Exchange by Fiat

A bunch of lawmakers — led by Reps. Defazio (D, OR), Slaughter (D, NY),  Kaptur (D, OH)  and Massa (D, NY) — recently introduced a bill (H.R. 1875) to establish an “Emergency Commission To End the Trade Deficit.” The House passed the bill by voice vote this afternoon.

After drawing Congress’ attention to a whole lot of scary-sounding data about the trade deficit (my colleague Dan Griswold explains why that metric is misleading as an indicator of national wellbeing), the national debt (which I agree is a problem) and the supposed death of manufacturing, the bill calls for a $2 million (for now) Commission, the purpose of which is to:

develop a trade policy plan to eliminate the United States merchandise trade deficit by January 1, 2019, and to develop a competitive trade policy for the 21st century. The plan shall include strategies necessary to achieve a balance of trade that fully reflects the competitiveness and productivity of the United States and also improves the standard of living of United States citizens. [my emphasis]

It is as though the standard of living for Americans over the past few decades of trade deficits had been falling, rather than rising.  As though a balance of trade was an end in itself.

A lot of the Commission’s work would be “merely” reporting on various aspects of our trade relationship with the rest of the world. But I do not for one second think that these lawmakers will be happy to take the Commission’s report and forget about it. They’ll want to torture that data until it confesses what they want, and then they’ll want to take action based on that confession. My hunch isn’t totally baseless, either. Plenty of clues lie in section 4(5), for example, which asks the Commission for suggestions for:

(A) the development of bilateral and multilateral trade relationships based on market access reciprocity; [i.e., managed trade]

(B) the retention and expansion of the manufacturing, agricultural, and technology sectors in the United States; [sounds like a call for protection]

(C) the discouragement of the expatriation of United States plants, jobs, and production to countries that have achieved competitive advantages by permitting lower wages or lower health, safety, and environmental standards, or by imposing requirements with respect to investment, performance, or other obligations; [ditto]

(D) methods by which the United States can effectively compete in a global economy while improving the labor, social, and environmental standards of its trading partners, particularly developing countries; [protectionism disguised in a humanitarian costume]

(E) methods by which the United States can respond to substantial shifts or manipulation of currency exchange rates that distort trade relationships; [highly risky – and probably ineffectual – unilateral sanctions on, reading between the lines, China]

(F) methods for overcoming and offsetting trade barriers that are either not subject to or otherwise inadequately addressed by the World Trade Organization or other multilateral arrangements; [unilateral sanctions outside the rule of international law that – for better or worse – the U.S. initiated, sponsored and adopted]

(G) specific strategies for achieving improved trade balances with those countries with which the United States has significant, persistent sectoral or bilateral trade deficits, including Canada, the People’s Republic of China, Mexico, and Japan; [see (A) above]

(H) methods for the United States to respond to the particular needs and circumstances of developing and developed countries in a manner that is mutually beneficial; [who knows what is lurking behind this statement] and

(I) changes that may be required to current trade agreements and organizations to allow the United States to pursue and nurture economic growth for its manufacturing, agriculture, and other production sectors in a manner that ensures improved compensation and quality of life for United States citizens. [sounds so pleasant and inoffensive, doesn’t it? Make no mistake, though: There’s a whole lotta infant industry protectionism lurking there. The use of the word “nurturing,” for example, is a flashing red light] (all emphases and bracketed comments mine)

If this bill passes the Senate and is signed into law (a big if, admittedly), that is the final death knell for any pending trade agreements, since the bill also calls for a moratorium on free trade agreements until the Commission’s report is issued and hearings held.

The freedom of individuals to trade across borders has rarely been held in so much contempt.