure we don't want textiles? Perhaps the perceived lack of demand >for this product is a result of the protection of the Canadian textile >industry which results in artificially high prices for imported textiles. > > Donald Acton I'm sorry; I didn't mean to imply that we don't want textiles. It was just using the example items from the original message. News reports had suggested that Indonesia was using textiles as trade offsets that someone in Canada would have to buy if Indonesia were to buy BC lumber. My point was not whether Canada would be better off buying Indonesian textiles, but that it isn't Canada that would be doing the buying. It would be some business that would import the textiles, and that business would have no interest at all in the lumber. Indonesian textiles might not be profitable, given that they could buy Korean (or even Canadian). The Government would have to act as a broker at the very least, and most likely would have to offer a subsidy. Judging from Acton's previous postings, he would probably not approve such a role for Government (sorry if this puts words improperly in your mouth). Trade offsets are very like protection. In both cases the local industry is given special tratment by its Government. In one case the Government forces other people to buy the product of the industry, and in the other it forces people to pay a high price for the product if they don't buy it from the local industry. If you don't like Canadian protectionism, you probably wouldn't like trade offsets either. Personally, I think that rare circumstances probably exist in which either is justified, but normally they are both bad ideas. -- Martin Taylor {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt {uw-beaver,qucis,watmath}!utcsrgv!dciem!mmt