The New Republic

January 20, 1992

HEADLINE: Bush protection: the president and free trade.

BYLINE: Bovard, James

BODY:
Inviting Lee Iacocca and a few other protectionist CEOS to accompany
President Bush on his two-week Pacific tour struck many as an odd, panicky ploy
by a free trade president to bolster his domestic ratings. In fact, it should
come as no surprise. George Bush has been closing off American markets almost
since his first week in office. In fact, by ceding to the demands of one
domestic lobby after another, he may be the most protectionist president since
Herbert Hoover.

More than 40 percent of the United States's 8,753 official tariff categories
are restricted by import quotas. And Bush isn't doing much to end it. As early
as July 1989, the president extended steel import quotas for two and a half
years, labeling the quota extension a "Steel Trade Liberalization Program."
These quotas were expanded to include railroad axles and oil pipes, hurting the
U.S. oil drilling and railroad industries who need high-quality foreign steel
products to compete. High-quality Japanese steel was particularly squeezed, with
dire consequences for U.S. industry. A 1991 U.S. International Trade Commission
survey of steel buyers found that 60 percent of U.S. machinery producers rated
Japanese steel quality as excellent, while only 8 percent rated U.S. steel as
excellent.

The U.S. dumping law is the administration's favorite protectionist tool,
and Commerce Department officials have urged American companies to bring
antidumping suits. Deputy Assistant Secretary of Commerce Marjorie Chorlins
thanked the American Wire Producers Association in early 1991 for their frequent
use of the law, declaring: "The partnership which the AWPA and Commerce have
enjoyed over the past ten years has been active and rewarding." Commerce
officials also encouraged the Big Three to file against Japanese minivan
producers-a suit that could cost consumers billions of dollars.


The Bush administration has also taken some highly protectionist positions
in the current GATT round. Though U.S. restrictions on shipping are costing
American consumers up to $ 10 billion a year, the administration has refused to
negotiate on opening the U.S. coastal trade to foreign shipping. Commerce's idea
of "trade liberalization" is to stop protecting a product once it's no longer
produced in the U.S. In May 1990, Commerce Deputy Assistant Secretary Auggie
Tantillo told some Carolina textile producers, We would inject some market
liberalizing features into the new GATT textile arrangement such as ... dropping
categories that no longer warrant protection, i.e., those that are no longer
made in this country."

There's more where that came from. Take peanuts. A drought in Georgia during
the summer of 1990 caused a severe shortfall in the U.S. peanut harvest, a
doubling of peanut prices, and layoffs at some food manufacturers. Bush had the
authority to relax the U.S. peanut import quota of two peanuts per U.S. citizen
a year, but delayed any opening of the borders for nine months-until just before
the next U.S. peanut crop was to be harvested. And, pandering to Southern
congressmen, Bush imposed enough restrictions on his trade liberalization
gesture to ensure that only a miniscule amount of additional peanuts could be
imported.


Last May, Rufus Yerxa, a high-ranking USTR official, condemned Japan because
the Japanese refused to lift their barriers against dairy imports. Yet the U.S.
itself restricts dairy imports to the equivalent of only one teaspoon of foreign
ice cream and only one pound of foreign cheese for each American per year. A
month later, Bush extended the semiconductor arrangement with Japan,
perpetuating trade restrictions on a crucial product for the future of the
American economy. In August, Oki and Hitachi announced that the new
semiconductor arrangement could force them to raise their prices in the U.S. by
up to 15 percent, thus putting the American electronics industry (which relies
heavily on imported chips) at a disadvantage to the Japanese electronics
industry (which can buy chips at a lower price).

Since last July, the Bush administration has imposed new textile import
quotas on Nigeria, Indonesia, Egypt, the Philippines, Burma, Costa Rica, Panama,
and Pakistan. A month later, Ron Sorini, a Bush USTR textile official,
arm-twisted Hong Kong and Korea into slashing their textile exports to the
United States by the equivalent of more than 30 million shirts as a
"contribution to Operation Desert Storm." On December 27, Bush extended import
quotas on machine tools from Japan and Taiwan.

Of course, Japan is not free of blame regarding trade. The Japanese have
sometimes been as creative with their trade barriers as they have with their


manufacturing processes. But Japanese trade barriers are no reason to erect our
own, and to subject American and Japanese consumers to a double protectionist
whammy from both sides of. the Pacific. If President Bush really wants to
persuade the Japanese of the joys of free trade, he should leave Iacocca behind
and take a few American consumers with him instead. It might give the Japanese
people a few dangerously liberating ideas. JAMES BOVARD is the author of The
Fair Trade Fraud (St. Martin's, 1991).