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How Do You Say Hawley-Smoot in Australia and China?

I caught Australian Prime Minister Kevin Rudd's speech at the Institute of International Economics this week. In the speech, he said basically that all the world's efforts to get out our financial mess would collapse if we adopted protectionist measures. No brainer.

But I wonder if he's saying one thing and doing another. Reports from Australia indicate that two big Chinese-owned firms are having trouble acquiring two large Australian companies.

Chinese-owned Minmetals has been blocked from acquiring the key asset in its $2.6 billion bid for OZ Minerals because the South Australian gold and copper mine was too close to a sensitive Australian defense facility, reports The Australian.

In addition, there's also trouble with a proposed $28 billion investment in Rio Tinto and some of its key mining projects by Chinese-owned Chinalco. The Australian government has labeled Chinalco a state-run firm. Under Australian law, state-run firms seeking to buy Australian companies have higher hurdles to jump than private ones.

The Chinese-speaking Rudd is under some pressure at home about his links to China. Some on the Australian right are mumbling that he's the "Manchurian candidate." That's silly, but it's also silly to be calling for continued open markets in Washington, while easing the door shut at home.

China, of course, shouldn't escape blame. It recently blocked Coca-Cola Co.'s bid to buy its biggest domestic juice maker -- China Huiyuan Juice Group Ltd. On March 24, Chinese officials denied the decision was aimed at protecting a national brand, but few believe that line .

How do you say Hawley-Smoot in Chinese?

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Comments (23)

neilcammack Author Profile Page:

"...Australia is ranked 14th in the world in imports. For other countries that have similar levels of imports, Australia has the lowest level of imports as a percentage of GDP."

- And our imports roughly match our exports. Isn't that the way it's supposed to work, or should we be aiming for an even bigger accumulated trade deficit?

This statistic neither proves nor disproves that Australia indulges in excessive protectionism - for that you'd have to adduce specific protectionist practices such as unusually high tariffs and other artificial barriers.

Chinalco may or may not act in a way that would reduce Australia's export income - there's a school of thought that they're more independent than that. That said, it's entirely legitimate for the Australian government to guard against excessive foreign ownership of national resources.

I'm still uneasy about Singtel's role as owner of Australia's No 2 telco, Optus, which is now a strong contender to build a proposed nationwide fibre-to-the-node broadband network. As I understand it, Singtel is indirectly owned by the government of Singapore.

Donald2 Author Profile Page:

Chinese companies understand the difficulty they face and are more careful in handling international purchasing after the failed Unocal purchasing. This is part of life. This is like Boeing has to offer some aircraft parts to be built in various countries in exchange for sales.

Just hope Chinese companies do not have to be pushed to buy resources from some ugly countries involved in genocide. If that happens, I am sure the so called "freedom lovers" will not waste any time criticizing China. Am I right?

Donald2 Author Profile Page:

What7 said:

"We're talking about COMMUNIST China! A dictatorship of the proletariat, by definition! The sworn enemy, again by definition, of capitalism! If you'd like to believe that "private-for-profit" companies truly exist in China then I have some really nice properties in Atlantis for you.
Neither one exists!"

Are you just wake up from a 20 year coma? Or what year are you traveling from? 1959, 69, 79, 89 or 99. Enen if you come from 1999, you are still wrong.

Look at you calendar and find out what year this is before you talk.

shepherdmarilyn Author Profile Page:

China has had this rather nasty habit of importing cheap labour though and their mines in China seem to be very bad for the lifestyle of the thousands killed in them every year.

dummy4peace Author Profile Page:

Refusing to sell a company to a foreign company for whatever reason is different from refusing to import goods from foreign countries. Perhaps many people both inside and outside China aren't so sure about "who owns what" in China.

manishyt Author Profile Page:

Australia Wrong On Asia. Again
Australia’s new Prime Minister, Kevin Rudd, is in a rush to prove his independence from the United States. Specifically, he wants to create an “Asia Pacific Community” that will handle the political and security challenges posed by China’s emergence on the international scene. But we suspect that China will not be so willing to listen to a local United Nations-style talking shop, when there are serious disagreements on contentious issues such as Taiwan, Tibet or Tiananmen Square. As such, this “community” of nations will fail in its fundamental objectives if those include dealing with security issues.

sgjerstad Author Profile Page:

To enufalready: Your argument appears to be that the Australians are victims of protectionism and you stated that "for someone in the US to complain about protectionism is just laughable."
The statistics that I presented suggest that among countries with similar levels of imports, Australia's markets are not as open to international trade as other countries in the region, and many other countries around the world. To the specific point of U.S. agricultural markets, the U.S. is the second largest importer of argicultural products in the world ($109.4 billion in 2007) and the second largest importer ($113.51 billion). The U.S. imported $2.77 billion in Australian agricultural products in 2007, which was 12.4% of all of Australia's agricultural exports. This is comparable to the European Union, which imported $2.44 billion in Australian agricultural commodities. Since U.S. and E.U. total ag. imports were roughly the same, it doesn't appear that the U.S. has any bias against Australian imports relative to the E.U. My review of the many statistics in the the WTO International Trade Statistics 2008 document don't suggest any unusual patterns of U.S. imports from Australia relative to other countries. In any case, whatever the limitations are of these data, they are more illuminating than argument ad hominum in your statement that "for someone in the US to complain about protectionism is just laughable." That just doesn't add anything to any discussion.

robertjames1 Author Profile Page:

Your article is empty - it says nothing of importance.

Chinalco wants to buy Rio Tinto's assets, some of which are in Australia.

The problem for the Australian government is that Chinalco is regarded as as instrument of the Chinese government. The danger is that through transfer pricing it will obtain ores from these mines at low prices and by avoiding fair market prices the Australian economy will miss out. In other words, if Chinalco was not government owned and controlled this issue would not arise.

I cannot understand why your article leaves out the salient arguments. When raised, they make your article seem trite.

enufalready Author Profile Page:

to sgjerstad,

Showing some stats that are barely relevant to the discussion does not add merit to a statement.

The tone and content of the piece suggest its a slow news day.

My point is that for countries such as Australia that export agricultural products the US can hardly be considered free trade ( nor are the europeans for that matter). And that has been the case for a very long time.

Equating this situation with Hawley-smoot is disingenuous. Oh and as has already been pointed out, the writer neglected to mention that the chinese had vetoed coke buying
a large soft manufacturer.

What7 Author Profile Page:

We're talking about COMMUNIST China! A dictatorship of the proletariat, by definition! The sworn enemy, again by definition, of capitalism! If you'd like to believe that "private-for-profit" companies truly exist in China then I have some really nice properties in Atlantis for you.
Neither one exists!
Be careful who you get in bed with and always wear a condom!

sgjerstad Author Profile Page:

To enufalready (first post): You seem to be suggesting that Australia isn't protectionist. Looking at World Trade Organization import figures (from Table I.9 in their International Trade Statistics 2008, available at http://www.wto.org/english/res_e/statis_e/its2008_e/its08_toc_e.htm) I noticed that Austrialia's imports account for 15.5% of GDP and Australia is ranked 14th in the world in imports. For other countries that have similar levels of imports, Australia has the lowest level of imports as a percentage of GDP. Some regional neighbors import much more. See the table below. Simply stating that a particular point of view is "laugable" isn't an argument.

..........................................as a %
.................GDP....Imports....of GDP


(Dollar amounts are in billions of U.S. dollars at current exchange rates.)

dubya19391 Author Profile Page:

...whatever. Since when has the government ever been perfectly objective and rational?

Why even bother to talk about this.

Oh yeah: you get paid to talk about this.

enufalready Author Profile Page:

If the writer doesn't like Rudd that's fine. He's hardly alone. BUT for someone in the US to complain about protectionism is just laughable. When will the US opens its markets to agricultural products ? Also,if the writer could be bothered he might care to checkout how the other mining companies the chinese have purchased in Australia are being run and why this is not in Australia's national interest.

Hypocrite1 Author Profile Page:

Pomfret: I am glad that you found a Aussie friend at higher place. Kevin Rudd is Aussie's No. 1 hypocrite and you are the Yankee's No.1 here. No brainer.

Citizenofthepost-Americanworld Author Profile Page:

The West's (and its partners') first problem has been, and remains more than ever: growth. So much so that growth has come to be replaced by artificial (speculative) "growth", which was in fact non-growth, it leading to the unmitigated disaster we are now witnessing. Hence the second problem the West and its partners now face: lack of cash or liquidity.

Globalization was meant to be the panacea that would save Western imperialism for centuries to come, thanks to so-called "emerging countries"... and their markets. With time, it has become doubful that globalization would serve the unilateral purpose for which its apparent virtues were so much exalted.

With that unique depression and our trillions being thrown into our bottomless black hole on a daily basis, in the hope of saving all the already failed and the already bankrupt (claimed nonetheless to be "too big to fail or to go belly up), now what? Now what?

However much the press has been silent on the subject in the West, much could be learnt on the nascent, new world order during those weeks leading to the forthcoming G-20 summit. Let's now watch closely how that renewed ritual goes... Something unprecedented, irresistible is happening very quickly right under our noses.

It would be sad to hear once again, in the coming years, that "nobody saw IT coming, really"!

janemcd_au Author Profile Page:

There is a vast difference between setting up trade barriers such as tariffs and quotas and "buy local" campaigns and foreign ownership of national assets.

There can only be one reason why one of our biggest minerals customers wants a share of our resources and it simply is not in the nations best interest to bow down to those demands.

The bottom line is that Kevin Rudd will be coming back to Australia to face a number of questions.

He is the Prime Minister of Australia, not a Chinese Diplomat.

ejonauskis Author Profile Page:

Protetionism, in itself is always a mistake, but this is not protectionism. There are few trade barriers left here in Australia, but foreign government ownership of private companies is not anti free trade.Perhaps more worrying is the fact that with Governments bailing out institutions all through the US financial sysmtem, there is a confusion as to what a free market really is.

Ash002 Author Profile Page:

I don't think this article addresses the clothing tarrifs and other tarrifs in Asutralia, which are being reduced at the cost of Australian jobs in the short term. So its a fairly mischievous article short on facts.

kls1 Author Profile Page:

Every time I get into a discussion of protectionism it finally ends with people saying we'd ultimately have to hire Americans to drive taxis, work assembly lines and pick up the garbage.
Somehow this would be an economic disaster because most Americans don't want to do that work and certainly not for minimum wage. So wouldn't the eventual result of large-scale protectionism actually be that Americans have to pay other Americans (not hapless immigrants) what they're worth to get the jobs done, the gap between rich and poor closes a bit -- we don't exploit immigrants and they don't drive down wages, and things are generally a whole lot better in the USA?

mibrooks27 Author Profile Page:

At least Rudd cares about his country and the fate of the Australian people. We, on the other hand, are still on the free trade train ride to h*ll. The author of this article, and a lot of readers, evidently are ignorant of the history of Smoot-Hawley. It was passed after GDP had shrunk by nearly 50% and unemployment had grown to slightly over 30%. Under Smoot, the GDP grew at least 3.5% annually, from $71 billion to $126 billion, it cut unemployment from 30% to 12%. In fact, contrary to the current popular blather about avoiding "protectionism", when we embarked upon re-armament, both for Lend-Lease and to modernize our military 1937, we dropped enforcement of Smoot-Hawley and immediately sunk into a mini-depression. Unemployment climbed to 18% and GDP grow froze. If our leaders had the brains of squirrel, they would pay attention to history and end this free trade madness as rapidly as possible, taxing the living snot out of companies that outsource jobs, enacting punitive taxes and fees on goods and services (like a $10 per U.S. service call on calls handled by offshore call centers, a 100% tariff on "U.S." computers and electronics assembled in China or India, and an immediate end to every sort of guest worker visa). Smoot-Hawley's lesson is that the effect would be an immediate drop in unemployment and the consequential uptick in consumer confidence and spending would end this recession-depression very quickly.

Bemused1 Author Profile Page:

"calling for continued open markets in the USA" WE in NZ and Australia must have missed that news, but I am glad to hear you have finally opened your markets in agricultural goods.

henryallwells Author Profile Page:

I think it is fair for any country government to block some asset takeover by the others, it is national interest, not a commercial reason, it happened in US too, like IBM refused takeover by Lenovo, and the other oil company back to 2003. Kevin Rudd did excellent job for the Australian, some idea may not be accepted by US, but you just could not comment on he no brain.

Aprogressiveindependent Author Profile Page:

As I recall, a year or two ago a large Chinese company was prevented from buying a company in the United States. The worst forms of protectionism in any country though are to erect trade barriers, such as tariffs, quotas or legislative requirements
to buy from one's own country in government spending programs.

An article in "The Post" several days ago reported seventeen of G-20 nations had enacted protectionism of some sort, including China and the United States. Politicans, whether in Australia, the United States or many other countries, preaching one thing to other countries, while violating the same sermon at home are quite typical.

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