Hypocrisy and the United States (Trade)

The United States thinks of itself as the leader in free trade and frequently brings actions against nations as unfair trade partners. Section 301 of the Omnibus Trade and Competitiveness Act authorizes the US government to investigate and retaliate against specific foreign trade barriers judged to be unfair and to up to 100 percent tariffs on exports to the United States from guilty nations unless they US domestic demands. But critics say the United States is somewhat hypocritical in some of the stands taken it is just guilty of protecting its markets with trade barriers. A Japanese government study alleges that the United States engages in unfair trade practices in 10 of 12 policy areas reviewed in the study. Notably, the United States imposes quotas on imports, has high tariffs, and abuses antidumping measures. Are the critics correct? Is the United States being hypocritical when it comes to free trade? You be the judge.

The United States launched a Section 301 investigation of Japanese citrus quotas. The removal of Japan’s unfair barriers could cut the price of oranges for Japanese consumers by one third, said the US trade representative. Coincidentally, the United States had a 40 percent tariff on Brazilian orange juice imports when the investigation was initiated.

The United States brought a 301 case against Korea for its beef quotas even though the United States has beef import quotas that are estimated to cost US consumers $873 million annually in higher prices. Another 301 case was brought against Brazil, Korea, and Taiwan for trade barriers on footwear even though the United States maintains tariffs as high as 67 percent on footwear imports.

Can you believe that we have two phone book sized volumes of the US customs code that includes restrictions on such innocuous items as scissors, sweaters, leather, costume jewelry, tampons, pizzas, cotton swabs, ice cream from Jamaica, and even products we do not produce as vitamin B12. We also have restrictions on more sensitive products such as cars, super computers, lumber, and every type of clothing imaginable. Would be Latin American exporters find hundreds of the most promising export products such as grapes, tomatoes , onions, steel, cement, asparagus, and shoes on the customs list. Visit www.usitc.gov/taffairs.htm and select the interactive tariff Database to see some other examples. So, is the US as guilty as the rest or not?

Robert Cusack smuggled a pair of endangered a pair of endangered pygmy monkeys into the United States. On June 13, 2002, a US Fish and Wildlife Service special agent was called to Los Angeles International Airport after Cusack was detained by US Customs on arrival from Thailand. Officials soon also discovered that Cusack had four endangered birds of paradise and 50 protected orchids with him. When one of the inspectors opened up his luggage, one of the birds flew out, tells one official. He had to go catch the bird. After finding the other purloined birds and exotic flowers, the inspectors asked do you have anything else you should tell us about? Cusack answered, I have monkeys in pants. The monkeys ended up in the Los Angeles Zoo, and the smuggler ended up in jail for 57 days. He also paid a five figure fine.

Richard Connors, a Chicago lawyer, should have known better. He was caught smuggling thousands of Cuban cigars into the United Sates in violation of the 40 year old trade embargo against Castro’s Cuba. Connors, who had made monthly trips to Cuba via Canada and Mexico, faces up to five years in prison for his transgressions.

Smuggling isn’t just a game played by sneaking individuals. Multinational companies an also get into the act. During this last year alone convictions have come down for smuggling cell phones into Vietnam, cigarettes into Iraq and Canada, and platinum into China. In perhaps the biggest ever corporate case, after a nine year lawsuit Amway Corporation agreed to pay the Canadian government $ 38.1 million to settle charges it had avoided customs duties by undervaluing merchandise it exported from the US to Canadian distributors over a six year period. As long as there have been trade barriers, smuggling has been a common response. Indeed, Rudyard Kipling wrote some 100 years ago.

Five and twenty ponies trotting through the dark —
Brandy for the Parson, ‘baccy for the clerk’;
Laces for a lady, letters for a spy;
And watch the wall, my darling while the Gentleman go by! —