Europe

EU-Korea Trade Pact Will Hurt U.S. Without its Own FTA

by Fran Smith on October 6, 2010

in International, Trade

As the European Union signs a trade pact with South Korea, U.S. manufacturers are calling on policymakers to approve the U.S.-Korea Free Trade Agreement or risk losing a greater share of that lucrative export market to its competitors. U.S. goods producers note that already the EU is ahead of the U.S. in exports to Korea, and the EU trade agreement will heighten that disparity unless the U.S. ratifies its own trade pact:

The European Union (EU) will implement its FTA with Korea early next year. As a result, European manufacturers will see tariffs removed on nearly every product they export to Korea – while American manufacturers continue to face tariffs averaging nearly 12 percent. This will be a significant blow to American manufacturers — one that we can ill-afford in this economic climate. This is not an idle threat – the EU is not only a significant competitor to the United States in manufactured goods exports to Korea, they are actually ahead of us. (See chart.) With this FTA, they will reap the benefits of zero tariffs, stronger protection for investments, and the removal of myriad non-tariff barriers.

President Obama has promised to push for the U.S.-Korea FTA in mid-November. With all the talk about doubling exports in 5 years, the Korea trade pact should be on the top of his action list.

Do we really want to be like Europe?

by Fred Smith on April 13, 2010

in Culture, Deregulate to Stimulate, Economy, International, Regulation

With the passage of ObamaCare, we’ve taken another giant step towards Europeanizing America. Tragically, our history shows a steady trend in that direction, with government spending as a percentage of GDP steadily increasing from 20% in the 1930s to over 35% in the last two decades. From the first success of the Progressives in the late 19th century, the United States has tended toward the European regulatory-welfare state model. Is this convergence wise?

Certainly European-style governance has many drawbacks. Consider Denmark. There, tax revenues are used to pay for health care expenses, all levels of education, child care, etc. Even students receive support grants while in school! Vacation policies are generous with employers required to grant at least 5 weeks of paid vacation per year. All this may seem great-you pay for nothing and get “free” vacation time. But, of ourse, there are no free lunches.

Danes pay a large price for all this. Minimum tax rates in Denmark are over 45%. In addition, Denmark pays the supra-governmental EU-imposed VAT (value added tax) of 15% on top of the national VAT of 10%. The VAT tax is essentially a sales tax raising the price of everything. Consumer goods are much more expensive with gasoline costing $6-8 per gallon, a beer over $10. European taxation shifts choice away from individuals and limits their ability to enjoy much of the world’s marvels.

Average take home income in Denmark is close to that of the United States, but Danes have a much lower purchasing power given these downstream taxes and the higher prices resulting both from the sales tax and the regulatory burdens. Home ownership in Denmark is more than 10% lower than in the United States.

Personal car ownership is discouraged in Denmark in favor of public transportation. The tax on a new car is over 100% of the sticker price, doubling the cost of car ownership. Danes also pay an annual ownership tax of anywhere from $1000-$4000. As a result, only about 400 individuals per thousand own automobiles in Denmark, compared to over 750 per thousand in the United States.

These aspects of European life are less well known to Americans. American tourists see a “nicer” side of Europe, staying in lovely hotels, enjoying beautiful scenery, and eating wonderful foods The reality of everyday life in Europe is less lovely.

While America is not perfect, allowing the government to control more aspects of our lives will not yield a better, healthier society. The government cannot wave a magic wand and rid the world of problems. We all want a healthier, safer, and wealthier society. Are free markets or bureaucracy the better path to those hopes? Indeed, if we continue down the current road, what will America resemble tomorrow? France without the good food?

The Little People of the Superstate

by Tatiana Kryzhanovskaya on November 24, 2009

in International, Odds & Ends, Regulation

Almost like answering Henry Kissinger’s famous question–Who do I call if I want to talk to Europe?–the 27 states of the EU have selected the top two figures of their superstate. Mr. Kissinger can now dial Herman Van Rompuy or Catherine Ashton.

Tony Blair, the ambitious British ex-prime minister, was the first one on the list of candidates for the EU presidency. But Germany and France didn’t want a strong and ambitious politician to be a head of the Union, and thus be the decision-maker. Even as Europe was in the process of ratifying the Lisbon treaty, no one really wanted to lose their national power.

And that is how Belgian Prime Minister Van Rompuy became the first EU president and EU Trade Commissioner Ashton became the new foreign relations chief.

Van Rompuy was a compromise figure during the 2007-2008 Belgian political crisis. Unable to form a government, Belgium called elections for the second time. Elections likely would have been called a third time if not for Van Rompuy, who was suggested as an alternative, moderate figure to head a joint government.

Ashton did a decent job as a head of the EU’s Directorate-General for Trade. The impression I received from meeting her during her spring 2009 visit to the U.S. was that she would have implemented sounder trade policies if she were not constrained by political duties. But if Ashton could not stand up for her ideas as trade commissioner, her prospects as the EU’s high representative for foreign affairs and security policy do not appear great.

More and more, it looks like much ado about nothing. The Lisbon treaty was ratified by all 27 states, the EU president and foreign relations chief have been elected, but it is unlikely that this will bring real change to the European Superstate’s policies.

Unemployment Skyrockets: “U.S. now beating European unemployment rates”

by Hans Bader on November 10, 2009 · 15 comments

in Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, Healthcare, Insurance, International, Legal, Personal Liberty, Politics as Usual, Regulation, Stimulus to Nowhere

Unemployment is now higher in the U.S. than in Europe,  reports the Washington Post.  “The official U.S. unemployment rate, reported last Friday, now stands at 10.2 percent,” compared to “9.7 percent” in Europe.   This is the highest rate in more than 26 years, and marks a huge change from the recent past, in which unemployment was double the American rate in much of Europe, such as in France.

Unemployment is at 10 percent in France, which refused to adopt a U.S.-style stimulus package, and only 7.6 percent in Germany, which adopted a stimulus package that was smaller relative to its economy than ours was.  (Countries that refused to adopt big stimulus packages have fared better than those that imitated President Obama. And the biggest-spending countries have suffered worst in the recession.)

A “broader measure of U.S. unemployment,” including discouraged workers, puts U.S. unemployment at 17.5 percent, reports the New York Times.

As the Post notes, “For many on the left, the lament for years has been: Why can’t America be more like Europe? Why can’t rustic Americans be more like sophisticated Europeans? The sentiment has resurfaced in recent months as the health-care debate has raged on — why can’t the American health-care system be more like Europe’s?”

Well, America is now more like Europe when it comes to unemployment.  But not when it comes to social benefits and protections.  The American Left knows how to import Europe’s failures, but not its successes.

The massive health-care bill passed by the House on Saturday is a classic example.  It would expand health care coverage somewhat, but not to European levels, and it would vastly increase the costs of our health care system, rather than reducing it to European levels.   It would also increase taxes to “European levels of taxation.”  The health care bill contains politically-correct provisions that Europeans would never put up with, like pork for trial lawyers and racial preferences.  And restrictions on national competition in health insurance, which do not exist in Europe.

In France, doctors don’t need to be paid as much, because competing professions, like lawyers, are paid less.  French law is much more conservative than American law when it comes to lawsuits, including lawsuits against doctors.  There are NO punitive damages, and France discourages lawsuits by making unsuccessful plaintiffs pay the other side’s legal bills.  (Other European countries have specialized health courts, rather than American-style jury trials, to cut lawyers’ bills, speedily compensate the injured, and prevent American-style baseless lawsuits against doctors.)  There are no racial preferences — even my Marxist father-in-law, a French trade unionist who likes Michael Moore’s book Stupid White Men, thinks that racial preferences are evil.  French people do not let political correctness shackle their minds the way American leftists do.

Europe is not as far to the left of America as people think, and America’s business climate is already not much more favorable than Europe’s.  For every three ways in which Europe is more socialistic than America, there are two ways in which it is less socialistic than America.  The Obama administration is getting rid of our advantages, but not our disadvantages.

American tort law and family law are much more burdensome, anti-business, and bent on redistribution of wealth, than Europe’s.

Confronted with the specter of new burdens under the health-care bills and global-warming bills backed by the Obama administration, many businesses with the money to do so are afraid to hire people and create jobs lest they be stuck with a large tab for things like health care benefits for newly-hired, less-skilled employees.

The Congressional Budget Office has repeatedly admitted that Obama’s stimulus package will shrink the economy “in the long run.”  It contained welfare and repealed welfare reform.  Unemployment is higher now than if Congress had voted it down.

European Environment Agency–stuck in a mental rut

by Marlo Lewis on February 11, 2009

in Energy, Environment, Global Warming, International

In a report titled “Beyond Transport Policy,” the European Environment Agency (EEA) bemoans the fact that European transport sector CO2 emissions increased by 26% during 1990-2006. The report is called “Beyond Transport Policy” because–hold on to your hat–the “drivers” of transport demand growth are “external” to the transport sector itself. For example, people don’t fly for the sheer thrill of flying, but in order to vacation or conduct business in an increasingly global economy.

Consequently, traditional transport policies such as fuel economy regulations, motor fuel taxes, and infrastructure upgrades have had little impact on transport demand and the associated emissions.

This implies that in order to achieve what the EEA calls a “sustainable transport system,” politicians and bureaucrats must control those pesky “external drivers”–basically the totality of things that constitute work and play in the modern world.

But, as I discuss here, the EEA’s proposed solutions are not “beyond transport policy,” but are the same old, same old: new taxes on fuels, vehicles, passengers, and imports. The EEA is stuck in a mental rut; it has taxes on the brain.

Eurocrats Push European Consolidation

by Doug Bandow on September 18, 2008

in International, Legal, Personal Liberty, Politics as Usual

Nothing horrifies the New Class of bureaucrats, intellectuals, politicians, and activists than an aroused public dedicated to defeating their plans.  The Irish vote against the Lisbon Treaty, which would create a stronger, consolidated government for the continent, shocked Europe’s political elite, who are pushing for Ireland’s government to stage a revote, or simply override the voters.  The latest argument being made is that approving Lisbon would empower Europe to confront Russia on security issues. It’s a silly claim, since the Treaty will deliver neither policy unanimity, an effective military, nor popular support, all of which are necessary for a genuine European nation state.  I offer this argument and more in Taki’s magazine today.