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U.S. export business lost today because of the VAT
For those of you who say there is no trade impact resulting from foreign Value Added Taxes, please read this.
I Squared R Element Company is in Akron, New York. It makes industrial heating elements which are used for many processes to make other things, including glass and computer chips. The company was the low bidder on a contract to export to China.
However, the company lost the bid. Why?
I squared R was told it did not include, in its bid, China's 10% customs duty or the 17% value added tax(VAT) that must be paid at the border.
All our goods pay a 17% VAT at the Chinese border. And the uninformed say we are a high cost producer. Chinese exporters also get a 17% VAT rebate, i.e. they get paid to export.
What are potential solutions?
If our trade negotiators had negotiated agreements that allowed access to the lucrative U.S. market only if the other country did not apply its VAT tariff (to our exports to them) or rebate their VAT (to their company exports to us), then it would be fine.
If the U.S. had its own VAT of, for example 12%, which also exempted families making $100,000 or less, then I Squared R Element Co. would have a 12% tax rebate upon export to get that much closer to the winning bid.
But we don't. There was a 27% charge at the Chinese border for U.S. goods. Lost sale.
perhaps we also need to get out of the world trade organization since united states goods are treated unfairly.
It seems like the cards are stacked against us when it comes to China and while the US rants loudly about it, the Chinese government does what is in the best interests of THEIR country and benefits THEIR industries over foreigners trying to import.
It would be nice if the US thought a little more highly of itself and put it's own products first but they don't..free trade, unfair tariffs and anti protectionism is all you ever read about.
It seems like the cards are stacked against us when it comes to China and while the US rants loudly about it, the Chinese government does what is in the best interests of THEIR country and benefits THEIR industries over foreigners trying to import.
It would be nice if the US thought a little more highly of itself and put it's own products first but they don't..free trade, unfair tariffs and anti protectionism is all you ever read about.
My friend U.S. investors and corporations will never bring back jobs to the American market. They are making too much profit to ever consider doing so. Our government is in the hands of those self interested bunch of thieves, and any government intervention on behalf of the people is only a dream. The days of buying American are over. People should realize that the wealthy few care not for the working class here in the states. It's all about money and that’s all. Many members on this board will talk economies and politics about why globalization is important but it all a rouse.
Yes indeed stac2007. With a growing middle class in India and China, there is the opportunity to grow the next "consumer class". We in the US have too much debt so they need fresh meat.
Globalization has reworked the global supply chain in an astonishingly brief period of time. As a result, the arbitrage of currencies (foreign exchange a.k.a. forex), wages, governance (less is more profitable) and environmental regulations (zero is the most profitable) have all placed advanced post-industrial economies like the U.S. at great structural disadvantages.
The U.S. claims to be competitive but much of this competitiveness is highly selective and thus illusory. Everything in the U.S.--labor, goods, buildings and taxes--is high-cost, overregulated (except for finance, banking and governance) and vulnerable to unpredictable lawsuits and officially sanctioned looting.
Last edited by floridasandy; 06-07-2009 at 04:18 PM..
The orice of living in a free society where people are alowed to choose. VAT and other such m,easure do not allow choice which has been shown to limit those countries as more than it limits the US. Less choice only hurts consumers because of higher prices like a monopoly does. It also stops innovation.
i am not for any more taxation until the money collected is spent more responsibly. what i am saying is that the WTO allows countries using a VAT system to promote an unlevel playing field for global trade. The VAT acts as a de facto subsidy for exports entering the American market and as a tariff against imported American goods.
The U.S. claims to be competitive but much of this competitiveness is highly selective and thus illusory. Everything in the U.S.--labor, goods, buildings and taxes--is high-cost, overregulated (except for finance, banking and governance) and vulnerable to unpredictable lawsuits and officially sanctioned looting.
The extremely high priced real estate, preferential zoning, and high taxes prevent all but the most hardy from even trying to innovate. The incompetent and corrupt legal system that refuses to uphold the Constitution finishes off the businesses who achieve success ethically. When the US was a more free country we led the way for the world. Government growth has sapped the productivity and until we can reverse government growth all is lost.
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