Alex Christoforou and Alexander Mercouris discuss the breakdown in trade relationship between the United States and China. After the talks reached an impasse, Trump threatened to raise tariffs on $200 billion worth of imports from China [raising the rate from 10 percent to 25 percent]. The increase will take effect on Friday.
My comment: Trump keeps mentioning how China pays and will pay for his tariffs and how great it is that the Chinese are fueling the US Government with [ironically] its own fiat money. Chinese-owned dollars sit on the Federal Reserve’s electronic ledger, by the way.
Every mainstream and heterodox economist will tell you that consumers pay these tariffs, not exporters. I must stress the fact that the only way the Chinese are paying for these tariffs is if they agree to decrease their markups to accommodate Trump’s tariffs, in order to maintain their market share [which is shrinking]. That being said, celebrating this [as Trump is doing] doesn’t square with his promise of bringing back jobs from China. In fact, even if China’s share of the US market were to vanish, that gap would largely if not totally be plugged by other foreign countries, NOT by domestic production & employment. Given Washington’s belligerent stance, Beijing is securing commercial and strategic ties with other important state actors and it’s concluding these agreements in currency swap operations, which bypass the US state financial system.
Trump is a master when it comes to wielding smoke and mirrors, both domestically and at international level. Many think Trump is an Anti-Globalist, but that is not true. He is a Globalist who wants to keep the US as the ‘grand master’ of that cabal and is actively combating efforts led by other countries [like Russia] to create a multi-polar system. As far as the ‘one world government’ idea is concerned, the US is that entity de facto [albeit not in its complete form] and wishes to remain so at any cost, even if the price is a new Cold War and needless mayhem across the globe. The most eloquent [recent] example of such needless death and suffering is this paper from the Center for Economic and Policy Research (CEPR), which finds US Sanctions on Venezuela Are Responsible for Tens of Thousands of Deaths!
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In November of last year, the Naseeb border crossing between Syria and Jordan was reopened, providing Lebanese exporters a land route for their output. Despite this, political quarrels between Damascus and Beirut and high tariffs rendered the border crossing unusable or unprofitable to say the least.
Syria is key for Lebanon’s access to foreign markets. The tiny country is confined between its neighbours: the conflict-weary Syria and the sealed border with a hostile Israel. Thus, border crossings into Syria and then out into other countries are required for land-bound exports. Lebanon’s exports collapsed from a peak of 78 percent of GDP in 2008 to as low as 36 percent in 2017, as the [outside-manufactured] Syrian civil war raged on. Exports by land would be cheaper and faster, a five day trip as opposed to a trip lasting 25 days. According to customs officials, before the Naseeb border crossing was closed, over 250 trucks a day headed out from Lebanon to markets in Syria, Jordan, Iraq, and the Gulf. When it closed, that volume dropped to about 300 trucks a month, and that was on a good month, bound only for Syria.
Sadly, the Naseeb crossing’s reopening last year brought with it high transit tariffs, imposed by Syria and Jordan on trucks heading to the Gulf – thus making Lebanese sea-bound exports more appealing via the Suez Canal, despite the longer route, for the Lebanese Government also provides subsidies to merchant ships.
Lebanon’s political leaders are divided between supporters and opponents of President Bashar al-Assad. This month, however, fruitful talks were held. The Syrian Government agreed to lower tariffs on Lebanese products entering Syria, and to reactivate [accords signed in 2010] and establish new agriculture agreements between the two countries. While the announcement comes as good news, the Syrian government has yet to disclose its new tariff rate.
The Future Movement, along with the Lebanese Forces, and the Progressive Socialist Party, strongly reject direct ties with Assad’s regime until a political solution to the conflict is reached. While Hezbollah, the Amal Movement, and the Free Patriotic Movement support direct talks with him in order to establish the return of Syrian refugees and improve the Lebanese economy.
The country’s president, Michel Aoun, visited Moscow last month to have talks with Putin on geopolitical subjects and to discuss bilateral business agreements. Since the end of the Syrian occupation of Lebanon [Assad withdrew remaining troops from Lebanon in 2005], Michel Aoun has been seeking to improve his country’s relationship with Syria. He has treated all Lebanese parties as potential partners, including Hezbollah.
It makes no sense for Assad to reopen the crossing and then to impose punitive tariffs on transit. Either you want to reopen trade or not. Keeping such a high tariff is not good policy, it’s not even in the category of protectionism. I wish to invoke the wisdom of Vattel’s The Law of Nations concerning the matter of trade. Every word Vattel writes conveys precious meaning, which should be put in practice.
“Every nation ought, therefore, not only to countenance trade, as far as it reasonably can, but even to protect and favour it. The care of the public roads,—the safety of travellers,—the establishment of ports, of places of sale, of well-regulated fairs,—all contribute to this end. And where these are attended with expense, the nation, as we have already observed, may, by tolls and other duties equitably proportioned, indemnify itself for its disbursements. […]
Freedom being very favourable to commerce, it is implied in the duties of nations, that they should support it as far as possible, instead of cramping it by unnecessary burdens or restrictions. Wherefore those private privileges and tolls, which obtain in many places, and press so heavily on commerce, are deservedly to be reprobated, unless founded on very important reasons arising from the public good. Every nation, in virtue of her natural liberty, has a right to trade with those who are willing to correspond with such intentions; and to molest her in the exercise of her right is doing her an injury.
The home trade of a nation is of great use; it furnishes all the citizens with the means of procuring whatever they want, as either necessary, useful, or agreeable: it causes a circulation of money, excites industry, animates labour, and, by affording subsistence to a great number of people, contributes to increase the population and power of the state.
The same reasons shew the use of foreign trade, which is moreover attended with these two advantages:—1. By trading with foreigners, a nation procures such things as neither nature nor art can furnish in the country it occupies. And secondly, if its foreign trade be properly directed, it increases the riches of the nation, and may become the source of wealth and plenty. […]
Nations are obliged to cultivate the home trade,—first, because it is clearly demonstrated from the law of nature, that mankind ought mutually to assist each other, and, as far as in their power, contribute to the perfection and happiness of their fellow-creatures: whence arises, after the introduction of private property, the obligation to resign to others, at a fair price, those things which they have occasion for, and which we do not destine for our own use. Secondly, society being established with the view that each may procure whatever things are necessary to his own perfection and happiness,—and a home trade being the means of obtaining them,—the obligations to carry on and improve this trade are derived from the very compact on which the society was formed. Finally, being advantageous to the nation, it is a duty the people owe to themselves, to make this commerce flourish.
For the same reason, drawn from the welfare of the state, and also to procure for the citizens every thing they want, a nation is obliged to promote and carry on a foreign trade.
[…] from all which it follows, that a nation has a right to procure, at an equitable price, whatever articles it wants, by purchasing them of other nations who have no occasion for them. This is the foundation of the right of commerce between different nations, and, in particular, of the right of buying. We cannot apply the same reasoning to the right of selling such things as we want to part with. Every man and every nation being perfectly at liberty to buy a thing that is to be sold, or not to buy it, and to buy it of one rather than of another,—the law of nature gives to no person whatsoever any kind of right to sell what belongs to him to another who does not wish to buy it; neither has any nation the right of selling her commodities or merchandise to a people who are unwilling to have them.
Let us only observe, that nations, as well as individuals, are obliged to trade together for the common benefit of the human race, because mankind stand in need of each other’s assistance: still however, each nation remains at liberty to consider, in particular cases, whether it be convenient for her to encourage, or permit commerce; and as our duty to ourselves is paramount to our duty to others,—if one nation finds herself in such circumstances, that she thinks foreign commerce dangerous to the state, she may renounce and prohibit it.”
Since Assad reopened the Naseeb crossing, he doesn’t view foreign commerce as a threat. The tariff in my opinion should be slashed to zero for a simple reason: Jordan and Lebanon and Syria are on equal grounds in terms of economic development. It’s a case of comparing apples to apples, rather than oranges to apples [say, the US vs Mexico]. And the cost of maintaining roads and safety can be successfully borne by the Governments involved without such taxes or tolls being levied. Friedrich List, an exponent of the Historical School and a protectionist, did not oppose free trade among nations with comparable levels of development, more so, he supported it.
The punitive Syrian tariffs are hurting Syria and they’re hurting Lebanese farmers and businesses the most. I’ll end this article with this magnificent performance from 2003 by Julia Boutros. Two songs with English subtitles that inflame the soul with hope.