México



Very usefull links



PW
Bookstore





Institutional
links


OPEC
\





 




PW
Business Partners

 


IRAQ OIL
THE FORUM

 


Blogspots

FxHQ Forex News

The Global Barrel

Tiempo Cultural

Gustavo Coronel

Iran Watch.org

Le Blog des
Energies Nouvelles

News Links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

ISSUES....
Inside, confidential and off the record


Winning a Trade Peace

 

YICAI

Winning a trade war means winning a trade peace


We have been of the view that America can “win” a trade war with China, in the sense that China will take more “casualties” than America. But that kind of war is the proverbial negative-sum game. Who wants to do something in which your side is still “losing” (taking casualties), even if you “win” the war? The purpose of a trade war is to establish a trade peace, in which your side reaps benefits that far exceed the costs of the war. Even though China is now vulnerable, an outcome that benefits America, rather than merely hurts China, will require a policy pivot. Without that policy pivot, the vulnerabilities in the American side of the dispute will start to rise very rapidly.

Until quite recently, markets have responded negatively to trade announcements coming from
the Trump administration, but then recovered as market participants came to believe that Trump was merely being tactical. As a result, key market indices are essentially flat for the year. But the recent spate of trade policy announcements have shaken that confidence. Unless the administration can restore the belief that the goal is to win a trade peace and not just a trade war, then equity values should go down because the future will be bleaker, not more positive.

This does not mean a comprehensive solution to all trade problems on the planet needs to be
resolved. But it does mean that the Trump administration must come to a “deal” on something, just to show that it can. Otherwise it is merely a disruptor of the status quo and not a disruptor that leads to a better outcome. China is a natural place to start, in large part because it also needs the promise of a cessation of hostilities at some point in order to keep its economy together and so it can agree to a trade “peace,” or even a trade “cease fire,” that will give Trump and America much of what it is looking for.

A trade cease fire might look something like this. (1) China agrees to reduce its annual trade
surplus with America by some number, say $150 billion. This is about one third of the current deficit and, other things equal, would add about threequarters of one percent to American GDP. (2) America agrees not to impose any new tariffs on Chinese goods for one year. At the end of that year
it will evaluate China’s success at meeting its promised reduction in the trade deficit. (3) America will handle other issues, such as intellectual property, outside of the tariff framework and use processes like CFIUS, augmented by FIRRMA, to handle these matters. (4) Over the next year the two sides will work together to negotiate a more lasting solution.

This is hardly a comprehensive solution to the trade issues between the U.S. and China. However, it does remove an important component of the uncertainty now beginning to creep into both financial markets and industrial planning around the global supply chain. Can investors be certain that a new round of tariffs will not begin a year from now? Of course not, but that was something that could never be guaranteed. It also separates the narrowly defined “trade” relationship from the intellectual property and investment issues. A basic rule of policy is that the number of policy instruments should be at least as great as the number of policy goals. Using tariffs as a mechanism for dealing with intellectual property concerns violated this fundamental principle. In so doing, it “overreacted” on the trade front thereby inducing others to respond to the overreaction using the same tools. Most important, it establishes a positive dynamic on the trade front that can lead to a net winning position for the American economy and not just one in which America merely suffers fewer losses.

Dr. Larry Lindsey / The Gartman Letter / July 6, 2018

(Dr. Lindsay is a former Fed Governor and Bush 43’s Chief Economic Advisor for many years)



ISSUES.... 07/ 02 / 2018 - Send Us Your Issues

Inside, confidential and off the record

Is an independent journalist effort from Petroleumworld, on Inside, Confidential and Off The Record Information, the views are not necessarily those of Petroleumworld

Link to the Original Article

Follow us in : twitter / Facebook

Send this story to a friend Copyright© 1999-2017. Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.

Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

 

We invite all our readers to share with us
their views and comments about this article.

 

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

 

Petroleumworld.com

Hit your target - Advertise with us



Any question or suggestions,
please write to: editor@petroleumworld.com

 

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels


 

 




 

 

TOP

Contact: editor@petroleumworld.com/Telephone:(58 414) 276 3041

Editor:
Elio Ohep.

Director & Producer: Elio Ohep

Contact: editor@petroleumworld.com

Advertising:Malena Vasquez:58 412 952 5301
Technorati Profile PW in Top 100 Energy Sites


CopyRight ©1999- 2017, Petroleumworld ™  / Elio Ohep- All rights reserved
Legal Information This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from Petroleumworld or the copyright owner of the material.Internet Web links to http://www.petroleumworld.com are apreciated.Petroleumworld no se hace responsable por los juicios de valor emitidos por esta publicacion, por sus colaboradores y columnistas de opinión y análisis. Aceptamos colaboraciones previa evaluación por nuestro equipo editorial, estamos abiertos a todo tipo o corriente de opiniones, siempre y cuando a nuestro juicio esten dentro de valores éticos y morales razonables. Petroleumworld alienta a las personas a reproducir, reimprimir, y divulgar a través de los medios audiovisuales e Internet, los comentarios editoriales y de opinión de Petroleumworld, siempre y cuando esa reproducción identifique a la fuente original, http://www.petroleumworld.com y se haga dentro de el uso normal (fair use) de la doctrina de la sección 107 de la Ley de derechos de autor de los Estados Unidos de Norteamérica (US Copyright) Internet Web links hacia http://www.petroleumworld.com son apreciadas.

.