Trade
Bills in the Pipeline: From the Sublime to the Ridiculous
S. 191, Trade Act of 2005. This Senate bill would provide trade relief
for certain least developed countries (LDCs), including Afghanistan, Bangladesh,
Bhutan, Cambodia, Kiribati, Laos, Maldives, Nepal, Samoa, Solomon Islands,
Timor-Leste (East Timor), Tuvalu, Vanuatu, Yemen, and Sri Lanka. What that
means is that the U.S. would offer preferential treatment to these nations
by eliminating barriers to their exports. CWT supports this bill for two reasons.
First, it is a humanitarian way to offer aid to those countries impacted by
last year's deadly tsunami and to those most impacted by the phase-out of
U.S. quotas on textile and apparel imports. It also recognizes that by making
it easier for least developed countries to export their goods to the U.S.,
new economic opportunities are created in those countries, thereby creating
jobs and alleviating poverty. Second, it offers American consumers access
to the imports from these countries free of border taxes. That translates
into lower prices at the cash register.
S. 14, S. 295, S. 377. These three Senate bills mandate increased duties on Chinese imports in an effort to offset the impact of China's low currency value. CWT does NOT support these bills for a couple of reasons. First, the Bush Administration is using diplomatic pressure to ensure the Chinese government revalues its currency which is pegged to the dollar in such a way that their products have a price advantage in the U.S. market. China has said that it will revalue its currency when it is financially and economically feasible. Many experts feel that were China to immediately revalue its currency, it would create an enormous contraction of the Chinese economy. This in turn would cause problems for American and other Asian exports, leading to a contraction of those markets as well.
Second, imposing a border tax of up to 25 percent on Chinese imports will not force the Chinese to revalue their currency. They will revalue their currency when the time is right. What it will do is drive up the price of goods in the United States. Why would we penalize China by taxing ourselves? That's like cutting off our nose to spite our face. For these reasons CWT does NOT support S. 14, S. 295, or S. 377.
H.R. 728 This House bill bashes China in a different way. It proposes
to withdraw Normal Trade Relations (NTR) status for China until it revalues
its currency. Normal Trade Relations status is the basic trading status that
the United States--as a member of the World Trade Organization -- must provide
to every other WTO member.
Since China and the United States are both members of the WTO, we can't simply stop providing NTR status to China without also opening the door for China to legally retaliate by increasing tariffs on all of our exports to that nation. Removing NTR status would impose import taxes of as much as 80 percent on Chinese imports. It's clear that China would retaliate if this bill were ever enacted. It's hard to believe President Bush would ever sign such an outrageous bill into law.
For these reasons, CWT does NOT support H.R. 728.
S. 135 This Senate bill imposes mandatory country-of-origin labeling
(COOL) on imported agriculture and foods. If enacted, importers of beef, lamb,
pork, fish, peanuts and other perishable agricultural commodities would have
to put labels on these products identifying their country of origin. These
labels will have to show where the animals were born, raised, and slaughtered.
On a simple package of ground beef, for example, you might find the following
label:
"Beef From Cattle with the Following Countries of Origin: Born in Mexico, Raised and Slaughtered in the United States; New Zealand; Born, Raised and Slaughtered in the United States; and Born and Raised in Canada and Slaughtered in the United States."
In our opinion that's more information than we really want to know about our hamburger patties!
But the bill doesn't stop with page-long labels. If enacted, all participants in the supply chain for these products would have to maintain additional records at a cost estimated by the U.S. Agricultural Marketing Service at $2 billion per year. This makes it the most costly, cumbersome and complex labeling proposal in history. Importers of these products will pass this extra cost along to American consumers.
Country of origin labeling constitutes a barrier to trade because it makes importing meat much more difficult and strengthens the perception that foreign products are less safe than, or of inferior quality to, U.S. food products. In truth, imported meat must already meet stringent safety standards.
Consumer research performed in August 2002 by the International Food Information Council indicates that the vast majority of consumers are not seeking more information on food labels. Those who are seeking more information are not requesting country of origin. Unless a consumer is intimately familiar with the meat processing conditions in other countries, listing the country of origin is meaningless. The reality is American consumers care more about the safety, quality and price of the meat they buy than where it comes from. For these reasons, CWT does NOT support S. 135.
H.R. 746, S. 355, Foreign Debt Ceiling Act of 2005. These two bills
would impose a limit on the U.S. trade and budget deficit and would authorize
the U.S. Trade Representative to come up with an emergency plan to reduce
the trade deficit if it surpassed this limit. This limit would be reached
when the United States trade deficit for the preceding 12-month period is
more than 5 percent of United States GDP for the same period.
This is problematic. It fails to recognize that imports (and the trade deficit) increase when our economy is growing. The more money we have the more we spend - this is actually a positive indicator of economic health. Second, we are a nation of conspicuous consumers and in a free society are we not allowed to be that? These bills could result in the government limiting our right to purchase products manufactured abroad. If our government genuinely feels that the deficit is a problem, than it should avoid imposing costly restrictions on imports and educate Americans to save money rather than spend it. An increase in national savings would lower our deficit without having to erect any new barriers at the border. For this reason CWT does NOT support H.R. 746 and S. 355.
CWT encourages the readers
of this newsletter to be active in bringing about change. Write or call your
representatives today and weigh in on these trade topics. Only rarely do our
legislators hear from consumers. Make yourself heard!!