A Welcome Transparency Improvement for US Trade Remedies

There is little doubt that I've been a rather vocal critic of the Commerce Department's treatment of various methodological and policy issues that arise in the US trade remedies (i.e., antidumping and countervailing duty) cases that the agency administers.  So let me take a moment to applaud an impressive improvement in the Department's online filing system and documents library, IA Access, that was unveiled yesterday.  Previously, only interested parties to specific trade remedy litigation could use IA Access and review public documents - e.g., case briefs and Department memos detailing its policy decisions and/or calculations - that are filed in a particular case.  This high wall made it virtually impossible for "normal people" (including journalists, policy wonks and, ahem, pesky trade bloggers) to review these documents and report on their details without trucking on down to the DOC Reading Room in Washington, DC and scouring hardcopies in the public files.  Moreover, the website's functionality was limited, so even if you were one of the "privileged few," serious research was extremely difficult.

Although this impediment sounds like a minor thing, it isn't: DOC makes significant policy and methodological decisions in the course of trade litigation, but only publishes a relatively vague overview of such moves in the Federal Register and on its general website.  These "devilish details" can allow various myths about US trade remedy proceedings to persist, and they can play a very significant role in determining the duties that US consumers must pay as a result of these investigations - duties affecting billions of dollars in annual trade and totaling hundreds of millions of dollars.  As noted in a Cato Institute report on the US antidumping law:

The U.S. antidumping law enjoys broad political support in part because so few people understand how the law actually works. Its rhetoric of "fairness" and "level playing fields" sounds appealing, and its convoluted technical complexities prevent all but a few insiders and experts from understanding the reality that underlies that rhetoric.

In this study we seek to penetrate the fog of complexity that shields the antidumping law from the scrutiny it deserves. Here we offer a detailed, step-by-step guide to how dumping is defined and measured under current rules. In addition, we identify the many methodological quirks and biases that allow normal, healthy competition to be stigmatized as "unfair" and punished with often cripplingly high antidumping duties. The inescapable conclusion that follows from this analysis is that the antidumping law, as it currently stands, has nothing to do with maintaining a "level playing field." Instead, antidumping's primary function is to provide an elaborate excuse for old-fashioned protectionism.

In short, even though the livelihoods many American companies and consumers - and millions of dollars - are at stake, the trade remedies game is won and lost in the deep weeds of specific AD/CVD proceedings, and only a few folks had the ability to spot and report on these important developments.  Now, however, IA Access' improved access and functionality means that anyone with a computer, internet access and email address can register with DOC and begin to scour the agency's records to find the important "methodological quirks" buried therein.  Now, I'm well aware that there aren't a lot of wonks, bloggers and journalists doing this right now, but maybe that'll change now that IA Access lets them actually do it from the comfort of their offices or homes.

Lord knows I'd certainly welcome the company.

Transparency: So There's Apparently a "Secret Farm Bill"

This news is not - I repeat, not - from The Onion:

Lawmakers on the House and Senate Agriculture committees are trying to write a new five-year farm bill through the supercommittee process.

The legislators are using the supercommittee to avoid what would be a more public, election-year debate in 2012, when the current farm bill expires and new legislation would be scheduled for writing, according to critics of the effort.

“We call it the secret farm bill,” said one environmental activist, who worries that if the lawmakers succeed, it will prop up U.S. farm payments through 2017....

While some of the changes lawmakers are expected to propose would save billions on paper, critics say the new farm payments could balloon in cost if commodity prices fall.

Opponents also worry the lawmakers are trying to get around longtime critics of the farm bill who for years have said the legislation is a symbol of waste that costs taxpayers money while hurting farmers in poor countries who do not receive similar levels of support....

“That is the last thing we want, to authorize multiyear programs through this process. I am worried,” Rep. Jeff Flake (R-Ariz.) said. "Their mission is to cut."

An advantage of locking in the changes through the supercommittee is that the panel’s recommendations must get an up-or-down vote in Congress. That would give less leverage to opponents of farm subsidies.

Ben Becker, a spokesman for the Senate Agriculture Committee, defended the effort to propose farm bill changes to the supercommittee.

“Either the supercommittee would in essence write the Farm Bill, with no hearings or public input, or the Agriculture Committees and the communities we represent would have a voice. Democrats and Republicans are working hard within the process that’s been imposed on us to develop a sound bipartisan and bicameral recommendation that members of both parties can support,” he said.

Becker's irrational non-statement aside, it's completely true that America's bloated, irrational and WTO-inconsistent farm subsidies have broad, bi-partisan support, particularly among perpetually-campaigning farm state politicians (gee, I wonder why?).  Yet, just like Congress, farm subsidies are also increasingly unpopular.  (Coincidence?  I think not.)  So what this new "secret" plan really boils down to is a bunch of desperate, farm-subsidy-loving Members of Congress seeking to avoid election-year scrutiny by circumventing the very public legislative process that they've been elected to follow in order to quietly enrich their domestic constituents.  They funnel all that sweet, sweet taxpayer money out of Washington, yet avoid the increasingly-bright spotlight that (fortunately) accompanies such fiscal profligacy.

The United States Congress, ladies and gentlemen.

Lawmakers Urge Review of Tire Tariffs, But Why Stop There?

From today's headlines comes welcome news that two US congressmen - one Republican and one Democrat - have called upon the Obama administration to analyze the effects of President Obama's bad decision to slap prohibitive tariffs on imports of Chinese tires under Section 421 of US Trade Law:

In a letter to U.S. Trade Representative (USTR) Ron Kirk, two congressmen demanded that the Obama administration establish a comprehensive system of monitoring the economic effects of the special tariffs on Chinese passenger and light truck tires levied last Sept. 11.

“It is…essential that the ITC (International Trade Commission) and the administration monitor the effects of the tariff not only on the domestic tire producers, but also on other domestic sectors, including distribution and retail, and on consumers,” said Reps. Dan Boren, D-Okla., and Kevin Brady, R-Texas, in their Jan. 21 letter to Mr. Kirk.

The congressmen said they had not heard of any jobs created by the tariffs, which amount to 35 percent in their first year on top of the normal 4-percent tariffs on tire imports from China. But they had heard of significant increases on tire prices as well as job losses in the tire distribution and retail sectors, they said.

Whatever system the administration puts in place to monitor the effects of the tire tariffs must consider not only employment at U.S. tire manufacturing plants, but also such items as retail price trends for domestic and foreign tires; changes in tire imports from countries other than China; and changes in tire retail and distribution employment, the congressmen said.

In a press release, the Tire Industry Association (TIA)—which opposes the tariffs—praised the Boren-Brady letter.

This is the first time the U.S. has implemented a trade remedy under Section 421 of the Trade Act, said Paul Fiore, TIA director of government and business affairs. “The United Steelworkers (USW) made some very far-reaching claims concerning this tariff, and the Office of the USTR should be diligent in setting up a comprehensive, verifiable system for quantifying the effects of this tariff,” Mr. Fiore said....

I've already documented most of the harmful unintended consequences of the Section 421 decision - namely, higher prices, supply shortages, trade diversion and no increased domestic production or employment - so an official government report on the subject would be an awesome rebuke of the President's tire protectionism.  It's also really great to see government officials - in both parties, no less! - raise such rarely-considered issues with the White House.

But why stop with just the Section 421 decision?

As I've noted before, US trade policy is chock-full of high tariffs and quotas imposed on everyday necessities like food, clothing and shelter in order to line the pockets of politically-connected domestic industries.  And the United States International Trade Commission (ITC) has already shown that these "tariff peaks" and other barriers dramatically increase domestic prices and thus act as a hidden tax that disproportionately harms lower-income American families.  Moreover, there are literally hundreds of different anti-dumping duties and countervailing duties on a wide range of products, thus raising domestic prices in order to assist the insular US industries that petitioned for import protection.  All of these tariffs and duties remain in place, yet never once has anyone in the Government examined their effects on third-country imports or on American consumers, importers, retailers, downstream users and their employees.  The "Brady-Boren" report would do just that for the US tire market, and it thus would shed some much-needed light on protectionism's unreported victims.

As Dan Ikenson and I explained in a paper last year, this kind of transparency is absolutely critical to countering the protectionist myths that permeate today's trade debate:

President Obama should announce something like a “Trade Transparency Initiative,” with the goal of publishing independent findings about the effects of trade and trade barriers on the U.S. economy and its constituent elements without political interference.... The ITC, or some other agency that is sufficiently shielded from political influence, should be allowed to fulfill its statutory authority to conduct independent research and publish findings on matters related to trade, and the public should be directed to those findings as objective sources of analysis.  An independent process like that—which is properly publicized by a president promoting change—would probably help disentangle trade from the truth-suppressing effects of politics and help fulfill the president’s goal of having a more transparent and open government.

Perhaps the Obama administration’s first study under the Trade Transparency Initiative should focus on the U.S. Tariff Schedule. The report would likely reveal that U.S. tariffs are highest on shoes, clothing, clothing inputs (like fabric, yarn, and cotton), food (including fruits and vegetables), and food ingredients (like sugar, wheat, and soybean). In conjunction with trade remedy duties on imported steel, lumber, and cement, U.S. tariffs and quotas on food and clothing ensure that the prices of life’s most basic necessities (food, clothing, and shelter) are artificially inflated by government policies. And since lower-income Americans spend a higher proportion of their budgets on life’s necessities, these trade policies amount to the kind of regressive tax that Democrats profess to abhor....

The unbiased empirical results of the Trade Transparency Initiative would give President Obama the ammunition he will need to put congressional protectionists of both parties where they rightfully belong—on the permanent defensive.

Unfortunately, this past year has taught us a lot about the White House's priorities, and trade transparency doesn't - to put it nicely - appear to be high on the President's list.  Thus, while I applaud Congressmen Brady and Boren for their attempts to unearth the Section 421 decision's dirty little secrets, I seriously doubt that a Trade Transparency Initiative - on tires or any other protected product - is coming anytime soon.