And the Winner Is . . . Europe?
Firms on the Continent may gain the most under Obama.
By KYLE WINGFIELD
Wall Street Journal Europe
November 6, 2008
Amid all the celebrations in Europe of Barack Obama's election as the American president, one wonders how many glasses were clinking in boardrooms across the Continent. The early guess: a lot.
[THE LONG HIDDEN COMMON AGENDA OF THE ELITIST LIBERAL PROGRESSIVE WING OF THE U.S. DEMOCRATIC PARTY AND THEIR EUROPEAN WELFARE STATE-MINDED COUSINS IN THE EUROPEAN COMMISSION & THE SOCIAL DEMOCRACIES OF FRANCE, GERMANY AND GREAT BRITAIN IS NOW PALPABLE & VISIBLE, AS THEY EACH SIP THEIR FRENCH & CALIFORNIA WINES AND CHAMPAGNES AND 'PURE' GERMAN BEERS IN CELEBRATION OF THE OSTENSIBLE COLLECTIVE VICTORY OF 'SOFT' SOCIALISM OVER 'COWBOY' CAPITALISM.]Many U.S. companies will be apprehensive about what an Obama administration coupled with a strongly Democratic Congress will mean for them: higher tax rates, or certainly not lower ones; greater power for trade unions after a decades-long pendulum swing toward management; stricter environmental regulations and possibly a cap-and-trade system; less inclination to negotiate meaningful free-trade agreements; a spate of new federal judges who are hostile to business interests. European firms can view these developments as a leveling of the playing field -- or even a tilting of the field in their favor.
[See ITSSD Press Release: Putting Country First Means Defending America's Sovereignty, Constitution and Free Enterprise System Against Foreign Incursion, PR Newswire (Sept. 6, 2008) at: http://www.reuters.com/article/pressRelease/idUS134761+08-Sep-2008+PRN20080908 ].
[See Lawrence A. Kogan, Exporting Europe's Protectionism, The National Interest (Fall 2004), accessible on ITSSD Main Website at: http://www.itssd.org/Publications/Kogan%20TNI%2077FINAL.pdf ].
[IT IS NO LONGER A SECRET THAT THE LIBERAL WING OF THE DEMOCRATIC PARTY HAS ACHIEVED ITS LONG-TERM GOAL - OF RETURNING THE U.S. TO THE TRANSATLANTIC NEGOTIATING TABLE TO HARMONIZE AMERICA'S ENLIGHTENMENT ERA-INSPIRED FREE ENTERPRISE SYSTEM & COMMON LAW-BASED LEGAL SYSTEM WITH CONTINENTAL EUROPE'S SOCIAL WELFARE STATE ECONOMIC & CIVIL LAW-BASED LEGAL SYSTEMS. HOWEVER, THE TABLE AT WHICH THEY NOW CELEBRATE AND THE SEAT EACH NOW OCCUPIES WILL CERTAINLY BE DIFFERENT FROM THAT AT WHICH THEY ALL ROLL UP THEIR SLEEVES TO DO THEIR 'DIRTY' WORK.]New regulations will play a large role in this leveling exercise. For instance, trade unions are licking their chops at the prospect of Democrats running both the executive and legislative branches. One of the items on their wish list is "card check," which would eliminate secret ballots among employees deciding whether to join a union.
Should card check help unions to boost their membership substantially from its current trough, American companies will be forced to make some of the same concessions that European firms have been making all along. Part of the trans-Atlantic competitiveness gap would be erased.
Environmental laws are another area where American competitiveness could fall toward European levels. Businesses in the EU already have to deal with a cap-and-trade system to curb carbon emissions. It's a good bet that the same will be true in America within the next four years, and the U.S. will probably work closely with Europe to create a successor to the Kyoto Protocol.
While the faulty construction of the first phase of the European Union's Emissions Trading Scheme limited the impact on businesses, the screws are being tightened in the second phase and more industries (e.g., airlines) are being sucked in. Any hit to European industry's global competitiveness, though, will be greatly softened if the U.S. introduces its own cap-and-trade system.
And as we've already seen in the automotive industry, a Washington that's determined to subsidize companies' transition to the low-carbon economy will only encourage European capitals to do the same.
Thus the $25 billion in public loans that have already been granted to Detroit, with another $25 billion possibly on the way once Mr. Obama takes office, have spurred Europe to consider a €40 billion loan program for its own car makers. The manufacturers will gladly take this taxpayer money.
[YES. THIS IS THE ULTIMATE GOVERNMENT APPROVED AND INDUSTRY LOBBIED 'SUBSIDY'!]
Both environmental laws and labor regulations are ways in which European firms wouldn't necessarily improve themselves, only see their American rivals become less competitive. A more positive benefit for Europe could come in the trade arena.
Those who hope Mr. Obama will breathe new life into a multilateral trade deal like the Doha Round are likely to be disappointed. There are trade experts who believe the president-elect and his advisers have more free-trade instincts than they've let on -- witness the brouhaha earlier this year over whether talk about a President Obama unilaterally rewriting the North American Free Trade Agreement was just a way of winning over protectionist-minded Democrats during the primary campaign.
The problem with that optimistic view is that Mr. Obama will face a Congress that views trade liberalization as anathema. Democrats on Capitol Hill haven't blocked bilateral trade deals with the like of Colombia and South Korea because George W. Bush wanted them, but because their trade-union supporters did not want them.
Democrats' refusal to approve those deals, alongside America's inability to push through a Doha deal, has opened the door for the EU to take the lead in bilateral free-trade agreements. Since lifting its self-imposed moratorium on bilaterals once it became clear that Doha was going nowhere, Brussels has been aggressive on this front. It has courted Canada, India, South Korea, the Association of Southeast Asian Nations and others.
Bilateral trade deals can mean administrative headaches for companies that do business in a number of countries. But however imperfectly, they do open markets. In just about anywhere outside U.S. borders, European industry could gain from American protectionism.
None of these gains will materialize, though, if European governments take the Obama era of "change" as an excuse to halt their slow crawl toward economic reform. Other countries or regions outside Europe could also choose to take advantage of a fall in U.S. competitiveness.
It would make no sense to react to an upswing in American trade-union power, for instance, by freezing the liberalization of Europe's still-rigid labor markets. This is one time it might not pay to follow America's lead.
Mr. Wingfield edits the Business Europe column.
No comments:
Post a Comment