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How much insurance would Apple require to cover an eventual nationalization and forced shutdown of all of its plants in China? (Purely as an example) Without a
by rtpg 10y ago
How much insurance would Apple require to cover an eventual nationalization and forced shutdown of all of its plants in China? (Purely as an example)
Without a body that can invoke broad sanctions, countries can play chicken with each other. Regimes can simply decide to seize company assets, and hope the offending parties don't cause enough of a real ruckus.
Of course this lowers investor confidence long-term. But governments that do that are rarely interested in this. They're more interested in lining their own pockets with personal wealth.
These sort of trade frameworks build a mutually-assured-destruction setup, so that any BS can get swiftly acted upon by a "neutral" party. And at the end of the day, it allows for stronger rule of law, which is better for most parties. The ones that end up the worst off are the kleptocrats.
Airliners can buy insurance for plane crashes. But most of them would rather planes just not crash.
- riffraff 10y agoAnd yet there were plenty of plants in China before it joined the WTO, right? The uncertainty just gets factored into business. Sure, ISDS can help a country build more trust, and lower the cost of foreign investments, but it's not a panacea. Plus, countries would still play chicken with each other. If China decides to seize Apple's plants, what should the US do, declare war? Should France and EU terminate all foreign deals with Egypt due to it not wanting to pay for the Veolia ISDS decision?
- rtpg 10y agobecause you have the WTO, the US can declare retaliatory tariffs within a generally accepted framework. There's less debate and uncertainty about the legitimacy of the retaliation, and its better understood than the advanced kremlinology required to decipher some other things. Not many things are panacea, but things like the WTO have been pretty useful at avoiding trade wars IMO.
- vacri 10y agoApple doesn't need that insurance (not that anyone could cover it anyway). They have $200B in liquid funds, which they can use to set up shop elsewhere. > Regimes can simply decide to seize company assets And they can ignore the provisions in a treaty they sign, too. If a country is willing to start seizing assets and taking the usual penalties in business for doing so, the TPP isn't going to mean much. Treaties are only as powerful as their ability to be enforced (whether that's militarily, politically, or economically). Have a look at the state of the 19th C treaties between the USA and various Indian nations for a crystal-clear example of this.