Subsides Distort the Free Market World Wide

Free trade is only a myth with the Obama administration. What is important is building a voter base in this country by subsidizing organization that can bring the most voters into the fold, i.e. General Motors, the auto industry, energy drug and farming to mention just a few. And by doing this they tilt the market in favor of these industries and erect walls to protect them from outside influence.

Socialism doesn't work and never has were ever it has been tried. As a result, this is what's happening in the markets today. The government picking winners which insure losers. Also the entire system of markets begins to fail, and consequentially, the entire industrial system fails.

Is this the agenda of the progressive socialist left Democrats in America? A "fundamentally" changed America? You decide this November. Which ever you chose, free markets and individual freedom or democratic socialism, be prepared to live with the results.

How to Stop the Global Subsidies Race
Source: Scott Lincicome,"Countervailing Calamity How to Stop the Global Subsidies Race," Cato Institute, October 9, 2012.

October 16, 2012
In the wake of the financial crisis, governments around the world sought to subsidize domestic industries to prevent the loss of jobs and wealth. These policies encouraged copycat subsidization, which spawned an increase in litigation at the World Trade Organization (WTO) and led to the frequent imposition of protectionist duties via national countervailing duty (CVD) laws, says Scott Lincicome, an international trade attorney with White & Case, LLP.

There are several prescriptions that countries may take to counteract foreign subsidies called antisubsidies.

•Antisubsidies are method of offsetting foreign subsidies with subsidies of our own.
•These usually take the form of import duties on the subsidized product.
•These antisubsidy measures are adjudicated on the national level (through CVDs) or multilateral level (through WTO dispute settlements).
•CVD case initiations and U.S. participation in them have doubled between 2004-2007 and 2008-2011.

The Department of Commerce's current policy allows the United States to use CVDs and antidumping duties on imports from countries that are considered non-market economies (NME). Essentially directed at China, this allows for the United States to impose harsh tariffs on Chinese goods, which exposes the United States to increasing amounts of litigation.

The U.S. trade policy is a contradiction, with a massive amounts of subsidies being poured into domestic industries while a large amount of antisubsidy measures are pursued. Several sources of evidence have shown that U.S. programs have damaged the economy and have distorted the market, which led to a misallocation of investment capital. On top of that, Washington's pursuit of antisubsidies places a burden on average consumers who have to pay higher prices for good.

Instead of pursuing policies that inhibit free trade, global antisubsidy rules and CVD laws need to be reformed:

•Reform or eliminate U.S. subsidy programs.
•Improve subsidy-related transparency.
•End the CVD/NME policy.
•Require transparent consultations between the parties in a CVD petition.
•Utilize a WTO-consistent "public body" standard.
•Tighten standards for specificity on what a subsidy is.