New Op-Ed: "How our 'do nothing' Congress can help US-China trade relations' (and quick analysis of the new CVD-NME bill)

The Daily Caller published a new op-ed of mine on the "CVD-NME" issue that I've been discussing over the last few weeks.  The op-ed is essentially the Cliff's Notes version of my many previous blog posts explaining why legislation amending the US countervailing duty law to expressly apply to non-market economies (and to retroactively apply to existing CVD orders and investigations of NME imports) is a truly horrendous idea and not nearly as urgent or necessary as the White House would have us believe.

A draft of that legislation and a summary of it were released today, and it's just as bad as expected.  (I particularly like the typos and mangled grammar in the summary.)  I plan to blog more on the bill later, but for now I'll just say that it appears to go out of its way to stick it to the foreign exporters and US companies who are caught up in this huge mess.  For example, the bill applies retroactively to all CVD investigations/orders that were conducted without lawful authority, but only prospectively allows Commerce to consider "double counting."  And on the latter issue, the legislation places a likely-impossible burden on foreign exporters to prove that double counting exists, and provides no direction as to how Commerce would re-calculate duties - a task that Commerce has repeatedly admitted could be downright impossible.  In short, the bill is the absolute worst of all worlds, and Commerce doesn't have to lift a finger as a result, even though multiple US courts and the WTO have ruled that the agency's actions were blatantly illegal.  (Gee, it's almost as if the domestic petitioners who benefit from CVDs and double counting wrote the bill or something.)

So let's hear it for the Rule of Law!  Sigh.

But regardless of how awful the draft bill is (and trust me, it is awful), its release means that my new op-ed couldn't be more timely, especially because I basically predicted the legislation's awfulness.  Here's a snippet:

Congress will soon consider legislation to fix a pillar of the president’s China trade policy that has been ruled illegal by federal courts and the World Trade Organization. The bill’s passage will please the White House and the domestic industries and unions that have used the policy to deter foreign competition, but it will do little to solve the underlying flaws in the administration’s approach to China trade. Fortunately, there is a better way forward, and it simply requires Congress to do what it does best: nothing....

Congress is expected to rescue the president, but the “fix” will create far more problems than it solves. First, retroactive application of the revised CVD law to existing orders will cause a legal firestorm, as aggrieved parties sue to recover the millions of dollars in duties that, prior to 2012, the U.S. government had no lawful authority to collect.

Second, the legislative fix will do nothing to resolve the underlying problems with the administration’s current policy. The U.S. Court of International Trade and the WTO’s Appellate Body have ruled that combined duties on NME products are artificially high because alleged subsidies are offset twice — once in the CVD calculation and again in the dumping calculation. Legislation will not solve this “double counting” problem, and Commerce itself has admitted that a proper solution could be impossible. Chinese and Vietnamese imports will thus continue to be unfairly penalized, leading to more disputes and exposing U.S. exports to WTO-sanctioned retaliation.

Third, the policy will irritate U.S.-China trade relations and keep the United States on the defensive in bilateral negotiations. The administration has many legitimate complaints against distortive Chinese trade practices, but the CVD/NME issue — and the United States’ refusal to comply with adverse court and WTO rulings — undermines those concerns.

Congress should not help President Obama continue down this tortuous road. By doing nothing, it can force the administration to make the choice that should have been made years ago: either stop imposing CVDs on NME imports and thus return to the previous policy of addressing Chinese and Vietnamese subsidies through anti-dumping measures, or designate both countries “market economies” and address their subsidies via the normal CVD process.

I then go on to explain why both of these options are better than the administration's chosen approach.  Be sure to read the whole thing here and then go share it with your local congressman or senator (if, you know, they'd ever return your phone calls).

And stay tuned.  More to come.

New Op-ed: Rick Santorum's "Disqualifying Political Protectionism"

In today's Investor's Business Daily, I argue in a new op-ed that, based on his congressional record on trade, "true conservative" GOP Presidential Candidate Sen. Rick Santorum is anything but conservative.  Here's the thrilling conclusion:

A candidate's stance on trade is predictive of whether he, once elected, will put facts and principle before politics and self-interest. Politicians who reject protectionism turn down eager corporate and union campaign donations from unseemly rent-seekers trying to thwart international competition at the expense of American families and companies.

They ignore demagogic attacks on their patriotism. And they openly support policies which, despite their overwhelming economic and historical support, are met with public hostility or disinterest and an unethical opposition willing to take full advantage thereof.

On the other hand, politicians who peddle protectionism are either ignorant of history and economics or are willing to discard their conservative ideals and prey on voter fears for short-term political advantage.

Sen. Santorum's record shows that he understands the costs of protectionism but is perfectly willing to impose them when his cronies stand to benefit. Such "political protectionism" not only is not "conservative," but also raises serious — indeed disqualifying — doubts as to the candidate's fitness as a leader and public servant.

Be sure to read the extremely detailed support for my conclusions here.

New Op-Ed: "G-20 Summit: Fresh Winds of Economic Leadership from the North"

I have a new op-ed on FoxNews.com today.  Here's the tease:

Leaders from 19 countries and the European Union will gather for the G-20 summit in Toronto beginning June 26 to discuss how to stem the global recession and get the world back on the path to strong, stable economic growth. They picked a good spot, as the assembled leaders could learn a lot from their host country.

Since the global recession hit two years ago, Canada has implemented a broad array of free market tax and trade policies. As a result, our neighbor to the north has surpassed an increasingly statist, mercantilist United States in The Heritage Foundation’s Index of Economic Freedom. More importantly, Canada is emerging from the “Great Recession” much more rapidly than the U.S. and virtually every other G-20 participant as well.

Read the whole thing here.  Go ahead.  You know you want to.

New Op-Ed: On Trade, It's Put Up Or Shut Up

I have a new op-ed in The Daily Caller today.  I hope you like it; as always, your feedback is welcome.

On trade, it’s put up or shut up

With his signature health care legislation now law, President Obama has a little under three months to prove that he actually supports free trade. After that, all bets are off.

By almost any metric, the Obama administration’s trade policy has been a disappointment. Inaction pervades, and our trading partners have gone from mildly annoyed to downright hostile. But the American trade agenda didn’t always look to be headed this way. In Spring 2009, the White House dramatically reversed the protectionist campaign rhetoric of then-Senator Obama. U.S. Trade Representative Ron Kirk launched an aggressive campaign advocating free trade and denouncing protectionism. The White House’s first Trade Policy Agenda called for ratification of the pending U.S.-Panama Free Trade Agreement “relatively quickly,” and sought to advance other completed FTAs with Colombia and South Korea. The Agenda also unequivocally supported the World Trade Organization and NAFTA, and anticipated congressional renewal of the President’s “fast track” trade negotiating authority.

Then political reality set in.

Immediately following the shift in White House trade rhetoric, congressional protectionists, almost all within Obama’s own Party, launched a stifling counter-offensive. Senator Sherrod Brown (D-OH), for example, expressed disappointment with USTR’s pro-NAFTA rhetoric and pledged to make it clear to President Obama that “our trade policy is not working and that it needs fixing.” Such comments proved effective. The White House abandoned overt free trade actions and speeches in order to secure needed health care votes from anti-trade Democrats – a move that Rep. Henry Cuellar (D-TX) apologetically confirmed at June 2009 Cato Institute event.

As the health care debate stagnated, so did US trade policy, and it remains that way today. Signed FTAs remain shelved, despite the fact that the EU, China and others have negotiated preferential deals with the same FTA partners, each to the competitive disadvantage of American companies. The WTO’s Doha Round negotiations are comatose, even though an ambitious Doha deal would provide billions in benefits to US economy. And US exporters endure superfluous pains because the White House has failed to resolve several bilateral trade disputes, including $2.4 billion in Mexican tariffs resulting from the United States’ NAFTA-illegal ban on Mexican trucking, and the threat of almost $900 million in Brazilian sanctions based on US non-compliance with WTO rulings against American cotton subsidies.

Despite these problems, some might argue that the National Export Initiative and the Trans-Pacific Partnership negotiations are concrete evidence that the Obama administration is dedicated to free trade. But real free trade policies – like the pending FTAs – involve immediate market liberalization at home and abroad. The NEI, by contrast, is a one-sided, non-controversial program which seeks to expand US exports through a timid combination of margin-tweaks that most economists believe will have little effect on US trade flows. Thus, calling the NEI “free trade” is like calling onanism “free love.”

The TPP Agreement, on the other hand, could yield significant trade gains, but would take years complete. Indeed, USTR Kirk lauded the TPP negotiations precisely because they won’t be completed for years. Of course, this is the same USTR whose 2010 Trade Agenda mentioned the word “import” only five times, and never once in terms of domestic market access. So Kirk’s statements about the TPP and the administration’s advancement of the NEI are hardly surprising. They’re just par for the cowardly course.

Throughout all of this, administration officials and the few free trade Democrats in Congress have quietly reassured the US business community that America’s free trade legacy will re-emerge once the contentious health care debate is over. In September 2009, Transportation Department officials told a concerned group of affected exporters that the White House would not resolve the Mexican trucking dispute because the President needed Teamster support for ObamaCare. And at an October 2009 event, Reps. Cuellar and John Tanner (D-TN) assured their audience that the FTAs would progress once the health care debate ended.

Well, folks, health care’s over. Time to put up or shut up.

Most of the United States’ current trade irritants are within the White House’s control to fix, as long as the President willing to expend an iota of political will to get things done. Signed U.S. FTAs have already been ratified by the partners countries and now only require the President to send their respective implementing legislation to Congress for ratification. While many congressional Democrats will resist such legislation, Obama can expect significant support from Republicans, many of whom, like House Trade Subcommittee Ranking Member Kevin Brady (R-TX), have routinely called on the President to submit the trade deals. Other issues show similar potential for bi-partisan resolution. All they require is an end to the White House’s politically-motivated ambivalence.

In late June, Washington will turn its attention to the November mid-term elections, and controversial legislation will become untouchable. If President Obama and his free trade supporters really mean what they’ve said over the past year about the President’s commitment to free trade, the White House will move on one or more of the unresolved trade issues before this “silly season” begins.

If, on the other hand, June comes and goes, and these issues are still unsettled because of the administration’s political calculations, then the die will have been cast. And no amount of excuses will be able to convince American businesses and consumers that this President really cares about free trade.

*     *     *

Bloomberg's Al Hunt strikes a similar note in his op-ed today.  I highly recommend giving it a look.

New Op-ed in The Daily Caller: "Exporting Nonsense"

For those of you who read this blog religiously (ha!), some of the stuff in my new op-ed ("Exporting Nonsense") in The Daily Caller will sound a bit familiar - it cobbles together several of my musings on the administration's new National Export Initiative.

For the rest of you, enjoy!

Given constraints on the op-ed's length, I had to omit some key data referenced in the piece.  All of that is available in various postings here, if you're interested.

(And for those of you who have yet to discover TDC, check it out.  It's a great new website for straight news, great conservative/libertarian commentary, and good ol' fashioned beltway gossip.)

Op-ed Update

The good folks over at RealClearMarkets have published my op-ed, "President Obama's Accidental War on America's Exporters." It's pretty much the same as what I posted here a week ago, but in case you're interested, it's here.

President Obama’s Accidental War on America’s Exporters

(Ed. note: this op-ed couldn't find a home, so I'm just publishing it here.)

President Obama and his friends in Congress have levied billions of dollars in new taxes to secure passage of their domestic agenda. This you probably already know. But you might not know that the folks paying the taxes are American exporters, that they’ve been doing it for months now, and that US labor unions and foreign governments, not the Treasury Department, are the ones collecting.

Such is the truth behind the President’s accidental war on America’s exporters.

I say “accidental war” because the administration’s public statements, and basic economics, belie overt bellicosity. This summer, the White House announced a new effort to help US exporters by expanding foreign markets, and the President routinely speaks of exports’ critical role in the long-term stability of the US economy. This, of course, is smart policy: with 95 percent of the world’s consumers living outside America’s borders, foreign markets are vital for US farmers, manufacturers and service providers, and developing economies provide fertile ground for the seeds of US business. That American exporters typically pay higher wages than their domestically-focused counterparts is icing on the economic cake.

Yet despite the cheery posturing and its sound reasoning, the White House and congressional Democrats have routinely made choices that end up closing markets, rather than opening them. Such choices result from a basic political decision to secure domestic priorities no matter the price, but all too often American exporters are left footing the bill.

Exhibit A is the President’s mid-September decision to impose, at the request of the United Steelworkers union, prohibitive tariffs on Chinese tires under “Section 421” of US trade law. Contrary to Obama’s excuses, the law gave him absolute discretion to impose the tariffs – discretion he used as a bargaining chip to solidify USW support for his fall health care push. But while the President’s protectionism ensured union adulation, it also resulted in China’s initiation of anti-dumping and anti-subsidy investigations of US chicken and automobile exports. The chicken retaliation – hinted by China weeks before Obama’s decision was announced – now threatens a growing market that purchased $722 million in American poultry last year alone. And while the autos case is small, an affirmative decision could foreclose the Chinese market to US car exports for years.

China also has used the tires decision as an excuse to abandon World Trade Organization negotiations to eliminate tariffs on chemicals and other products - so-called "sectoral agreements" that are part of the Doha Round negotiations on industrial market access. Because these side agreements contain "critical mass" exceptions that prevent them from taking effect unless almost all major exporters participate, China’s rejection essentially ruins the tariff elimination party for everyone else – including many large US exporters like Dow and Dupont that view the sectorals as key to their long-term global competitiveness.

The tires case is not an isolated incident. The Democrats’ refusal to ratify pending bilateral Free Trade Agreements has cost American exporters billions and is rooted in a cowardly decision to avoid “controversy” until health care and cap-and-trade legislation are secured. For example, Commerce Secretary Locke recently confirmed that the administration would not seek congressional passage of the US-Colombia FTA in 2009 because of these domestic priorities. Yet according to Locke’s own Commerce Department, American companies pay about $1.9 million per day in Colombian tariffs they wouldn't owe if the FTA were in force. Given that the agreement was signed in November 2006, this political stalling has resulted in a pointless tax on American exporters of around $2 billion and counting. Trade agreements with South Korea and Panama have been similarly shelved, and considering the US-Korea FTA is the largest since NAFTA, the price of its delay likely dwarfs Colombia’s billions.

Exporters are also under attack because the White House has refused to re-open US roads to Mexican trucks (a direct NAFTA violation) in order to curry favor with the Teamsters. Part of the 2009 Omnibus Appropriations Act, the trucking ban provoked $2.4 billion in additional Mexican tariffs on 89 American products. After signing the legislation with full knowledge of its NAFTA-illegality, President Obama promised the businesses injured by Mexico’s retaliation that his administration would quickly resolve the dispute. Six months later, the Transportation Department has crafted a solution but says the White House is sitting on the fix because it needs Teamster support for ObamaCare. So exporters will keep paying.

From these examples, the result of the White House’s political strategy is clear: American farmers and manufacturers are being forced to pay billions of dollars to foreign governments – and to lose new markets and customers – so President Obama can achieve his domestic policy goals. The President is literally buying off American labor unions with US exporters’ money, and in the process is waging an immoral war on an integral part of the American economy and thousands of innocent workers.

Accidental or not, this war’s damage is very real, and it’s time the President demanded a ceasefire.