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Wednesday, September 23, 2009
George Will :: Townhall.com Columnist
A Willowy Weakness
by George Will
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WASHINGTON -- While in Pittsburgh, a sense of seemliness should prevent President Barack Obama from again exhorting the G-20, as he did April 2 in London, to be strong in resisting domestic pressures for protectionism. This month, invertebrate as he invariably is when organized labor barks, he imposed 35 percent tariffs on imports of tires that China makes for the low-price end of the market. This antic nonsense matters not only because of trade disruptions it may cause, but also because it is evidence of his willowy weakness under pressure from his political patrons.

In 2000, as a price of China's admission to the World Trade Organization, Congress enacted a provision for "relief from market disruption" to American industries from surges of Chinese imports. Actually, American consumers cause "disruption" in American markets when their preferences change in response to progress -- better products and bargains. Never mind. Congress said disruption exists whenever imports of a product "like or directly competitive with" a U.S. product increase "rapidly" and threaten "significant" injury to a U.S. industry. Evidence of disruption includes the volume of imports of a particular product, the effect of imports on the prices of competing U.S. goods, and the effect on the U.S. industry.

Arguing with Idiots By Glenn Beck

Notice that China need not be guilty of any wrongdoing: It can be punished even if it is not "dumping" -- not selling goods below the cost of manufacturing and distributing them. (That we consider it wrongdoing for a nation to sell us things we want at very low prices is a superstition to be marveled at another day.) And China need not be punished: Presidential action is entirely discretionary. So Barack Obama was using the sort of slippery language that increasingly defines his loquacity when he said he was simply "enforcing" a trade agreement.

None of the 10 manufacturers who comprise the domestic tire industry sought this protectionism. Seven of the 10 also make tires in other countries. Most U.S. manufacturers have stopped making low-end tires, preferring the higher profit from more expensive models. (Four U.S. companies make low-end tires in China.)

The president smote China because a single union, the United Steelworkers, asked him to. It represents rubber workers, but only those responsible for 47 percent of U.S. tiremaking. The president's action will not create more than a negligible number of jobs, if any. It will not restore a significant number, if any, of the almost 5,200 jobs that were lost in the tire industry between 2004 and 2008. Rather, the president will create jobs in other nations (e.g., Mexico, Indonesia) that make low-end tires. They make them partly because some U.S. firms have outsourced the manufacturing of such tires to low-wage countries so the U.S. firms can make a small profit, while making high-end and higher-profit tires here in high-wage America.

The 215 percent increase in tire imports from China is largely the fault, so to speak, of lower-income Americans, many of whom will respond to the presidential increase in the cost of low-end tires by driving longer on their worn tires. How many injuries and deaths will this cause? How many jobs will it cost in tire replacement businesses, or among longshoremen who handle imports? We will find out. The costs of the president's sacrifice of the national interest to the economic illiteracy of a single labor union may also include injuries China might inflict by imposing retaliatory protectionism or reducing its purchases of U.S. government debt, purchases that enable Americans to consume more government services than they are willing to pay for.

Obama was silent when Congress, pleasing the Teamsters union, violated the North American Free Trade Agreement by stopping Mexican trucks from delivering goods north of the border. And although he is almost never silent about anything, he did not protest "Buy American" provisions in the stimulus legislation. And he has not denounced the idea many Democratic climate tinkerers have of imposing "border adjustment mechanisms" -- tariffs -- on imports from countries that choose not to burden their manufacturers, as the Obama administration proposes burdening American manufacturers, with restrictions on carbon emissions. And he allows unratified trade agreements with Colombia, South Korea and Panama to languish. Nevertheless, he says he favors free trade.

He must -- or so he thinks -- say so much about so many things, perhaps he cannot keep track of the multiplying contradictions in his endless utterances. But they -- and the tire tariffs -- are related to the sagging support for his health care program.

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About The Author
George F. Will is a 1976 Pulitzer Prize winner whose columns are syndicated in more than 400 magazines and newspapers worldwide.
 
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ricardian theory
Gentle Readers,

A quick comments on Free Trade:

Free Trade is based on Ricardian Economic
Theory. ( Economist David Ricardo )

However, that theory has 3 assumptions:

#1: There is no national security consideration.
Ricardo assumes peaceful relations between
countries.

Many OPEC countries and many members of the
Chinese Communist Party are hostile to the
United States.

#2: There is an assumption of perfect ' elasticity " in the labor market. A tire
factory worker put out of work on Monday
can become employed as an electrician on
Tuesday morning.

Reality of course is different. There are huge
training, relocating and job search costs and
loss of production during periods of unemployment. Once retrained and having lost
money selling his home and moving to another
city, our former tire factory worker, now
an electrician, finds himself again unemployed
as the transformer factory he works at has
been put out of business by cheap Chinese imports.

#3. There is no currency manipulation. There
is a gold standard for all transactions.

Welcome to the real world of fiat money and
constant currency manipulations.

Again, the Free Trade policies are generally
successful, but there are 3 notable exceptions,
and its high time our government started carrying out its Constitutional obligation
to ' defend against all enemies, foreign and
domestic '.

That includes enemies waging economic warfare
and economic agression against Americans.

Kindest Regards to all,

I am,

John Lepant
Brighton
Colorado

I've criticized Pres. Obama alot, but...
Gentle Readers,

I've criticized Pres. Obama alot on TownHall,
but he is fundamentally correct in this action.

The U.S. policy of Free Trade has been an
enormous success and a great benefit to both
the American people and the entire world, with
3 very notable exceptions:

#1: Communist China: Free Trade is antithetical
to Communism,

#2: OPEC: OPEC has destroyed our domestic oil
industry by flooding the market with cheap oil
and then ripping off U.S. consumers with artificially high prices, and

#3: Japan: The Central Bank in Japan subsidizes
exports with 1% loans, and as a video producer
I can personally state it takes 2 years for any
kind of video: childrens cartoon, religious,
any kind, to clear Japanese Customs. They simply keep foreign goods out.

China has a trade deficit with every country
in the world except for the U.S. We allow them
access to our markets to sell, then they take
the money to other countries to buy.

OPEC is largely comprised of governments hostile
to the USA.

The Japanese don't import motor vehicles from
the U.S., Sweden, Germany or anyone! ( just
a few, not very many )

We should modify our Free Trade policies:

a. We need to become self-sufficient in motor-
fuels ( not energy, motor fuel ),

b. China should be put back on reciprocal trade:
we buy $100 of Chinese goods for every $100 of
U.S. goods they buy, which was the policy from
1979 - 1990, and

c. We need to as gently as possible cooperate with our Japanese friends on a new set of economic arrangements.

To say that Chinese tire imports will be substituted with imports from Indonesia or
Mexico misses the point that we have no structural trade deficit with those countries.

Our Trade Deficit is with China, Japan and OPEC.

Our policies should apprehend this reality. The
President is right.

Kindest Regards to all,

I am,

John Lepant
Brighton
Colorado
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