Protectionism rears its
Less than a month after imposing steel
tariffs, the Commerce Department under the Bush administration set duties
as high as 35 percent on
more than $6 billion of Canadian softwood
This came after a ruling last year that
the Canadian government unfairly subsidizes its softwood industry by allowing
domestic companies to
clear government-owned land at below market
prices. Softwood trade between Canada and the United States had been governed
bilateral trade accords, which ended in
April 2001. The accord set a 15 percent duty on lumber imports above 14.7
billion board feet per year.
The National Lumber and Building Materials
Dealers Association estimates that 32 percent tariffs on lumber would add
$1,500 to the cost of a
new home built with softwood.
That amount might seem small compared to
the cost of a new house, but based on U.S. census data and bank lending
formulas, a $1,000
increase would eliminate 300,000 potential
homeowners from receiving a mortgage. That money is a deal breaker for
low-income families in
search of low-cost housing, as softwood
is low-cost wood.
In free trade, consumers purchase from
the lowest-cost producer; domestic industries that are unable to compete,
drop out. If the U.S. softwood
industry dies out, that is merely a casualty
along the way to free markets and cheaper imports for Americans.
A casualty of this sort has to be accepted,
because it's inevitable that some country will produce some commodity cheaper
than our domestic
producers. Softwood, a nonessential commodity,
seems like a good starting point.
This raises a deep trade question: At what
point do we accept foreign subsidization in trade in order to maintain
our status as the world's free
The answer is: when the subsidization does
not threaten the extinction of a domestic industry necessary for national
security, such as steel.
Softwood is not necessary for national
security; it is a replaceable commodity, and therefore, nonessential.
The United States should not become reliant
on foreign sources for commodities. But consider our relationship with
the source in question,
Canada. We share the largest demilitarized
border in the world and are the world's largest trade partners, with $360
billion in goods crossing
our border last year.
We are partners in the North American Free
Trade Agreement; imposing tariffs only hinders the synergy that is the
goal of our unique
relationship. If there is any country
in the world that the United States can rely on for critical commodities,
it is Canada.
Free markets, cheap imports from a dependable
foreign source; sounds like an easy decision. Then why would free trader
Answer: Senate Minority Leader Trent Lott
is from Mississippi, a state whose softwood industry is suffering. Even
Republicans cannot refrain
from indulging in protectionist policies,
especially if their constituents are clamoring for it.
Lott probably appealed to Bush personally,
and Bush regretfully accepted. There is probably no denial of protection
for minority or majority
leaders when appealing to a president
of the same party.
No protection for softwood would hurt Lott
and Thad Cochran, the two Republican senators from Mississippi. If there
were one trend that would
be disastrous for Bush, it would be a
decline of Republican power in Congress.
Asma, a sophomore political science
major, can be reached at email@example.com