Wednesday, June 12, 2002 Volume 67, Issue 146


 
 









 

Protectionism rears its head

Thomas Asma
Opinion Columnist

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 imports.

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 through
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
trade leader? 

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 President Bush
impose tariffs?

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 thomas_asma@hotmail.com


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