July/August 2013

Combating Regulatory Protectionism

Despite the impressive success of trade liberalization, domestic industries continue to find ways to use the power of government to protect themselves from foreign competition. The practice of using domestic environmental or consumer safety regulations as a way to disguise protectionist policy has become a serious and growing problem in the United States. “This regulatory protectionism harms the U.S. economy and violates our trade obligations,” write K. William Watson and Sallie James, trade policy analysts at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, in “Regulatory Protectionism: A Hidden Threat to Free Trade” (Policy Analysis no. 723). According to the authors, a number of factors — including economic globalization and increased constraints on tariffs and quotas — have combined to explain the rise in regulatory protectionism. “The consequence is a perfect storm in which social welfare activists and special commercial interests join forces to promote regulatory regimes that unfairly and unnecessarily restrict imports,” they write. At the same time, there is already a system of laws in place to prevent regulatory protectionism. The rules of the international trading system recognize that domestic laws can be just as protectionist as tariffs. “But the U.S. government must take its WTO obligations more seriously,” Watson and James write. They review a number of recent examples of protectionism to show that policymakers should be skeptical of regulatory proposals backed by the target domestic industry. In the end, they conclude, “the enemies of regulatory protectionism are transparency and vigilance.”

Protecting Free Speech
Three years ago the U.S. Supreme Court decided the case of Citizens United v. Federal Election Commission, in which it found that Congress lacked the power to prohibit independent spending on electoral speech by corporations. A later lower-court decision, SpeechNow v. Federal Election Commission, applied Citizens United to such spending and related fundraising by individuals. Concerns about the putative political and electoral consequences of the Citizens United decision have fostered several proposals to amend the Constitution. In “Move to Defend: The Case against the Constitutional Amendments Seeking to Overturn Citizens United (Policy Analysis no. 724), John Samples, director of Cato’s Center for Representative Government and author of The Fallacy of Campaign Finance Reform, argues that both the new and old public purposes cited for such restrictions are not persuasive. In short, he says, they “do not justify the breadth of power granted under these amendments.” Throughout his analysis, Samples seeks to answer the question of why Congress should or should not gain such power over spending. He considers — but dismisses — the notion that perhaps the spending and speech at stake should not be protected by the Constitution. He then weighs whether or not Congress should have the power to pursue other values — such as minimizing political corruption or ensuring equal spending — at the cost of freedom of speech. Yet such rationales do not justify such “broad and risky powers,” Samples writes. In the end, most justifications for amending the Constitution simply propose giving Congress unchecked power over political speech — “power that will be certainly abused.” Ultimately, Samples concludes that Americans should defend — not amend away — the freedom of speech recognized by the First Amendment.