Smelly Cheese and the Future of Trade
Posted on January 29, 2009
Smelly Cheese and the Future of Trade
According to the Washington Post, the Bush Administration slapped a 300 percent duty of Roquefort cheese on its last day in charge.
Quel Dommage!
I am not a particular fan of Roquefort cheese, unless I have it with a very nice glass of red wine. Everything tastes better with a full-bodied Bordeaux, in my view.
The Bushies said they took this action in retaliation of the French ban on beef plied with hormones, but it looks like an over-reaction to me. It will hurt the French villagers that make the cheese, yes, but it will mostly hurt customers who want some stinky cheese.
George Bush was a big proponent of free trade. From a policy perspective, he was good on trade, but from a communications perspective, we have steadily lost ground on the importance of low tariffs and free commerce between countries during the Bush years.
Globalization is under assault. American blame trade agreements (especially trade agreements with Mexico and China) for the slumping economy and lost jobs.
Barack Obama is no-free trader. He wants to renegotiate NAFTA (at least that is what he said during the campaign). He will likely take a harder line with China (witness Tim Geithner’s testimony on currency manipulation). And he was carried to victory on the backs of organized labor. They hate free trade.
Over the year, Congress has become even more hostile to trade. I witnessed that during several votes on trade bills during Denny Hastert’s tenure as Speaker. Each vote become more difficult as free trade Democrats largely disappeared, and protectionist Republicans became more prominent.
The inclusion of Buy American provisions in the stimulus package passed yesterday are even more troubling for our trading partners. Should this provision remain in the legislation, it could spark a trade war, which will hurt our exporting companies, manufacturers like Caterpillar and Boeing.
Congress seems determined to repeat the history of Great Depression. The Depression was exacerbated by the infamous Smoot-Hawley tariffs, which successfully choked international trade to a trickle.
International trade has already slowed down precipitously. The global economy has been a source of great innovation, great diversity and great prices for consumers. When we erect higher walls to protect our industry, the rest of the world follows suit. The result is economic stagnation, job loss and misery for consumers and for job-seekers.
But that lesson has been lost on too many politicians.
What happens to the farmers in France and to the American cheese lovers who want Roquefort is just one small example of what happens when tariffs rise. The farmers lose their livelihood and the consumers have to do without.
Americans have little sympathy for the poor little French farmer, but the same thing will happen to factory worker in Peoria who may get laid off from Cat should Congress pursue these protectionist policies. Smelly cheese in only the beginning.