Risky Amendment Threaten Fast Track

This article appeared on Cato.org on May 10, 2002.
Share

The keystone of the Bush administration's trade policy from DayOne has been renewal of "trade promotion authority" -- also knownas TPA and fast track. With TPA in hand, the president can go outand negotiate major new market-opening deals that benefit U.S.businesses, workers and consumers, and promote growth and securityaround the world.

But the effort to renew TPA has been anything but easy.Opposition from Democrats in Congress has been a major obstacle.Only 21 House Democrats voted for TPA last December (the measuresqueaked through by one vote). And in the Senate Tom Daschle, SouthDakota Democrat, is holding the bill hostage to demands overhealth-care benefits for displaced workers.

It gets worse. Now members of the president's own party arethreatening to wreck TPA with a killer amendment. If this "poisonpill" is included in the bill, there is no point in passing it.Negotiating major trade deals will be impossible.

Under the amendment, provisions of trade agreements that makeany changes to U.S. trade remedy laws -- in particular, theantidumping law -- would be stripped out and denied fast-trackprocedures. While the rest of the agreement would be voted onup-or-down in one package, the provisions on trade laws would beconsidered separately and subject to line-by-line tinkering from535 U.S. trade representatives, i.e., Congress. The sponsors ofthis amendment are Sen. Larry Craig, Idaho Republican, and Sen.Mark Dayton, Minnesota Democrat; a number of Republican senatorshave joined Mr. Craig as co-sponsors.

The amendment is a deal killer. Whatever you think of U.S. traderemedy laws, the fact is that we won't be able to get newmarket-opening agreements in either the World Trade Organization orthe Free Trade Area of the Americas without some changes in currentantidumping rules. Dozens of countries are demanding those changes,and they won't sign any deal if U.S. negotiators aren't in aposition to offer them.

Consequently, voting for this amendment is indistinguishablefrom voting against TPA. The effect is the same: no progress inknocking down trade barriers around the world.

Opponents of antidumping reform argue that any changes tocurrent rules would expose U.S. industries to devastation by"unfair" competition. This is a myth. Many improvements inantidumping rules are needed not to open loopholes for unfair tradebut to ensure that normal, healthy competition isn't inadvertentlystifled. And on this point, senators should bear in mind the extentto which U.S. exporters are now increasingly victimized byantidumping abuses.

Unbeknownst, apparently, to Mr. Craig and his cosponsors,antidumping isn't the exclusive prerogative of the United States.During the past decade, dozens of countries have enactedantidumping laws. And by the second half of the 1990s the UnitedStates became the world's third-largest target of world antidumpingactions, trailing only China and Japan. U.S. companies targeted sofar make up a Who's Who of corporate America: Amana, Bristol-MyersSquibb, ConAgra, Dow Chemical, DuPont, ExxonMobil, Gerber,International Paper, Monsanto, Owens Corning, Union Carbide,Weyerhaeuser and Whirlpool. In Mr. Dayton's state of Minnesota,export giants 3M and Cargill have been on the receiving end offoreign antidumping actions.

Lax rules on antidumping have been of great comfort toprotectionist interests in countries like India, South Africa andArgentina, which until recently maintained extremely high tariffsand quotas. As those barriers have begun to fall in compliance with WTO obligations, antidumping has emerged to fillthe vacuum.

In the first half of the 1990s, South Africa initiated 16antidumping investigations; in the second half, it initiated 129.India's 15 antidumping investigations in the first half of the1990s exploded to 140 during the second half. In 2001, Indiasurpassed the U.S. and initiated more cases than any other countryin the world.

China, which just recently joined the WTO, has been the world'sleading target of antidumping measures for the past decade. To winentry into the WTO, China agreed to sweeping market-openingcommitments. As Risky amendments threaten fast track thosecommitments begin to squeeze local industries, expect China tostart evening the antidumping score. In the past few months, Chinacompleted an overhaul of its antidumping regulations and ramped upsubstantially the number of employees in its antidumpingadministration. And earlier this month, China informed WTOofficials that it does not expect or intend to meet certainrequirements with respect to its antidumping reportingmechanisms.

The United States thus has a strong national interest in betterantidumping rules. It has an even stronger interest in tradeliberalization generally. New trade agreements promise expandedbusiness opportunities for U.S. manufacturers and serviceindustries; perhaps more important, they will promote economicgrowth and promarket reforms in underdeveloped regions thatotherwise might become seedbeds of terrorism. But no agreements arepossible unless TPA is passed first -- and passed without foolishkiller amendments.