Tag: fair trade

The Growing U.S. Trade Surplus in Services: Part Two

President Trump and others who are mistakenly troubled by trade deficits with specific countries should at least get the facts straight. To fret about trade deficits in goods alone (ignoring services) is hopelessly old-fashioned in a world where the most exciting business and investment opportunities are typically in the service industries. U.S. businesses are famously outstanding in software and communications services, health and education services, food and lodging services, legal, financial, accounting and marketing services, and so on. Hollywood, Wall Street, Madison Avenue, Las Vegas and D.C.’s K-Street lawyers have always been known for their services, not “making stuff.”

The table shows a rapidly growing U.S. trade surplus in services with many important economies and regions. The U.S. services surplus tripled from 2003 to 2017 with Canada and was 7-times larger for the EU, 12-times larger for South Korea, 25-times larger for China. Rising trade surpluses in services have become large enough to more than offset the trade deficit in goods with some major trading partners – notably Canada. For all countries combined, of course, the surplus in services is not yet large enough to offset the familiar cyclical uptick in the trade deficit in goods (most imported goods are industrial components and materials). But it does not take much imagination or statistical expertise to envision an interesting trend in that direction.

Trade Surpluses in Services, in millions

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Citizens! Do You Know the Source of Your Honey?

Some disturbing news indeed reached my inbox today (HT: David Boaz). Apparently honey is entering the United States under assumed identities. Chinese honey, once ubiquitous, was largely shut out of the American market through anti-dumping measures. So, this article from NPR.org alleges, it started to be sold through a third country (perhaps Indonesia, Thailand, or Malaysia) and was falsely labelled to evade the duties. (Apparently we know this because the honey can be tested for peculiar types of pollen.) The U.S. government wasn’t having any of that of course, and so they held up suspicious shipments through regulations, inspections, and documentary requirements.  So now the Chinese honey is allegedly being sold through India.

The domestic honey industry is now starting to worry that all of this nefarious, subversive honey-related activity will suppress the market for all types of honey, including their own, and are starting a fair trade-esque system called True Source Honey, which will trace the honey to a proper, ‘merican source. None of that Chinese muck.

Eric Wenger is president of True Source Honey. Soon, he’s going to Vietnam to help with the first audit of a Vietnamese honey exporter.

“The question we want to answer is: Does that exporter only purchase honey from beekeepers in that country?” he says.

The exporter will give the True Source auditor a list of the beekeepers from whom it buys honey. “Then the auditor will randomly select a number of those beekeepers, go out to that beekeeper’s apiary, and evaluate the capacity of that beekeeper to produce the volume that that exporter claimed was purchased and shipped,” says Wenger.

If everything checks out, that exporter is certified. But even after that, True Source will take samples from every shipment of honey and send those samples to a lab in Germany to see if the pollen matches the flowers that are actually blooming in Vietnam.

True Source wants to expand this system globally. One exporter in India is already certified.

Jill Clark, from Dutch Gold Honey, says these sorts of audited, verified supply chains are getting more common throughout the food business. In some cases, governments are requiring it.

“With all the food safety and food security issues, knowing where your food comes from right now is incredibly important,” she says.

Shouldn’t consumers be the ones to decide that? Removing the anti-dumping duties and discriminatory regulations will reduce the incentive for Chinese honey to be labelled falsely, and then we can decide for ourselves what is “incredibly important.” Or maybe we don’t care, and True Source will be a massive flop.

On a positive note, there are an encouraging number of libertarian comments to the article.