Tag: sherrod brown

Eternal Vigilance Needed on Trade Carve-Outs

A bill that would have set a troubling precedent indeed was killed in the Senate last week. I’ve written previously about the Trade Adjustment Assistance program, and its fate has been tied up with the Generalized System of Preferences, a scheme by which certain developing countries gain duty-free access to the U.S. market for many of their goods. Congress was trying – and failed – to pass an extension of the programs together, along with the Andean Trade Preference Act.

Well, in an effort to extend for eighteen months the stimulus-enhanced TAA program (they were less fulsome in their enthusiasm for the other part of the bill; the barrier-reducing ATPA), Senators Bob Casey (D-PA) and Sherrod Brown (D-OH) introduced what they deemed to be a legislative “fix” to the thorny problem of how to extend all these programs in the face of Sen. Jeff Sessions (R-AL) opposition to the GSP so long as sleeping bags were included in the program (there just happens to be a sleeping bag manufacturer in his state).  Their solution? Just carve out sleeping bags from the GSP.

Section 202 of the proposed bill was literally titled “Ineligibility of Certain Sleeping Bags for Preferential Treatment Under the Generalized System of Preferences”. The Senators didn’t even go to the trouble of carefully wording and designing the provision so that it – oh, hey, look at that! – just happened to pertain to exactly the product for which a carve-out was being sought. No, in this case all subtleties were thrown to the wind. They even, should any confusion remain, helpfully provided the specific H.S. number (the code used by customs officials to identify a good) for the sleeping bags in question.

(I should note here that administrative reviews – processes built into the GSP to avoid what legislators deem undue harm to domestic interests – had already shown that the conditions for GSP ineligibility for sleeping bags were not met. )

While this bill thankfully failed, it serves as a timely reminder that legislators will not allow anything so minor as the rule of law (in this case an administrative review) to prevent them from seeking favors for certain constituents. Thank goodness that effort was thwarted this time: a precedent whereby any Senator (or House member, for that matter) can get a carve out from general trade liberalization for their special interest friends would see the post-war progress on freer trade – imperfect though that may be – quickly unravel.

An additional note: in their press releases, Senators Casey and Brown both alluded to the “fact” that the TAA helps workers “either get back to work or regain some measure of the financial security that has been stripped from them due to unfair foreign trade.” [emphasis mine]  TAA has no such condition attached: workers eligible for the stimulus-enhanced TAA didn’t even have to prove that they lost their job because of a trade agreement, let alone any condition that the trade was “unfair” (i.e.,  a result of dumping or subsidization – and see here why those charges are themselves  canards).  Unless, of course, the Senators consider any trade that threatens domestic producers’ interests to be “unfair”.

Ten Protectionist Senators Pay Lip-Service to International Trade Rules

Sen. Sherrod Brown (D, OH), along with eight other “usual suspects,” yesterday sent a letter to Senators John Kerry (D, MA), Joe Lieberman (I, CT) and Lindsey Graham (R, SC), outlining what’s necessary for their support of the latter’s climate green jobs bill (there seems to be some confusion about the precise purpose). The math, assuming that Republicans vote as a block to defeat the bill, requires that these senators’ demands be met if the Democrats are to overcome a filibuster and pass the bill.

So what exactly do they want? The main thrust of their demands seems to be for U.S. manufacturing’s competitiveness to be “addressed,” including by asking for the bill to “invest” (don’t you just love the way that word is used in the public policy context?) in retooling, R&D, and “support [for] American manufacturers of clean energy technology,” among other requirements.

Of course, no letter from these folks* would be complete without the obligatory  calls for a “level playing field.” Their wish-list therefore also includes provisions to ”apply border measures to prevent carbon leakage”. That, my friends, is a clear reference to carbon tariffs. The senators explain their concerns as follows:

An automatically triggered border measure is necessary to promote comparable action from other countries and prevent carbon leakage. To avoid undermining the environmental objective of the climate legislation, a WTO-consistent border adjustment measure, which the WTO has recognized as a usable tool in combating climate change, should apply to imports from countries that do not have in place comparable greenhouse gas emissions reduction requirements to those adopted by the United States. A border adjustment measure is critical to ensuring that climate change legislation will be trade neutral and environmentally effective.

Much of these sentiments are familiar. Indeed, I have combatted some of the myths implicit in the statement, including why “carbon leakage” might be a bit of a red herring, in my paper from September 2009, “A Harsh Climate for Trade,” and at a Hill brief I gave on this topic last year.

There are a couple of new and interesting things here, though. First, the  almost convincing attempt by these senators to cloak their protectionism in green-speak about the need to ensure that climate legislation is environmentally effective. They will have to keep that up, too, if they are to stay on the right side of WTO law, which says there must be a clear link between a trade measure and an environmental purpose if the measure is to be at least prima facie legitimate.  Imposing border measures to address adverse competitiveness effects of domestic environmental regulations, in other words, probably won’t cut it. (“A Harsh Climate” has more on why unilateral border actions may in and of themselves be inconsistent with WTO obligations.)

Second, and related to the issue of WTO legitimacy,  is the reference to the WTO “recogniz[ing]” border adjustment measures as “a useable tool in combating climate change.” This is disengenuous and possibly misleading rhetoric from the senators, because the WTO has done no such thing. There has been no formal ruling on this issue from any WTO judicial body, because no such cases have come before it. The WTO members as a group have not issued a proclaimation on it, either. I suspect the senators are referring to a joint WTO/United Nations Environment Programme report that came out last year, but as I said in my paper, that report “merely summarizes the relevant provisions, precedents and existing literature on the question on WTO consistency–without reaching any prescriptive conclusion at all.” And the demand that this tool be “automatically triggered” may put it at odds with jurisprudence that says that certain administrative procedures–including the right for a WTO member to review and appeal any decisions made–must be followed (reference for the trade wonks reading this: I am referring to Shrimp-Turtle). 

In sum, while the senators are at least trying to appear as if they give two straws about international obligations (and for small mercies we should be grateful, I guess), I’m not convinced they fully understand the implications of their proposal. Shocking, I know.

* The first letter sent by the group let by Sherrod Brown was signed by Senators Russ Feingold (D, WI), Jay Rockefeller (D, WV), and Al Franken (D, MN). Those senators did not sign the latest letter, and were “replaced” by substitute protectionists Claire McCaskill (D, MO), Kay Hagan (D, NC), and Mark Warner (D, VA).