More Refutation of Protectionist Doctrine

The backlash against trade in the 110th Congress is fueled by three emotive but purely fictional assertions: (1) trade agreements have caused the trade deficit to rise, and an increasing trade deficit means we are losing at trade; (2) rising imports explain the decline in the U.S. manufacturing sector, including the loss of jobs; (3) the United States is losing at trade because the Bush administration doesn’t enforce our trade agreements and instead turns a blind eye toward the rampant cheating of our trade partners.

The Center for Trade Policy Studies  has produced numerous refutations of the first two fallacies (1, 2, 3, 4, 5, ), while a ruling yesterday from a World Trade Organization dispute panel adds to the growing list of refutations of the third. 

Mostly affirming the complaints lodged by the United States, Europe, and Canada in 2006, the panel ruled that Chinese tariffs on imported auto parts violate China’s WTO obligations.

China must now act to bring its practices into conformity with its WTO commitments (i.e., change the offending laws or regulations) or it can challenge the ruling before the WTO’s Appellate Body.  Yesterday’s decision constitutes the first ever WTO panel ruling against Chinese trade practices, but it doesn’t represent the first U.S. enforcement action taken against China.

The Auto Parts case is the second of five formal U.S. complaints against China in the WTO.  The first case was brought in 2004 and involved a Chinese value-added tax on integrated circuits for which domestic firms could get partial rebates—putting foreign suppliers at a disadvantage.  That dispute was resolved 19 months later during the consultation phase—without need of a dispute panel—when the Chinese agreed to change the tax rule.

The third case was filed in February 2007 and concerns other Chinese tax policies that grant refunds, reductions or exemptions from taxes to domestic firms only.  A memorandum of understanding to resolve and terminate the dispute was reached 10 months later, with China agreeing to change the discriminatory nature of the law.

Two other cases—both initiated in Spring 2007—are pending.  One concerns the alleged failure of China to protect and enforce intellectual property rights and the other concerns alleged barriers facing foreign traders and distributors of copyrighted materials, like books, videos, and DVDs.  A dispute panel was recently composed for the IP case, and the distribution barriers case is still in the consultations phase.

The administration has demonstrated its commitment to enforcement, not only by bringing WTO cases, but in myriad other ways that fly under the radar.  Dialogue is always ongoing between the United States and China, and the United States and other trade partners.  Contrary to the implications of the rhetoric that trade enforcement requires a bludgeon, the most effective enforcement entails quiet diplomacy, where problems are discussed and resolved outside of the shine of the spotlight.

When the foundations of the protectionist backlash are revealed to be made of silly puddy, you’ve got to wonder how long the backlash will endure.

Thanks, Mayor Bloomberg

New York Mayor Michael Bloomberg’s continuing crusade to manage every aspect of his constituents’ lives has generated another perverse consequence: Customers of Wendy’s in New York will now get less information on nutrition than they did before the newest regulations. Wendy’s has posted this notice “For NYC Customers” on its Nutrition website:

Special notice to inquiries originating from New York City:

We regret that Wendy’s cannot provide product calorie information to residents or customers in New York City. The New York City Department of Health passed a regulation requiring restaurants that already provide calorie information to post product calories on their menu boards – using the same type size as the product listing.

We fully support the intent of this regulation; however, since most of our food is made-to-order, there isn’t enough room on our existing menu boards to comply with the regulation. We have for years provided complete nutritional information on posters inside the restaurant and on our website. To continue to provide caloric information to residents and customers of our New York City restaurants on our website and on our nutritional posters would subject us to this regulation. As a result, we will no longer provide caloric information to residents and customers of our New York City restaurants.

We regret this inconvenience. If you have questions about this regulation, please contact the New York City Department of Health and Mental Hygiene and refer to Health Code Section 81.50.

The World Is Not Going To End This Weekend

One of the biggest problems in the FISA debate is that a lot of the reporters writing about the subject seem to be seriously confused about the details of the legislative process. Take, for example, the lede to this write-up of yesterday’s action from the Politico:

House Democrats were unable to hold together their caucus on a key intelligence vote on Wednesday, as a coalition of Republicans, Blue Dog Democrats and liberals helped defeat a measure to extend the Foreign Intelligence Surveillance Act as the deadline approaches.

The measure, which failed 191 to 229, would have extended the bill an additional three weeks to work out differences with the Senate on the issue of granting immunity to telecom companies which aided the federal government in wiretapping.

FISA is not expiring this weekend. FISA was passed in 1978 and isn’t slated to expire ever. What’s going to expire this weekend is the Protect America Act, which gave the president some additional spying powers beyond those he enjoyed under FISA. And in fact, even that is misleading, because all that’s really going to expire is the ability to authorize new surveillance activities. The PAA allowed the government to authorize surveillance programs for a year, which means that any surveillance programs that have already been approved will continue to be authorized until August at the earliest.

What this means is that the only real effect of the PAA’s expiration is that if a new terrorist suspect comes to the government’s attention, and he makes a phone call or sends an email that passes through the United States, then the government would need to fill out the extra paperwork required to get a FISA warrant in order to surveil that call. This paperwork can be filled out after the interception begins, so we’re not talking about the NSA missing any important phone calls, we’re just talking about bureaucrats doing some paperwork. That’s a problem, to be sure, but it’s a pretty minor one.

Yet virtually every press account I’ve seen seems to accept the White House’s story that the expiration of the PAA would completely shut down terrorist surveillance activities. My guess is that this is a combination of ignorance on the part of reporters and the desire to make the story seem more dramatic. (And conservative pundits like Andrew McCarthy have made no effort to clear up the confusion) But it’s a real problem, because it may allow the president to stampede Congress into passing legislation they’ll regret later.

Update: Luckily, some journalists are paying attention. My friend (and Cato alum) Julian Sanchez has a write-up for Ars Technica that accurately describes the state of play:

House Speaker Nancy Pelosi (D-CA) has signaled that she may be prepared to face down the threat. “Even if the Protect America Act expires later this week,” Pelosi said in a statement, “the American people can be confident that our country remains safe and strong. Every order entered under the law can remain in effect for 12 months from the date it was issued.” Since many observers believe that the surveillance authorizations under the PAA are likely to be couched in quite broad terms, it is likely that intelligence agencies will be able to continue most surveillance without further authorization even if the bill does lapse. The ACLU has urged Congress to simply allow the PAA to expire.

Business Travel Group Seeks Change to REAL ID

The Association of Corporate Travel Executives recognizes the problems that the Department of Homeland Security will cause if it follows through on the threat to make air travel inconvenient for people from states that refuse the REAL ID Act’s national ID mandate. That’s why ACTE has released a statement asking for change to the REAL ID law.

An ACTE release published on etravelblackboard.com says:

“The traveling public needs more time to consider how these new regulations will affect them, and to be made aware of alternative efforts that may serve the same security objectives with less stress,” said Gurley. “Divisive activity by pressuring states into accepting a mandate at the risk of inconveniencing travelers is not conducive to the best policy-making.”Gurley is referring to the Identification Security Enhancement Act S.717, described as a “compelling alternative to Real ID,” and is cosponsored by four senators from both parties. A companion bill, H.R. 1117, introduced by Tom Allen (D-ME) has been cosponsored by 32 representatives. It has been stated that these bills would produce a more secure identification program, faster than the implementation date (2017) given by DHS.

As I wrote in the American Spectator a week ago:

With enough states saying “Hell No” to the REAL ID mandate, the feds will back down from their threat to make air travel inconvenient. The airline industry will be up on Capitol Hill faster than you can say “You are now free to move about the country.” Congress will back the DHS off.

I was close. It turns out to be an air travelers group making the first to move to end DHS’s brinksmanship.

Telecom Amnesty

Over at Slate, I wonder what ever happened to the Republican devotion to the rule of law:

Press reports suggest that the Bush administration has created at least two warrantless surveillance programs with the cooperation of major telecom companies. The first, reported by the New York Times in 2005, involved the warrantless interception of several hundred Americans’ international phone calls and e-mails. Under the second, first reported by USA Today in 2006, Verizon and AT&T (then called SBC) reportedly provided the government with access to the domestic calling records of its customers. Qwest CEO Joseph P. Nacchio declined to participate in the latter program, believing that doing so would be against the law. Nacchio now alleges that the NSA retaliated for his refusal by canceling an unrelated, lucrative government contract. (He faces unrelated charges of insider trading.) Last summer, the Heritage Foundation’s Matthew Spalding insisted that giving amnesty to illegal immigrants would be “deeply unfair to the millions who obey the law and abide by the rules.” By the same token, letting AT&T and Verizon off the hook would not only be unfair to the customers whose privacy they violated, it would also be unfair to Qwest, which was put at a competitive disadvantage for obeying the law.

Last year, when the Senate was debating immigration reform, Sen. Kay Bailey Hutchinson was arguing that “America is based on the rule of law, and that law must be enforced.” Many other Republican Senators expressed similar sentiments, opposing any leniency for illegal immigrants. But yesterday she voted with every one of her Republican colleagues to forgive telecom companies for their illegal activities. If migrant workers are obligated to obey our laws, surely our largest corporations have the same obligation.

Whaddaya Know? Pangloss Was Right after all!

All these years I was thinking that Voltaire’s Pangloss was a credulous ignoramus for claiming that “we live in the best of all possible worlds.” But then I turn on the TV while making coffee this morning to find the Congress of the United States of America spending its limited time chatting with grown men who play a game for a living….

Fantastic! If this is the most important issue for our elected representatives to be dealing with, our nation and the world must be in far far better shape than I imagined.

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The first blogger to put up a list of every elected representative who participated in this foolishness, along with the districts they represent, gets a hotlink. Just e-mail me at ACoulson-at-cato-dot-org.

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Iraq War Spending: 2001-present

The CBO has issued a report titled “Analysis of the Growth in Funding for Operations in Iraq, Afghanistan, and Elsewhere in the War on Terrorism.”

I ran the figures through the Net Present Value calculator I use at WashingtonWatch.com. (The amount you’d have to put in the bank for future spending, or the amount you’d have in the bank but for past spending.)

The results? A little over $8,600 per U.S. family, or $2,700 per person.