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EU and Japan create world's biggest free trade zone

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Re: EU and Japan create world's biggest free trade zone

#361

Earlier quoted context omitted.

First of all, where's the evidence of these supposed high-entry monopolies? Seems more like a thought experiment to me. Secondly, you're only looking at the negative consequences for some workers. You're not looking at the benefit to all workers, who pay lower prices as result of cheaper labor from abroad. Suppose workers had been guaranteed their jobs for life because of protectionist policies. This is called mercan…

Have you tried producing and assembling electronics in the west? You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore. If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that. Apple tried their best to move even some assembly back to the US, and couldn't even get the simplest custom screws made…

> Have you tried producing and assembling electronics in the west?

Of course not, U.S. labor is far too expensive to do the kind of menial work required to assemble electronics, unless maybe it's a repair shop for certain products.

> You don't have shops to buy parts anymore, you don't have assembly lines anymore, you don't have people trained in this anymore.

You don't need "local shops" to purchase parts for assembly lines. Ask Elon Musk if the biggest challenge in building an assembly line is procuring the parts, he will say: No. You have a worldwide integrated economy where you can buy basically anything. The number one challenge is labor cost.

In any event, training people for electronics assembly is trivial. If you can take apart an iPhone and put it back together, you're good.

> If China decided tomorrow to increase the costs of the electronics they export, you'd have to accept that.

"China" doesn't decide the costs of electronics, individual businesses do. But even if China was dumb enough to slap tariffs on their own exports, there are plenty of alternatives. There is no monopoly. In fact, China is doing the exact opposite: They are artificially lowering the value of their currency to stay competitive.

You should also really look into how electronics are actually produced, there are numerous countries involved in it, each specialized into particular parts:

http://www.worldstopexports.com/electronic-circuit-component...

> It's not just a single monopoly, the problem is that entire industries are gone, and it'd take decades to train workers and regain the institutional knowledge.

Actually, a lot of institutional knowledge remains with the companies that just use labor abroad. However, it also leaks into the domestic industry, that's why you have a lot of companies complaining about "IP theft" from China.

The broader point remains: There is no monopoly. There is plenty of competition. Even if for a "relatively" short period of time (decades) there where to exist a monopoly, it could only sustain its higher prices for so long as it stays unprofitable to rebuild that infrastructure. At that point the "monopoly pricing" becomes "fair pricing".

> In our household, we're now spending 71% of our budget on rent and utilities.

You should probably look into what building regulation (artificial scarcity) does to the price of rent. You can't blame free trade for that.

> Under more protectionist policies, I might pay 20% more for products, but I'd also be making 20% more wages — and as result, I'd be better off (in fact, my disposable income after rent, utilities and food would almost triple)

First of all, why do you assume that rent and utilities would not rise in tandem with the cost of goods? Why do you believe rent in Silicon Valley is so high? It's the scarcity combined with the high wages of the tech workers.

Secondly, you are losing your competitive advantage. You are worse off.

Re: EU and Japan create world's biggest free trade zone

#362

Earlier quoted context omitted.

Me too, I was working in Docklands when there was the bombing [1]. First time I ever saw an armed policeman in a mainland UK street. Forget pistol, they were wielding MP5s. > threat of the IRA differently to the threat of Islamist terrorism Fully agree. The overreaction has been extreme. I don't understand why the political reaction hasn't been more like it was. [1] https://en.wikipedia.org/wiki/1996_Docklands_bombin…

I have a theory that during the cold warn western democracies behaved better towards their own people because they had a 'bad guy's to compare against. A sort of 'would they do this in East Germany? Then maybe we shouldnt' yardstick. Also I think a lot of the over reaction to terrorism is just a power/land grab by the intelligence services, I mean they do valuable work but we don't really know how much and what the n…

> 'would they do this in East Germany? Then maybe we shouldnt' yardstick.

I think there might be some mileage in your theory. :)

The UK has an odd relationship with intelligence thanks to the Bletchley Park story being part of our WW2 myths. I've always thought it goes some way to explaining our politicians being so keen on the UK being so excessive and early with things like CCTV everywhere.

Which brings us to now when even with all that tech, terrorists seem able to do what terrorists do just as well. At which point it's hard not to become cynical.

Re: EU and Japan create world's biggest free trade zone

#363

Japan has avoided the madness of tariffs and trade wars that has affected the west recently. Instead they have been quietly negotiating trade deals with everyone and generally getting along. Good on them! Also it includes cheese, which will make westerners in Japan very happy.

For those interested in why - Japan always had very high tariffs on cheese (40% on WTO, 37.5% on EU). In comparison, the US has a general tariff of 10% on cheese, with many exceptions making it 0%. http://www.customs.go.jp/english/tariff/2019_2/data/e_04.htm https://hts.usitc.gov/?query=cheese Similarly high tariffs across the board on most imports has been the norm in Japan for decades, with many agricultural produc…

Protectionism is economically the same thing as an embargo. Yet we use protectionism to protect an economy, and an embargo to punish an economy.

There are valid reasons for protectionism, but prosperity isn't one of them.

Re: EU and Japan create world's biggest free trade zone

#365
post #275

Earlier quoted context omitted.

That's probably only France, where cheese after meals is common. While it's frequently used as a topping in Italian cousine, it's nearly exclusively eaten on top of slices of (dark) bread as a standalone dish in German cousine (though Germans eat a lot of Italian food). The most American use of cheese (i.e. not Italian cousine related) is maybe the cheese flavored corn-snacks (e.g. cheetos).

While cheese is used also as topping in Italy (in particular Parmigiano cheese and the likes) I think it's main usage is after meals, at least in northern Italy (not sure about south). In fact we have a saying that goes like "The mouth is not tired [of eating] if it doesn't taste of milk", meaning that the ending act of a meal is eating some cheese.

Interesting. Have been in Italy a bunch of times as it's fairly close from Bavaria, but didn't know that!

Re: EU and Japan create world's biggest free trade zone

#366

Earlier quoted context omitted.

For those interested in why - Japan always had very high tariffs on cheese (40% on WTO, 37.5% on EU). In comparison, the US has a general tariff of 10% on cheese, with many exceptions making it 0%. http://www.customs.go.jp/english/tariff/2019_2/data/e_04.htm https://hts.usitc.gov/?query=cheese Similarly high tariffs across the board on most imports has been the norm in Japan for decades, with many agricultural produc…

> Free trade is great when applied evenly. Free trade is great even when applied unevenly.

It's not exactly like that. But I think I share your point of view

Re: EU and Japan create world's biggest free trade zone

#367
post #238

Earlier quoted context omitted.

Which works fine until they own a monopoly to a business with high cost of entry and decide to raise prices again. Things like this are rarely simple.

Precisely, if your subsidized monopoly can afford to take the hit for a decade or two - the international competition starts dying, their facilities and towns shutter, and locally accumulated institutional knowledge and its transfer disappears. African agriculture and industry suffered similarly in the 20th century due to decades of ham-fisted global charity (essentially subsidized commodity dumping). There are compl…

Maybe, but that involves burning a lot of resources in a sort of crazy hope that nobody is going to try and compete when you start making money again.

Africa is an interesting case in point - I don't know very much about the average case, but I remember Zimbabwe gutted themselves, going from the Bread Basket of Africa to famine in a very short period of time with no particular effort from outside forces. There is a strong case the Africa's economic problems are more attributable to their struggles to organise politically rather than charity and dumping from external economies (which probably hasn't helped or hindered in the big picture). Maybe we can peg the organisational issues on foreign countries; but it is going to be more complicated than that.

Take China. Their protectionist policies probably have an impact, but most of their advantage is they are organised, politically stable, willing to work more for less pay and have a culture that believes in investment and education. Without government handicaps like Maoist Communism, that is a very formidable set of attributes in a competitor.

Re: EU and Japan create world's biggest free trade zone

#368

Earlier quoted context omitted.

No, it wasn't. The EU is not insisting that parts of Canada obey EU law automatically and are effectively different countries as a result, which is what it's currently demanding of the UK. Nor did the EU demand tends of billions of euros from Canada in return for nothing in particular. The EU has actually never been willing to discuss trade deals with the UK, let alone "let's be like Canada". So far it's refused enti…

The billions are not arbitrary, but to settle obligations arising from the UKs past membership, such as pensions for their EU personell. You obviously know that and are pretending to be ignorant, considering it was all over the news at the times.

No, there are no such obligations at all. Every lawyer who has looked at this reached the same conclusion.

The treaties are very clear. Two years after invoking Article 50 all rights and obligations terminate.

Pensions are obligations of the EU itself, not the UK. The fact that the EU has failed to invest properly into a pension fund and is structuring its pensions as a ponzi scheme is not the problem of former members.

Re: EU and Japan create world's biggest free trade zone

#369
post #248

Earlier quoted context omitted.

Here's one thing I find funny though about this argument (Econ 101, yet correct, yet complicated): The argument for free trade is an efficiency argument (comparative advantage, Ricardo, Hecksher-Ohlin yada yada) that it's unambiguously better, but it's predicated on redistribution: The reason that free trade is unambiguously better is that you can compensate all the "losers" of free trade so that they're as well off…

I don't know where you got this idea, but the argument for comparative advantage has nothing to do with the redistribution of income, nor is there a claim of "fairness" towards each and every individual or interest group. To understand why comparative advantage is an advantage, you must consider the alternative: Economic protectionism. It results in inefficient allocation of labor, because everyone's job is protected…

> the argument for comparative advantage has nothing to do with the redistribution of income

But it has.

Comparative advantage shows you that the country as a whole can afford more with free trade than before.

But one of the theoretical consequences of the Heckscher-Ohlin trade model [1] is factor price equalisation, ie in once country wages might fall while returns to capital increase. Inevitably, there are winners and losers.

Now, since economics rightfully shies away from inter-personal utility comparison, that does not tell you whether the country as a whole is better off; unless you invoke redistribution, such that everyone has at least as much as before (now you can say that everyone is (weakly) better off, and some strongly, and thus the country).

This is well understood (see eg [2] for some more on this issue, quoting James Kwak, & I'm pretty sure Krugman has articulated the same). (This, btw, is not an argument from authority, but an answer to "I don't know where you got the idea")

> Of course there are economic winners and losers, but by attempting to fully protect everyone, everyone becomes a loser

How about comparing to northern Europe, and not some dystopia nobody is arguing for anymore?

My point was that the case for free trade is good and valid, and it rests on (and should go along with) redistribution/compensation.

[1] https://en.wikipedia.org/wiki/Heckscher–Ohlin_model

[2] http://www.samefacts.com/2015/05/everything-else/free-trade-...

Re: EU and Japan create world's biggest free trade zone

#370

Will consumers benefit from it? Can Japanese order from amazon.de without customs charges and vice versa?

Currently I can order cheap products (less than 20€) from China without customs fees or VAT. The shipping cost is around 1€. It means that it is cheaper to buy from China than from my local store. Unfortunately, that is about to change soon (customs fees for all products from China). Having something like that between EU and Japan would definitely boost the trade. Edit: I just checked and the same no customs fees rul…

my god this annoys me, here in Sweden you pay $10 just for post office mishandling your package, with VAT and duty on top of the fee. and sooo many people pay it all and then never receive their package because the post office send it back the sender for no clear reason whatsoever
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