Brake still on un­til Bush goes

Finweek English Edition - - Property Compass - HOWARD PREECE

THE IN­COM­ING OBAMA ad­min­is­tra­tion in the United States could find it­self caught up in a big early bat­tle at the World Trade Or­gan­i­sa­tion. At is­sue will be mas­sive fi­nan­cial as­sis­tance – “bail-out” in cur­rent jar­gon – for the deeply trou­bled US ve­hi­cle man­u­fac­tur­ing in­dus­try. It’s even pos­si­ble that by the time this re­port is printed, the Democrats will have got Congress to vote the in­dus­try large in­terim aid.

But that will in any case only be a sideshow, be­cause un­til Barack Obama for­mally be­comes US pres­i­dent on 20 Jan­uary next year, Ge­orge W Bush will re­main in the White House still hold­ing veto pow­ers. There­fore, the cri­sis fac­ing the US ve­hi­cle in­dus­try can’t get any long-term re­lief from the US gov­ern­ment – if any such re­lief, even par­tial, is ul­ti­mately pos­si­ble – from ac­tions over just a few months.

Fur­ther, the Repub­li­cans are op­posed (with a few im­por­tant ex­cep­tions) to an at­tempted ma­jor gov­ern­ment res­cue of the ve­hi­cle in­dus­try. They’ve called the car mak­ers “di­nosaurs” and say lead com­pany Gen­eral Motors should rather seek pro­tec­tion un­der US bank­ruptcy laws and then look to prof­itable re­con­struc­tion.

Cru­cially, that would mean a dras­tic re­duc­tion in the crip­pling health and pen­sions costs that GM in­curs for tens of thou­sands of past and cur­rent work­ers. But huge Fed­eral fi­nan­cial back­ing for the US ve­hi­cle in­dus­try will surely at­tract sharp crit­i­cism from the other ve­hi­clepro­duc­ing na­tions. That could see the whole mat­ter be­ing re­ferred to the WTO for all kinds of rul­ings.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.