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Jewish World Review April 15, 2002 / 4 Iyar, 5762

George Will

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The price of protectionism | The United States has asked for and received extraordinary help from Pakistan in the war on terrorism. Now Pakistan has asked for something from the United States. Pakistan (per capita income: $470) has asked this mighty republic (per capita income: $26,503), which spans a continent and bestrides the globe like a colossus, to remove the quotas on imports of Pakistani pillows and sheets. It also asked the United States to suspend textile tariffs until 2004, and permit 50 percent increases in quotas for pajamas, towels, underwear and some other apparel.

But the United States, which made short shrift of the Taliban and supposedly has Saddam Hussein in its crosshairs, nevertheless flinches from some threats, and one of them is a potential torrent of inexpensive Pakistani pajamas. The United States has grudgingly offered 15 percent to 25 percent increases in some of the quotas that are all that stand between America and Pakistan's economic muscle.

This U.S. obduracy is a tribute to the power of America's textile lobby. And to the fact that Republican control of the House of Representatives hangs by the thread of six seats: two congressional seats currently held by Republicans, one in Alabama and one in North Carolina, have significant numbers of textile workers. Furthermore, Republicans are defending Senate seats in the textile states of North Carolina and South Carolina.

The Bush administration recently interrupted its proclamations in favor of free trade in order to protect the steel industry with tariffs of up to 30 percent. And two weeks after that, the administration imposed a tariff of 29 percent on Canadian softwood, which is used in housing. Thirty percent of softwood used in America comes from Canada. The administration says, and Canada vehemently denies, that Canada excessively subsidizes its timber industry, and has been dumping (selling below the cost of production) softwood in America. Some critics say the tariffs will add as much as $1,500 to the cost of new houses.

U.S. textile and citrus interests, among others, are gearing up to get additional protection. South Carolina's governor says, "The textile industry has been offered up on the mantle''--perhaps he means altar--"of free trade.'' There are 439,000 textile workers, but the Economist magazine says 116 U.S. textile mills closed last year, and in the last five years 180,000 textile workers--there are not that many steelworkers--have lost their jobs. But protectionism breeds protectionism.

The Bush administration clearly had electoral votes in mind when imposing protectionism for the benefit of steelworkers, especially those in West Virginia, Ohio and Pennsylvania. But European Union bureaucrats also can read the U.S. electoral map, and have done so in compiling a list of more than $2 billion worth of 316 American goods targeted for retaliatory tariffs.

Harley-Davidson motorcycles are on the list. Most of them are made in Wisconsin. In 2001 the company shipped 19,600 of them to Europe. In 2000, Bush lost Wisconsin by 5,708 out of 2,598,607 votes cast. Also on the list is Tropicana orange juice, 80 percent of which is made in Florida, a state Bush carried by 537 out of 5,963,110 votes cast..

The Economist estimates that developed nations of the West spend $1 billion a day protecting their farmers from exports from poor countries. But globalization has made capital more and more mobile, and Kraft Foods, maker of Life Savers, says that this candy, made in America for 90 years, will no longer be made here because of the government's solicitude for the strong--the domestic sugar lobby.

American Enterprise magazine reports that the Life Savers plant in Michigan is being closed and production moved to Canada, where Kraft will save $10 million a year on the cost of the main ingredient, sugar. U.S. import quotas make sugar at least twice as expensive as it is on the world market. Another candy maker, Brach's, is closing its Chicago plant, which employs 1,100 people, and is moving production to Mexico, where sugar can be bought, as in Canada, at the world price.

It is argued that small dollops of protectionism are the price the administration must pay to purchase congressional approval of broad authority to pursue free trade. But it is paying in the coin of its credibility and moral authority.

And it is doing so at an impropitious moment. An administration that proclaims "zero tolerance'' of terrorism while protecting and negotiating with Yasser Arafat already is acquiring a reputation for a certain plasticity of conviction.

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