WE HAVE written twice in the past few days about protectionist poison in the trade bill -- a bill that contains much of value but also has many dangerous provisions that the conference committee needs to remove. Here is some more -- from the House's version of the bill, three cases of good intentions that got out of hand:
To deter trade scofflaws, the authors of one section have set a Draconian penalty. A company that is penalized for three violations of customs law in a period of seven years would be prohibited from importing any goods for three years. That's enough to push many companies out of business altogether. A large retailer may be involved in tens of thousands of customs transactions in a year. It's like saying to a large trucking company that if its trucks are cited for three highway violations in seven years the whole line will be shut down. The intent wasn't protectionist, but the effect would be to make it much more dangerous for a large company to depend on imports.
Rising competition from China has generated anxiety in several American industries. The House, in response, has applied to the Communist countries the rule against export subsidies. Since subsidies are impossible to measure in those countries, the bill would define as a subsidized price anything lower than the American price, or the average price of imports of the same goods into this country. But in some products the Chinese can legitimately beat the average. That's how they expand their trade here, and the House bill would become a weapon for choking it off.
The bill would make denial of workers' rights an unfair trade practice, and grounds for legal action against imports from countries that deny them. The idea was to bar goods produced by slave labor or child labor. It's a good-hearted idea; nobody wants to welcome production from the Gulag into world trade. But it would provide protectionists with powerful legal weapons against imports from much of the Third World, not just Eastern Europe, the Soviet Union or, again, China.
Through patient negotiation over the past four decades, the United States has done a lot to raise the general level of fair play in world trade. This bill depends too heavily on threats to penalize or disrupt the American trade that is crucial to American prosperity. The bill can still be rescued, but it will require much surgery by the conference committee that is now getting down to work.