{"id":12828,"date":"2018-12-06T14:58:15","date_gmt":"2018-12-06T19:58:15","guid":{"rendered":"http:\/\/jimbovard.com\/blog\/?p=12828"},"modified":"2018-12-06T21:18:04","modified_gmt":"2018-12-07T02:18:04","slug":"g-w-h-bush-protectionist-follies-1989-1992","status":"publish","type":"post","link":"https:\/\/jimbovard.com\/blog\/2018\/12\/06\/g-w-h-bush-protectionist-follies-1989-1992\/","title":{"rendered":"G.W.H. Bush Protectionist Follies, 1989-1992"},"content":{"rendered":"

Some folks thought I was too harsh on the late George H.W. Bush in my USA Today oped<\/a> and on my Twitter comments<\/a>. So here’s some of the articles I wrote on Bush’s protectionist debacles in the early 1990s.<\/p>\n

[The following piece was reprinted in two economics college textbooks]<\/p>\n

Wall Street Journal
\nWednesday, September 6, 1989
\nThe Great Ice Cream War
\nBy James Bovard<\/p>\n

America was deluged by foreign ice cream last year: 576
\ngallons came in from New Zealand and 12 gallons from Denmark.
\nIn other words, foreigners “foisted” almost as much ice cream
\non “hapless” Americans as a large Safeway sells on a summer
\nSaturday. Obviously, a crisis was imminent.<\/p>\n

While many people relish American-made ice cream with
\ndeliberately foreign-sounding names, few people realize that
\nthe U.S. government restricts ice-cream imports to less than
\none-tenth of one percent of U.S. consumption. Jamaica, the
\nNetherlands and Belgium are the only other countries allowed
\nto sell ice cream to Americans, and with quotas so low and
\ntransportation costs high, they don’t bother to ship us any
\nice cream at all.<\/p>\n

The U.S. exports hundreds of thousands of gallons of ice
\ncream to Canada, yet Canadian ice cream is banned from the
\nU.S. Canada expressed its appreciation for this treatment
\nlast year by slapping a quota on U.S. ice-cream exports to
\nCanada. (Dairy trade was exempted from last year’s Free Trade
\nAgreement.)<\/p>\n

Across North America, armies of bureaucrats have mobilized
\nto slug this one out. Officials from the Canadian Embassy met
\nwith U.S. State Department officials to raise the ice-cream
\nissue last October. Canada filed a formal complaint with the
\nU.S. government in November. The U.S. Agriculture Department
\nconvened a task force that spent months studying ice-cream
\nquotas.<\/p>\n

On May 5 of this year, President Bush sent a letter to the
\nU.S. International Trade Commission demanding an ice-cream
\ninvestigation. The ITC has had as many as 30 people dealing
\nwith this project. The ITC made a report on Aug. 28 to the
\nU.S. Trade Representative’s Office, which is responsible for
\nforwarding it to the president. According to Claire Buchan,
\nspokeswoman for the trade rep, “The president has not made a
\ndecision on this, and there is not a deadline.” Doesn’t he
\nrealize the ice cream is melting?<\/p>\n

The U.S. ice-cream quotas date back to Dec. 31, 1970, when
\nPresident Nixon decreed that future ice-cream imports could
\nnot exceed 431,330 gallons a year. Why? That year, according
\nto Deputy Secretary of Agriculture Ann Veneman, testifying
\nthis July before the ITC, the U.S. was hit with a “flood of
\nimports.” This so-called “flood” amounted to barely 1% of
\nU.S. ice cream consumption.<\/p>\n

How did Mr. Nixon decide to limit imports to exactly
\n431,330 gallons a year? Section 22 of the Agriculture
\nAdjustment Act allows the U.S. government to protect domestic
\nprice-support programs by restricting imports to 50% of the
\nannual average imports of a representative period. Ice-cream
\nimports did not begin until 1969 — so the U.S. government
\nchose the years 1967, 1968, and 1969. This allowed the
\ngovernment to slash imports by 95% of their 1970 level and
\nthen tell foreigners that the 5% remaining was their “fair”
\nmarket share.<\/p>\n

Under the “free trade” Bush administration, the
\nAgriculture Department still has a phobia about foreign ice
\ncream. Deputy Undersecretary Veneman told the ITC, “We
\nbelieve that imports above (the current) level would render
\nor tend to render ineffective or materially interfere with
\nthe domestic dairy price support program.”<\/p>\n

The ice-cream controversy illustrates the meaninglessness
\nof some of the central terms in our trade law. In 1983, the
\nAgriculture Department concluded that imports of roughly 160
\nmillion pounds of casein, a dairy derivative, did not
\n“materially interfere with domestic dairy (price) supports,”
\neven though the casein imports had far greater impact on the
\ndairy price support program than did ice-cream imports.<\/p>\n

This July, when ITC Chairman Anne Brunsdale pushed
\nAgriculture Department official John Mengel to explain what
\nhad changed between 1983 and 1989, Mr. Mengel sputtered, “I
\nthink, Madam Chairman, that perhaps budget is a stronger
\nconsideration now.” Yet the Agriculture Department a few
\nweeks later endorsed a $900 million drought bailout to
\nfarmers who had failed to protect themselves by buying crop
\ninsurance.<\/p>\n

Given all this controversy, what was the ITC looking at?
\nApparently, it looked only at changing the distribution of
\nthe quota — allowing more countries to compete to sell the
\nsame tiny amount of ice cream to the U.S. Abolishing or
\nincreasing the quota apparently was not even seriously
\nconsidered.<\/p>\n

In this mega-investigation, the U.S. government has
\nprobably already spent more than a thousand dollars in
\nadministrative expenses for each gallon of ice cream imported
\ninto the U.S. last year. International trade disputes are
\nrapidly degenerating into a full employment program for
\ngovernment bureaucrats.<\/p>\n

Since 1987, the U.S. has been hollering for the abolition
\nof all trade-distorting agricultural subsidies. But how can
\nwe tell the Japanese to abolish their rice subsidies or the
\nEuropeans to stop dumping wheat when the U.S. is terrified
\nover a few scoops of ice cream?<\/p>\n

—<\/p>\n

************************
\nThe New York Times<\/p>\n

January 28, 1990, Sunday, Late Edition – Final<\/p>\n

HEADLINE: FORUM; No Justice in Anti-Dumping<\/strong><\/p>\n

BYLINE: By JAMES BOVARD; James Bovard, the author of ”The Farm Fiasco,” is working on a book on ”The Myth of Fair Trade.”<\/p>\n

BODY:
\nWhile American politicians lecture the world on fair trade, our dumping laws
\nare an inquisitorial nightmare for foreign companies, making a mockery of due
\nprocess and justice at every turn. In the last 17 years, Congress and the
\nCommerce Department have repeatedly expanded the definition of dumping. Between 1980 and 1986, the Commerce Department found only 6 percent of all imports it investigated not guilty of unfair trade practices.
\nDumping occurs when a company charges a lower price for a product in an
\nexport market than in its home market. But anti-dumping laws are a relic of the
\ndays of fixed exchange rates. The Commerce Department will convict a foreign
\ncompany for a price difference as small as one-half of 1 percent between its
\nAmerican and its foreign prices – yet the dollar routinely fluctuates 10 or 15
\npercent in value a year. Although Commerce Department officials treat dumping as a self-evident crime, it is often solely the result of fluctuating currency
\nexchange rates that may be totally unrelated to trade trends.<\/p>\n

The Commerce Department allows itself great latitude in how it administers
\nthe dumping law. In 1984, an Italian company was convicted of a dumping margin
\nof 1.16 percent on its exports of pads for woodwind instruments. The Commerce
\nDepartment deduced the 1.16 percent by comparing the prices of a smaller
\nwoodwind pad sold in the United States with a larger woodwind pad sold in Italy.
\nSince the smaller pad sold for a lower price than the larger pad, Commerce
\nDepartment found the Italian company guilty.<\/p>\n

Even if a company sells its products in the United States for exactly the
\nsame prices as in its home market, the Commerce Department can nail the company for dumping. How? It compares the average foreign price over a six-month period with individual American sale prices. Naturally, product prices vary over time and in different locales. If any of a company’s American prices fall below the\u00a0 average foreign price, Commerce can slap a duty on all its imports.<\/p>\n

In the 1980’s, the Commerce Department has increasingly relied on
\ncost-of-production proofs to prove that foreign companies are dumping their
\nproducts in the United States at below the alleged cost of production. But,
\nCommerce Department cost analyses are straight out of ”Alice in Wonderland.”
\nAmerican trade law requires that the Commerce Department always assume a foreign company makes an 8 percent profit. If a foreign company shows a profit of 7 percent, then the Commerce Department convicts the company for selling at a loss of 1 percent.<\/p>\n

Once a company is convicted of dumping, the Commerce Department can
\neffectively keep the company under economic house arrest for the next 15 years.
\nWhile Australian and Canadian dumping laws have sunset provisions that
\nautomatically end the protection provided by dumping duties after five years,
\nthe Commerce Department has succumbed to domestic political pressure to
\nperpetuate dumping orders long after the alleged dumping has ended.<\/p>\n

To be hit by a dumping order can easily cripple a foreign company, especially
\nsince the Commerce Department can inflate the dumping margin in an annual
\nreview. In August 1989, the Department announced that a Japanese ball-bearing
\ncompany must pay duties of 67 percent – for bearings it exported between 1974 and 1979.<\/p>\n

Commerce is judge, jury, prosecuting attorney, and executioner, as Washington
\ntrade lawyer David Palmeter told this author. The Commerce Department can demand practically an infinite amount of information – and any refusal to comply is
\ntaken as a confession of guilt, after which it imposes the highest possible
\ndumping margins. The Commerce Department collects vast amounts of confidential information from foreign businesses and has frequently allowed this information to fall into the hands of American competitors.<\/p>\n

While other nations are calling for a General Agreement on Tariffs and Trade
\nagreement to trim or gut dumping laws, the American Government is almost alone
\nin advocating making dumping laws more punitive and protectionist. Yet, outside
\nthe United States, American companies get hit by dumping penalties more than any other nation’s companies. The more oppressive our dumping laws become, the more likely that it is that foreign nations will copy our laws and clobber American exporters.<\/p>\n

*************<\/p>\n

The Wall Street Journal
\nWednesday, March 28, 1990
\nOur Taxing Tariff Code<\/strong>
\n—<\/strong>
\nLet Them Eat Lobster!<\/strong>
\nBy James Bovard<\/p>\n

In 1790, the U.S. Tariff Code consisted of a single sheet
\nof rates posted at Custom Houses; now, it occupies two hefty
\nvolumes with 8,753 different rates. While the average tariff
\nnow is only about 5%, hundreds of tariffs are still in the
\nSmoot-Hawley league — with some as high as 67%.<\/p>\n

Why the blizzard of discriminations against and among
\nproducts? A cynic might say the Tariff Code is devoted to
\nencouraging the poor to raise their standards of living:<\/p>\n

— Mink furs are duty free. With the money a mother saves
\non her mink, maybe she can afford a polyester sweater —
\nwhich carries a 34.6% tariff — for her baby.<\/p>\n

— Lobster is duty free. With the savings, struggling
\nparents may be able to afford infant food preparations, which
\ncarry a 17.2% tariff.<\/p>\n

— Orange juice’s tariff is 36%. But Perrier’s is only 0.4
\ncent per liter. (If the Customs Service reclassifies Perrier
\nas benzene, then it can enter duty free.)<\/p>\n

— Fresh broccoli carries a 25% tariff. But, happily,
\ntruffles are duty free.<\/p>\n

— Footwear valued at not more than $3 a pair with rubber
\nor plastic outer soles and uppers is tariffed at 48%. If
\nvalued at more than $12, the tariff is only 20%.<\/p>\n

Congress also uses the tariff code to deny equal rights to
\nthe malnourished. Vitamin B12, which is no longer produced in
\nthe U.S., is hit with a 16.2% tariff, while vitamin B1
\ncarries a 3.1% tariff. Vitamin C carries a 3.1% tariff —
\nwhile Vitamin E is hit with a 7.9% levy.<\/p>\n

Some tariffs were raised early last year, when the U.S.
\nchanged its tariff classification system to harmonize with
\nwidely used international tariff categories. In 1988, the
\nrate on imported jams ranged from zero to 8.5%; now, the rate
\nvaries from 3% on currant jam, to 10% (plus 15.4 cents a
\nkilogram) on cherry jam, to 20% on peach jam, to 35% on
\napricot jam. This is one more telling bit of evidence that
\nthe apricot jam cartel controls Washington.<\/p>\n

The U.S. Trade Representative has submitted a plan to
\noffer tariff reductions during the current Uruguay Round of
\nnegotiations under the General Agreement on Tariffs and
\nTrade. The Trade Policy Staff Committee, a group of staffers
\nfrom various federal agencies, held hearings on tariff reform
\nin November — and some of the pleadings from protected
\nindustries were especially insightful:<\/p>\n

— A producer of pimentos, tariffed at 9.5%, commented,
\n“The present tariff on pimentos is not an impediment to
\nimports and any reduction in the tariff would have an adverse
\n— even a disastrous — effect on the domestic industry.”<\/p>\n

— Indiana Glass Co. complained that glasses from Mexican
\ncompanies were selling at K mart for $1.99 a set — while
\nIndiana Glass’s sets were selling at K mart for $3.99. As the
\ncompany’s brief noted, “There is absolutely no difference in
\nquality” between the Mexican product and Indiana Glass’s
\nproduct. Indiana Glass concluded that “this evidence of
\n[foreign] price advantage under current tariffs compels at
\nleast the maintenance, if not increase, of tariffs [currently
\nup to 38%] on [such] glasses.”<\/p>\n

— Bobby McKown of the Florida Citrus League declared:
\n“Many of our foreign competitors receive important government
\nassistance. U.S. producers receive none.” Mr. McKown must
\nhave been carried away by his dedication to high tariffs. The
\nAgriculture Department has showered more than $30 million on
\nAmerican citrus companies and organizations in recent years
\nto bankroll their foreign brand-name ads.<\/p>\n

— The Committee to Preserve American Color TV gave a
\npresentation on why the U.S. should retain its 15% duty on
\ncolor picture tubes. The person who testified was Joseph
\nDonahue, a senior vice president of Thomson Consumer
\nElectronics, a subsidiary of Thomson S.A., the French
\ncorporation that recently bought GE’s TV production
\nfacilities.<\/p>\n

Why does the U.S. have 8,753 tariff rates? Partly because
\nof the bargaining strategy followed by the U.S. for the past
\nhalf-century. As Washington trade lawyer Noel Hemmendinger
\nnotes, there’s been a constant subdividing of tariff
\ncategories to provide special rates for specific products
\nfrom nations that were offering to reduce the tariff rate on
\nsome specific American export.<\/p>\n

In the current GATT round, many nations favored working
\nfor an agreement to cut all existing tariffs across-the-board
\nby 33%. But the U.S. preferred that nations haggle out
\nmutually acceptable tariff-rate cuts on a product-by-product,
\nrate-by-rate basis.<\/p>\n

Our tariff code is part of our fossilized industrial
\npolicy — perpetuating handouts for the biggest political
\ncontributors to previous generations of congressmen. The
\nlethargy of our democratic system allows high tariffs to
\nremain long after the original beneficiaries have turned to
\ndust.<\/p>\n

Tariffs are either a bailout to perpetuate uncompetitive
\nAmerican industries, or a license for efficient American
\nindustries to gouge their customers. It makes no sense for
\nthe government to “improve” a level playing field by randomly
\ninserting hundreds of bumps, boulders and brick walls.
\nRegardless of what tariffs another country may have, it is
\nnot in America’s national interest for the Customs Service to
\nselectively blockade our own ports.<\/p>\n

\n

********************<\/p>\n

The Wall Street Journal
\nThursday, December 13, 1990
\nTrade Nuttiness<\/strong>
\nBy James Bovard<\/p>\n

With the GATT talks broken off, agricultural trade
\ndisputes remain at the forefront. Yet, while U.S. officials
\nbusy themselves denouncing foreign farm-trade barriers, a
\nU.S. trade barrier is devastating many American food
\ncompanies.<\/p>\n

It is easier to import semi-automatic rifles or toxic
\nchemicals into the U.S. than to import peanuts. Since 1953,
\nAmericans have been permitted to buy only 1.7 million pounds
\nof foreign peanuts each year. This amounts to roughly two
\nforeign peanuts per year for each American citizen.<\/p>\n

Import quotas help keep U.S. peanut prices far higher than
\nworld prices: The U.S. International Trade Commission
\nconcluded that the quota was equivalent to a tariff of up to
\n90% on peanut imports in 1988. The import quota, along with
\nfederal price supports and strict federal controls on who is
\nallowed to grow peanuts, guarantees domestic peanut farmers
\ngenerous profits. A 1990 Agriculture Department report noted
\nthat the federal price support was 44% higher than the total
\neconomic costs of peanut production.<\/p>\n

This year, a severe drought hit Georgia, where almost half
\nof all U.S. peanuts are grown. As a result, prices are
\nsoaring far above their usual heights. The Agriculture
\nDepartment reported on Nov. 21 that prices for jumbo shelled
\npeanuts have increased 119% in the past year, to $1.25 a
\npound. Peanut prices are now roughly double the federal
\nprice-support level.<\/p>\n

High prices and shortages are skewering companies that use
\npeanuts. Ed Goodrich, president of Plantation Peanuts in
\nWakefield, Va., observes, “We are now faced with the
\npossibility of having to shut down.” The chairman of one of
\nthe nation’s largest nut processors fears that his company
\n“could be forced out of business” with a resulting loss of
\n150 jobs. Tasty Fresh Nuts Co. of Ferndale, Mich., reports,
\n“We have less than half our need contracted for with no
\nguarantee that we will receive all of these.” King Nut Co. of
\nSolon, Ohio, complains, “We have been [unable to purchase
\nany] Jumbo runner peanuts for three weeks.” Even large
\ncompanies are suffering: M&M\/Mars is seriously concerned over
\nthe peanut shortage.<\/p>\n

The Peanut Butter and Nut Processors Association, alarmed
\nat the skyrocketing prices, petitioned the Agriculture
\nDepartment and the ITC to allow 400 million pounds of peanuts
\nto be imported in the coming months. The petition outraged
\nfarm organizations.<\/p>\n

Rep. Walter Jones (D., N.C.) wrote to the ITC: “The Peanut
\nGrowers Association has assured me there is no shortage of
\npeanuts for the domestic market at the present time.” The
\nAmerican Farm Bureau agreed: “The real argument is not with
\nsupplies but with price.” Perhaps the congressman and the
\nFarm Bureau believe that as long as there is one homegrown
\npeanut left in the U.S. (regardless of its price) there is no
\nreal shortage. The fact that peanut prices have doubled does
\nnot indicate any type of shortage, but simply that God
\ndecided to inflict his wrath on American consumers.<\/p>\n

Hancock Peanut Co., a peanut-shelling company in
\nCourtland, Va., argued that no additional peanut imports
\nshould be allowed because “the free market is working.” The
\nSouthwestern Peanut Shellers Association told the ITC that
\nadditional peanut supplies are unnecessary because consumer
\ndemand for peanuts is plummeting (down 14% in September
\nalone, according to the Agriculture Department). Thus, as
\nlong as government-caused high prices drive consumers out of
\nthe market, the market is doing just fine.<\/p>\n

Peanut growers have beseeched Congress for drought relief.
\nGeorgia farmers feel they are entitled to be compensated by
\ntaxpayers for the peanuts that did not grow, and that Uncle
\nSam is obliged to keep consumer prices high on the peanuts
\nthat did grow. This is the rural American version of the
\ndoctrine of divine right.<\/p>\n

Clayton Yeutter, the secretary of agriculture, could
\nrecommend that the president issue an emergency proclamation
\npermitting more foreign goobers to invade American stomachs.
\nBut Mr. Yeutter is preoccupied these days with European
\nimport barriers. He is gravely concerned about the current
\nlow price of wheat — but has said nothing about the high
\nprice of peanuts.<\/p>\n

The peanut import quota is perceived abroad as the epitome
\nof U.S. hypocrisy. Japan has made the point that the U.S.
\nought to end its peanut import quota before demanding that
\nJapan remove its rice import ban. The peanut import quota
\nmakes it more difficult for peanut exporters like Argentina
\nand Brazil to earn dollars to pay their debts to U.S. banks.
\nAnd it makes it difficult for low-income Americans to enjoy
\nthat most American of treats — a peanut butter sandwich.<\/p>\n

******************<\/p>\n

The Wall Street Journal
\nWednesday, July 31, 1991
\nThe Customs Service’s Fickle Philosophers<\/strong>
\nBy James Bovard<\/p>\n

Few people realize that the U.S. Customs Service is
\nperhaps the most philosophic of all government agencies.
\nCustoms Service employees routinely wrestle with such age-old
\nquestions as “Is a popcorn popper an electrothermic appliance
\nor an electrical article?” and “Is a jeep a truck or a car?”
\nThe U.S. has 8,753 different tariff classifications, with
\ntariffs ranging from zero to 458%. Naturally, tariff
\nclassification rulings are often disputed with a passion that
\nwould have made St. Thomas Aquinas proud.<\/p>\n

Take tariff classification ruling 89-27(6), which could
\nhave a major impact on some Americans’ social lives. Customs
\ndecreed in 1989 that condoms imported from Mexico that are
\nelectronically tested must carry a higher import tax than
\ncondoms that are not tested. Customs also ruled that
\nimporters must pay more for condoms that include a spermicide
\nthan they would for condoms without spermicide. (It is not
\nknown whether this decision was part of a secret plan to
\nboost the revenues of family planning clinics.)<\/p>\n

The arbitrariness of such customs decisions can devastate
\nimporters and destabilize international trade. Here are a few
\nmore examples from the Customs casebook:<\/p>\n

— Girls’ jackets. The Customs Service in 1988 boosted the
\ntariff on a shipment of 33,000 girls’ ski jackets to 27.5%
\nplus 17 cents a pound from 10.6% because the jackets had
\nsmall strips of corduroy trim on the sleeves. Customs ruled
\nthat the strips, amounting to roughly 2% of the jacket’s
\ncomposition, changed the tariff category from “garments
\ndesigned for rainwear, hunting, fishing, or similar uses”
\n(such as skiing) to “other girls’ wearing apparel, not
\nornamented.”<\/p>\n

Famous Raincoat Co., the importer, appealed the Customs
\nruling to the U.S. Court of International Trade. Judge Kenton
\nMusgrave observed, “During the trial, government counsel . .
\n. relied on the ‘philosophical’ meaning of the word ‘or’ . .
\n. as opposed to ‘and.’ ” The judge threw out the government’s
\ncase and ordered Customs to refund the tariff surcharge.<\/p>\n

— Shoes. More than 3,600 of the U.S.’s 8,753 tariff
\ncategories are restricted by import quotas. When Customs’
\ndecisions change a product’s tariff classification from
\nunrestricted to restricted, the ruling can effectively ban
\nimports. In 1989, a Customs inspector decreed that a box of
\nathletic shoes could not contain an extra pair of
\nshoestrings. Shoestring imports are covered by textile import
\nquotas; Customs’ decision, by requiring importers to have a
\nfederal license to import the extra shoestrings, blocked the
\nimport of tens of thousands of athletic shoes from Asia. None
\nof the athletic shoe importers were thinking of the extra
\nshoestrings as anything but part of the athletic shoes, many
\nof which had eyelets for more than one set of shoestrings.<\/p>\n

Customs modified the ruling in 1990, permitting an extra
\npair of strings as long as the extra shoestrings were laced
\ninto the athletic shoes and were color coordinated with the
\nshoe. But Customs warned importers, “We note that where
\nmultiple pairs of laces of like colors and\/or designs are
\nimported . . . a presumption is raised” that the shoelaces
\nare not actually part of the shoe.<\/p>\n

— Lingerie. The U.S. government has been drubbed in
\nrepeated court battles for trying to block imports of
\nlingerie and nightgowns by claiming that the lingerie is
\nactually a blouse or long shirt. As the U.S. Association of
\nImporters of Textiles and Apparel complained in 1988,
\n“Customs resistance to a decision which distinguished
\nnightwear from daywear has left importers in limbo. Importers
\nwho believe they are following the dictates of the Court
\ncontinue to have merchandise seized as non-complying.”<\/p>\n

— Steel. In the 1980s, the U.S. strong-armed 28 nations
\ninto signing so-called Voluntary Restraint Agreements (VRAs)
\nto restrict their steel exports. Each VRA specified which
\ntariff classifications of steel would be restrained. Though
\nhappy with the VRAs, the U.S. steel industry was aghast at
\nthe prospect of any freely imported steel remaining and
\nlobbied Customs to solve this problem.<\/p>\n

On Dec. 6, 1988, Customs reversed three previous rulings
\ndating back to 1974 and announced that it was reclassifying
\nsteel wire rope with beckets from an uncontrolled tariff
\ncategory into a tariff classification restricted by the VRAs.
\nOn Aug. 31, 1989, at the behest of Bethlehem Steel, Customs
\nreversed three rulings since 1978 and moved scroll-cut
\ntin-free steel sheet into a restricted tariff classification.<\/p>\n

— Sweeteners. In the early 1980s, Canadian firms were
\nexporting sugar-corn-sweetener blends to the U.S. These
\nblends were 35% cheaper than pure sugar, for which there are
\nquotas. The U.S. government created a separate import quota
\nand classification for the blended product in 1985. Even
\nthough the quota limited Canadian sales to 2% of the U.S.
\nmarket, the imports still gave heartburn to American sugar
\ngrowers. In 1988, the Cane Sugar Refiners Association
\ncontacted its good friend, Sen. Jesse Helms; the North
\nCarolina Republican repeatedly called his good friend,
\nCustoms Commissioner William von Raab, for sweet talk,
\naccording to Greg Rushford of the Legal Times.<\/p>\n

In early 1989, the Customs Service redefined sugar and
\nbanned all Canadian blended imports. The first time Canadian
\ncompanies learned of the new sugar definition was when four
\ntrucks carrying their products were stopped at the
\nU.S.-Canada border and prohibited from entering the U.S. The
\nCustoms’ change in definition devastated an Ohio firm that
\nrelied on the Canadian blend as its primary product, as Mr.
\nRushford reported.<\/p>\n

The combination of thousands of tariff categories and
\nendless redefinitions of products is turning importing into a
\ncrapshoot. Tariff classification disputes are the ultimate
\n“reductio ad absurdum” of enlightened ‘managed trade.’ If the
\ngovernment cannot even intelligently decide what an athletic
\nshoe or an item of lingerie is, how likely is it that
\ngovernment trade restrictions will actually benefit America
\nas a nation?<\/p>\n

\n

***********************<\/p>\n

The New York Times<\/p>\n

January 7, 1992, Tuesday, Late Edition – Final<\/p>\n

SECTION: Section A; Page 15; Column 2; Editorial Desk<\/p>\n

HEADLINE: Don’t Brake for Detroit<\/strong><\/p>\n

BYLINE: By James Bovard; James Bovard is author of “The Fair Trade Fraud.”<\/p>\n

DATELINE: WASHINGTON<\/p>\n

BODY: When President Bush arrives in Japan today with an entourage of frustrated American businessmen, he will demand that Japan buy more American autos — and pressure the Japanese Government to further restrict Japanese auto sales in the U.S.<\/p>\n

For the Americans, the $30 billion U.S.-Japan auto trade deficit is a result of Japanese unfairness rather than superior competitiveness. In June, Robert Mosbacher, the Secretary of Commerce, asserted that “in virtually all cases [U.S. auto parts] have been shown to be just as good as” Japanese auto parts.<\/p>\n

American car experts disagree. When Road and Track magazine announced its 10 best cars of 1991, nine were Japanese and one was German. A 1991 Consumer Reports survey gave the highest reliability ratings to Japanese autos. Nearly all the cars with a poor reliability rating were made by the Big Three: General Motors, Ford and Chrysler.<\/p>\n

When the Japanese don’t buy sufficient numbers of relatively low-quality American cars, the U.S. Government responds by making it more difficult for American citizens to buy relatively high-quality Japanese cars.<\/p>\n

Representative Richard Gephardt, Democrat of Missouri, introduced legislation last month to penalize Japan for its trade deficit with the U.S. Michigan Congressmen are licking their chops over the prospect of new restrictions on Japanese auto imports.<\/p>\n

The assault on these imports is also being fueled by the Commerce Department’s recent preliminary finding that Toyota and Mazda have been selling their minivans at unfairly low prices, “dumping” them in the U.S. Senator Donald Riegle, Democrat of Michigan, declared that the minivan case “is an illustration of the systematic pattern of trade cheating by Japan that must be stopped.”<\/p>\n

But the findings prove only the absurdity and unfairness of the U.S. dumping law. The Commerce Department found Toyota guilty of selling its minivans for roughly one percent less than the department approved, largely because Toyota was not sufficiently bureaucratic. The U.S. dumping law actually penalizes foreign companies whose administrative costs are less than 10 percent of their production costs.<\/p>\n

Mazda was found guilty of a 7.19 percent dumping margin largely because the Government arbitrarily compared the price of 470 vans sold under special circumstances in Japan with the price of 30,000 vans sold by Mazda dealers in the U.S.<\/p>\n

The Japanese were not selling their minivans at a loss or for less than they sold for in Japan. If American companies had done what the Japanese companies did, they would never have been penalized. The dumping laws make a mockery of U.S. demands for a level playing field.<\/p>\n

Japanese auto exports to the U.S. have been restricted by quotas since 1981, when President Ronald Reagan pressured the Japanese into reducing their exports. A 1987 International Monetary Fund study estimated that the subsequent artificial shortage of cars for sale in the U.S. cost American consumers $17 billion between 1981 and 1984, resulting in an average increase of $1,650 for new car prices (domestic and import) in 1984. Between 1980 and 1989, the cost of a new car rose from 18.7 weeks of the median household’s earnings to 24.7 weeks.<\/p>\n

The Japanese Government last month reportedly ordered a further reduction in the number of cars exported to the U.S. Tokyo has successfully pressured companies to buy more American auto parts, even if those parts are of lower quality, and is expected to make further concessions during the President’s visit.<\/p>\n

The U.S. auto industry is not a victim of unfair play but rather of its own incompetence. If 10 years of protection did not close the U.S.-Japan auto quality gap, further protection will simply be extortion of American consumers. Neither President Bush nor Congress should be able to nullify the freedom of Americans to choose the best auto they can buy.<\/p>\n

*****************<\/p>\n

The New Republic<\/p>\n

June 22, 1992<\/p>\n

HEADLINE: Miniban: Detroit’s victory over Mazda; Minivan price gouging cases<\/strong><\/p>\n

BYLINE: Bovard, James<\/p>\n

BODY: The U.S. government is on the verge of adding thousands of dollars to the price of new minivans, a decision that could lead to price gouging on almost all automobile sales. Last year Commerce Department officials urged the Big Three automakers to formally accuse Japanese companies of dumping minivans in the United States. On May 19 Commerce pronounced Toyota and Mazda guilty. The U.S. International Trade Commission will rule on June 24 whether American makers have been injured by the dumping.<\/p>\n

The U.S. dumping law prohibits foreign companies from selling products in the United States for less than their foreign price or their cost of production. Commerce has rigged this case by manipulating the numbers to boost Mazda’s and Toyota’s apparent production costs–and to lower their foreign cost\/U.S. price gap that it cited as proof of unfair trade.<\/p>\n

This is a bizarre case. Domestic companies account for more than 90 percent of the minivan market, and Japanese minivans tend to be significantly higher priced (and higher quality) than U.S. ones. Yet, according to the Big Three’s complaints, a trickle of high-priced imports are devastating the U.S. auto industry.<\/p>\n

Although the Commerce Department convicts 97 percent of the foreign companies it investigates, it attacked the minivan case with a rare vengeance. At one point it had four verification teams in Japan rummaging through the confidential records of Toyota and its suppliers. Commerce made eleven sweeping demands for information from Toyota; Toyota responded to one with thirteen boxes of computer printouts. The department apparently spent so much money going after Toyota and Mazda that it has almost exhausted its annual budget for import-related computer work and is postponing work on many other dumping cases.<\/p>\n

Toyota’s and Mazda’s primary crime was failing to make large profits. U.S. dumping law, inspired by medieval scholastics, requires foreign companies to earn at least an 8 percent profit on their U.S. sales (the average U.S. corporate profit in a good year is 5 percent to 6 percent). Toyota’s “dumping” margin was 6.75 percent and Mazda’s was 12.7 percent. If not for the 8 percent rule, Toyota would be innocent and most of Mazda’s margin would have evaporated. Toyota is also being penalized because some of its operations are not sufficiently bureaucratic; U.S. law declares that foreign companies are cheating unless they spend at least 10 percent of their cost of production on administrative overhead.<\/p>\n

Based largely on allegations by Ford engineers, Commerce investigators asserted that Toyota was not paying enough for parts from some of its related companies. Commerce also claimed that Toyota’s current prices did not account for future minivan research and development–a novelty in the annals of cost accounting. Mazda was convicted partly because, in many cases, Commerce compared the cost of building new MPVs in Japan with the sale price of used MPVs in the United States. Mazda was also skewered because Commerce chose an abnormally long period–October 1990 through May 1991, instead of the usual six months–to compare U.S. prices and Japanese costs, and made no adjustments for gyrations in exchange rates during the Gulf war. Deputy Assistant Commerce Secretary Francis Sailer admitted in an August 12, 1991, internal memo that dollar\/yen exchange rate fluctuations by themselves would add 1.9 percent to Mazda’s dumping margin.<\/p>\n

The case is now before the International Trade Commission, where a peculiar concept of trade law comes in. A foreign company can be convicted of injuring an American company if the latter’s prices would have been higher without foreign competition. So Japanese producers can be found guilty if their minivan sales resulted in “price suppression”–i.e., preventing the Big Three from charging more. This may be the most anti-consumer regulation in the federal statute book.<\/p>\n

The U.S. minivan industry has probably been hurt more by Consumer Reports than by imports. Last year the magazine headlined a story on the faulty automatic transmissions used in most Chrysler minivans: “It’s a Lemon–Steer Clear.” It noted that Ford’s Aerostar suffered from “slow and clumsy routine handling; even more sluggish in accident-avoidance maneuvers . . . harsh, bounding ride . . . haphazard controls.” General Motors has foundered partly because of the weird design of its APV minivan; one GM manager told The New York Times that it “looks like a dustbuster.”<\/p>\n

Chrysler has dominated the minivan market since 1983, and, according to Chrysler counsel John Greenwald, “We rely on the minivan business for a disproportionate share of our profits.” Ward’s Auto World estimated in 1990 that Chrysler made $ 5,000 gross profit on each minivan it sold. That is a profit ratio of up to 30 percent–which is now being threatened by competition from imports. Chrysler Vice President for Washington affairs Robert Perkins moaned to the ITC on May 21, “I can unequivocally tell you that stiff competition from the new Japanese imports was a very key factor in our decision to [offer consumer rebates] on these vehicles . . . Profits really fell off.”<\/p>\n

Perhaps the most creative argument advanced in this case is that Japanese minivan imports somehow destroyed Chrysler’s credit rating. Perkins complained that minivan imports were the key to Standard and Poor’s downgrading Chrysler’s credit rating in 1990: “The loss of our investment grade credit rating has cost us millions, tens, hundreds of millions of dollars in added interest costs.” Greenwald told the ITC, “The impact of competition in the minivan sector on Chrysler’s debt rating dwarfs everything else . . . in terms of palpable injury.” Actually, Chrysler is declining toward a junk bond rating because it has foisted so many lemons on the American public.<\/p>\n

There are other twists. More than half the minivans Chrysler sells in the United States are made in Canada. Thus it is arguing the U.S. government should force American consumers to pay higher prices in part because its Canadian operations have lost business to Japanese competition. Though Ford has spent
\na small fortune prosecuting this case, it owns 25 percent of Mazda’s stock–and will soon begin selling a new minivan jointly developed with Nissan.<\/p>\n

Unfortunately for the Japanese, the ITC is stacked. There are six commissioners and, in tie votes, foreigners are found guilty. This may be the only judicial institution in the government where a deadlock among the judges results in penalties on the accused.<\/p>\n

If the ITC finds injury, Mazda will be forced to raise its minivan prices by up to $ 2,700 and Toyota by up to $ 1,700; the Big Three’s prices will assuredly also rise. The Japanese companies’ prices will also be put under the perennial supervision of Commerce bureaucrats devoted to protecting the domestic auto industry. And that’s not all. Red Poling, CEO of Ford, indicated to the Detroit News last month that the Big Three may soon file an anti-dumping suit against luxury car imports. Dumping cases on sports utility vehicles may soon follow. The lesson: buy now. JAMES BOVARD is the author of The Fair Trade Fraud (St. Martin’s Press).<\/p>\n

**********<\/p>\n

The New York Times<\/p>\n

July 12, 1992, Sunday, Late Edition – Final<\/p>\n

HEADLINE: FORUM; Big Steel’s Suicidal Attack on Imports<\/strong><\/p>\n

BYLINE: By JAMES BOVARD; James Bovard is the author of “The Fair Trade Fraud.”<\/p>\n

BODY: As the Munich economic summit sinks mercifully into oblivion, industrial nations face grave problems from the proliferation of protectionism. American steel producers — in buildup to the summit — deluged the American Government with more than two million pages of allegations of unfair trade against 21 foreign nations. The steel lobby’s legal bombshell will severely disrupt steel trade, hamper American competitiveness and decrease the likelihood of a successful completion of the current General Agreement on Tariff and Trade negotiations.<\/p>\n

Within those two million pages were 48 petitions alleging that foreign companies are dumping steel in the United States. Dumping refers to selling for a lower price in America than in the foreign home market, or selling for less than cost of production.<\/p>\n

Unfortunately, the dumping law is far more protectionist than it appears, and it ought to be abandoned. The current law was largely written by steel industry lobbyists in 1974; as a result of their strict wording, the Commerce Department now finds 97 percent of foreign companies it investigates guilty of dumping.<\/p>\n

Steel companies can reap big profits simply from filing anti-import petitions. Dumping penalties are assessed retroactively — thus creating great uncertainty among steel buyers about possible future penalties they might face. Japan’s NKK Steel and Nippon Steel recently announced that they would cease exporting some steel products to the American market to avoid any possible dumping penalties. That does little to keep costs and steel-producing technology competitive.<\/p>\n

But while American steelmakers file lawsuits here, they are massively dumping in foreign markets themselves. An analysis last month by Donaldson, Lufkin and Jenrette, a New York investment banking firm, concluded that “more than 90 percent of the nonspecialty steel exported from the United States since 1990 — over 10 million tons — has been dumped. It is reasonable to estimate that exports have involved losses of more than $100 per ton for most carbon steels.” (The analysis estimated that exports by American mini-mills, in contrast, are profitable). Mexico filed an anti-dumping suit against American steel exports last month, and Canadian companies are expected to soon file a similar suit.<\/p>\n

Steel imports have been politically throttled for most of the last 20 years. Steel-import restraints have been perhaps America’s worst anti-industrial policy. A study by the Center for the Study of American Business estimated that import quotas destroyed three jobs in steel-using industries for every steel-making job saved. The Institute for International Economics estimated that steel import quotas cost American consumers $6.8 billion a year, $750,000 for each steel worker’s job saved. A 1984 Federal Trade Commission study estimated that steel quotas cost the American economy $25 for each additional dollar of profit for American steel producers.<\/p>\n

In addition to the dumping charges, American steel companies filed 36 petitions accusing foreign companies of receiving Government subsidies. But the American steel industry has also been heavily subsidized. The Economic Development Administration in the Commerce Department loaned $265 million to four struggling steel companies in the late 1970’s; all four — Korf Industries, LTV, Wisconsin Steel and Wheeling-Pittsburgh — defaulted. The federal Pension Benefit Guaranty Corporation has assumed the pension liabilities of several steel companies, thereby providing a benefit of $3.7 billion to the industry. The Canadian Steel Producers Association estimates that the American steel industry has received almost $30 billion in Government subsidies over the last two decades.<\/p>\n

Import barriers on foreign steel make less sense now than ever. They hurt the competitiveness of American products overseas and unfairly penalize the auto, construction, electrical and equipment industries by forcing them to use a higher-priced, often inferior product. This nation can no longer afford a trade law that allows one laggard industry to take dozens of other industries hostage.<\/p>\n

*********************<\/p>\n

The Wall Street Journal
\nThursday, August 15, 1991
\nThe Mother of All Import Charades<\/strong>
\nBy James Bovard<\/p>\n

To reward Turkey for its sacrifices during the Gulf war,
\nWashington has deigned to allow it to double its apparel
\nexports to the U.S. And, since one nation is being allowed to
\nsell more clothes to Americans, the U.S. government feels
\nobliged to force other nations to sell less clothing to
\nAmericans.<\/p>\n

As a “contribution” to the U.S. war effort, Hong Kong has
\nbeen strong-armed into agreeing to slash its textile exports
\nto the U.S. by the equivalent of 16 million shirts.
\nRepresentatives of the Korean and Taiwan governments confirm
\nthat U.S. government officials are pressuring them also to
\nsanctify America’s victory by sharply reducing textile
\nexports. The U.S. request has exasperated some Koreans, since
\nKorea already gave $500 million in cash and in-kind
\ncontributions to help the Gulf War effort.<\/p>\n

On July 16, the Office of the U.S. Trade Representative
\nannounced that Hong Kong had agreed to “reduce its access to
\nthe U.S. market by 27 million square meter equivalents as a
\ncontribution” to the U.S. war effort. “Square meter
\nequivalents” are official estimates of the quantity or
\npoundage of textile products that different clothing and
\ntextile imports contain. According to the fine print of U.S.
\ntextile restraint agreements, 27 million square meters is
\nequivalent to 16 million shirts, or 81 million brassieres, or
\n112 million pairs of cotton mittens. Hong Kong could lose
\nroughly $125 million in exports to the U.S.<\/p>\n

The U.S. is seeking to “compensate” for Turkey’s increased
\nexports by reducing other countries’ exports. Given the U.S.
\ngovernment’s method of measuring the textile content of the
\nhundreds of different products restricted by textile import
\nquotas, this could lead to some peculiar tradeoffs: If Turkey
\nexports 50,000 extra pounds of yarns and sewing thread to the
\nU.S., for instance, Hong Kong could be required to export one
\nmillion fewer handkerchiefs. If Turkey exports 100,000 more
\npounds of tampons, Korea could be required to cut its fish
\nnet exports by 62,539 pounds. Or, if Turkey exports an extra
\n20,000 negligees, Taiwan could be pressured to slash its
\ntyping ribbon exports by 10,000 pounds.<\/p>\n

Patriotism is the best refuge of a protectionist. Foreign
\ngovernments have said nothing publicly to criticize the U.S.
\ngovernment’s latest anti-import charade because they fear a
\nbacklash from the American public. American importers have
\nalso been uncharacteristically mute on an issue that is vital
\nto their pocketbooks. Potential critics fear that opposing
\nthe new restrictions on East Asian exports might get them
\nportrayed as closet Saddam-sympathizers. But the American
\npublic is being hurt by trade restrictions. The President’s
\nCouncil of Economic Advisers estimates that trade restraints
\nboost the price of imported clothing by 50%.<\/p>\n

What will the government do next to help Americans
\ncelebrate the mother of all victories? Pressure Mexico to
\nsell us fewer bottles of tequila? Bludgeon Honduras to stop
\nsending us bananas? Arm-twist Finland into slashing its
\nexports of ice-hockey pucks?<\/p>\n

A war that was fought to protect America’s ability to buy
\nimported oil is being perverted to further restrict
\nAmerican’s freedom to buy imported clothing. Perhaps the
\nsecret goal of U.S. trade policy is to have low-income
\nAmericans wearing clothes that are as tattered as the
\nrefugees from the Iraq war.<\/p>\n

**************<\/p>\n

The Wall Street Journal
\nFriday, October 11, 1991
\nAmerica’s Most Harebrained Import Quota<\/strong>
\nBy James Bovard<\/p>\n

The Bush administration may soon announce plans to extend
\nimport quotas on machine tools from Japan and Taiwan for
\nthree more years. These quotas, a so-called Voluntary
\nRestraint Agreement, are deserving of fame as America’s most
\nharebrained trade barrier. In the name of preserving a
\ndomestic industry, the U.S. government has hurt some of the
\nmost progressive companies and given a windfall to some of
\ntheir foreign competitors.<\/p>\n

In May 1986, the U.S. announced plans to impose quotas on
\nmachine tools from Japan and Taiwan. Machine tools are
\nautomatic power-driven tools that are used to cut, drill and
\nstamp the metal that becomes cars, airplanes, missiles, etc.
\nThough the machine-tool industry employs roughly 70,000
\nAmerican workers, while industries relying on machine tools
\nemploy millions of workers, Commerce Secretary Malcolm
\nBaldrige promised listeners that the trade restrictions “will
\ncertainly increase employment.”<\/p>\n

Some American machine-tool makers are world-class
\ncompetitors, but many have lagged far behind the
\ntechnological breakthroughs of the past 15 years. The import
\nquotas effectively created a quality bottleneck, holding
\nAmerican industry hostage to one lagging group of politically
\nconnected companies. The Institute for International
\nEconomics estimated that the import quotas boosted the
\nprofits of foreign machine-tool exporters by $320 million, by
\nmaking machine tools more expensive than they otherwise would
\nhave been.<\/p>\n

In 1989, Caterpillar Inc. needed advanced Japanese machine
\ntools to produce parts in the U.S. that it was then buying in
\nJapan. But Caterpillar was stymied because that year’s quotas
\nhad been allocated. It eventually persuaded Japan’s Ministry
\nof International Trade and Industry to reallocate part of the
\nquota to Caterpillar’s Japanese supplier.<\/p>\n

Bill Lane of Caterpillar observes: “The quotas let MITI
\ndetermine which American companies would be winners and
\nlosers. In our case it worked out OK — but, as a result,
\nsome other American company faced delays in getting the types
\nof machine tools that it needed.” One congressional staffer
\nsuggests other U.S. manufacturers may not have openly
\ncriticized the quotas for fear of retaliation by U.S.
\nmachine-tool makers.<\/p>\n

The quotas on Japan’s producers were set at much higher
\nlevels than on Taiwan’s, and are currently not impeding
\nJapanese exports. (Insiders suggest that Japanese officials
\nwere much more savvy, using 1981 Japanese exports as a
\nbaseline — a year in which a weak yen and surging U.S.
\ndemand resulted in very high exports.)<\/p>\n

Many U.S. companies are concentrating on developing
\nadvanced software and computer numerical controls to drive
\nmachine tools, rather than on building the frames, which they
\nneed to import. The quotas have made it harder for U.S.
\ncompanies to devote their resources to the area where they
\nhave a comparative advantage.<\/p>\n

By disrupting the supply of Taiwanese low-priced, low-tech
\ninputs for high-tech U.S. machines, the quotas helped
\nbankrupt at least two American machine-tool makers — Bayer
\nIndustries Inc. of Phoenix and MHP Machines Inc. of Buffalo,
\nN.Y. And, by boosting the production costs of U.S.
\nmachine-tool makers, the quotas have undercut U.S. companies’
\nefforts to maximize exports. Brian McLaughlin, chief
\nexecutive of Hurco Companies Inc. of Indianapolis, one of
\nAmerica’s premier machine-tool exporters, estimates the
\nquotas have cost his company $5 million a year.<\/p>\n

Machine-tool import quotas control “the building blocks of
\nindustry,” as Secretary Baldrige observed in 1986. Yet, a
\n1990 General Accounting Office report noted that Commerce
\n“does not have written policies or procedures for monitoring
\nthe agreements and does not maintain complete records of the
\nmonitoring it does.” U.S. businesses, desperately trying to
\nget advanced equipment to enter the computer era of
\nmanufacturing, are at its mercy.<\/p>\n

Commerce even has flouted U.S. trade law in its crusade to
\nslash imports. In 1988, Taiwan began shipping some
\nmachine-tool parts to Israel, where an Israeli company
\ncombined the parts with Israeli products, built the finished
\nproduct, and exported it to the U.S. The Customs Service
\nruled in 1988 that, since more than 35% of the value of the
\nfinished product originated in Israel, the machine tools were
\nIsraeli products.<\/p>\n

But Commerce designed its own 12-point test to determine
\nmachine tools’ national origin and then decreed that it would
\npenalize Taiwan for Israel’s exports. Inside U.S. Trade, a
\nnewsletter, reported on Feb. 16, 1990: “Commerce has
\napparently decided to count the Israeli machine tools against
\nthe [Voluntary Restraint Agreement] retroactively from 1989.
\n. . . As a result, Taiwan has stopped shipping the
\nmachine-tool parts to Israel, and the Israeli company that
\nmade the machine tools has gone out of business.” A recent
\nU.S.-Israeli panel concluded that Commerce’s action violated
\nthe U.S.-Israel Free Trade Agreement, but the U.S. has
\neffectively refused to abide by the panel’s decision.<\/p>\n

Though the quotas were supposed to be a one-time dose of
\nprotection, the National Machine Tool Builders Association
\n(ignoring dissent in its own ranks) and 120 representatives
\nand senators are lobbying to extend the quota beyond its Dec.
\n31 expiration date. The association warns: “The machine-tool
\nindustry is the belt that holds up the pants of America’s
\ndefense capabilities. A slip of one notch could be enough to
\nhave the United States find itself in a compromising
\nsituation.” But the U.S. government cannot protect the tool
\nbuilders without economically exposing all industries that
\nrely on machine tools.<\/p>\n

Several leading machine-tool producers are urging
\nPresident Bush not to extend import quotas, in part because
\nthey believe the quotas make it harder for them to compete
\nwith Japanese companies in the U.S. market. Hurco’s Mr.
\nMcLaughlin believes Japan’s MITI is actively lobbying the
\nWhite House to extend the quotas.<\/p>\n

After years of staunchly pro-free-trade speeches emanating
\nfrom the White House speechwriters’ offices, American
\nbusinesses will learn whether it is once again safe to read
\nGeorge Bush’s lips.<\/p>\n

*****************<\/p>\n

The Wall Street Journal
\nWednesday, October 23, 1991
\nLEISURE & ARTS
\nBookshelf: The High Cost of Protectionism<\/strong>
\nBy William McGurn<\/p>\n

“To introduce a tariff bill into a congress or parliament
\nis like throwing a banana into a cage of monkeys,” wrote
\neconomist Henry George back in 1886. “No sooner is it
\nproposed to protect one industry than all the industries that
\nare capable of protection begin to screech and clamor for
\nit.”<\/p>\n

Apparently someone has heard them, judging from the 8,753
\ndifferent tariffs on foreign goods imposed by the U.S. In
\n“The Fair Trade Fraud<\/strong>” (St. Martin’s Press, 336 pages,
\n$24.95), James Bovard notes the restrictions and concludes
\nthat the century since Henry George penned those words has
\nseen “no significant evolution of the American political
\nanimal.”<\/p>\n

Subtitled “How Congress Pillages the Consumer and
\nDecimates American Competitiveness,” the book lays bare the
\nprotectionist barnacles that today cost the American family
\n$1,200 per year: everything from the tariffs that force us to
\npay higher prices for the goods we prefer, to the quotas that
\nlimit us further when tariffs don’t do the trick, and the
\nbureaucratic mummery called “anti-dumping orders” that hits
\nforeign companies who provide us with real bargains.<\/p>\n

To the task of charting these follies, few come better
\nqualified than Mr. Bovard, a frequent contributor to this
\nnewspaper and a fellow at the Cato Institute in Washington,
\nD.C. In chapter after chapter, he shows how those crying
\nloudest about “fair trade” are quick to spot the splinters in
\nthe eyes of our neighbors while blind to the protectionist
\nbeam in our own.<\/p>\n

Now, on paper and in Congress, fair trade is not without
\nits appeal: All we want, the argument goes, is a level
\nplaying field so our companies can compete. The problem is,
\nthe level playing field is a lot like the “frictionless
\nsurface” we learn about in high school physics: an
\ninteresting concept with no resemblance to reality. Those
\nnations that have done best by their people have done so not
\nby rigging the home field but by allowing their citizens to
\ntake advantage of whatever low prices come along without
\nasking too many questions.<\/p>\n

Mr. Bovard puts it well: “The benefits of unilaterally
\nadopting free trade now are greater than the benefits of
\nmultilateral adoption of free trade ten or fifteen or thirty
\nyears from now.” Ask Hong Kong, which has totally shunned
\nretaliation and not coincidentally has had the highest growth
\nrate in the world over the past three decades.<\/p>\n

The simple truth is that you can’t protect Peter without
\npunishing Paul. Take the much-heralded Semiconductor
\nArrangement we forced Japan to sign in 1987 to protect U.S.
\nchip makers complaining they weren’t getting their fair share
\nof the Japanese market. That protection came at the expense
\nof the U.S. computer industry, for whom cheap chips were
\nessential; one study estimated the job losses in the American
\ncomputer industry at 11,000. Ditto for other areas. When
\nJesse Helms or Howell Heflin or George Mitchell come
\na-begging for help for their textile manufacturers
\n(“America’s oldest infant industry,” says Mr. Bovard), what
\nthey’re really doing is robbing the retail industry.<\/p>\n

Overall, Mr. Bovard does a fabulous job at showing how
\narbitrary and ultimately counterproductive our restrictive
\ntrade practices are. But at times he takes away from his own
\ncase by downplaying the lousy practices of other countries
\nthat do indeed hurt American producers. He uses the word
\n“alleged,” for example, in talking of foreign steel
\nsubsidies.<\/p>\n

Far better to concede the foreign protection and argue, as
\nhe does elsewhere in his book, the costs of retaliation are
\njust not worth it. “The U.S. Trade Representative retains
\nthick files on foreign practices that supposedly justify
\nAmerican retaliation but keeps little or no information on
\nhow American trade retaliations or foreign
\ncounterretaliations have harmed American industries and
\nconsumers,” he writes.<\/p>\n

That message could not come at a more opportune moment.
\nWith the collapse of the Evil Empire and the renewed
\nenthusiam for free markets, we now have the potential for
\n(dare I say it?) a liberal New World Order the likes of which
\nwe first saw in the Pax Britannica. Already the seeds of such
\nan order are being sown with the wooing of Mexico (and
\nultimately all Latin America) into the North American Free
\nTrade Agreement, the championing of Taiwan’s entry into the
\nGeneral Agreement on Tariffs and Trade, and the emergence of
\nthe old Eastern bloc as a capitalist wedge against the
\nFortress Europeans to the west. In an ever-larger world
\ntrading order it will become increasingly expensive for
\ncountries to opt out. Maybe then it will begin to dawn on
\nmembers of Congress that, to use a quaint, fittingly
\nold-fashioned analogy, “If your neighbor beats his wife, you
\ndon’t teach him a lesson by beating your wife.”<\/p>\n

—<\/p>\n

Mr. McGurn is Washington bureau chief for the National
\nReview.<\/p>\n

*********************<\/p>\n

The Wall Street Journal
\nTuesday, November 26, 1991
\nTorpedo Shipping Protectionism<\/strong>
\nBy James Bovard<\/p>\n

The Jones Act of 1920 requires all shipping between U.S.
\nports to be carried on American-built, American-owned, and
\nAmerican-crewed ships. Though this trade restriction
\neffectively dates back to 1817, a recent proposal by the
\nNordic countries to include shipping restrictions under the
\nproposed GATT Services Code has sparked hope of abolishing
\nthis costly burden on American consumers. (The Bush
\nadministration, the world’s premier free-trade theoreticians,
\nopposes the Nordic proposal).<\/p>\n

Shipping has long been one of America’s leakiest
\nindustries. In the year the Jones Act was enacted, it cost
\ntwice as much to build a ship in the U.S. as in Britain. By
\n1959, American shipping costs were seven times higher than
\nsome competitors’. The Congressional Budget Office reported
\nin 1984 that American shipyards charged three times the price
\nof Japanese and Korean yards and were slower in delivery.
\nNaturally, the less competitive a U.S. industry, the more
\nvigilant Congress is to dragoon customers for it.<\/p>\n

Since Congress has given U.S.-flag ships a captive market,
\ncongressmen feel entitled to force American shippers to hire
\nAmerican workers, and strong unions guarantee exorbitant
\nsalaries. U.S. ship crews cost six times more than Third
\nWorld crews; American shipmasters routinely cost shipping
\ncompanies $300,000 a year. The high pay breeds corruption: An
\nFBI sting operation recently discovered that shipping jobs
\nare illegally being sold by one maritime union.<\/p>\n

A recent U.S. International Trade Commission study
\nconcluded that abolishing the Jones Act would save consumers
\nas much as $10.5 billion as a result of lower shipping costs,
\nwhile U.S. maritime operators would lose only $630 million in
\nprofits. Thus, the Jones Act could be costing consumers $17
\nfor every $1 of domestic shippers’ profits. Federal Maritime
\nCommissioner Rob Quartel, who is championing the repeal of
\nthe Jones Act, estimates that the total savings from repeal
\ncould actually be $20 billion or more, as the ITC estimate
\ndid not include the costs of shipping restrictions on Great
\nLakes trade, forgone tax revenue, indirect effects on smaller
\nindustries, etc.<\/p>\n

The Jones Act, by making water-borne transport far more
\nexpensive that it otherwise would be, partially nullifies the
\nbenefits of the Panama Canal for transporting goods from
\ncoast to coast. This makes it more difficult for Pennsylvania
\nsteel producers to compete against Japanese steel in
\nCalifornia, or for West Coast lumber to compete with Canadian
\nproducts in the eastern U.S. The ITC estimated that Jones Act
\nrestrictions destroyed over 2,000 jobs in agriculture,
\nforestry, mining, and other industries.<\/p>\n

Sean Connaughton of the American Petroleum Institute
\nnotes, “We are seeing more and more oil imports in the
\nNortheast, and imports have driven out a lot of the previous
\ncoastwise oil trade from the Gulf Coast. The Jones Act is a
\nvery significant factor in this.” U.S. oil shippers cannot
\ncompete with foreign tankers with far lower operating costs.
\nAccording to the General Accounting Office, the Jones Act
\nrestrictions on oil shipping helped cause a serious shortage
\nof heating fuels on the East Coast during a severe cold snap
\nin December 1989.<\/p>\n

Americans also have minimal opportunities to travel
\ndomestically on passenger ships, largely because of the
\nPassenger Services Act of 1886, a Jones Act equivalent for
\nthe passenger cruise industry. In a free market, foreign
\ncruise ships would offer pleasure trips from New York to
\nBaltimore, Savannah, and Miami, and from San Diego to San
\nFrancisco. But cruise ships are prohibitively expensive
\nbecause of federal buy-American and crew-American mandates.
\nSeattle is especially victimized, as each year, hundreds of
\nthousands of tourists fly to Seattle for cruises to Alaska —
\nbut then cross over to Vancouver, Canada, in order to catch
\nthe cruise ships. Mark Sullivan of the Port of Seattle
\nestimates that the restrictions cost Seattle a minimum of $30
\nmillion a year in lost tourist business.<\/p>\n

Shipping protectionism has been extended to dozens of
\ntypes of boats over the years, including Hovercraft, sewer
\nsludge carriers, and dredging ships. The Customs Service has
\neven banned whitewater tour companies from using foreign-made
\ninflatable rubber rafts on American rivers.<\/p>\n

The Jones Act is often defended as providing a reserve
\nfleet for military emergencies. But Commissioner Quartel
\nnotes that of the 400 ships used in Desert Shield by the
\nMilitary Sealift Command, only one ship subsidized by the
\nJones Act was used. (Jones Act ships tend to be too old or of
\nthe wrong type to aid a war effort).<\/p>\n

The Jones Act is supposed to stimulate U.S. shipbuilding.
\nBut, as New York shipping consultant Michael McCarthy
\nobserves, “There is only one commercial ship being built in
\nthe United States today — a fairly small container ship, at
\nabout twice the price of what it would cost to build abroad.”
\nThomas Crowley, chairman of Crowley Maritime Corp., believes
\nthat the performance of American shipyards has been ruined
\nlargely by their reliance on government contracts: “Any
\nshipyard that does Navy work isn’t worth a damn for
\ncommercial work.”<\/p>\n

Though the Bush administration is demanding that foreign
\ngovernments end their shipbuilding subsidies, it refuses to
\nrecognize the implicit subsidy the Jones Act provides to U.S.
\nshipyards. Deputy U.S. Trade Representative Linn Williams
\ndeclared last February that the act does not amount to a
\n“hill of beans in terms of subsidies” and is a “commercially
\nmeaningless program” because so few commercial ships have
\nbeen built in the U.S. in recent years. But, as the American
\nPetroleum Institute’s Mr. Connaughton observes, “That’s kind
\nof like saying that because we have destroyed an industry,
\nlet’s make sure it never arises again.”<\/p>\n

The Jones Act engenders a chain reaction of extortion —
\nallowing American shipyards to charge stratospheric prices to
\nAmerican ship buyers, allowing American-flag ships to charge
\nshakedown shipping rates to American businesses, and allowing
\nAmerican congressmen to demand lavish campaign contributions
\nfrom the American maritime industry (more than $1 million a
\nyear).<\/p>\n

U.S. maritime lobbies have been so generous that three of
\nthe past five chairmen of the House Merchant Marine
\nSubcommittee have been indicted for criminal links to the
\nmaritime industry, as Congressional Quarterly reported. (A
\nfourth chairman was indicted for other reasons.) Former Rep.
\nThomas Ashley declared that the House Merchant Marine
\nCommittee “sucks from the taxpayer; it sucks from anything
\nthat isn’t nailed down.”<\/p>\n

While the Jones Act fleet is relatively small and old,
\nthere are 300 U.S.-owned ships flying foreign flags. If
\nCongress actually wanted a large U.S.-flag fleet, it could
\neasily create one almost overnight by abolishing the
\nbuild-American and crew-American requirements on U.S. owners
\nof foreign-flagged vessels who might otherwise choose to fly
\nthe Stars and Stripes. But Congress is more interested in
\nperpetuating maritime campaign contributions — and those
\ncontributions can be garnered only by federal policies that
\ncontinue sabotaging U.S. maritime competitiveness.<\/p>\n

***********************<\/p>\n

The Wall Street Journal
\nFriday, March 27, 1992
\nThe Custom Service’s Chainsaw Massacre<\/strong>
\nBy James Bovard<\/p>\n

In this election year, politicians work overtime to
\ndenounce foreign governments’ unfair treatment of American
\nexports. But when it comes to arbitrary, unfair treatment,
\nfew foreign governments can beat the record of the U.S.
\nCustoms Service. Customs has conducted a bureaucratic reign
\nof terror against importers, pilots and boaters and against
\nthe $500 billion in imports that Americans buy each year. In
\nthe process, property rights have been thrown overboard.<\/p>\n

Customs has partially reined in its “seizure fever,” in
\nresponse to a Ways and Means Committee investigation and
\nunder the leadership of Customs Commissioner Carol Hallett,
\nwho replaced William von Raab in 1989. But as trade lawyer
\nJohn Pellegrini observes, “If there is a change at the head
\nof the agency, it could bring us back to the time when
\nCustoms seized first and asked questions later.”<\/p>\n

Unfortunately, the Bush administration is opposing a bill
\nsponsored by Rep. Barney Frank (D., Mass.) that would end
\nfederal agents’ incentives to destroy private property, no
\nmatter who is in charge.<\/p>\n

As the following examples illustrate, some Customs
\nofficials have not hesitated to skewer the Fifth Amendment’s
\nprotection of property rights:<\/p>\n

— As a 1990 House Ways and Means Committee report noted,
\nCustoms inspectors in Seattle chain-sawed an imported
\ncigar-store wooden Indian to prove beyond a shadow of a doubt
\nthat the Indian did not contain any narcotics. Customs agents
\nalso used chain saws to “inspect” a large container tightly
\npacked with paper products, rubber products and an antique
\nteakwood elephant.<\/p>\n

Chain saws are an attractive, efficient means of
\ninspecting imports in part because Customs never compensates
\nanyone for damage it does during inspections. The Ways and
\nMeans investigation concluded, “The U.S. Customs Service has
\nlittle or no incentive to avoid damaging cargo during
\nexaminations.”<\/p>\n

— On April 9, 1989, Customs officials “inspected” a
\nsailboat owned by Craig Klein of Jacksonville, Fla., with
\naxes, power drills and crowbars. By the time the search was
\ncompleted, the gas tank was ruptured, the engine was ruined,
\n15 large holes had been drilled below the waterline, and the
\nsailboat was worthless. No narcotics were found. Customs
\ndenied any compensation to the boat owner. A Customs agent
\nlater phoned Mr. Klein at home and threatened his life to try
\nto dissuade him from complaining to his congressman.<\/p>\n

— Customs “inspected” one airplane by forcing the owner
\nto land it — after which Customs officials pulled up close
\nby in a Black Hawk helicopter, and a prop blast from the
\nhelicopter flipped the plane over and destroyed it. Customs
\nthen arrested the pilot because they suspected he was a drug
\nsmuggler. Customs found no drugs, and the man was later
\nreleased. But Customs refused to compensate the man.<\/p>\n

— In 1988, the Farm Belt was suffering from a severe
\ndrought, and the dryness of land was causing a larger than
\nnormal number of tractor breakdowns. A Canadian company
\nshipped several truckloads of tractor parts to American
\nfarmers. At the border near Detroit, a single U.S. Customs
\nService official, disregarding previous Customs rulings,
\ndecreed that each individual tractor part had to be stamped
\n“Made in Canada,” seized the entire shipment and levied a
\nheavy penalty. While Customs later admitted its error and
\nreleased the shipment (although it refused to refund the
\npenalty), the shipment arrived too late for many farmers.<\/p>\n

— Apparel is one of the most frequently seized items. In
\n1988, an importer had a visa to bring in 204,000 shirts from
\nMexico. But a Customs inspector discovered that the shipment
\nactually contained 204,007 shirts — and seized the entire
\nshipment.<\/p>\n

— The Customs Service also forces some people to mutilate
\ntheir own property. The Customs Service has established
\nintricate rules for bringing clothing samples into the U.S.
\nEven if a designer is bringing in only a single dress from
\nHong Kong, the Customs Service requires the person to cut a
\nlarge hole into the dress in order to destroy any possibility
\nof its sale.<\/p>\n

— Under the 1984 tariff act, Customs can levy heavy
\npenalties on companies for importing items “contrary to law.”
\nIt now invokes this authority to fine shippers that are
\nrobbed at U.S. airports or ports. If the cargo is stolen
\nbefore it clears Customs, then Customs will hit the shipper
\nwith a penalty equal to 100% of the cargo’s value. (The
\ncompany is also liable to reimburse the owner of the stolen
\nproperty.) Mary McMunn of the Air Transport Association of
\nAmerica observes: “What are we compensating Customs for? They
\ndon’t own the merchandise.” With this policy, Customs
\neffectively clobbers private companies for the government’s
\nown failure to control the high theft rates at areas such as
\nKennedy Airport in New York.<\/p>\n

Rep. Frank’s bill would permit private citizens to sue to
\nrecover damages from Customs officials’ actions. Deputy
\nAssistant Attorney General Stephen Bransdorfer, testifying
\nbefore the House Judiciary Committee last October, opposed
\nholding the Customs Service liable for “negligent
\ndestruction” of commercial cargo because “standard marine
\ncargo insurance . . . is available at readily affordable
\nrates.” If Mr. Bransdorfer’s doctrine were adopted throughout
\nthe government, federal agents would have a blank check to
\ndestroy any private property for which insurance can be
\nbought.<\/p>\n

Rep. Sam Gibbons (D., Fla.) and Rep. Phil Crane (R., Ill.)
\nhave proposed a bill to significantly reduce Customs’
\nauthority to seize imports — but not to allow importers to
\nsue Customs for negligent damage. After many months of
\ndifficult negotiations between the Hill and the White House,
\nthe Bush administration has grudgingly signed onto the
\nGibbons-Crane bill. But this still falls short of what
\ncitizens and property owners deserve.<\/p>\n

**************<\/p>\n

The Wall Street Journal
\nWednesday, April 8, 1992
\nCongress Says Hard Cheese to Cheese Eaters<\/strong>
\nBy James Bovard<\/p>\n

The U.S. dairy program and 100,000 American dairy farmers
\nmay face imminent destruction from a few wheels of Hungarian
\ncheese — or so you’d think from the rhetoric emanating from
\nWashington. The supposed threat comes from Goya cheese, a
\nhard cheese sometimes used as a cheap, lower-quality
\nsubstitute for or blended with Parmesan or Romano cheese.
\nEven though Goya cheese is not and never has been produced in
\nthe U.S., an administration proposal to eliminate the tariff
\non Goya cheese from Hungary has produced perhaps the biggest
\npanic on Capitol Hill since the outbreak of the House Bank
\nscandal. The unsympathetic House Agriculture Committee has
\nscheduled a hearing on the Goya crisis for Thursday morning.<\/p>\n

The U.S. government has long protected Americans against
\nforeign cheese. Import quotas permit each American to
\npurchase the equivalent of only one pound of foreign cheese
\nper year. The U.S. International Trade Commission estimated
\nin 1990 that cheese import quotas produce the equivalent of
\ntariffs as high as 172%. The Agriculture Department estimates
\nthat dairy import quotas and other federal dairy policies
\ncost Americans more than $5 billion a year in higher prices.
\nThe ITC reported in January, “The U.S. has been a net
\nimporter of dairy products for many years largely because it
\ncannot compete with New Zealand, Australia, and . . .
\nIreland.”<\/p>\n

There are a few types of cheese, such as Goya, not covered
\nby import quotas, primarily because the U.S. dairy industry
\nassumed that they were not worth protecting against.
\nCurrently Goya cheese is hit with a “mere” 25% tariff.<\/p>\n

As the history of protectionism has shown, the more
\nprotection an industry receives, the greedier it becomes. The
\ndairy industry and its congressional agents are no exception.
\nHere’s a sampling of the rhetoric against the
\nadministration’s proposal to grant duty-free access to Goya
\ncheese from Hungary:<\/p>\n

Sen. Arlen Specter (R., Penn.) warned on Feb. 25 that
\nallowing duty-free entry of Goya cheese from Hungary would
\n“devastate the domestic dairy industry.” Sen. Harris Wofford
\n(D., Penn.) asserted that “many Pennsylvania farmers . . .
\nwill be financially hurt” simply by the White House decision
\nto consider duty-free access for Goya cheese.<\/p>\n

Rep. David Obey (D., Wis.) complained, “For American dairy
\nfarmers, the Goya cheese petition could not have come at a
\nworse time,” and Rep. Toby Roth (R., Wis.) said, “The
\nproposed duty-free entry of Goya cheese would result in
\nunfair competition with our own Parmesan, Romano and other
\nhard cheeses” — even though the Hungarian government, unlike
\nthe U.S. government, is not drowning its dairy farmers in
\nsubsidies.<\/p>\n

Rep. Dave Nagle (D., Iowa) warned, “Iowa’s dairy industry
\n. . . absolutely will not tolerate the Red Carpet being
\nrolled out to foreign dairy producers who are already
\ncompetitive with their product on the world market.” Rep.
\nSteve Gunderson (R., Wis.) said, “My farmers and cheese
\nmakers are being put at very serious risk once again because
\nof international geo-politics over which they have no
\ncontrol.” Mr. Gunderson added that if Goya cheese is given
\nduty-free access, “it may very well be time that we in the
\nCongress put a stake in the heart of what is fast becoming a
\nmonster” and abolish all special duty-free treatment of
\nimports from Third World nations or emerging democracies.<\/p>\n

Some congressmen warn ominously that if Hungarian exports
\nof Goya cheese are let in duty-free, the same access might be
\nextended to Goya cheese from Uruguay and Argentina. This is a
\nred herring. For one thing, the administration could easily
\ntailor the duty-free treatment specifically for Hungarian
\ncheese. But even if the tariff were lifted on Uruguayan and
\nArgentinian Goya cheese too, so what? Total U.S. imports of
\nGoya cheese from all countries amounted to barely $7 million
\nin 1990 — less than one-fiftieth of 1% of the total value
\n($48 billion) of dairy products sold in the U.S. Does Goya
\ncheese possess some magical property which, even in trace
\namounts, can destroy a nation’s dairy markets?<\/p>\n

All the righteous indignation against cheese imports is
\nparticularly jarring considering that the U.S. Agriculture
\nDepartment is massively dumping U.S. cheddar cheese onto
\nworld markets at a huge loss to American taxpayers.
\nAgriculture Secretary Edward Madigan last month announced
\nplans to subsidize the export of 4,700 metric tons of cheddar
\ncheese, more than four times Hungary’s total annual
\nproduction of Goya cheese.<\/p>\n

The U.S. may actually be suffering from a shortage of
\nItalian-type hard cheeses. Christopher Brescia, a lobbyist
\nfor the Hungarians, says, “U.S. production of hard cheeses,
\nregardless of category, does not meet the market demand.”
\nJerome Schuman, a New Jersey cheese importer, observes,
\n“Prices for Parmesan and similar loaves [wheels] of cheese
\nhave risen approximately 15% to 20% in the last two years —
\nyet very little increase or no in domestic production of
\nloaves has occurred.” Jack Schwarz, a New York food broker,
\nsays that the U.S. hard cheese makers have cut back
\nproduction of wheels of cheese, producing blocks and barrels
\nof cheese instead. Many grocery stores strongly prefer wheels
\nof cheeses but cannot get sufficient supply.<\/p>\n

President Bush will likely decide in the next few weeks
\nwhether Goya cheese will receive duty-free access. The
\nbrouhaha over his proposal is just one more example of
\nCongress’s idea of a level playing field: giving American
\nfarmers a 25% advantage and then letting the “best” farmer
\nwin.<\/p>\n

*************<\/p>\n

The Wall Street Journal
\nMonday, June 8, 1992
\nU.S. Protectionists Claim a Russian Victim<\/strong>
\nBy James Bovard<\/p>\n

The Commerce and Energy departments are squandering
\nmillions of tax dollars, hitting consumers with higher
\nelectricity bills, bushwhacking struggling ex-Soviet
\nenterprises, and perhaps helping some Third World dictators
\nto build nuclear bombs. And all in the name of “fair trade.”<\/p>\n

Late last month, the Commerce Department announced it was
\nimposing a 115.82% dumping penalty on uranium imported from
\nsix of the nations created by the shattering of the Soviet
\nUnion — Russia, Ukraine, Kazakhstan, Tajikistan, Uzbekistan
\nand Kyrgyzstan. Uranium had been the third largest export for
\nthe Soviet Union, and Commerce’s decision — which
\neffectively bans imports — devastates one of the
\nCommonwealth of Independent States’s most competitive
\nindustries.<\/p>\n

Secretary of State James Baker declared on April 9 that
\n“Russia, Ukraine and the other former Soviet republics are
\nnew countries. They should begin their new histories with a
\nclean bill of health.” But Commerce is penalizing new
\ngovernments for the Soviet Union’s pricing behavior from June
\nthrough October 1991 — though none of the CIS governments
\nexisted at that time.<\/p>\n

Commerce, acting on a complaint by domestic producers and
\na labor union, sent representatives of CIS governments a
\n66-page questionnaire demanding detailed information on their
\nuranium operations. It failed, in violation of U.S. law, to
\nprovide CIS governments with copies of the full petitions
\nfiled by U.S. industry against them. Commerce has convicted
\nthe CIS governments for not providing thousands of pages of
\ndocumentation on operations controlled by the Soviet Ministry
\nof Atomic Power and Industry. But that ministry was abolished
\nin January, and most CIS governments have limited access to
\ninformation on uranium operations in their territories during
\n1991.<\/p>\n

Uranium production, because of its military applications,
\nis considered top secret by most nations. Commerce has
\nconceded in previous dumping cases that governments have a
\nright to refuse disclosure of national security information,
\nbut denies this right to the CIS states. One CIS declared in
\nMoscow in March that Commerce’s questionnaire appeared to
\nhave been issued by the CIA.<\/p>\n

How, then, did Commerce decide that Soviet uranium prices
\nwere unfairly low? In most dumping cases, Commerce judges
\nforeign company prices by comparing their home market prices
\nwith those they charge in the U.S. But it has special rules
\nfor non-market economies that lack realistic price systems.
\nCommerce took the unproven assertions it received from the
\nU.S. producers, juggled the numbers, and then announced that,
\nif Soviet uranium had been mined with Canadian efficiency,
\nPortuguese electricity, and Namibian labor costs, it would
\nhave cost 115% more than it actually did.<\/p>\n

Because the U.S. industry claimed that Canadian uranium
\nminers are four times as productive as Czech uranium miners,
\nand because Czechoslovakia is a non-market economy too,
\nCommerce simply assumed that CIS mines required four times as
\nmuch labor as Canadian. It boosted its dumping margins
\naccordingly. This method gives new meaning to the old phrase,
\n“close enough for government work.”<\/p>\n

Instead of the concoct-an-imaginary-uranium-producer test,
\nCommerce officials could have judged Soviet export prices
\nsimply by comparing them to prices of other major uranium
\nexporters. Commerce officials chose the method that maximized
\ntheir arbitrary power over imports.<\/p>\n

In most dumping cases, a key issue is whether imports have
\ninjured an American industry. But, in this case, the question
\nis whether blocking CIS uranium imports can miraculously
\nresurrect a dead domestic industry. The U.S. Department of
\nEnergy has publicly admitted that the U.S. uranium industry
\nis not commercially viable. The uranium ore found in the U.S.
\nis simply of too low quality to compete with ore from Canada
\nor Australia.<\/p>\n

But despite the Energy Department’s admission that the
\nU.S. industry is hopeless, it is paying $3.3 million to a
\nWashington law firm to fight uranium imports. Why? Because
\nthe Energy Department owns and operates the only plants in
\nthe U.S. producing enriched uranium — a staple for nuclear
\npower plants. The Energy Department’s uranium enrichment
\nplants are technological dinosaurs. The only way that they
\ncan remain competitive in the U.S. is by crippling imports.<\/p>\n

The Energy Department’s victory is a disaster for
\nAmerica’s public utilities and the 50 million Americans who
\nrely on nuclear power. Commerce’s 115% dumping duty on CIS
\nimports could mean as much as $300 million in higher utility
\nbills in New York, Virginia and other states.<\/p>\n

Some foreigners will benefit from the tariff on CIS
\nuranium: Third World dictators seeking uranium to build their
\nown nuclear bombs. While there are strict international
\ncontrols on uranium sales, most CIS states are in desperate
\nneed of hard currency. If the CIS states are banned from the
\nU.S. market, it is far more likely that uranium will be
\ndiverted to military uses.<\/p>\n

This case is another national embarrassment concocted by
\nbureaucratic hacks at the Commerce Department. George Bush’s
\nadvocacy of free markets is worthless if he cannot prevent
\nhis own administration from wrecking those markets.<\/p>\n

*****************<\/p>\n

The Wall Street Journal
\nMonday, July 13, 1992
\nSummer Trade Follies<\/strong>
\nBy James Bovard<\/p>\n

The trade bill passed by the House last week is Congress’s latest
\nattempt to scuttle world trade. The bill is full of damaging
\nprovisions:<\/p>\n

— Car quotas. The bill imposes quotas on Japanese auto imports
\nuntil the turn of the century. Several congressmen explained that
\nthe fact that Japanese auto exports to the U.S. are much higher than
\nU.S. auto exports to Japan proves Japan is incorrigibly
\nprotectionist. The Japanese, like the British, drive on the wrong
\nside of the road, but the Big Three have refused until very recently
\nto build cars with steering wheels on the right side for the
\nJapanese market. Congress apparently thinks that driving on the left
\nside of the road is an unfair foreign trade practice.<\/p>\n

— Super 301. The bill resurrects the Super 301 program, under
\nwhich the Bush administration is obliged to proclaim an annual list
\nof the world’s most “unfair” traders. The real achievement of this
\nprovision is to provide an opportunity for congressmen to get on
\nnational TV to blast administration officials for not denouncing
\nenough foreign countries’ trade practices. It also allows
\ncongressmen to decree which foreign governments should be presumed
\nguilty of unfair trade and subjected to a highly confrontational
\nU.S. government investigation.<\/p>\n

For instance, the bill requires the U.S. Trade Representative to
\nre-investigate Japanese rice import barriers. The Trade
\nRepresentative estimates that if Japan opened its rice market to
\nAmerican farmers, American farmers could sell $656 million in rice
\nto the Japanese. The House would prefer to deflect attention from
\nthe U.S. Agriculture Department’s handouts to American rice farmers,
\nwhich last year added up to $851 million. U.S. taxpayers lose far
\nmore from rice subsidies than American rice growers could possibly
\ngain from an open Japanese market.<\/p>\n

— Wheat police. Rep. Byron Dorgan (D., N.D.) slipped a provision
\ninto the bill to require that all wheat imports have an “end-user”
\ncertificate. Mr. Dorgan says he’s worried about our domestic wheat
\nindustry since wheat imports have risen fivefold since 1983. The
\nculprit is U.S. farm policy, which drives down world market prices
\nby subsidizing exports while raising prices at home. Mr. Dorgan’s
\nplan would create severe paper work burdens for grain traders; the
\nKansas Association of Wheat Growers admitted in April that the goal
\nof the certificate requirement was “to increase costs for imported
\ngrain . . . and provide enough extra work to make imported grain
\nless attractive.”<\/p>\n

— Dumping. The bill mandates that the U.S. government make it
\nless expensive for U.S. companies to file suits against their
\nforeign competition for “dumping” — that is, charging low prices to
\nAmerican consumers. But, U.S. companies already have a huge
\nadvantage in U.S. government trade proceedings. A domestic company
\ncan point the Commerce Department like a guided missile against its
\nforeign competition and let the U.S. government do the rest. For
\nexample, as a result of the dumping charges filed by U.S. steel
\nmakers last month, foreign steel producers may be forced to spend
\nmore than $100 million to defend themselves, four to five times more
\nthan domestic steel producers will spend on the case.<\/p>\n

Foreign products may be considered “dumped” if they contain parts
\nor components that the U.S. thinks are “dumped.” For instance,
\nbecause Commerce created a 63% dumping margin on Japanese computer
\nflat panels last year, the bill could result in $1,000 dumping
\ntariffs on imports of laptop computers.<\/p>\n

— Machine tools. Mandatory import quotas on machine tool imports
\nfrom Taiwan are authorized by the bill. Last December President Bush
\nasked Taiwan and Japan to extend their 1986 quotas on machine tool
\nexports. Taiwan is balking because it believes the U.S. is imposing
\nmore punitive restrictions on it than on other machine tool
\nexporters. Maybe Congress’s action will help other nations realize
\nthe real meaning of the word “voluntary” when the U.S. government
\ninvites them to restrict their exports.<\/p>\n

— Tariffs. This bill doubles tariffs on some types of steel
\npipes and tubes and on a key ingredient for household detergents and
\nother cleaners. The higher tariffs will cost almost $100 million
\nbetween now and 1997, a cost that will be passed along to the
\nconsumer. Foreign governments may retaliate by raising their tariffs
\non American exports, a right they have under the General Agreement
\non Tariffs and Trade. Thus, the tariff hikes could sacrifice U.S.
\nexports in order to further protect uncompetitive U.S. industries.<\/p>\n

— Dolls. Congress is on the verge of creating a new definition
\nof stuffed dolls. The ever vigilant House Ways and Means Committee,
\nauthor of the trade bill, has decreed that for the purpose of the
\nU.S. tariff code, stuffed dolls shall henceforth be considered to
\ninclude dolls filled with “pellets, beans, or crushed nutshells.”
\nThe bill also mandates refunds for tariffs paid by doll importers
\nbetween Dec. 31, 1985 and Oct. 1, 1988. No one has ever revealed how
\nretroactive tariff reductions spur international trade or help
\nconsumers.<\/p>\n

The floor debate on the bill last Wednesday did nothing to
\ntarnish congressmen’s reputation for economic omniscience. Rep.
\nLucian Blackwell (D., Penn.) offered this concise summary of
\nU.S.-Japan relations: “Last year the United States compiled a
\nridiculous $43.4 billion trade deficit with Japan. That means that
\neverything was coming from Japan and nothing was going back.” In
\nreality, the U.S. exported $47 billion to Japan last year. Rep. Gene
\nTaylor (D., Miss.) edified C-SPAN viewers with the revelation that
\n“99% of the jobs that are lost in the U.S. are caused by imports.”
\nMr. Taylor did not explain how imports caused the 500,000 jobs lost
\nin construction and 83,000 jobs lost in financial services since
\n1989.<\/p>\n

With what can only be considered malicious humor, the House has
\nlabeled its trade bill the “Trade Expansion Act.” Congress should
\nfind some less dangerous way to amuse itself than throwing rocks at
\nimports.<\/p>\n

******************<\/p>\n

The Wall Street Journal
\nFriday, July 31, 1992
\nNAFTA’s Protectionist Bent<\/strong>
\nBy James Bovard<\/p>\n

Pandering to protectionists is poisoning the North American Free
\nTrade Agreement. In its attempt to get a so-called free trade pact
\napproved, not only is the Bush administration surrendering to
\nCongress’s demands, but it may be setting a precedent for higher
\nU.S. trade barriers against scores of other countries. It calls to
\nmind the Carter administration’s surrender to Soviet demands in the
\nSALT II talks.<\/p>\n

The key protectionist danger in NAFTA lies in its new rules of
\norigin. Rules of origin are the federal regulations that determine
\nthe national origin of an imported good. For most imports, national
\norigin is determined by the country in which the product was last
\nsubstantially transformed into a “new and different article of
\ncommerce.”<\/p>\n

NAFTA will have more protectionist rules of origin for autos,
\ntelevisions, and especially clothing. In 1984 the U.S. Customs
\nService, at the behest of the domestic textile industry, announced a
\nmuch more restrictive rule of origin for apparel, decreeing that the
\nnation of origin would depend not on where fabric was finally sewed
\nor assembled, but on the nation of origin of both the fabric and of
\nthe sewing.<\/p>\n

NAFTA builds on this precedent to concoct a super-protectionist
\nrule of origin for apparel. It requires not only that clothing be
\nsewed in North America from fabric made in North America, but that
\nthe yarn the fabric is made from also be from North America — a
\ntriple rule of origin.<\/p>\n

The intent of this “yarn forward” rule is to oblige Mexican and
\nCanadian apparel makers to buy yarn and fabrics from American
\ntextile mills before being allowed to sell clothing to U.S.
\nconsumers. This makes as much sense as forcing Belgian companies to
\nuse American sugar for their chocolate exports.<\/p>\n

Many types of yarn and fabrics are not produced in the U.S. But
\nMexican and Canadian companies that must rely on those yarns or
\nfabrics to produce products for export to the U.S. will have to get
\nspecial exemptions from the triple rule of origin. NAFTA will have
\nbyzantine regulations for determining whether specific yarns and
\nfabrics are in “short supply” in the U.S. And who will likely be the
\nfinal judge? The American textile industry’s best friend, the U.S.
\nCommerce Department. (During the mid-to-late 1980s, Commerce ran a
\nsimilar short-supply program for steel products; the General
\nAccounting Office concluded that Commerce officials “viewed it as
\ntheir responsibility . . . to keep foreign steel out of the U.S.”)<\/p>\n

The short-supply system could empower U.S. bureaucrats to heavily
\ninfluence which fabrics Mexican factories use to produce dresses
\nthat Americans will buy. At a June 29 closed-door meeting,
\nretailers, importers and apparel manufacturers presented a list of
\n117 fabrics they considered to be in short supply in North America;
\nU.S. textile manufacturers responded by insisting that only eight
\nfabrics are in short supply. Ron Sorini, the chief U.S. textile
\nnegotiator, who was present at the meeting, appears to have accepted
\nthe textile manufacturers’ claims. This means that the U.S.
\ngovernment is likely to deny short-supply exemptions in the vast
\nmajority of cases.<\/p>\n

The short-supply system will also hurt Canadian apparel makers.
\nFour years after President Reagan signed the Free Trade Agreement
\nwith Canada, the Bush administration is demanding that Canada accept
\nnew restrictions on the number of wool suits it can export to the
\nU.S. (The U.S. currently imposes no textile import quotas on
\nCanada.) Wool suits are one of Canada’s most successful garment
\nexports, and, since Canadian apparel makers import most of their
\nfabric from Europe, the “yarn forward” rule will throttle their
\ntrade with the U.S.<\/p>\n

Israel Shames, president of the Quebec Apparel Manufacturers
\nInstitute, estimates that NAFTA could halve Canada’s exports of some
\napparel items. Jack Kivenko, president of the Canadian Apparel
\nManufacturers Institute, estimates that NAFTA could result in the
\nloss of as many as 40,000 jobs in the Canadian apparel industry. Mr.
\nKivenko complains: “America is drawing up rules to keep the threat
\nof a Canadian apparel invasion down to a mere trickle. Every time
\nthe Americans ‘level the playing field,’ we find that Canadians have
\nhigher hurdles to jump.”<\/p>\n

Judging from the current negotiation, NAFTA is likely to sow
\nother seeds of national conflict. Customs Service Commissioner Carol
\nHallett told a congressional hearing in May that she presumes that
\nNAFTA will allow U.S. agents to enter Mexico in search of illegally
\nlabeled goods, as States News Service has reported. (Some
\ncongressmen fear that Mexican companies may purchase Chinese
\nclothing and attach a “Made in Mexico” label.) Last December, two
\nbusloads of heavily armed Customs agents pulled up outside of the
\nEmpire State Building in New York and ransacked the offices of 20
\ntextile companies, browbeating employees and seizing hundreds of
\nboxes and computer tapes to investigate whether the companies
\ncomplied with U.S. textile import regulations. If U.S. Customs
\nagents pulled a similar stunt in Mexico City or Toronto,
\nU.S.-Mexican or -Canadian relations could be devastated.<\/p>\n

Mexico currently provides barely 3% of U.S. textile and apparel
\nimports. Yet the archprotectionist textile rule of origin will
\nlikely be applied to other nations in the future. Textile negotiator
\nSorini explicitly declared that the yarn-forward rule will guide
\nfuture trade negotiations: “This will be a model for all future free
\ntrade agreements. We feel we have balanced the interests of
\nbusiness.”<\/p>\n

Furthermore, the U.S.’s preferential treatment of Mexican imports
\ncould hurt other Latin American nations. If, for example, both
\nMexico and Guatemala are shipping lace brassieres to the U.S. and
\nthe U.S. abolishes the 32% tariff for Mexican producers but retains
\nit for Guatemalan producers, then Guatemalan producers will be left
\nat a severe disadvantage. Puerto Rican government officials have
\nwarned that eliminating tariffs on Mexican textiles while
\nmaintaining tariffs on Caribbean textiles could torpedo the entire
\nCaribbean textile industry.<\/p>\n

NAFTA will give too much discretion to Customs Service employees,
\nwho have injected protectionist intention into previous trade laws.
\nThis February, for example, Customs bureaucrats bushwhacked Honda
\nwith a profoundly creative, retroactive interpretation of the
\nU.S.-Canada Free Trade Agreement, ruling that automobile engine
\nblocks that are cast, shaped, machined and finished at a Honda plant
\nin Ohio are not made in America. The Honda decision created much ill
\nwill north of the border, making many Canadians suspect that
\nhypocrisy is now the U.S.’s leading export.<\/p>\n

There is also danger in how much political ransom the Bush
\nadministration may pay Congress to get NAFTA approved. Democrats
\nhave already demanded a large increase in spending for government
\njob training programs to ameliorate the impact of NAFTA. However, as
\na recent Labor Department report showed, government job training is
\none of the worst things politicians can inflict on young workers.
\nThe Labor Department found that young male trainees in the Job
\nTraining Partnership Act, the nation’s premier job-training program,
\nhave significantly lower earnings than similar youths who were never
\ntrained by the government.<\/p>\n

The negotiations are not yet complete. The Bush administration
\nstill has a chance to drop its protectionist stance and make NAFTA a
\ntreaty worth signing. Free trade is not complex; it does not require
\nan army of bureaucrats to define and re-define it. It is
\nprotectionism that requires endless administrative gimmicks to
\ncamouflage its true nature. With each new politically contrived
\ndefinition of fair trade, the NAFTA negotiators are sowing the seeds
\nof future uncertainty, accusations and ill will.<\/p>\n

—<\/p>\n

**************************<\/p>\n

The Wall Street Journal
\nTuesday, September 8, 1992
\nBush’s Wheat War Leaves Many Casualties<\/strong>
\nBy James Bovard<\/p>\n

President Bush announced plans last week for an additional
\nbillion dollars of wheat export subsidies. His announcement of new
\nhandouts — and his promise to farmers of “keeping the government
\noff your back as best we can” — may harvest a few Farm Belt votes.
\nBut U.S. farm export subsidies will continue whipsawing world
\nmarkets, infuriating our allies and bushwhacking some American
\nfarmers.<\/p>\n

The U.S. government has spent more than $3.5 billion to subsidize
\nwheat exports since 1985 via the Export Enhancement Program. EEP
\neffectively subsidizes both foreign buyers and American farmers, but
\nmost analysts believe that the foreign buyers get most of the
\nbenefits.<\/p>\n

EEP’s ostensible purpose is, by subsidizing U.S. exports, to
\npersuade the Europeans that they should cease subsidizing their
\nexports. When EEP subsidies began in 1985, farm-state congressmen
\nand Agriculture Department bureaucrats believed that a few carefully
\nselected sales would sufficiently intimidate the European Community.
\nInstead, the precedent of a few U.S. subsidies created the demand
\nfrom foreign grain buyers for far more subsidies, and now the U.S.
\nis paying large subsidies on roughly 80% of wheat exports. The
\nForeign Agriculture Service admits that generous subsidies for wheat
\nexports have displaced unsubsidized American corn exports.<\/p>\n

One Agriculture Department study concluded that nine out of 10
\nbushels of wheat exported via EEP would have been exported anyhow.
\nThe primary effect of EEP was that, instead of exporting for a
\nprofit, the U.S. sold for a loss. Harvard economist Robert Paarlberg
\nnotes, “It would have been almost a dollar a bushel cheaper simply
\nto buy surplus wheat on the free market and then destroy it, rather
\nthan to give it away under EEP.”<\/p>\n

William Pearce of Cargill Inc., the world’s largest private grain
\ntrader, complained to Congress in February: “We have found no
\nevidence that EEP increased bulk grain exports.” The U.S. will
\nlikely export 20% less wheat this year than it did in 1984, when no
\nexport subsidies were provided. (The U.S. is also providing $2
\nbillion in direct subsidies to American wheat growers this year.)<\/p>\n

Mr. Bush, in Wednesday’s speech to South Dakota farmers in which
\nhe announced the subsidy plan, claimed: “My strategy is to
\noutproduce our competition and beat their socks off in the
\nmarketplace.” But the Agriculture Department is currently rewarding
\nAmerican farmers not to plant 11 million acres of wheat each year —
\nas well as paying them to idle more than 40 million acres of land
\npreviously used for other crops. This decrease in wheat production
\nmay have done more than anything else to stifle U.S. exports — and
\nto indirectly subsidize the European Community’s harebrained farm
\nprograms. Thanks largely to such policies, the U.S. share of the
\nworld wheat market has nosedived since 1981.<\/p>\n

Mr. Bush declared in his speech: “The fact is that the prices
\nfarmers are receiving are too low today. And to get the prices up we
\nmust expand demand, and that means an aggressive export policy.” It
\nis peculiar that Mr. Bush would declare that food prices are too low
\n— especially since the Organization for Economic Cooperation and
\nDevelopment estimates that federal farm policies cost American
\nconsumers almost $20 billion in higher food prices last year.<\/p>\n

EEP inflates domestic prices by artificially increasing the
\ndemand for U.S. wheat — and decreases foreign prices by offering a
\nsubsidy to foreign buyers. EEP uses tax dollars to drive down the
\nprice for foreign buyers — and to drive up the price that American
\nconsumers are forced to pay. A Congressional Research Service report
\nestimated that EEP wheat subsidies alone will cost consumers more
\nthan $200 million this year.<\/p>\n

Wheat prices jumped by almost nine cents a bushel the day of Mr.
\nBush’s announcement. But the more export subsidies drive up the U.S.
\nprice, the less competitive U.S. wheat is on world markets. The
\nexport subsidies widen the gap between U.S. and world grain prices,
\nthereby producing a vicious circle of decreasing competitiveness and
\nspiraling federal outlays.<\/p>\n

A White House statement indicated that the U.S. will begin
\ntargeting new markets for EEP subsidies — including Pakistan and
\nSouth Africa. Australia’s New South Wales Farmers’ Association
\nestimates that Mr. Bush’s initiative will cost Australian farmers
\nmore than $300 million, and urged its government to sharply increase
\nthe rent it charges the U.S. for military bases in Australia.
\nCanadian Grains Minister Charlie Mayer declared that Mr. Bush’s
\nannouncement is “tantamount to a declaration of war on Canadian
\nfarmers” because the U.S. is taking aim at such traditional Canadian
\ngrain customers as India, Kenya, Lebanon, Poland and Romania.
\nArgentine farmers could be hurt because the U.S. is targeting Brazil
\n— and Brazil has traditionally bought unsubsidized Argentine wheat.<\/p>\n

We are more likely to achieve trade liberalization not by
\nbrowbeating the Europeans but by deregulating and liberating U.S.
\nagriculture. A study by Andrew Feltenstein of Kansas State
\nUniversity estimated that the elimination of agricultural subsidies
\nin 1986 would have reduced America’s trade deficit by $42 billion,
\nand a Purdue University study found that eliminating farm subsidies
\nwould boost U.S. exports by $10 billion.<\/p>\n

Getting into an export subsidy war is like trying to punish a
\nforeign government by financially massacring our own citizens.
\nRather than caterwauling for higher food prices, Mr. Bush should
\nabolish farm programs that cripple American competitiveness.<\/p>\n

********<\/p>\n

The Wall Street Journal
\nTuesday, November 10, 1992
\nFree Trade, 1990s-Style, Is Anything But<\/strong>
\nBy James Bovard<\/p>\n

In the current U.S.-EC farm trade dispute, the European Community
\nis blatantly in the wrong. It has breached its 1962 commitment, and
\nhas negotiated in bad faith for five years to try to weasel out of
\nits earlier pledges. The EC is taking its cue from French farmers, a
\ngroup that pioneered the art of social protest by setting sheep on
\nfire. But the only thing worse than the U.S. “losing” this trade
\nconflict may be winning it.<\/p>\n

The issue in the dispute is not whether the EC will cease
\ndistorting international agricultural markets. Rather, it is whether
\nthe EC will sufficiently decrease its trade-distorting subsidies for
\none type of farm product — oilseeds — to mollify the U.S.,
\nArgentina and Brazil. If the EC decides to trim its massive
\nsubsidies for oilseed production, it will be hailed as a victory for
\nfree trade. In reality, it is largely a question of marginally more
\nmanaged trade vs. marginally less managed trade: Will the EC agree
\nto U.S. demands to cut back its subsidized production of soybeans,
\nsunflowers and rapeseed to nine million tons a year — or just to
\n9.5 million tons?<\/p>\n

So much for free trade in the ’90s.<\/p>\n

President Reagan launched the current Uruguay round of the
\nGeneral Agreement on Tariffs and Trade with a commendable goal back
\nin 1986 — an international agreement to abolish all
\ntrade-distorting farm subsidies within 10 years. Since Mr. Reagan
\nannounced his goal, American taxpayers and consumers have been
\nforced to provide more than $150 billion in handouts to American
\nfarmers. As the negotiations have dragged on, the potential benefits
\nof a multilateral agreement have withered. The last formal proposal
\nfor a GATT agreement in January would have required the U.S. to
\nreduce its farm subsidies only slightly.<\/p>\n

Unfortunately, the current oilseeds dispute could further
\npolitically legitimate American farm subsidies. Congressmen will
\nalmost certainly manipulate the controversy to claim, because
\nsoybean farmers are being victimized, that the U.S. must continue
\ncarpet-bombing rice, cotton, wheat and dairy farmers with more
\nsubsidies. (While soybean production receives minimal subsidies in
\nthe U.S., most soybean farmers receive government handouts for
\ngrowing corn or other subsidized crops.) The big issue will not be
\nwhy the federal government is harming 250 million consumers and
\npaying hundreds of thousands of farmers not to work, but why soybean
\nexports to Europe are lower than they previously were.<\/p>\n

American soybean farmers are protected by high U.S. tariffs on
\nsoy oil imports; the U.S. heavily subsidizes most of its soy oil
\nexports, thereby disrupting world markets. On the flip side, federal
\nfarm policies have done more to hurt some American soybean farmers
\nthan has the EC. Lavish subsidies for sugar beet farmers have
\ndoubled the cost of renting farmland in parts of Minnesota —
\nthereby driving some soybean farmers off the land.<\/p>\n

In the current conflict, U.S. Trade Representative Carla Hills
\nand chief agricultural negotiator Julius Katz have commendably bent
\nover backward to follow international rules strictly and to propose
\npunitive tariffs on a very narrow, targeted list of European
\nproducts. Yet, if the EC does accede to the U.S.’s rightful demands,
\nmany congressmen will almost certainly draw the wrong lessons.
\nAmerican politicians rarely limit their demands for “retaliation”
\nagainst foreign countries to cases where the U.S. has actually been
\nwronged.<\/p>\n

While the U.S. is on the moral high ground on the oilseeds issue,
\nthe U.S. is taking the low road on several other trade issues. Last
\nmonth, the U.S. imposed import quotas on uranium imports from Russia
\nand other former Soviet nations. Kazakhstan, Kyrgzstan and
\nUzbekistan have been banned from exporting uranium to the U.S. until
\nthe world uranium price rises at least 20%. The U.S. recently
\nimposed import quotas for the first time on textiles from Lebanon,
\nLesotho and Laos — one of the world’s poorest nations.<\/p>\n

The U.S. just initiated an unfair trade practice investigation
\nagainst Indonesia because Indonesia imposes high tariffs on its log
\nexports — even though the U.S. also restricts log exports from
\nparts of Oregon and Washington state. And a recent dumping duty
\nimposed on computer memory chips from South Korea is devastating
\nsmaller American computer makers, causing chip shortages and much
\nhigher chip prices.<\/p>\n

While many American politicians are demanding new U.S. trade
\nbarriers, foreign politicians are increasingly dismantling their
\nown. Mexico since 1985 has cut the maximum tariff from 100% to 20%,
\nand the average tariff from 23% to 10%. In 1986, Kenya reduced many
\nof its tariffs to zero. New Zealand recently announced a plan to
\nslash its tariffs, almost all of which will be down to a maximum of
\n10% by 1996. In late 1990, Hungary proposed reducing duties on 90%
\nof the country’s imports.<\/p>\n

Unfortunately, some American politicians continue to view the
\nU.S.’s 8,000-plus tariffs and 3,000-plus import quotas as valuable
\nnational assets — bargaining chips to be hoarded and given up only
\nvia negotiations with foreign governments. But the benefits of the
\nU.S. unilaterally adopting free trade now are greater than the
\nbenefits of the multilateral adoption of free trade 15 or 30 years
\nfrom now.<\/p>\n

Negotiating with the EC to achieve free trade is like <\/strong>negotiating with prostitutes to achieve chastity.<\/strong> The U.S. should
\ncontinue vigorously trying to reach a GATT agreement and to settle
\nthe oilseeds dispute. But we should cease allowing our national
\nself-interest to be held hostage by the most violent group in
\nWestern Europe — French farmers. If the EC continues to refuse to
\nliberate European consumers, that is no excuse for Washington to
\ncontinue shackling American consumers.
\n—<\/p>\n

***************************************<\/p>\n

The Wall Street Journal
\nFriday, December 18, 1992
\nThe Great Federal Panty Raid<\/strong>
\nBy James Bovard<\/p>\n

Last Friday, Bill Clinton nominated Laura Tyson — one of the
\nnation’s premier advocates of managed trade and industrial policy —
\nto be chief of his Council of Economic Advisers. Coincidentally, the
\nU.S. International Trade Commission on Monday will drop on President
\nBush’s desk a textbook case of protectionist industrial policy. The
\ngovernment is on the verge of devastating dozens of manufacturers in
\na vain attempt to compensate two small companies for the fact that
\nrubber trees do not grow in America.<\/p>\n

Rubber thread is a key component of the waistbands of panties and
\nother underwear, sock tops and bungee cords. The ITC’s three
\nDemocrats — David Rohr, Don Newquist and Janet Nuzum — recently
\nvoted for an added tariff of as much as 25% on rubber thread
\nimports. Imports from Malaysia, the main supplier, are already hit
\nby various tariffs totaling 29%; the new levy will raise the tariff
\nto 54%. The ITC’s three Republicans — Anne Brunsdale (the
\nReagan-Bush administrations’ unsung hero of free trade), Carol
\nCrawford and Peter Watson — voted against providing added
\nprotection.<\/p>\n

After the two ITC factions forward recommendations to the White
\nHouse, the president will have 60 days to decide whether to impose
\nnew barriers. If Mr. Bush passes the buck, Mr. Clinton will have to
\ndecide the case early on.<\/p>\n

Rubber thread is composed primarily of latex, and Malaysia
\nproduces most of the world’s latex from its rubber trees. Latex,
\nwhich accounts for more than half the cost of producing rubber
\nthread, is extremely expensive to transport, and Malaysian producers
\nhave many advantages from being next to the rubber plantations. The
\nITC concluded that, for 1990, the average cost of producing rubber
\nthread was $1.79 a pound for U.S. companies but only 77 cents a
\npound for Malaysian companies. But, American trade policy makers
\nrefuse to be intimidated by mere facts of geography.<\/p>\n

Though rubber thread imports are already heavily taxed, two Falls
\nRiver, Mass., companies — Globe Manufacturing Co. and North
\nAmerican Rubber Thread Co. — want more. Globe and NART petitioned
\nthe ITC to impose more tariffs on Malaysian rubber thread imports to
\ngive themselves a chance to charge higher prices and modernize their
\nequipment.<\/p>\n

The two petitioners have fewer than 150 workers employed making
\nrubber thread, while total employment in U.S. companies using rubber
\nthread is more than 3,000. Thus, additional protection could destroy
\n20 times as many jobs as it saves.<\/p>\n

Globe and NART have been loudly damned by their American
\ncustomers. Thomas Butler, president of Norbut Manufacturing Co. of
\nFalls River, complained to the ITC that his company experienced
\n“three weeks of constant rubber breaks in our rubber covering
\nmachines” after buying thread from NART. Michael Asheghian of
\nElastic West Industries of Los Angeles declared, “Because of late
\ndeliveries and sticky rubbers, the U.S. producers cannot meet
\ncustomers’ needs.” Dave Casty, president of Elastic Corp. of
\nAmerica, the largest purchaser of rubber thread in the U.S.,
\ndenounced the petition at an ITC hearing: The rubber thread industry
\n“abdicated that whole marketplace years ago.” (Even with high levels
\nof protection, NART and Globe could not possibly supply American
\ndemand.)<\/p>\n

The 29% tariff on Malaysian rubber thread imports is already
\npummeling rubber thread users. John Elliott, president of Rhode
\nIsland Textiles, which produces elastic, complained that his firm
\nrecently lost “a very large customer” in Los Angeles to a Hong Kong
\nfirm that can buy rubber thread at world prices (roughly 30% to 40%
\nbelow current U.S. prices) — and must pay only an 8% U.S. tariff on
\nits elastic exports. The high tariffs are also undercutting U.S.
\ncompanies’ efforts to export American-made elastic.<\/p>\n

The ITC’s Democrats even propose adding new tariffs on a specific
\ntype of rubber thread not produced in the U.S. Food-grade rubber
\nthread is used for mesh wrapping for hams and other meats, and
\nstrict production controls are necessary to avoid carcinogens.
\nTimothy Carroll of C&K Manufacturing of Westlake, Ohio, railed: “I
\ncannot fathom what the U.S. industry hopes to gain by requesting
\nadditional duties and quotas on this product when they don’t produce
\nthem. . . .” Mr. Carroll also worried about the danger to U.S.
\ncompanies of using tainted Americanmade thread: “All we have to do
\nis have one product not meet the statute, and . . . we are sued and
\nwe are out of business.”<\/p>\n

Trade barriers divert capital from more productive to less
\nproductive uses. Globe is reaping large profits from producing
\nSpandex — a frequent substitute for rubber thread. ITC Commissioner
\nNuzum asked Globe’s Bob Bailey: “If you have essentially two
\ndifferent opportunities and one gives you a better return on your
\ndollar, why isn’t it that you would continue to devote more
\nresources towards that more profitable line?” Mr. Bailey replied:
\n“Because we still want to be a full service manufacturer. We don’t
\nonly want to make Spandex.” But corporate vanity should not drive
\nU.S. trade policy.<\/p>\n

According to U.S. trade law, before the president can impose
\nthese special higher duties, he must conclude that they would
\n“provide greater economic and social benefits than costs.” The U.S.
\ngovernment, by trying to forcibly enrich two small companies, could
\nexport a much larger industry. Several manufacturers warned the ITC
\nthat they may move their operations overseas if the ITC imposes new
\nrestrictions on rubber thread imports.<\/p>\n

The rubber thread case vivifies the essence of protectionism —
\npoliticians intervening to allow floundering American companies to
\ntake successful American companies hostage. As Mr. Casty of Elastic
\nCorp. warned, “If we lose that competitive entrepreneuring edge by
\nactions like this, we just put America 50 leagues behind the rest of
\nthe world.”<\/p>\n

—<\/p>\n","protected":false},"excerpt":{"rendered":"

Some folks thought I was too harsh on the late George H.W. Bush in my USA Today oped and on my Twitter comments. So here’s some of the articles I wrote on Bush’s protectionist debacles in the early 1990s. [The following piece was reprinted in two economics college textbooks] Wall Street Journal Wednesday, September 6, […]<\/p>\n","protected":false},"author":1,"featured_media":10640,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1841,15,495,1819,122,732,1820,264,27,1842,1840,855,494,1822],"class_list":["post-12828","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-cheese","tag-congress","tag-free-trade","tag-george-h-w-bush","tag-hypocrisy","tag-ignorance","tag-japan","tag-lies","tag-lying","tag-minivans","tag-panties","tag-peanuts","tag-protectionism","tag-steel"],"yoast_head":"\nG.W.H. 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