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Everything is Protectionism

Published 03/23/09 Stumo - Print Article
E-mail - editor@economyincisis.org

The following article originally appeared on TradeReform.org and may not reflect the views or opinions of EconomyInCrisis.org. Feedback is welcome.

This is the story line. If any traditional domestic regulation impacts the goods of a foreign country, it is protectionism. The wacko free traders have done a great job raising their pet issues above every other health, safety and economic rule possible.

It used to be just tariffs and boycotts. But now every rule is impacted by the free trader rhetoric.

· Put a tax on manufactured goods both domestic and imported? Protectionism.

Of course, it is especially bad if the U.S. starts to level the playing field rather than continuing its destructive "unilateral free trade in a world of protectionists" policy. We led by example. The trouble was, others just took our market share, but did not follow our example.

I'm not arguing here whether these domestic policies are good or bad. But they are legitimate rules that any country has long had the power to enact. That sovereign power exists, politicians can wield that power in smart or stupid ways, but the free traders have been very successful in sweeping all these policies under the rhetorical net of "protectionism."

Mark Landler of the NY Times drank the Kool-Aid. Someone fed him a story which was regurgitated as a "surge in protectionism" across the world.

The first line of the story is...

After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.

But is it true? There are trade disputes every year. WTO cases are filed every year. International Trade Commission cases are filed every year. Countries change rules that affect domestic and imported goods every year. Is this year worse?

The surge in protectionism is casting a shadow over an economic summit meeting of world leaders scheduled for London on April 2.

A "surge" of protectionism casting a "shadow." Surges are bad... especially if they cast a shadow. We like light. Not darkness... like a shadow.

But where is the data? The story is filled with anecdotes. Russia raising tariffs. China banning Irish pork. India banning Chinese toys. The U.S. "Buy American" provision in the stimulus package.

These things happen every year. When Canada and Europe put domestic procurement in their regulations, was there a "surge in protectionism"? When 144 countries increased their VAT tariffs over the past 40 years, was there a "surge in protectionism"?

It was ok so long as the U.S. was opening its borders, reducing tariffs, and ignoring unsafe imports. It was ok so long as America continued its "unilateral free trade" trend.

The point is that the narrative created by the free traders is powerful. Fundamental problems - problems caused by their policy prescriptions - such as a massive trade deficits and global capital imbalances are ignored because they are able to attack "Buy American" provisions.

Its like debating the O.J. Simpson trial when the economy is tanking.

They have rhetoric and talking points. But not data. Data is bad... because it goes against their rhetoric. But the next two years are going to be bad for their world view. Because the public is not with them anymore.

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