Daniel Drezner is displeased at the news that the administration may try to evade the WTO ruling against the steel tariffs. The adminstration plans to maintain these protectionist barriers despite evidence that the steel tariffs cost many more American jobs—in many industries that use steel—than they saved.
The open political question is whether the tariffs are causing enough damage to the overall economy, including the economic recovery, that their marginal benefit in states like West Virginia is offset. The trouble here is that the marginal benefit from the tariffs is easy to quantify, because it is concentrated, while the damage is diffuse—thousands of jobs spread across perhaps two dozen states. And that damage could get far worse if it leads to a trade war with the European Union, who—in this case, at least—are clearly in the right.
Like Dan, I hope the administration will come to its senses. But I can’t be optimistic, especially since the dynamics of the Democratic campaign preclude almost any criticism of Bush from that quarter for not being enough of a free trader.
Both Matt Stinson and Robert Garcia Tagorda note George Will’s Sunday WaPo column on the politics of the steel tariffs—and of the European Union response to them. Like Robert, I hope this development gives the administration the final push it needs to abandon the tariffs, before this escalates to a trade war which neither the U.S. nor foreign states can win.
Today’s New York Times has a piece in the business section looking at the effects of the Canadian beef import ban on both sides of the border—few of which are good unless you’re an American cattle rancher. It seems fairly clear (to me, at least) that the motivation behind those seeking to extend the ban is naked protectionism rather than concern about Americans’ health.
The small bit of silver lining in this is that, unlike on the steel tariffs, the president is on the right side of the issue, although there are many in Congress who aren’t.
Sunday’s New York Times has an unsigned editorial noting the opportunity to fix America’s cotton farming subsidies as the result of an adverse World Trade Organization ruling on Thursday. As in the case of the Canadian beef case, President Bush appears to be on the right side of the issue, marking a welcome change of pace from his election-driven protectionist behavior on steel imports.
Good news for consumers: the ban on beef imports from Canada will be lifted this week, which should lead to lower prices for beef products on both sides of the border. As I discussed before and Pieter Dorsman mentioned Friday, the import ban had little to do with the risk of BSE (or “mad cow disease”):
More than anything it was a deliberate move influenced by US meatpackers to manipulate prices. Even in Canada prices somehow remained higher than where they should have been despite the glut of beef.
Reducing this sort of rent-seeking behavior is a very compelling argument for continued progress in dismantling trade barriers in food products.