What
the Doha Negotiations Mean for Consumers
The United States stands to gain enormously by liberalizing its economy. Trade
liberalization entails removing barriers to imports such as quotas and tariffs.
While the average non-agricultural tariff on goods entering the U.S. is just
about 2.5%, much higher tariffs remain on many consumer goods, such as footwear,
apparel, luggage, purses, and drinking glasses. The average tariff on apparel,
for example, is 14 to 17%. Some items are especially high. The tariff on acrylic
sweaters is 32%. That means a sweater that costs $30 dollars will have a tariff
of $9.60 added to it. That's before the retailer's mark-up and local sales
tax are added on. What American wouldn't rather keep that $9.60 in her pocket?
As for footwear, the average tariff is 15%, but the tariff on low-end sneakers
most likely to be bought by low-income Americans varies from 48 to 67%. This
is especially nonsensical since 98% of the footwear available to American
consumers is manufactured abroad. Who exactly are we protecting with this
tariff? Why are we taxing a product that is scarcely even made in the U.S.
any more? And why would we tax low-income Americans at a higher rate than
high-income Americans?
The United States is a major world producer of agricultural commodities and processed food products, as well as a major consumer of these goods. While the average agricultural tariff in the United States is about 12%, this average masks some extremely high and very non-transparent tariffs. For example, according to USDA's Economic Research Service, the following six groupings of food commodities have U.S. tariffs at or above the U.S. average: oilseeds (17%), nuts (17%), cocoa beans and products (18%), dairy products (43%), and sweeteners (46%). Since many of the food products with high tariff rates in the U.S. are similarly protected in other major agricultural producing nations the Doha negotiations provide an ideal opportunity to dismantle these tariff walls on a global basis, benefiting consumers everywhere.
In addition to tariffs and quotas, there is a third type of barrier that drives up the cost of agricultural commodities for Americans. A tariff rate quota, or TRQ, is a two-tiered tariff system where a certain quantity of goods is taxed at one rate and goods exceeding that amount are taxed at a higher rate. TRQs on products like sugar, peanuts and dairy are hugely distorting to the U.S. economy. Not only would end consumers benefit from a reduction or elimination of border taxes on these products, the elimination or steep reduction of these tariffs would assist intermediary consumers, or down-stream producers such as candy companies, to remain competitive.
The United States Trade Representative has estimated that American consumers stand to save $18 billion a year if we were to eliminate tariffs on imported goods. Clearly it is in the consumer's interest for this round of negotiations to succeed. It is also in the interests of exporters in the developing world. By eliminating barriers to their products, they will have greater access to the American market, thereby increasing their sales. With greater demand for their goods in the U.S. and other affluent nations the economies of developing nations will grow and new jobs will be created. That's something we can feel good about every time we purchase something made in El Salvador or Vietnam.
Another opportunity afforded by the current round of negotiations is the chance to strengthen our trade remedy laws. Trade remedy laws govern the use of anti-dumping and countervailing duties. Too often governments, including our own, manipulate these laws to keep imports out at the expense of American importing industries and consumers. Not only do trade barriers drive up consumer costs to the tune of $12.4 billion each year according to the U.S. International Trade Commission, they also open the United States to retaliation against our exports. Increasingly, our trading partners are using trade remedy rules as cynically as U.S. producers do to the detriment of American exporters. Trade remedy rules can be improved by making them more transparent, permitting a greater role for domestic consumers in trade remedy cases and creating accurate and tamper-proof methodologies with which to calculate anti-dumping margins.
Finally, U.S. dumping and countervailing duty cases don't allow consumer interests
to be fully represented, because consumers are not considered "interested
parties" to the case. Consumers are allowed to present their views to
the Department of Commerce and the International Trade Commission, but those
agencies are not required to weigh the negative impact of duties on consumers
and downstream industries against the positive impact of protecting domestic
special interests. Very often, the consumer impacts can be very significant,
but they are often ignored. The decision to impose duties is made by policy
makers behind closed doors making duties a hidden, unsanctioned tax. CWT would
like to see the impact of duties on consumers and consuming industries to
be factored into the decision on whether or not to impose duties in anti-dumping
and countervailing duty cases.
There is a lot to be gained from the successful conclusion of the Doha negotiations.
CWT encourages you to contact your representative and senators and express
your support for free trade.