Tuesday, March 6th, 2012 and is filed under Blog
There are always two sides to government intervention into free-markets; taxation and regulation on the one hand and subsidization on the other hand. Republicans, for the most part, are able to identify the inimical effects of the former, but come up short in articulating the latter, especially as it relates to trade policy.
There are many Republicans who believe that government should prop up domestic exporters in an effort to give them a leg up over foreign exporters to America. In doing so, they often advocate some form of tariffs on imports. But they fail to see how this government intervention artificially raises the cost of vital products on the American consumer. Those who peddle protectionist trade policies need to learn that only a pro-growth agenda at home will boost domestic producers, not higher tariffs on foreign goods, which hurts all consumers.
Unfortunately, the Senate agreed yesterday to preemptively sign off on a House bill which authorizes the Department of Commerce to slap countervailing tariffs on imports from countries that subsidize their exports. The amazing thing is that it passed with unanimous consent, even though it would result in higher prices for everyone. Under the unanimous consent agreement, the Senate would automatically clear the House bill (H.R. 4105) for the president following House action on the bill.
It’s understandable that some conservatives felt it was futile to object to UC on a bill that enjoys such popular support and will inevitably pass. However, we must ask ourselves why we are willing to expand the role of the Department of Commerce in the free-market at a time when conservatives are trying to get rid of the department.
It is also understandable for some conservative lawmakers to be squeamish about butting heads with manufacturers in their states, but why should consumers be left holding the bag? Proponents of the countervailing duties claim the free-market has already been corrupted from countries like China and Vietnam that subsidize their own exports. That’s true. But why should we further distort the market and punish consumers with our own form of subsidies and tariffs?
Today, the House is set to bring up the legislation (H.R. 4105) under suspension. Nobody appears willing to take a stand against the bill.
In the coming weeks, we will also have the opportunity to stand for free markets in international trade by allowing the export-import bank to expire at the end of the month. The Ex-Im bank offers loan guarantees to exporters to counter foreign exporters that enjoy government subsidies. Once again, the answer to our trade problems is not to fight subsidies with subsidies.
We either believe in the free-market or we believe that it is the role of the government to prop up businesses and pick winners and losers. Which one is it?
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