Wednesday, March 06, 2002
President Bush has decided to impose tariffs on steel imports. As the article I linked to shows, one questions how useful such an action will truly be given how badly it has annoyed our trading partners. Lord knows why creating conflict with our partners in the midst of war on terrorism makes any sense, but from a political standpoint, it satisfies certain narrow interests in the run up to elections this November.
Import duties on steel are a bad idea for a number of pragmatic reasons. First, rest assured that our trading partners will retaliate with import duties of their own, costing other American companies that have nothing to do with steel. Second, those same trading partners will surely file a case against us with the WTO, which WILL rule against us, adding to the string of cases we have lost in the WTO and undermining our credibility in international trade negotiations. Third, within the United States, companies that depend on steel as an input will have to pay more to support what is, in essence, an indirect subsidy to the American steel industry. Fourth, steel companies will have less incentive to restructure, leading to an industry that will remain on life support for the forseeable future (as is always the case with protected industries).
America used to be the torch bearer for the expansion of free trade. One would think that the collapse of socialist economies around the world would have made clear the merits of trusting the wisdom of free individuals in market economies. Instead, we have boosted antitrust enforcement, stalled the approval of fast track negotiating authority, insisted on the addition of labor and environmental restrictions to future WTO negotiations, and used with increasing frequency the WTO "anti-dumping" back door to protect American industries from the rigors of open competition.
We've forgotten what it was that made America the richest nation in the world. If the attacks on America should tell us anything, it is that freedom has ethical AND practical benefits. America is affluent and the Islamic world is not because we believe in freedom, and they don't. That freedom is expressed in the right to buy what we want and sell what we want without the interference of a government which tries to tell us what we should buy or sell. As it turns out, free people build more efficient and prosperous economies.
Politics is NEVER an excuse to do the wrong thing for the nation. If the price of politics is a deterioration of our nation's credibility as a champion of free markets, that is too high a price to pay.
Import duties on steel are a bad idea for a number of pragmatic reasons. First, rest assured that our trading partners will retaliate with import duties of their own, costing other American companies that have nothing to do with steel. Second, those same trading partners will surely file a case against us with the WTO, which WILL rule against us, adding to the string of cases we have lost in the WTO and undermining our credibility in international trade negotiations. Third, within the United States, companies that depend on steel as an input will have to pay more to support what is, in essence, an indirect subsidy to the American steel industry. Fourth, steel companies will have less incentive to restructure, leading to an industry that will remain on life support for the forseeable future (as is always the case with protected industries).
America used to be the torch bearer for the expansion of free trade. One would think that the collapse of socialist economies around the world would have made clear the merits of trusting the wisdom of free individuals in market economies. Instead, we have boosted antitrust enforcement, stalled the approval of fast track negotiating authority, insisted on the addition of labor and environmental restrictions to future WTO negotiations, and used with increasing frequency the WTO "anti-dumping" back door to protect American industries from the rigors of open competition.
We've forgotten what it was that made America the richest nation in the world. If the attacks on America should tell us anything, it is that freedom has ethical AND practical benefits. America is affluent and the Islamic world is not because we believe in freedom, and they don't. That freedom is expressed in the right to buy what we want and sell what we want without the interference of a government which tries to tell us what we should buy or sell. As it turns out, free people build more efficient and prosperous economies.
Politics is NEVER an excuse to do the wrong thing for the nation. If the price of politics is a deterioration of our nation's credibility as a champion of free markets, that is too high a price to pay.
