- The Washington Times - Wednesday, November 22, 2000

Thanks to Sen. Robert Byrd, the United States is inviting a trade war with Canada, Japan and other major U.S. trading partners and putting U.S. jobs at risk.

The West Virginia Democrat would no doubt bristle at the suggestion. After all, he merely added an amendment to an agriculture-spending bill recently signed by President Clinton. But the devil's in the details, and Mr. Byrd's amendment is already upsetting our foreign trading partners and casting a pall over the future of free trade.

The amendment changes U.S. anti-dumping laws, which use tariffs to protect U.S. industries from foreign competition that dump massive amounts of their products into the U.S. market, depress prices and push American industries out of business. Specifically, it would transfer the money raised through these tariffs from the U.S. Treasury to the businesses that requested the protection.

Mr. Byrd says he sponsored the amendment because "U.S. trade law is not intended to raise revenue for the general treasury." That may be true. But how can he miss the pro-tariff incentive he's dangling in front of American industries? In practice, this legislation will simply encourage U.S. businesses to seek relief from foreign competition through higher tariffs. They already have an incentive to seek protection via U.S. anti-dumping laws because a favorable ruling makes imported goods and services less competitive. This windfall in revenues amounting to approximately $200 million each year will increase the protectionist tendencies of many U.S. businesses.

Mr. Byrd's action won't go unnoticed. When the United States indulges in protectionism, foreign countries respond in kind. The Rushford Report, a monthly business newsletter, notes that more than 130 U.S. companies have been investigated by foreign countries in recent years for alleged anti-dumping practices, and no doubt some of these investigations were lodged in retaliation for U.S. anti-dumping investigations.

And who ends up paying the price? Consumers and workers. Applying tariffs on raw materials like steel or wood drives up the price of im-ported materials and makes exporters less competitive on the world market. The less competitive exporters are, the more they need to fire workers to stay afloat.

Mr. Byrd's amendment also shows favoritism for the steel industry, a key business in his home state. Since the 1998 Asian financial crisis, which saw steel imports to the United States increase, the steel industry (which employs about 200,000 Americans) has aggressively petitioned for relief under anti-dumping laws.

But what about the 8 million Americans who work in steel-using industries, from transportation to construction? According to trade expert Brink Lindsey, they outnumber steel-makers 40 to 1. Does this mean that for every one American who benefits from the law, 40 others must suffer? And let's not forget how U.S. consumers who benefit from the lower prices that free trade brings to such products as automobiles, houses and major household appliances would be affected.

Federal lawmakers may be ignorant of the bill's ramifications, but our trading partners are not. (Indeed, it was largely the failure of U.S. policy-makers to address anti-dumping laws that caused the Seattle trade talks to collapse last year.) The 11 countries that make up the European Union, along with Japan and Canada, asked President Clinton to veto this bill, and they have been threatening to take action against the United States because of it.

The United States and the EU are already locked in a number of trade disputes over such issues as genetically modified livestock and export subsidies to U.S. firms. The Byrd amendment can only further harm trade relations with many of the largest U.S. trading partners.

Worse, it shows the United States is willing to sacrifice the interests of consumers and exporters and risk a trade war to keep a few protected industries insulated from the rigors of competition. The price is too steep.

Aaron Schavey is a trade policy analyst at the Heritage Foundation.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide