The yen and Japanese subsidy myths
If the Monday Commentary article by J.T. Young were to be believed (Japan’s subtle subsidy), the Japanese government would be guilty of more than a “subtle subsidy.” It would be in wholesale violation of international trade agreements going back years.
Mr. Young, through a mixture of lopsided economics and anecdotes, claims that Japan manipulates the yen to such an extent that it amounts to a 25 percent subsidy on its exports. In fact, this argument is one frequently advanced by defenders of the Detroit Three automakers to explain their current market and financial difficulties. This comes as little surprise to those of us who know Mr. Young in his day job with Ford Motor Co. in Washington, which his byline neglects to mention. Truth be told, this is the “subtle” case developed here.
Despite his assertions, two U.S. government studies, including one released just last month by the Treasury Department, concluded the Japanese government is in fact not manipulating its currency. This makes sense: Despite the selective use of numbers to suggest otherwise, the immense size of the yen-dollar currency market underscores the exceedingly slim influence that the government of Japan can ever hope to have on exchange rates.
In fact, approximately $230 billion worth of yen-dollar currency transactions take place each day, which amounts to $80 trillion worth in currency trades every year.
In 2004, total Japanese government purchases of dollars and sales of yen amounted to only 0.17 percent of all yen-dollar transactions. The government has not intervened since March of that year.
Mr. Young also claims that the Japanese government is now verbally intervening in currency markets. The government could not successfully talk investors into a weak yen if it cannot spend its way there itself. Simply stated, the Japanese yen is weak because U.S. interest rates are higher and our economy is stronger. Currency traders and investors respond first and foremost to these macroeconomic indicators. Japanese companies cannot be “subsidized” by an exchange rate their government cannot control.
The U.S. auto industry is undergoing a new and potentially far-reaching transition. Of that there is no question. Neither is it debatable that this transition will be difficult and painful for some. The issues involved should be addressed thoughtfully and with considerable empathy. Accusations hurled against easy and convenient targets are unhelpful because they mask rather than illuminate possible solutions to real problems, including those involving our nation’s health care and pension systems.
TIMOTHY C. MACCARTHY
President and CEO
Association of International Automobile Manufacturers
Alito on Roe
David Limbaugh suggests that although Supreme Court nominee Samuel Alito believes that Roe v. Wade was wrongly decided, Judge Alito might also believe that “its presence in our jurisprudence for 20 more years weighs heavily against overturning it in 2005” (“The Alito memos,” Commentary, Thursday). Mr. Limbaughpoints out that justices “sometimes believe that longstanding Supreme Court decisions, even if erroneous when entered, should rarely be overturned,” a practice known as “stare decisis.”
“Stare decisis” is a doctrine under which the Supreme Court adheres to an earlier decision in deciding a new case. Although it is not unknown for the court to overturn one of its earlier decisions, such action is an exception to the rule. This practice is true even when the precedent is erroneous. The reasoning is that predictability in the law is desirable.
But should not the Constitution trump predictability? Why should they be bound by it if their understanding of the Constitution is contrary to an earlier decision?
Under such circumstances, why should stare decisis be a consideration? If the Constitution is truly “the supreme law of the land,” one would think that stare decisis loses its footing. And what about the oath each justice takes to uphold the Constitution? There is no stare decisis exception.
During Judge Alito’s confirmation hearings, the liberals will make much of predictability and Roe. In this connection, it is noteworthy that in 1954 in Brown v. Board of Education, the court overturned its 1896 separate-but-equal decision in Plessy v. Ferguson. Even though more than 50 years had elapsed, the Constitution trumped predictability. Was the Brown decision enigmatic, or did the court get it right? It will be interesting to hear Judge Alito’s take on stare decisis.
Stephen Harper, for the record
Patrick Basham of the Cato Institute calls me “pro-free trade, pro-Iraq war, anti-Kyoto, and socially conservative” (“Gift from Canada?” Commentary, Dec. 2). While I certainly consider myself to be a friend of the United States, I am afraid this greatly oversimplifies my positions.
For the record: While, unlike the current Liberal government, I have always supported free trade, there is a deep concern in Canada about the commitment of the current U.S. administration and Congress to free trade. The United States is withholding some $5 billion in duties held from Canadian softwood lumber producers, despite the fact that a NAFTA panel has ruled that these duties are illegal.
In a recent speech, I stated that Canada must determine “the willingness of the United States to strengthen the dispute resolution mechanism and to subordinate domestic political pressures to a shared system of rules” and that “if this is not a direction in which the United States wishes to go, then Canada will have to make other long-term choices in its economic infrastructure,” including expanded trade relationships with Asian countries such as India, Japan, and China.
On Iraq, while I support the removal of Saddam Hussein and applaud the efforts to establish democracy and freedom in Iraq, I would not commit Canadian troops to that country. I must admit great disappointment at the failure to substantiate pre-war intelligence information regarding Iraq’s possession of weapons of mass destruction.
While I think that the Kyoto Treaty is deeply flawed, I support developing a plan, in coordination with the United States and other countries, to reduce greenhouse gas emissions by developing new technologies and energy conservation.
And while I have promised a free vote in Canada’s parliament to reconsider the recent change of law to allow same-sex marriages in Canada, and will vote myself for a return to the traditional definition of marriage, I have said any changes must protect the existing status of same-sex couples who have been legally married. As well, a new Conservative government will not initiate or support any effort to pass legislation restricting abortion in Canada.
Despite my differences on many issues with some American conservative politicians, I look forward to a cooperative, constructive relationship with the United States as our principal trading partner and ally under a new Conservative government.
HON. STEPHEN HARPER
House of Commons
Europe’s unnoticed human-rights problem
The European Union’s threat to suspend the voting rights of members who reportedly hosted CIA prisons, such as Poland, is ironic (“CIA prisons claim discomfits Warsaw,” World, Wednesday).
Even after their admission, the EU has treated the countries of Central and Eastern Europe as stepchildren, withholding the full benefits enjoyed by Western European EU members. Is threatening Poland for cooperating with the United States a genuine expression of concern with human rights abuses, or just another way of discriminating against new members?
Prison camps and transfer flights are on the front pages today. The Council of Europe, the EU’s human-rights arm, nonetheless should also address long festering and unresolved human rights problems in its backyard.
For instance, ethnic and religious minorities in the Serbian province of Vojvodina have for years been harassed and physically assaulted and their cemeteries have been desecrated. All the while, the Serbian government has turned a blind eye. Romania, an EU candidate country, has failed to restore thousands of church properties confiscated under Communism and rejects its Hungarian minority’s autonomy proposals for local self-governance and the protection of that minority’s unique culture and ethnic identity.
These are some of the practices not appearing on the front pages but which the EU should vigorously investigate and forcefully speak up about. They undermine Western values and the very pillars of democracy in Europe.
FRANK KOSZORUS JR.
American Hungarian Federation
of Metropolitan Washington, DC