If it Looks Like Catfish…
Subject Tariffs
Topic International Trade
Key Words Tariffs, Trade Restrictions, Free-Trade Zone
News Story

Although the Bush Administration claims to be a proponent of free trade, there have been a number of instances where talk and action have diverged. Some claim that recent trade tiffs are simply the expedient of politics substituting temporarily for an established policy. The Administration's actions, critics claim, are winning votes for the upcoming battle over "fast-track" trade legislation. Without fast-track authority, the Administration argues, there would be fewer trade deals and therefore less international trade.

The imposition of tariffs on steel imports is just one of a number of trade restrictions the Bush Administration has recently placed. When Pakistan sought quota relief on the import of textiles, its pleas were refused. Canada, a U.S. partner in the North American Free Trade Agreement, was upset by a decision to levy duties on Canadian softwood exports. And Vietnam, a country that only recently signed a bilateral trade agreement with the U.S., was told that it could no longer call a fish that looks and tastes like catfish, which it had been exporting to the U.S., "catfish." It seems that the Vietnamese import was cutting into sales of U.S. catfish and catfish farmers in Southern states had complained to their Congressmen.

While these policy actions have angered U.S. trading partners and, especially in the case of steel tariffs, probably invited retaliation, they have also generated needed political support for future trade legislation. At issue in the Congress is "fast-track" authority, the ability to send trade agreements to Congress for a yes or no vote, denying Congress the ability to amend these trade bills. Last year, the Administration was able to get fast track approved by the narrowest of margins - one vote. Every protectionist measure proposed by the Administration is likely to be important in getting fast-track authority renewed.

For now, the fallout from recent trade restrictions has been limited to threats of tariffs on the import of some goods from the U.S. According to some analysts, the odds of retaliatory tariffs are high. Whether U.S. trade restrictions will lead to a trade war or a minor skirmish is unknown. In 1930, a brutal trade war occurred that deepened the global recession.

(Updated June 1, 2002)

1. What is fast-track authority? Why does the Bush Administration believe it is important for the implementation of trade policy?
2. What is the difference between a tariff and a quota? How does each restrict trade?
3. Economists argue that free trade increases economic welfare. Explain how this can occur.
Source George Hagan, "Bush plays free-trade game," USA Today, May 2, 2002.

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