Treasury Releases Semi-Annual Report to Congress on International Economic and Exchange Rate Policies

WASHINGTON – The U.S. Department of the Treasury today released the Semi-Annual Report to Congress on International Economic and Exchange Rate Policies that is required under Sections 3004 and 3005 of the Omnibus Trade and Competitiveness Act of 1988.  The Report covers international economic and foreign exchange developments in the second half of 2011.  Where pertinent and available, data and developments through mid-May 2012 are included.

The Report highlights that conditions in Europe continue to pose a risk to the U.S. recovery, that global growth has been hindered by insufficient demand rebalancing, and that greater exchange rate flexibility is needed – most notably in China.  Based on the appreciation of the RMB against the dollar since June 2010, the decline in China's current account surplus, and China's commitments in the G-20 and the U.S.-China Strategic & Economic Dialogue to move more rapidly to a more market-determined exchange rate system, Treasury has concluded that the standards identified in Section 3004 of the Act during the period covered in this Report have not been met with respect to China.  Nonetheless, the available evidence suggest the RMB remains significantly undervalued, and we believe further appreciation of the RMB against the dollar and other major currencies is warranted. Treasury will continue to closely monitor the pace of RMB appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth.

The Report, along with past Reports, can be found at http://www.treasury.gov/resource-center/international/exchange-rate-policies/Pages/index.aspx.

Secretary Geithner to Travel to China and Japan Next Week

Trip to Highlight Issues Including State of the Global Economy, Stronger Growth and Increased Pressure on Iran

 

WASHINGTON – The U.S. Department of the Treasury today announced that Secretary Tim Geithner will travel to Beijing, China and Tokyo, Japan January 10-12, 2012, for meetings with senior government officials in both countries to discuss the state of the global economy, policies to strengthen global growth and other economic issues of mutual importance. Secretary Geithner will also discuss our continued coordination with international partners in the region to increase pressure on the Government of Iran, including financial measures targeting the Central Bank of Iran.

 

On Tuesday, January 10, Secretary Geithner will arrive in Beijing for a meeting with Chinese Vice Premier Wang Qishan. The following day, he will meet with Premier Wen Jiabao, Vice President Xi Jinping and Executive Vice Premier Li Keqiang to discuss measures to promote continued economic growth and level the playing field for U.S. workers and firms. The Secretary’s visit to Beijing comes ahead of Vice President Xi’s visit to Washington later this year.

 

On Thursday, January 12, the Secretary will be in Tokyo, Japan for meetings with Prime Minister Yoshihiko Noda, Finance Minister Jun Azumi and other senior government officials to confer on the U.S. and Japanese economies and cooperation on efforts to support strong, sustainable and balanced global growth.

 

Additional details will be announced in the coming days.

Department of Justice and Federal Trade Commission Meet with Chinese Ministry of Commerce on Merger Enforcement Matters

WASHINGTON – Acting Assistant Attorney General Sharis Pozen of the Department of Justice’s Antitrust Division and Federal Trade Commission (FTC) Chairman Jon Leibowitz today met with a delegation from China’s Ministry of Commerce (MOFCOM) to discuss antitrust merger enforcement.  The delegation was led by China International Trade Representative and MOFCOM Vice Minister Gao Hucheng.  MOFCOM is responsible for handling reviews of mergers and acquisitions under China’s Antimonopoly Law.

 

 This is the first high-level MOFCOM visit to the U.S. antitrust agencies since the department and the FTC signed an antitrust memorandum of understanding (MOU) with China’s three antimonopoly agencies in July 2011, to promote communication and cooperation among the antitrust enforcement agencies in both countries.

 

 The discussion topics in today’s meeting included recent antitrust enforcement and policy developments, the role of antitrust enforcement in times of economic downturn and cooperation among the three agencies on merger enforcement issues.  The three agencies developed further guidance for cooperation on investigations when one of the U.S. antitrust agencies and MOFCOM are reviewing the same merger.

 

Department and FTC officials said that the discussions with the delegation from MOFCOM were productive, and that they look forward to continuing their cooperative relationship.

Chinese Company Trying to Drive Up Prices

October 21, The Register – (International) Chinese giant halts rare earth shipments to hike prices. China's largest rare-earth producer, the state-owned Baotou Iron and Steel Group, is stopping rare earth shipments to the United States, Japan, and Europe, for a month starting October 19 in an attempt to drive up prices.

 

DailyTech reported the Baotou Group also plans to buy rare earth metals to raise demand and further increase prices. Rare earths are used in many high-tech components, such as disk drive magnets, lenses, and lasers. Lower prices for Chinese-mined rare earths caused China to gradually become the world's largest rare earth provider, controlling 95 to 97 percent of world production. The assumption behind the stoppage is China wants to increase production of goods that use rare earth metals, such as magnets. More money is made using rare earths in finished goods than in mining the minerals… (Read more)

 

Source: The Register via Homeland Security Daily Open Source Infrastructure Report, October 24 2011

“Buy American Only?” A Letter From a Concerned Citizen

By Zach Foster

This article is also featured on the Political Spectrum

Dear [friend], thank you so much for writing to me with your concerns.  I happen to share your deep concern for the fate of working class America, especially since the recession (which I justifiably call the Second Great Depression) has fallen the hardest on the backs of the working poor and the middle classes.

I'm also concerned with the fact that so many of our products come from China and other overseas producers.  Unfortunately, this is not necessarily the fault of American producers but rather that of government intervention in the economy.

What I'm about to say to you might seem a little crazy, but I urge you to bear with me.

The Myth of Protecting American Industry

Buying American products alone will do nothing to restore our economy, nor will it bring production and jobs back to the country.  Instead, what this does is actually raise prices and diminish the quality of domestic products, since producers now know that they have American buyers captive and no longer need to make the best products; they know that the law is on their side.

When I say that I'm all for free market capitalism, it means that the market needs to be truly free and unrestrained in order for consumer sovereignty to take place.  By consumer sovereignty, I refer to the old notion that "the consumer is king" or "the customer is always right", and according to this ideology, producers who want to get rich know that the only HONEST way to do this is to produce the BEST QUALITY goods at the LOWEST COST and sell them at the lowest possible price.  This is how hard-working Americans have been getting rich for centuries.

Unfortunately, there are those who have found easy ways to get rich through the evils of government intervention.  I’ll explain this momentarily.

There have been periods in American history where there were high tariffs on imported goods (and some of these taxes still exist) which were meant to improve conditions for American businesses and consumers, but instead made things worse.  The free market is all about competition, and tariffs are essentially meant to kill competition.  Not only do tariffs on imports cause many American producers to lose their incentive to produce high quality goods at low prices (because without the competition they know they have their consumers by the throat), but often times foreign countries retaliate.  Because our high taxes make it harder for them to sell their countries’ products in America, they in turn set super high tariffs to punish American producers.  Therefore, the quality of goods produced at home goes down, the prices of those low-quality goods goes up, and the quality of foreign goods which are often good quality is now super high.

Interventionism

This happened during the Great Depression, and both the Hoover and Roosevelt administrations have blood on their hands.  Both administrations, among many other anti-free market crimes, dramatically raised tariffs on foreign goods under the myth that it would boost American industry.  They also set minimum wage laws that were meant to protect incomes.  Well, guess what the tariffs DIDN’T do for our economy and job creation, and guess how foreign countries reacted to them.  Regarding the minimum wage laws, they made production more expensive and unmaintainable for producers, so instead of only having some pay cuts, they ended up having to lay off workers or just went under completely, thus laying off all workers.  Furthermore, small and medium-sized employers were no longer able to afford to hire people because they couldn’t pay X dollars per hour.  Removing the regulations and interventionist measures that strangle industry will ultimately make it less expensive to create jobs in America, and jobs will migrate back from the third world.

Because of the government stepping in to be the hero, business growth is stunted, and that stunted growth also stunted job creation, and things are more expensive for everyone.  Many big businesses will send lobbyists to the federal government because most of this is EXACTLY what they want.  They want to be able to charge higher prices for cheaply produced goods, and they want no foreign competition, especially not from foreigners who are probably making things better and selling them cheaper.  The one thing these greedy businesses DON’T see is that, while they’ll make a profit from their captive consumers in the short run, everyone gets poor in the long run and these businesses fail and end up having to be bailed out by the federal government. This is not what the free market ever intended.

For more on the evils of regulation, you can check out Frederic Bastiat’s book The Law, which talks about how government intervention and regulation empowers the two main forms of plunder: stupid greed and false philanthropy.  The producers getting lazy on the quality of their products because people can only afford to buy American falls under stupid greed.  The regulations and minimum wage laws and “job creation” bills, “consumer protection” bills, etc., fall under false philanthropy.  You can also see chapter 18 of Jeffery Tucker’s book Bourbon For Breakfast (chapter titled “How Free is the Free Market?”).  I also HIGHLY recommend chapters 1 and 2 of Kel Kelly’s book The Case For Legalizing Capitalism, which fully explain the consequences of government intervention on stateside producers as well as international trade (and this book is a lot of fun to read and easy to understand).  All three books can be downloaded in full and for free at Mises.org/books.

Continued in part 2: Bailouts, the Federal Reserve, and the Contender

Treasury Designates Ten Shipping Companies, Three Individuals Affiliated with Iran’s National Shipping Line

In Coordinated Action with the Manhattan District Attorney’s Office, Treasury Targets IRISL Front Companies and Executives in the Middle East, Asia and Europe

WASHINGTON – Continuing efforts to target the financial underpinnings of the Islamic Republic of Iran Shipping Lines (IRISL), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced the designation of 10 shipping companies and three individuals affiliated with IRISL. Responding to Iran’s continued efforts to evade sanctions and its ongoing creation and use of new front companies, subsidiaries, and affiliates to protect IRISL and to advance its proliferation activities, today’s actions targeted IRISL’s operations in the United Arab Emirates (UAE), Singapore, China and the United Kingdom (UK).

“As the private sector around the world increasingly turns its back on Iran’s national shipping line, IRISL’s efforts to evade international sanctions and increased scrutiny have grown more and more desperate,” said OFAC Director Adam Szubin. “The persistent attempts by IRISL to deceive the world, including through the front companies identified today, attest to the weakness of IRISL as it tries to maintain a semblance of legitimacy while supporting Iran’s proliferation activities.”

Pursuant to Executive Order (E.O.) 13382 – which is aimed at prohibiting transactions with, and freezing the assets of proliferators of weapons of mass destruction and their supporters, thereby isolating them from the U.S. financial and commercial systems – Treasury today designated:

•UAE-based companies Pacific Shipping, Great Ocean Shipping Services, Azores Shipping, Atlantic Intermodal, Crystal Shipping and Pearl Shipping for acting for or on behalf of IRISL affiliate Oasis Freight Agency, designated by Treasury in September 2008, and/or IRISL.

•Top IRISL managers and executives Mohammad Moghaddami Fard and Ahmad Tafazoli. Fard is based in the UAE and is a director of IRISL affiliates and designated companies Oasis Freight Agency and Iran o Hind Shipping. Tafazoli is the managing director of IRISL Marine Services and Engineering Company (IMSENGCO), also designated by Treasury in September 2008.

•Alireza Ghezel Ayagh, Managing Director for Asia Marine Network, an IRISL front company in Singapore designated by Treasury in September 2008. Ghezel Ayagh is also a director of Singapore-based Leading Maritime, which was also designated today.

•Sinose Maritime, the agent of both Asia Marine Network and IRISL in Singapore.

•Santex Lines, IRISL’s regional office located in China. Ahmad Tafazoli is the General Manager for Santex Lines.

•Fairway Shipping, a shipping company located in the UK controlled by Mohammad Hadi Pajand, who Treasury designated in November 2010 for being company secretary of Irinvestship Ltd and director of Lancelin Shipping Company, two previously designated entities affiliated with IRISL.

In a coordinated action, Manhattan District Attorney Cyrus R. Vance, Jr. today announced a 317-count indictment of 11 corporations and five individuals for their roles in a conspiracy involving IRISL and its affiliates to evade sanctions, in which the defendants repeatedly falsified the records of banks located in New York County to illegally access the U.S. financial system. 

Manhattan District Attorney Cyrus R. Vance, Jr., added, “Today our office is shining a spotlight on the fraudulent activities of IRISL, which has been sanctioned by the United States, the European Union, and the United Nations for its role in the proliferation of weapons of mass destruction. IRISL and its sanctioned affiliates used a web of aliases or corporate alter egos across the globe to exploit the services of financial institutions located in Manhattan.  For sanctions to be effective, they must be enforced. New York remains the number one target of terrorist organizations around the world, and today's joint action will make it more difficult for Iran, a state sponsor of terrorism. It falls to both federal and state authorities to work cooperatively in an area vital to all of our security.”

IRISL was designated by Treasury in September 2008 pursuant to E.O. 13382 for its provision of logistical services to Iran's Ministry of Defense and Armed Forces Logistics (MODAFL), the arm of the Iranian military that oversees its ballistic missile program. Since then, IRISL has been increasingly isolated from the international financial system and has in turn engaged in deceptive behavior to evade the impact of sanctions and increased scrutiny of its activities.  This behavior has included reliance on an expansive global network of front companies, falsifying shipping documents, changing the nominal ownership of vessels, and repainting and renaming ships, all to hide the affiliation of vessels with IRISL. Including today’s action, Treasury has designated 121 companies and individuals affiliated with IRISL since September 2008.

Identifying Information:

Entity:               Pacific Shipping DMCEST

Address:          206, Sharaf Building, Al Mina Road, Bur Dubai

                          Dubai, United Arab Emirates

Entity:               Great Ocean Shipping Services L.L.C.

Address:          2nd Floor, Sharaf Building, Al Mina Road, Bur Dubai,

                          Dubai, United Arab Emirates

Entity:               Azores Shipping Company LL FZE

Address:          P.O. Box 5232, Fujairah, United Arab Emirate

Entity:               Atlantic Intermodal

Location:         United Arab Emirates

Entity:               Crystal Shipping FZE

Location:         Dubai, United Arab Emirates

Entity:               Pearl Ship Management L.L.C.,

Location:         Dubai, United Arab Emirates

Individual:        Moghaddami Fard Mohammad

DOB:                July 19, 1956

Passport:         N10623175 (Iran) issued March 27, 2007; expires March 26, 2012

Individual:      Tafazoli, Ahmad

AKA:                Tafazoly, Ahmad

AKA:                Tafazzoli, Ahmad

DOB:               May 27, 1956

POB:                Bojnord, Iran

Passport:       R10748186 (Iran) issued January 22, 2007; expires January 22, 2012

Individual:      Ghezel Ayagh, Alireza

AKA:                Ghezelayagh, Alireza

DOB:               March 8, 1979

POB:                Kerman, Iran

Passport:        E12596608 (Iran)

Entity:             Sinose Maritime PTE. LTD.

Address:        200 Middle Road, #14-03/04 Prime Centre 188980, Singapore

Entity:             Santex Lines Limited

AKA:               Santex Shipping Company

AKA:               Santexlines

Address:        Suite 1501, Shanghai Zhongrong Plaza, 1088 Pudong (S)

                        Road, Shanghai  200122, China

Alt. Address:  F23A-D, Times Plaza No. 1, Taizi Road,

                        Shekou, Shenzhen  518067, China

Entity:             Leading Maritime PTE. LTD

AKA:              Leadmarine

Address:          200 Middle Road, #14-01 Prime Centre 188980, Singapore

Entity:             Fairway Shipping LTD

Address:          83 Victoria Street, London SW1H 0HW, United Kingdom