Its The Free Trade Agreements Dummy!

[JimofPennsylvan]

During the last week there was a lot of criticism of the European Union's solution to saving the Cyprus banking system! Although the EU's response wasn't the worst thing that could have happened, the criticism was warranted the EU acted in a dysfunctional manner! The country of Cyprus didn't have many economic strengths and they severely damaged probably the most precious one of them in eliminating one of their two major banks and creating a precedent that sends a message don't put large amounts of money in Cyprus banks because if the bank you deposited your money in gets in trouble authorities will raid your account to fix the problem. To an ordinary person whose not an expert on the EU one wonders why things didn't transpire differently on this whole problem. Why did the ECB bring this problem to a head now when Germany is facing elections where Chancellor Merkel's options in helping Cyprus were limited because she couldn't be seen as pro-bailouts which would hurt her party at the polls. Why didn't the ECB move this crisis to after the German elections because the total amount of money the Cyprus banking system needed to stay alive was only like $16 billion surely a better solution than what was reached could have been achieved in a better political climate. Why didn't a solution like the U.S. government's saving of Fannie Mae and Freddie Mac take place the solution where the U.S. government poured money into these businesses to cover their losses and took eighty percent of the equity of these businesses, the solution has turned into a success story for the American people. In the Cyprus case, the European Stability Mechanism Fund could have loaned the Cyprus government the $16 billion or so the Cyprus banking system needed, the Cyprus government could have put that money into the two major Cyprus banks and took eighty percent of the banks equity and the banks current equity and bondholders could have split up the twenty percent balance of the equity thereby eliminating these banks bond debt; and to juice growth in these banks until their books were good and their reputation amongst customers was good the ECB could agree to loan these banks money at one percent interest rate like the ECB has done to help banks in the European Union over the last two years (this is fair to the ECB because they as a regulator was asleep at the wheel for allowing these Cyprus banks to load up on Greek sovereign debt which caused these Cyprus bank problems in the first place)! When the Cyprus banks financially recovered the Cyprus government could sell the equity and use the proceeds to repay the ESM. This result would have spared Cyprus banks depositors from any harm thereby saving the Cyprus banks reputation amongst bank depositors and of course saved Cyprus's two big banks thereby keeping these important lending institutions for the Cypriot people!


This Cyprus bank thing is really a sideshow in a major respect to the European Union and the whole world's fundamental economic problem which is the free trade system, the free trade paradigm in the world does not work. It leaves workers by the side of the road it does not create the number of jobs that countries need for their people! In the media this week it was reported that fifty percent of young workers in Spain and Greece are unemployed, in Italy and Portugal youth unemployment was reported at forty percent, a conservative estimate for the United States is probably at least thirty percent for the number of young people that want full-time employment and cannot find it. There is not even an issue that the world's free trade system does not work with effects like this. It is incomprehensible the lack of call for change to free trade agreements why aren't economic experts, political leaders, social leaders calling for dramatic changes here, where is the character and virtue amongst these people don't they care about their countrymen! How can these people stand-by as these massive numbers of unemployed people the world sees go without the basic constituent of life, a job - this is incredibly shameful! These people and actually population masses throughout the world should be calling, protesting and engaging in political activity like crazy demanding change to these free trade agreement that "guarantees" jobs for countries' populations so that there is no widespread unemployment, not change that helps the situation but guarantees a solution - unemployed people deserve nothing less it is crystal the current system does not work. To this end for starters all free trade agreements and treaties should allow a country to use protectionist measures to preserve fifty percent of a domestic market share for domestic manufacturers and producers the protectionist measures can include tariffs and/or quotas on imports. Protecting, preserving and reserving fifty percent of domestic market share for domestic manufacturers and producers will protect and/or create jobs for a country's population. Sure there will be losers, big business executives and their owners that do a lot of exporting and importing, workers for these business, consumers that in some cases will have to pay more for products and in some cases will not have the selection of products. But all these and the other negatives don't outweigh that such new trade agreements will empower the private sector and government of a country to create jobs for its people it will set aside this fifty percent of domestic markets for domestic businesses and their workers it will give government officials the tools they need to solve the unemployment problem. This common sense, "jumps out at one" solution to the unemployment crisis in the world should be so demanded by publics throughout the world right now that the outcry rises to a fever pitch compelling change, elected officials should be telling their people this absolutely will be done this minimum protection for workers will absolutely be permanently enshrined in national and international law!

 

[waltky]

David Cameron: "We're talking about what could be the biggest bilateral trade deal in history"...

EU and US 'in biggest trade deal'
17 June 2013 > UK Prime Minister David Cameron has announced plans for what could be "the biggest bilateral trade deal in history" between the EU and the US.

He announced the start of formal negotiations on a trade deal worth hundreds of billions of pounds, aimed at boosting exports and driving growth. Mr Cameron said a successful agreement would have a greater impact than all other world trade deals put together. The talks were announced ahead of the G8 summit in Northern Ireland.

US President Barack Obama said the first round of negotiations would take place in Washington in July. They aim to conclude by the end of 2014. Mr Obama said he was confident of reaching an agreement. "There are going to be sensitivities on both sides... but if we can look beyond the narrow concerns to stay focused on the big picture... I'm hopeful we can achieve [a deal]."

'Once in a generation'

Mr Cameron said the deal could be worth £100bn to the EU economy, £80bn to the US and £85bn to the rest of the world. He said the pact could create two million jobs, and lead to more choice and lower prices in shops. "This is a once-in-a-generation prize and we are determined to seize it," said Mr Cameron. European Commission President, Jose Manuel Barroso. who will lead the negotiations with President Obama, said that integrating the EU and US economies would not be easy but "we will find convincing answers to legitimate concerns". "We'll find solutions to thorny issues, we'll keep our eyes on the prize and we will succeed," he said.

Herman Van Rompuy, the president of the European Council, said: "Together Europe and the United States are the backbone of the world economy. Opening up that space further for opportunities for business and consumers is simply common sense." The trade talks had been under threat from a potential veto from France, but on Friday EU ministers agreed to French demands to exclude the film and television industry from the talks. Some had argued that omitting the media business from the trade talks even before they had begun could prompt the US to seek exemptions for other sectors.

Possible hurdles?

See also:

US-EU trade deal: How it affects you
17 June 2013 > Talks to thrash out the largest free trade agreement in history have been officially launched at the G8 meeting in Northern Ireland. So what might a US-European Union deal achieve?

About £100bn ($157bn) to the EU, £80bn to the US, and £85bn to the rest of the world. As UK Prime Minister David Cameron officially launched the trade talks, rattling through the potential gains, it was easy to forget how much work lies ahead. Tearing down trade barriers between the world's two largest economies will not happen overnight, and nothing will be signed on a deal before the end of 2014. There are two key elements - the reduction of tariffs and the harmonising of regulations. So, unpicking the jargon and distilling the generalities, what might it really mean?

1. Cheaper shoes for Americans

Only 1% of shoes sold in the US are made on American soil, but that influx of foreign-made shoes comes at a price - tariffs are as high as 66%, giving the US Treasury a handy $2.4bn (£1.5bn) a year. "From the importer to the distributor to the retailer, that price is marked up to create profit margins," says Matt Priest, president of the Footwear Distributors and Retailers of America (FDRA). "So looking at a children's shoe at $9.99, $3-4 of that could be attributed to the tariff paid at the border."

By eliminating that barrier, put in place by the Tariff Act of 1930, prices will fall in the mass market, he says. "If Walmart was to pass on that saving to consumers, the competitors will follow. If you're a single mum with three kids and you have to buy them shoes once a quarter you're talking about a decent saving just by eliminating this tax."

2. Europe less reliant on Russian gas

Under the Natural Gas Act of 1938, US natural gas exports are regulated and must be authorised by the Department of Energy, which considers whether exporting is "consistent with the public interest".

However, exports to free-trade-agreement (FTA) partner countries are fast-tracked, so cheap American shale gas would be available to all member countries of the EU, says Bruce Stokes, a non-resident fellow at the German Marshall Fund of the United States. "That would be in American self-interest and help our trade imbalance but there are US industries who benefit from cheap energy and who probably are not keen to see European competitors benefit from it also. "It would also help the European economy and go some way to weaning it off Russian gas. So there are huge geo-strategic reasons for the US to tie its allies to itself through energy exports. "Whether you would be able to export enough gas to wean Europe off Russia entirely, it depends, but symbolically it would be very important."

3. Good news for European car firms...