Monday, July 14, 2003

I received a phone call from a member of Rep. Gil Gutknecht’s staff before the July 4th holiday. He complained that in an earlier article I referred to his boss as a parochial member of Congress whowascluelesstothe broader national interest for pushing a proposal that would forbid the Food and Drug Administration for vouching or testing for the safety of medicines imported from countries such as South Africa and Canada.

I take back the clueless comment. Mr. Gutknecht, along with other leaders of the drug importation movement in Congress, is simply looking for a politically expedient position. He supports the importation of cheap foreign goods when it suits him and opposes their importation when it doesn’t.

Mr. Gutknecht and others claim that importing drugs that are cheaper is really a form of free trade and competition. He goes on to argue that allowing wholesalers and insurance companies to buy drugs overseas, instead of domestically, would force down prices here and save Medicare gazillions.

So then, the principle behind this dangerous attempt at the importation of drugs is that America should shop any country, seek any bargain, import any product, find any discount, to assure the cheapest price and greatest savings for our nation. Well, it seems there are several exceptions. For Mr. Gutknecht, a big one is milk protein concentrates (MPC) and casein products that are meant for use in food and animal feed. He has fought to impose tariffs (read, higher prices) on these products where none have previously existed to support the dairy industry in his state. As Mr. Gutknecht put it, “Why should we accept predatory pricing from foreign countries waged against our own farmers?”

Mr. Gutknecht is not alone in his exception on free trade. Sen. Byron Dorgan, North Dakota Democrat, has led the fight to import drugs from Canada, some of which are cheaper there, thanks to a government monopoly on drug prices that is already devastating Canadians and their drug industry. But the senator takes strong exception to imports of Canadian wheat into the United States because the Canadian Wheat Board sells the grain to America at a price below that sold by American farmers. This, he claimed, was unfair competition. So, Mr. Dorgan fought to impose price increases of up to 8 percent on Canadian wheat to make things fair.

Mr. Dorgan and others have no problem with Canada becoming the transfer point for all sorts of low cost drugs from other countries to enter America. But he goes insane when it’s sugar, baby: “Let me give you another example, about Brazilian sugar. There is a tariff on sugar, but none on molasses. So what happens? Brazilian sugar is sent into the United States through Canada disguised as molasses. It is shipped from Brazil to Canada, loaded on as liquid molasses and becomes stuffed molasses. It comes from Canada to the United States. The sugar is unloaded from the stuffed molasses. The molasses [goes] back to Canada and the whole process is repeated. This is fundamentally unfair trade. It goes on all the time, right under our noses. And nothing is being done about it — nothing.”

Not exactly; there is a sugar program that artificially sweetens domestic sugar prices . The General Accounting Office noted that the sugar program cost consumers about $1.9 billion in 1998. Mr. Dorgan backs that program and said that Americans are not being overcharged. Rather, he contends, prices on the world market are artificially depressed by surplus sugar from countries that subsidize production.

It’s easy to be a free-trader when principles don’t matter and you conveniently ignore facts. Rep. Jo Ann Emerson, who sold her vote for Medicare reform in exchange for a promise from the Republican House leadership to pass Mr. Gutknecht’s bill, has been on both sides of the free trade issue at the same time. She, along with Mr. Gutknecht, supported American steel companies seeking duties up to 40 percent on imported metal products, while at the same time opposing an International Trade Commission ruling that Russia was dumping fertilizers into America at predatory prices, because the resulting tariffs would hurt farmers.

Another drug import leader, Sen. Debbie Stabenow, asserts, “I find it ironic that in this era of free trade, we have effectively erected barriers on our borders that force American citizens to purchase their prescription drugs at prices that are often twice that paid by our neighbors in Canada.” What is in fact ironic is Ms. Stabenow’s support for tariffs on steel imports. Apples are not spared the shelter of Stabenow’s protectionist wing. She and other pro-drug import members have fought courageously for higher prices and a 52 percent duty on “unfairly priced” Chinese apple juice products that upset the apple growers in their respective states.

Mr. Gutknecht, Mr. Dorgan and others want to force American biotech and pharmaceutical innovators to sell as many of their products at the lowest prices in the world, regardless of the impact it has on health, jobs, safety or future innovation. Yet they fight like mad when lower cost foreign imports compete with their pet industries and have no problem raising prices on consumers in response. Drugs take up a lower percentage of disposable income than food, energy or other goods and are only nine cents out of every health care dollar.

Is it free trade to import price controlled drugs but ban lower priced imports of milk protein, wheat or steel? If you can answer that question with a straight face, I have some imported fertilizer to sell you.

Robert Goldberg is director of the Manhattan Institute’s Center for Medical Progress.

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