Subject China to Tariffs

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Monday, February 26, 2007

In "Matching Free Trade With Taxes" [op-ed, Feb. 19], Sebastian Mallaby derided all tariffs but criticized Democrats for shrinking from taxes that serve good purposes.

The fact is, tariffs can serve good purposes, too. They could play a constructive role in saving free trade.

China employs all manner of subsidies to promote exports, and the Bush administration has filed notice with the World Trade Organization that it wants China to stop. In addition, Federal Reserve Chairman Ben S. Bernanke has singled out China's undervalued currency as providing an additional incentive to exports and impediment to its imports. These mercantilist practices are at the root of the huge U.S. trade deficit with China, and that deficit is significantly driving the backlash against free trade.

WTO rules and U.S. law provide for the United States to implement countervailing duties -- tariffs calibrated to offset protectionist subsidies -- but the Bush administration has so far refused to apply those.

That's a crying shame. Such tariffs would correct for Chinese mercantilism, and without an answer to that, all the good that free trade could do is compromised.

PETER MORICI

Alexandria

The writer was chief economist at the U.S. International Trade Commission from 1993 to 1995.


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