International Economic Law and Policy Blog

Unsure about Offshoring

There's a lot of talk these days about the "offshoring" of jobs.  For example, here is a recent press release from Global Trade Watch:

“Offshoring” is the term businesses coined to describe their practice of sending work now performed in the United States to other countries.

“For many years, white-collar workers have watched as blue-collar workers’ jobs have been shipped to China and Mexico,” said Leo Gerard, president of the United Steelworkers. “Now it is white-collar workers whose jobs are being targeted for offshoring. Pennsylvania workers need to wake up and join together to demand concrete solutions from our presidential candidates before their only option is a job at Wal-Mart.”

...

A surprising array of jobs are at risk of offshoring, not just computer programmers and call centers, but actuaries and accountants, editors and writers, drafters and graphic designers, underwriters and financial analysts, even scientists and mathematicians. Most jobs done in front of a computer are vulnerable to offshoring.

Global Trade Watch has more about its offshoring concerns here.  The core of the issue seems to be that when the U.S. trades with other countries, some jobs done by Americans are shifted abroad to be done by non-Americans.  (Countries other than the U.S. also have these same concerns about their own jobs, of course.)

Now, there may be situations here and there in which foreign competition is not a concern (e.g., if a small country that does not produce cars imposes a tariff on car imports, it will not be protecting domestic jobs from going overseas because there is no domestic industry).  But for a large economy like the United States, which produces just about everything, it seems likely that there will almost always be both a domestic industry and foreign competition.  This leads me to some questions.  How far would groups like Global Trade Watch go in preventing offshoring or reversing current offshoring?  If they could, would they want to stop all imports that compete with domestic producers?  Is there some amount of offshoring that is acceptable?  Or should we allow imports only where there is no domestic industry?

I have read some of their materials, but I don't have a good sense of what kind of trade policy they would like to see in this regard.

Born To Trade?

Despite growing up in New Jersey, I was not a big Bruce Springsteen fan when I was younger.  Over the years, though, I've come to appreciate him, and he is now one of my favorites.  So, I was amused to stumble across this quote from a 1984 George Will column:

If all Americans -- in labor and management, who make steel or cars or shoes or textiles -- made their products with as much energy and confidence as Springsteen and his merry band make music, there would be no need for Congress to be thinking about protectionism. No "domestic content" legislation is needed in the music industry. The British and other invasions have been met and matched.

Maybe we should call this the "Bruce Springsteen" theory of trade policy:  Make your products of such high quality that you can compete with anybody!

Just the other day Springsteen endorsed Obama, but I suspect that George Will is not going to follow Springsteen on that one.

Back to the Future of Outsourcing

Via Marginal Revolution, this is from economist Glen Whitman:

If backward time travel is also somehow possible, maybe firms in the future will choose to outsource some of their operations to the past, locating their manufacturing and other services in lower-wage time periods. This opens the possibility of transtemporal gains from trade... assuming, of course, that governments don’t implement effective trade barriers. Would America-3000 place tariffs on goods from America-2000? Would temporal nativists call for the construction of a time-wall to keep out the trans-temporal immigrants -- even if those immigrants were, in fact, their own ancestors?

In the unlikely event this all comes to pass, there would probably be a few other issues that took precedence.  But just for fun, how about regulation along these lines:  outsourcing of this type would be limited in such a way that it could only be utilized in times of tight employment markets, taking advantage of high unemployment in earlier eras.  This way we could finally deal with that pesky Great Depression I'm always reading about.

A New Kind of Outsourcing

From The Onion (via Greg Mankiw), a new form of outsourcing:

(Let me just repeat, for those who didn't catch it, this is from The Onion).

How Should I Feel About "Tariff Earmarks"?

I'm not a big fan of earmarks generally.  Even if specific projects are defensible, the process just seems fundamentally flawed.  But what if the "earmark" is a suspension of a tariff duty?  As a free trader, shouldn't I support that?  According to this story, both Hillary Clinton and Barack Obama have engaged in the practice, taking money from companies who want a tariff reduction for specific products.  John McCain, on the other hand, does not:

John McCain, the likely Republican nominee, does not introduce tariff suspension bills under "a longstanding policy — no private relief bills or any bills for one person," spokeswoman Jill Hazelbaker said in an e-mail.

It's good to cut tariffs, right?  But is it good to cut tariffs as a special favor to well-connected lobbyists?  Tough call, but at least the process seems to be more transparent these days.

Free Trade and War

Over at IntLawGrrls, Marjorie Florestal has a three part series of posts asking:  Can Free Trade End War?

My short answer would be that free trade is more likely to contribute to peace than are the alternatives.  However, it's probably too complicated a question for a short answer to be of much use.

Trade Talk in Davos

Most of us did not get an invitation to Davos, but YouTube has some video of the trade talk going on over there: http://www.youtube.com/watch?v=J7jOIAvsPa8.  Thanks to Amy Porges for the pointer.

Welcome to New Blogger Meredith Lewis

We have a new contributor:  Meredith Lewis of Victoria University of Wellington Law Faculty in New Zealand.  A big welcome to Meredith!

Who Makes the Most "American" Cars?

According to Cars.com, two of the top 10 models are from Toyota.  They explain:

Cars.com's American-Made Index highlights the cars that are built here, have the highest amount of domestic parts, and are bought in the largest numbers by Americans.

The Chinese Film Ban (If It Existed) No Longer Exists

The Chinese film ban, if there was one, is apparently over:

China's blackout of Hollywood films has been broken by the Will Smith starrer "The Pursuit of Happyness," which Chinese film import officials now say will be released here in January.

...

'Happiness Knocks at the Door' (the film's Chinese title) is coming in January. We are planning what day to release it," Yuan Wenqiang, China Film Group Import Export Co. deputy manager, said in a telephone interview.

The unofficial ban of imported films, earlier denied by China Film Group executives, was thought to have come down from on high in the Communist government, which long has moved to prevent what it calls "pollution" of domestic culture and to protect the struggling domestic film industry.

That's a good movie to open with.  I didn't see the whole thing (I only caught bits and pieces on cable), but from what I did see it was pretty moving.

Note to Feedblitz Subscribers

For those of you who read this blog via the Feedblitz email updates, I made a couple tweaks which you might notice.  The sender will now be "IELP Blog," not "Feedblitz."  And the reply email address will be mine (administrator@worldtradelaw.net).  Also, the name of the post's author will be in the emails.

Hopefully I made these modifications properly.  I'll know tomorrow when the email goes around.  If I made any mistakes (and I might have), I'll fix them when I figure out what they are.

Gutierrez Speaks on the Chinese Film Ban

From news reports:

China has suspended imports of American films, US Commerce Secretary Carlos Gutierrez said here today, as he urged the mainland to lift a tight quota on foreign movies.

China allows just 20 foreign films to be shown in the country's cinemas each year but it was not immediately known whether the halt on screenings was due to that number already being reached.

'There has been a suspension,' Gutierrez told reporters, confirming a US media report that Hollywood films had been mysteriously blocked.

Gutierrez, speaking at the sidelines of top-level economic talks between the two nations during which trade tensions have been exposed, said suspensions had happened previously.

'(This) has happened in the past and at certain times of the year where they will suspend foreign movies,' he told Agence France-Presse, declining further specific comment on the latest movie stoppage.

But Gutierrez, who along with other US Cabinet secretaries is taking part this week in a twice-a-year Strategic Economic Dialogue with China just outside Beijing, expressed displeasure with the quota system.

'The problem we have with movies... is that there is a limit, there is a number, there is a quota, and we would like to get that lifted,' he said.

So it's not just the ban that is of concern, but also the quota system itself.

More generally, I guess the U.S. complaint is that China is restricting movies being shown through normal channels, while at the same time allowing them to be viewed in pirated form.

Is There A Chinese Ban On American Films?

Variety reports:

In its most drastic measure ever against Hollywood, Chinese authorities have banned the release of American pics for at least three months.

Ban began Saturday and will continue until the end of February at least, but Chinese sources say it could continue until May.

Central-government order came from echelons higher up than the State Administration for Film Radio and Television or the Film Bureau, which normally handle movie industry policy and application. Ruling likely emanated within the Propaganda Ministry.

Part of the explanation offered was that:

... the film ban is seen in some quarters as retaliation against the Motion Picture Assn.'s studio members for persuading the Office of the U.S. Trade Representative to take action against China through the World Trade Organization over intellectual property protection and market access (Daily Variety, April, 11).

While the IP and piracy case came as little surprise, China was outraged that film import quotas, blackout periods (when only local films show) and other restrictions might be picked over by the WTO.

But China says there is no ban:

Chinese film industry officials denied on Thursday a news report that China is banning Hollywood movies for three months to protect local films.

...

... Zhang Pimin, deputy director-general of China's Film Bureau, and Xiao Ping, vice president of import and export business at state-run China Film Group, both denied the report in phone interviews.

"We haven't received instructions like that and we haven't set policies like that," Zhang said.

"We're continually going through Hollywood movies. We haven't stopped," Xiao said.

It seems like there should be a way to sort through the facts here, to determine if there really is a ban.