Monday, September 28, 2009

Crash Course in Global Economics

Crash Course in Global Economics - Cato Institute: (Center for Trade Policy Studies)

G20 leaders convened in Pittsburgh last week during a sticky time for global trade relations. Brazilians, Canadians, Mexicans and Chinese are angry with the Americans. The Indians and the Chinese are furious with each other, as are the Europeans and the Americans. Most of this stems from new trade restrictions imposed despite repeated pledges from G20 countries to avoid protectionism.

To quell the anger and gain a constructive focus, leaders must recognize how outdated it is to view the world in terms of "us" versus "them." A crash course on the global economy is in order.

The largest "American" steel producer is the majority-Indian-owned Arcelor-Mittal, which has headquarters in Luxembourg and Hong Kong, and is listed on the New York Stock Exchange and five European stock exchanges. The largest "German" producer, Thyssen-Krupp, a conglomerate with 670 companies worldwide, is investing $3.7 billion in a carbon and stainless steel factory in Alabama, which will create 2,700 permanent jobs there.

California's steel industry consists almost entirely of rolling mill operations that process imported carbon steel slabs from Brazil, Russia and other countries.

The Californian finished products are disqualified from President Obama's Buy American procurement rules for failing to meet the statutory definition of American-made steel. This illustrates the impossibility, futility and harm of attempting to define producers by national characteristics.

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