Protectionism: Not Dead Yet
Paul Krugman has a post in which he proclaims "The Death of Protectionism." He refers to this chart from the U.S. International Trade Commission:
And he says:
In doing course prep for trade policy, I looked, as I always do, at the latest edition of the USITC publication on the economic effects of import restrictions — and discovered that my subject was gone. At least according to the ITC estimates, there’s almost nothing left to talk about.
...
What happened? Mainly the end of the Multi-Fiber Agreement; also, US and world sugar prices have converged. But now that protectionism is a trivial issue, what will economists inveigh against?
The ITC chart shows tariffs falling from about 3.5% in 1993 to under 1.5% in 2011. That sounds like they started low and got lower.
But it's important to note that these are average tariffs. Tariffs on certain goods are still quite high. A publication called World Tariff Profiles illustrates this nicely. If you look at p. 170 for U.S. statistics, you will see tariff duties for four general product categories of over 10%. You'll also see maximum tariffs (i.e., the high tariff on particular products) of over 100%!
And if you look at the duty rates for other countries, they are generally much higher.
And none of that includes special "trade remedy" tariffs (anti-dumping, countervailing duties, safeguards), subsidies, discriminatory government procurement, or domestic laws and regulations that discriminate (such as local content requirements).
So, protectionism is alive and well.
I have little doubt that Krugman knows this. So why is he doing a post proclaiming the death of protectionism? I don't know for sure, but allow me to speculate. He wants the focus of economic growth policy to be on fiscal and monetary stimulus. He doesn't want free trade agreements to be offered up as an alternative growth strategy. Thus, he is telling people that there is not much for free trade to do.
I don't know if that's really what's going on. But it could be.
