beggar-thy-neighbour

bubblesmoney

protectionism seems to be coming in a big way in the usa and probably here in the uk and everywhere else too. looks like this is going to worsen the economic situation everywhere tradewise. once the usa starts down this route it will open a can of worms and every country will start retaliating with their own measures and by the time they start unwinding it this will take years. in the short term credit situation will get worse as in usa they seem to be moving to limit bailouts for companies that use only usa made steel, which can be a very loose criteria for full blown protectionism. loads of companies will suffer. pretty sure retaliatory measures will start the world over if this starts in usa.

Now, prodded by America's mighty steel lobby, a key congressional committee has voted, 55-0, to attach a still more rigorous “Buy America” clause to President Obama's stimulus package. It bars federal funding of any public projects “unless all of the iron and steel used is produced in the United States”. The clause could be extended to asphalt, cement, heavy machinery, you name it.

this will be the end of the 'we need a global economic stimulus' story pretty soon.

EliteHeat

I am pretty sure that if I was unemployed yet qualified and able to work at a local facility owned by a French company that employs an American company to manage a project, who then in turn sub-contract the work out to an Italian company (gasp) I would feel slightly miffed.

More so, if the Italian labour force flipped me the bird for wishing to work in my own country and provide for my family.

However, this being the UK, we are bound to introduce unilateral anti-protectionism laws which of course will require a legion of additional neo-Nazi zealots to administer with their usual breath taking fervour.

I imagine our enlightened stance would be extended to include pledges of aid and monetary assistance to countries far wealthier than us, but oddly not positioned to weather the recession as well as the UK.

bubblesmoney

well most of your local companies that have a global presence or export most of their produce would suffer badly if protectionism gave rise to more protectionism elsewhere and the company that hires only locally might really feel the effects of the downturn as well then.

lynzpower

I worry for our brothers & sisters in the developing world whose mining devastates thier environment who may soon be left with nothing as international demand dries up.

I wonder whether in the UK suddenly the cost of the likes of rice will be so prohibitive we wont buy it and the poor farmers in the phillipines/ india etc will struggle to survive.

These are dark days indeed. I can see why politically it has to happen, but practically I can see major problems.

bubblesmoney

lynzpower wrote: »

I worry for our brothers & sisters in the developing world whose mining devastates thier environment who may soon be left with nothing as international demand dries up.

I wonder whether in the UK suddenly the cost of the likes of rice will be so prohibitive we wont buy it and the poor farmers in the phillipines/ india etc will struggle to survive.

These are dark days indeed. I can see why politically it has to happen, but practically I can see major problems.

most of the rice consumed here is of the basmati type. most of the rice consumed in india etc is of other types, frankly if i could get easily the other types i would buy it here but it is always easier to get basmati here. anyway most of the food there gets consumed locally, loads gets wasted because of improper storage/infrastructure facilities, when they improve the storage infrastucture there there will be a glut of food there probably. you get many varieties of rice many for prices probably like 20p per kg in cities and only the costly varieties get exported and even that will be a small percentage of the total agriculture output. there are restrictions on exports imposed as needed to avoid price hikes and shortages locally there. most of the price you see here will be shipping costs and profits of the sellers here, the actual street price there will be probably 20-30p for many varieties, you get for less as well, basmati will be costlier. many rural places actually use the parboiled variety rather than the variety you see here which is rarely seen outside india but you do get it here sometimes in some asian shops here. but reduced exports will hit the farmers who depend on exports only but they will be a small amount compared to the size of the market.

when i was there i never knew anyone buying frozen food ever including myself because everyone buys fresh stuff to cook which is easily available everywhere so there is no need to consuming frozen stuff except for stuff like fish etc in inland places. at seasides even that is always fresh. poultry and meat etc is always fresh straight from the butcher never frozen as far as i know at almost all places there unlike here not because people cant buy frozen but because people prefer to buy fresh produce.

Generali

Isn't most of the rice consumed in the UK long grain? I would think it is by white Brits. Perhaps the quantity of rice consumed by people of Asian sub-continental origin high enough that basmati is the most consumed rice by variety. It'd be interesting to know.

Annnyway.

A big problem with protectionism is that it requires people to consume things that are more expensive and of lower quality. Imagine having to drink Scottish wine or French whisky for example. It's hard to think which would be worse.

Thrugelmir

bubblesmoney wrote: »

protectionism seems to be coming in a big way in the usa and probably here in the uk and everywhere else too. looks like this is going to worsen the economic situation everywhere tradewise. once the usa starts down this route it will open a can of worms and every country will start retaliating with their own measures and by the time they start unwinding it this will take years. in the short term credit situation will get worse as in usa they seem to be moving to limit bailouts for companies that use only usa made steel, which can be a very loose criteria for full blown protectionism. loads of companies will suffer. pretty sure retaliatory measures will start the world over if this starts in usa.



this will be the end of the 'we need a global economic stimulus' story pretty soon.

What's left to protect in the UK ? We have very few major industrial/commercial companies left which are UK owned. Our economy has been built both externally and internally on financial services for the past 10 years. We have steel mills here in the UK but with the lack of demand from UK based companies there's no market.

tradetime

According to Frederic Bastiat, "When goods cannot cross borders, armies will."

Whether or not that quote can be justified, I think the negatives of protectionism far outweigh the benefits of free trade, let's hope all the talk of it is simply an effort to get politicians to think very carefully about the potential consequences before they set the wheels of that particular machine in motion

vivatifosi

I was in the States last week and the unions were running 'buy American' ads at the time of the inauguration and onwards.

I had an interesting conversation with a friend out there who works for a car-rental firm. Because of the credit crunch, they can no longer lease cars from the likes of Chrysler, they have to go to say, Kia, Hyundai, Toyota etc. If major US manufacturers can't raise capital to lease cars to companies with good credit records, then how do you get the industry going again?

It strikes me that the issue is much deeper than protectionism, and that protectionism can only harm things.

Ian_Griffiths_Halifax

Thrugelmir wrote: »

What's left to protect in the UK ? We have very few major industrial/commercial companies left which are UK owned. Our economy has been built both externally and internally on financial services for the past 10 years. We have steel mills here in the UK but with the lack of demand from UK based companies there's no market.

Well I don't know about you, but I'm going to get fat on a lovely juicy Building and Contents Insurance policy I've had in the fridge for a couple of days. Hmmm, now Sunday lunch could be a pie made from a cracking piece of Health and Safety Manual.

It's not all doom and gloom.

Buy British, Eat British!

Ian_Griffiths_Halifax

tradetime wrote: »

According to Frederic Bastiat, "When goods cannot cross borders, armies will."

Is that because, if you have something they want they'll just come and take it? A bit like Oil.

I do hope that nobody wants to get their hands on our Rhubarb. I'd fight them to the death.