The news is that Northrop Grumman Corp. and partnering European Aeronautic Defense and Space Co.(EADS) have dropped their bid for a U.S. military aircraft contract is bad news. Boeing now remains the sole bidder for the $40bn contract after Northrop et al. dropped out, claiming that the contract specification was skewed to suit Boeing’s product. Ignoring the technicalities of the contract, which we don’t have the expertise to comment on, the fundamental point is the importance of a competitive tendering process for government procurement. The Pentagon, like any other government department, must do its absolute utmost to ensure that competitors can challenge for its lucrative contracts -- wherever they are based.
“Green jobs” are being hotly contested as a viable form of job creation. Ultimately, we have to question whether subsidies, tariffs and taxes are an effective way of promoting growth? It is more likely that they will stifle growth and innovation outside of their immediate focus. Politicians’ hobby horses should not be the guiding principles for driving an economy.
Brazil has published a list of 102 products that it intends to impose import tariffs upon- to the tune of $591 million- in retaliation to the egregious U.S cotton farm subsidies as per a ruling in a long-running dispute that the World Trade Organisation delivered a verdict on in August 2009.
Just days after it emerged that China was the victim of more discriminatory trade restrictions than anyone else in the 2nd quarter of 2009, Washington has added insult to injury by imposing tariffs of up to 12.97 percent on China-made seamless steel tubes.
The move, branded by Beijing as an “abuse of trade relief measures,” is certain to rile Chinese manufacturers who are struggling to cope with a fall in demand for exports. This is just the latest in a string of tit for tat trade restrictions which have included everything from tyres, pipes, and ribbon gift wrapping, to poultry!
The question of foreign ownership of firms is revisited in today’s Financial Times. The recent takeover of Cadbury ignited nationalistic sentiments among those who incorrectly view domestic ownership as being of fundamental importance. In today’s globalised economy, the notion of defining ownership by nationality is inappropriate and outdated. Ultimately a company needs to be profitable to ensure stability. Political meddling, such as imposing draconian rules of ownership, invariably reduces investment and mitigates potential profits, harming a company’s long term future.