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Monday, August 15, 2005

Nyah Nyah Nafta

Free trade isn't for the faint of heart. The open-markets rallying cry may be music in Adam Smith's ears, but he's been dead for eons and not running for reelection next year.

Now it comes that the U.S. may be looking to pick up its free trade ball and leave our NAFTA partners empty-handed.

Canada's international trade minister has called his U.S. counterpart to demand the Americans return the $5 billion in duties they've collected in the softwood lumber dispute. Jim Peterson warned U.S. Trade Representative Rob Portman that the future of the North America Free Trade Agreement is in peril if the United States doesn't respect a ruling handed down by a NAFTA panel on Wednesday. (CBC 9-13-05)

Could this bode well for CAFTA? For international trade agreements everywhere? Could the U.S. come off any more like a petulant bully?

None of this should surprise anyone. If this is strictly a provincial matter of pork and jobs, the administration's utter tolerance of the recent energy and transportation bills makes it as guilty as those on the Hill. But don't forget that the administration champions open markets and free enterprise while it hands out billions in no-bid contracts to well-connected industry allies. Cronyism never smelled right to Adam Smith. It smells like Agent Orange to this crew, it smells like victory.


Blogger Samurai Sam said...

The Republicans believe in the free market in respect to low worker wages and no regulation. Not so much when it comes to equal competition.

8/15/2005 3:51 PM  
Blogger cornhuskerblogger said...

amen -- whether that frightful competition comes in business or in politics (see: Texas congressional redistricting)

8/15/2005 3:59 PM  
Anonymous bu$h ate my baby said...

Typical Wall Street Journal editorial being an apologist for and lickspittle to the administration:

Homeowners and home buyers scored a rare and sweet victory last week when a three-person arbitration panel ruled unanimously that U.S. tariffs against imported Canadian softwood lumber violate the North American Free Trade Agreement (Nafta). The American Homeowners Alliance estimates that rescinding the tariffs will reduce the average construction cost of a new home by about $1,000 and make about 300,000 more moderate-income Americans eligible for mortgages.

Instead of hailing the move as a welcome step toward more affordable housing, the Bush administration insists that it won't lift the tariffs, which can reach as high as 27%. It further plans to engage in more stalling tactics by appealing the decision to the World Trade Organization. The Office of the U.S. Trade Representative declared that the ruling "will have no impact on antidumping and countervailing duty orders."

It's too bad the White House doesn't know an opportunity when it sees one. The trade panel's pro-consumer ruling allows the administration a graceful exit from one of its more bone-headed economic policy decisions: the imposition of the lumber tariffs in 2002. Its cave-in to the domestic timber industry -- combined with the imposition of steel tariffs at about the same time -- damaged U.S. trade credibility around the world and has hurt progress toward concluding the Doha global trade round that the President says is one of his priorities.

It also sends a lousy message to Capitol Hill. Just last month the White House muscled the Central American Free Trade Agreement through Congress. To do so, it had to strong-arm many Midwestern and Southern House Republicans to vote against their own parochial textile, manufacturing or agricultural interests, in favor of a measure that benefits the nation's economy as a whole. But now the President puts protecting the lumber industry above the principle of free trade, lower prices, and competition. The victims here are American consumers, who have already paid $5 billion in higher housing costs.

Under Nafta rules, the $5 billion must be returned to the Canadian companies that were forced to pay the illegal tariffs. The administration says it won't comply, and the Canadian government is now threatening retaliatory trade sanctions on U.S. agricultural products. These are the first grenade launches in a potentially ugly trade war -- precisely the sort of thing Nafta was enacted to prevent. We can hardly blame Ottawa for its loss of patience. This is the fourth time either the Nafta referees or the WTO arbitrators have rejected the Bush administration's claims of unfair competition.

Making matters worse is that the administration's proposed remedy for the lumber dispute is a complete economic loser for Americans. The U.S. is demanding that Ottawa impose a tax on the softwood lumber it exports to the U.S. so that prices here rise. This whole inane scheme may very well lead to a net reduction in employment in the U.S. because for every lumber and sawmill job there are about 25 Americans working in industries that depend on low-priced Canadian lumber as an input.

There's an old saying that you can never regain your virginity, but in trade policy you can at least reclaim a bit of virtue. Mr. Bush had the good sense to lift the counterproductive steel tariffs, which cost as many jobs as they saved. If he does the same with lumber, not only will he help avert a mutually destructive trade war with Canada, but he can advance another long-stated administration goal of helping record numbers of Americans own their own homes.

8/15/2005 5:01 PM  
Blogger Mark Thoma said...

People of the Republican party seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise profits for its members. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder Republicans from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

8/15/2005 11:13 PM  
Anonymous Northern Observer said...

Canadians are getting so sick of this quiet hypocricy. 5 Billion. A 5 billion dollar fraud based on lies and the best Congressmen money can buy. And meanwhile the average American gets screwed paying more for their renovations or new home and wood lots owners like GW Bush make out like bandits.

Get it through your heads, Canada has a competitive advantage in lumber. Well like no kidding. Have you ever seen Canada? It's trees trees trees.

8/16/2005 12:12 PM  

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