Time to demand Fair Trade!

[Glen]

A new report details the environmental damage of steel making in China and accounts for the cost advantage that lax regulations and enforcements provides. On the heel of that, we have an Chinese official stating that it the consumers that buy Chinese steel that should pay for the damage;

“Countries that buy Chinese goods should be held responsible for the carbon dioxide emitted by the factories that make them in any global plan to reduce greenhouse gases, a Chinese official said on Monday.

“About 15 percent to 25 percent of China’s emissions come from the products which we make for the world, which should not be taken by us,†said Gao Li, director of China’s Department of Climate Change.â€

http://www.reuters.com/article/environmentNews/idUSTRE52F5X620090316


http://www.americanmanufacturing.org/assessment-of-china/

 

[Glen]

Canada. Should. Not. Be. Making. Nuts. And. Screws. We could over value the Yuan by 100%, it would still make absolutely no sense to make products with virtually no value in Canada.

Your wish is coming true.

http://nbbusinessjournal.canadaeast.com/canadaeast/article/640165

INGERSOLL, Ont. - A southwestern Ontario plant that has been in operation for 130 years is set to close shop.

Ingersoll Fasteners in Ingersoll, Ont., is shutting its doors in the next three or four months.

Employees heard the news from company officials last week.

The workforce of 183 employees produces industrial cold-formed fasteners.

Ingersoll Fasteners began producing fasteners in 1887 under the name of the Morrow Screw and Nut Co. Ltd

 

[Glen]

Comparative advantage in pictures.......

http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/

 

[Glen]

I came across an interesting article today related to the point on fasteners I made earlier........

http://www.nytimes.com/2009/12/10/world/asia/10jakarta.html?_r=1&hp

The lowly nail is one focus of tension. Making nails is not complicated: start with a bale of steel wire, shave it down to the proper diameter, then feed it into a punch that shapes the nail, cuts it and spits it into a bin. Labor and machinery account for 10 or 15 percent of the cost of a nail. The rest is the cost of the wire.

And that is Indonesia’s problem.

“Many Chinese steel factories have overcapacity, so they sell their wire very cheap,†said Ario N. Setiantoro, who leads the Indonesia Nail and Wire Factory Association. “Chinese nails enter the market here at about the same price as our wire.â€

and while Canada is one of the largest producers of met coal and iron ore in the world , China can undercut Canadian producers of nails by 30-40%. Meanwhile China imports met coal and iron ore, can produce simple products and sell them back to us at prices less than our producers pay for raw material.

Between an undervalued currency and other distortions, China is cannibalizing employment everywhere.

 

[Dilla]

But hey, cheap nails.

 

[afransen]

Exactly. If the Chinese want to pay full price for our exports, but sell their exports at a discount to cost, that increases Canadian consumers' buying power. In other words, they're the dumb ones for selling us stuff below cost--let's take advantage of it.

 

[Glen]

Exactly. If the Chinese want to pay full price for our exports, but sell their exports at a discount to cost, that increases Canadian consumers' buying power. In other words, they're the dumb ones for selling us stuff below cost--let's take advantage of it.

Not if it is short term. Once other producers are gone what incentive do they have to continue?

 

[afransen]

What do you mean? The second China's nail producers become uncompetitive, competitors will sprout in other low wage jurisdictions. There is no shortage of those.

Face it, folks: China is taking all of our low value added industries. Let them have it.

 

[Glen]

Face it, folks: China is taking all of our low value added industries. Let them have it.

If Shipbuilding, semiconductor fabrication, pharmaceuticals, chemical production are low wages then what is left?

 

[afransen]

Many of the jobs in those industries are low value added. Of course, in many industries, the parts get shipped to China for assembly, but the components are made elsewhere.

I'm all for less expensive ships, processors, and chemical products, so long as they meet standards for consumption in Canada.

 

[Glen]

Many of the jobs in those industries are low value added. Of course, in many industries, the parts get shipped to China for assembly, but the components are made elsewhere.

You must not be aware of the technical know-how involved in the industries I listed.

I'm all for less expensive ships, processors, and chemical products, so long as they meet standards for consumption in Canada.

Do you support the same for doctors, lawyers, engineers, teacher/professors, accountants, architects, urban planners ,etc.?

 

[Dilla]

I just don't follow, Glen. Before the west's banking system shot itself and the rest of us in the feet, unemployment was quite low in most regions of the world. It certainly was here.

 

[Glen]

I just don't follow, Glen. Before the west's banking system shot itself and the rest of us in the feet, unemployment was quite low in most regions of the world. It certainly was here.

That is true but does not provide the whole picture. Was the pre crisis make up of jobs sustainable? Was it itself fueled by the credit binge? It is also important to look at real wage growth. Real wage growth was near stagnant from 1980 to 2005.

Here is a decent paper on the subject.
http://www.csls.ca/notes/Note2009-2.pdf

 

[kEiThZ]

Actually there are many jobs in the industry mentioned that are low skill. The high skill jobs in semiconductor fabrication or shipbuilding or petrochemical and pharmaceuticals are composed of the engineers, scientists and project managers. Those are jobs which continue to be done in the home country. While it does happen, it's pretty rare that engineers and doctors and lawyers and project managers are based in China when the client is over here.

Many of those industries simply aren't as high tech as they used to be. The metal bashing portion of shipbuilding is a rather low tech gig for example. And the high tech portions of these industries will always be reserved for the home country. As an example, our own government is currently developing a national shipbuilding industrial policy to coordinate with the our shipbuilding industry to build navy warships and coast guard patrol vessels.

Also do we really want all these industries here? Consider the example of how Taiwan became the semi-conductor fabrication capital of the world. They simply allowed their country to become a giant electronics manufacturing byproducts toxic dump site. That's hardly the vision anybody has for Canada.

Finally, you have to keep in mind that much of China's development is to meet its own internal consumption. The Chinese have been importing ships, aircraft, semi-conductors, petro-chemicals, etc. for decades. Much of their technological and industrial development is merely aimed at self-reliance. Not all of it is export related. After all, just think, which Western airline is going to deploy Chinese built aircraft any time soon? Would any rail operator buy a Chinese built high speed train? Yet Bombardier and Boeing rule the roost in China.

Certainly, some of their trading practices need to be curbed. But nothing is so extreme here. If Western consumers increased the savings rates a few percentage points, the tsunami of imports from China would slow to a trickle.

 

[kEiThZ]

Real wage growth was near stagnant from 1980 to 2005.

But corporate profits, GDP, etc. weren't. The common man is suffering because those at the top of the pyramid have been getting fat. It's not because the Chinese are trying to steal his lunch.