Common Cents

Port Proceedings

Ralph Murphy

(11/17) The annualized growth measure for the nation’s economy or Gross Domestic Product advanced about 2% last month denoting a drop in exports but an even higher import one for a decrease of .8% to total regrade. The capital account that measures monetary flows tied to domestic production and foreign direct investment was however in balance. That seemed to show bank interests near trade deals could still retain domestic funds or draw the foreign assets back. What is of interest and real concern to current post Dodd Frank legislative repeal is uniformity to laws now victim of policy wins or losses that don’t reflect a consistent program standard but rather vested interests that merely had control sway at the points of decision and not policy consistency associated with advancing a system.

What is of real interest or alternate concern includes trade policies that have arisen projecting almost underworld black market programs for conventional, not even vice, programs that reflect domestic demand but are thwarted by formal law restrictions. They don’t reflect consumer demand. A case in point here to the United States and relevant to over 130 nations which also maintain the policy is the use of special economic zones or more specifically free or foreign trade zones. They involve areas geographically located within a sovereign nation but can write their own trade policies. These include warehousing, duty requirements as delays, deferrals or exemptions, inventory storage, tax exemptions, manufacturing, or quotas linked to import or export programs.

There’s an FTZ board run by the Commerce and Treasury departments but the 1934 Foreign Trade zones Act that established the program was so liberal in trade allowance the board role seems limited to almost non interference. It had followed and circumvented an era of high tariff restrictions mandated by Congressional legislation. The U.S. Customs and Border Protection Service is involved in regulating the access routes or departure points to the domestic or export markets, but not the internal working of the FTZ. That regulatory regimen was also tied to a National Association of Foreign Trade Zones that seemed almost a general discussion network when the FTZ groups held power.

Legislation in the 1950s allowed production to proceed on approved sites as well, subsequent law of the 1980 s permitted recombination of goods to be packaged and sold domestically in the domestic or export markets. It was important in avoiding fees or duties levied by the BCPS when a good fit the description of a tariff or tax sanctioned import or export. Chartered companies could also produce off the FTZ control area. A modification as addition or deletion and rebranding or even bundling it with other goods or services was also often enough to avoid the charges.

Overseas the issues were even more important to domestic policy as even the controlling mechanisms of customs unions that could and did dictate most any aspect of trade policy could be avoided to an extent by the domestic FTZs. Germany’s Bremerhaven port was a noted FTZ area as was Hamburg for the heavier industrial exports the nation’s known for as cars or heavy equipment couldn’t easily be airlifted. Another awkward phenomenon that may be linked to over restricted markets seemed to include the use of foreign military bases to avoid the often oppressive externally mandated trade policies.

It wasn’t just a vice link to those areas but did seem to include conventional goods or services that wouldn’t have been attractive in that venue if the normal free flow of goods or services were provided to consumer or producer receipts. Foreign military base use for that purpose really is a perversion of the stated aid goal. The bases themselves aren’t so much an anachronism to current defense needs but more a novelty as when a uniformed foreign military group was historically operative out of country it would be an act of war or o thwart a very clear overt threat to colonial or allied interest the standing hypothetical one doesn’t neutralize.

Locals use covert tactics and intelligence can best counter them if that the case. It’s hard to relate to here but foreign soldiers based abroad without a clear and present danger to address do hurt trade and culture ties if not perceived as needed. Having written that there is the need to protect domestic interests out of country, but internally it is usually an intelligence role. Externally it’s more likely in commercial shipping or air corridors with an emphasis on perception the hostility can be quickly countered. That defense need seems best suited by a constantly moving and patrolling Naval Force than an isolated stationary one as the alternate service groups provide. The fire power and mobility make them ideally suited for that type deployment. They’re of marginal land use but a buildup that requires ground forces can quickly be deployed from host domestic bases and not the standing foreign ones that honestly don’t counter the real erosive covert threats or even attacks.

The combined services wouldn’t need the foreign sites, sovereign possessions like Guam could be enough to harbor them. The issue has proven so volatile and costly it has even surfaced recently in an executive near offer to buy Greenland where Thule Air Force Base provides over $100 million domestic program service linked to its deep water port and airfield as well as civilian use and access. The Dane Prime Minister had to address the matter and claimed the nominal possession " not for sale".

The FTZ issue it should be noted was largely eclipsed by the Dodd Frank 2012 legislation that consolidated fund control and linked corporate ownership and dispersal programs to very few New York bankers and other financiers. They could then arbitrarily write their own trade policies and make them uniform statute. FTZs that controlled over 30 % the foreign trade markets linked especially to non legislated trade barriers were just part of the total internal accords few could breach. That era passed last year with the Dodd Frank repeal and has many concerned at the new environment and whether trade interests will prove a return to parochial piecemeal bargaining or reflect a uniform standard.

All that would be needed is a clear definition of tax receipt needs and program objectives and a standard federal tax across all sectors variable per need but to include imported goods treated as consumer valued at prices determined by the markets. It would preclude the necessity for any other tax including arbitrary personal income ones some earners don’t even pay. It’s a guess but I doubt the services provided to an $18 trillion dollar economy would be 5%. Other trade barriers as quotas or bans could be determined by policy accord as cost benefit of the goods themselves versus possible cash outflow. It seems a good opportunity to ban government sales programs linked to any other financing intake as they don’t end or necessarily reflect public need or interest if they can’t be reversed to changes in circumstance. FTZs at home and abroad would no longer be needed in that capacity as conventional supplies and consumer demand not impeded by statute would provide more optimal output of approved goods or services.