Friday, July 09, 2004

World Trade Week lasts little more than a week

In his World Trade Week, 2004 proclamation, President Bush praised the benefits of world trade. Less than two months later, Mr. Bush imposed tariffs on imported shrimp.

According to the Seattle Post-Intelligencer
"The proposed tariffs on Chinese exporters range from about 8 percent to 113 percent. Vietnam exporters face duties ranging from about 12 percent to 93 percent. Those numbers could change as the department continues investigating.

Besides China and Vietnam, shrimpers allege India, Brazil, Ecuador and Thailand also have dumped shrimp on the U.S. market. Later this month, the Commerce Department is expected to rule if those countries are guilty of dumping."
For a lucid explanation of the issue, see The Fallacies of Shrimp Protectionism
"[T]he International Trade Administration (ITA), a division of the U.S. Department of Commerce [has a] history of ruling in favor of most every dumping claim that comes its way, [making] it difficult to conclude that the U.S. antidumping law is anything other than pure protectionism.

In the shrimp dumping case, the conclusion is inescapable. Modern shrimp farming was developed in the early 1970s and proliferated rapidly. In 1975, shrimp farms accounted for about 2.5 percent of world shrimp production. By 1985, they accounted for 10 percent of world shrimp production. By 2001, shrimp farms were operating in over 50 countries and accounted for 40 percent of world production.

Shrimp farming has proliferated for one simple reason: efficiency. Trawling for shrimp is costly, and the harvest often varies considerably from year to year with changes in weather and ecological conditions. Shrimp farms not only produce shrimp at much less cost, they produce a steady and reliable volume. Seafood processors value the reliable volume: these companies buy harvested shrimp and produce finished products for consumers whose desire for shrimp does not fluctuate with weather and ecological conditions.

As shrimp farming has expanded, world shrimp production has increased and shrimp prices have fallen. Shrimp prices are now so low that they threaten the market survival of U.S. shrimp trawlers. So the trawlers have turned to the U.S. government and its antidumping law to protect themselves, not from dumping, but from market competition with their more efficient foreign competitors."
But Mr. Free Trade President was never one to let the benefits of private initiative and free markets stand in the way of politics, especially if the initiative is foreign and the politics is domestic.

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