Earlier this week, Rep. Phil English (R-Pa.) introduced some of the most cynical trade legislation in recent memory. Simply put, English's bill and a Doha Round agreement are mutually exclusive.
English calls for significantly lowering the already laughably lax evidentiary thresholds (described by Brink Lindsey and me here, here, here, here, here, here, here, and here) required to impose antidumping, countervailing duty, and safeguard protection. The legislation collides head on with the practical requirement of the Doha negotiating mandate that those rules be tightened, not loosened.
In introducing his legislation, English relies on the same tired, well-refuted rhetoric: “Failing to update our outdated trade laws allows foreign countries to continue robbing Americans of their jobs,” he says. Pu-lease.
Granted, in Mr. English’s district of Erie, Pa., the unemployment rate of 5.1 percent is slightly higher than the downward-trending national rate of 4.6 percent (just announced today). Yet Erie's rate is still well below the national average in each of the past four decades.
But it’s not the jobs of his Erie constituents that English seeks to protect. Rather, it’s the jobs of Washington’s legions of underutilized trade lawyers who are the primary beneficiaries of this proposal.
“My initiative streamlines the process for American companies seeking relief against import surges, illegal imports, and other crippling circumstances stemming form trade,” English says. “Our trade laws are essential to police our domestic market and are used only when others break the rules. Now is the time to fix the law to serve our interests, not those of predatory trading partners.”
Exactly whose interest he means by “our interests” should be clear. There’s been a lot of talk within the trade community recently about the paucity of new trade remedy cases. In fact, there has been only one U.S. antidumping initiation this entire year, and only three over the past 10 months, which is a major dropoff from the one or two per months we’ve seen for the past few years. Combine that trend with the recent “softwood lumber” truce between the United States and Canada, and you have a sudden glut of starving trade lawyers. (And Research-in-Motion thought it was out of the woods when its patent infringement suit settled!)
The reduction in trade remedy cases is attributable to a few laudable facts:
First, the U.S. economy has been growing steadily, if not handsomely, for over four years now. Under those circumstances, it’s difficult to make the case that your industry is materially injured (one of the stubborn requirements of winning antidumping protection).
Second, the U.S. steel industry, which accounts for the preponderance of antidumping protection, is healthier than it has ever been.
Third, as globalization has progressed, supply chains have gone international. The once clear definition of a domestic industry has been blurred by the fact that production of a final product often takes place in multiple countries. Bringing antidumping suits has a greater downside now, as domestic petitioners are more likely to ensnare an entity in its own supply chain or related to them in some other way.
And fourth, as the world economy has expanded, producers have many more sales opportunities around the globe than they used to. Emerging demand in previously flat markets has caused managers to rethink their sales strategies: fewer are pursuing a strategy of competing on price in the United States, while more are looking to be early entrants in developing markets.
So, since the conditions that give rise to successful antidumping petitions are scarce today, the lawyers are trying to create demand for trade remedy measures by lowering the standards. If Congressman English’s bill were to become law, they just might succeed. What will be interesting to track is the rigor with which respondent law firms (those firms that typically represent importer and foreign-producer interests) oppose this legislation. The current environment favors their clients, but the lack of legal action doesn't pay those hefty lawyer salaries.