Posted 10:41 AM by Robert

Herr Doktorprofessor Loots Trade Theory

Herr Doktorprofessor Paul Von Krugman's column today is a rich compost pile of leftovers from many of his Bush-bashings past, including - just un peu, mind you - from what is supposedly his specialty dish, international trade:

Then there's international trade policy. Here's how the steel story looks from Europe: the administration imposed an illegal tariff for domestic political reasons, then changed its mind when threatened with retaliatory tariffs focused on likely swing states. So the U.S. has squandered its credibility: it is now seen as a nation that honors promises only when it's politically convenient.

Surely Herr Doktorprofessor is right on this one. Such White House behavior has got to go! And the new Democratic administration that begins its term in 2005 will see to it, right? Indeed, the Los Angeles Times reports that the Democratic contenders are speaking out:

Gephardt and former Vermont Gov. Howard Dean, who have won the most endorsements from organized labor, voiced the strongest support for keeping the tariffs. Connecticut Sen. Joe Lieberman is opposed to the tariffs, but argues that Bush could have done more to help the domestic steel industry. Retired Gen. Wesley K. Clark, who has not run for office before, avoided taking a specific stance on the tariffs. .... Clark said in a statement. "We need a real strategy to help our manufacturing communities."

But a spokesman would not say whether Clark supported or opposed steel tariffs.

Lieberman suggested that Bush should have done more to push foreign steel competitors into fairer trade practices, among other measures. .... Gephardt, who has been endorsed by United Steelworkers of America, argued that Bush should have asked the International Trade Commission to review whether the tariffs could be restructured in a way that would address objections raised by the World Trade Organization.

"The president's decision to prematurely lift the tariffs on steel imports severely undermines the recovery of the U.S. steel industry from decades of unfair trade practices that have jeopardized the viability of a vital domestic industry," he said in a statement.

Dean joined him in criticizing Bush's trade policies.

"Despite what President Bush may claim, the steel industry needs additional breathing room to get back on its feet," Dean said. "But the tariffs are a short-term solution to a larger problem: this administration's broken trade policy. Our trade agreements need to benefit workers, not just big multinational corporations." ....

Earlier this week, Kerry voiced support for maintaining the steel tariffs, saying, "Bush is cutting and running from his commitments to help working Americans."

Edwards did not specify his position on the steel tariffs, but took Bush to task for not protecting jobs.

"This president has done virtually nothing to protect American manufacturing jobs ?— not steel manufacturing jobs in Pennsylvania, not steel consuming jobs in Michigan, not textile jobs in North and South Carolina," he said.

A recap:

Gephardt, Dean and Kerry are squarely for extending the tariffs. Gephardt even suggests that they could be "restructured" to make them legal - although Herr Doktorprofessor elsewhere has implied that they are illegal in principle. His column does not address the point.

Clark and Edwards offer incoherent waffles, while arguing that jobs in the steel industry should be "protected" without any suggestion of how that might be done absent protectionism.

And while Lieberman at first seems to advocate ending the tariffs, he makes the weird, unsupported suggestion that American the steel industry has been the victim of "unfair trade practices" by foreign steel competitors - practices the foreigners should have been "pushed" more to end. That Senator Lieberman is bloviating (at best) here is clear from his failure to identify what those "unfair trade practices" might be, or why he hasn't exposed and crusaded against them expressly, or how the President is supposed to "push" for their end other than by imposing trade sanctions like the tariffs.

Much later in the column, Herr Doktorprofessor does allow that some of the general "looting" he ascribes to the Administration is "bipartisan" - but he does not mention trade policy.

It of course goes without saying that the Administration's intentions are sinister in Herr Doktorprofessor's mind, as where he notes: The prevailing theory among grown-up Republicans - yes, they still exist - seems to be that Mr. Bush is simply doing whatever it takes to win the next election.

But if the Administration's unprincipled craving to win the next election is what is driving trade policy, why does the Los Angeles Times report:

The Democratic candidates vying to unseat President Bush next year quickly seized on his decision Thursday to lift tariffs on steel imports, seeing it as an issue that will give them a political edge in key steel-producing states.

Party strategists said rescinding the tariffs had jeopardized Bush's standing in Pennsylvania, Ohio and West Virginia ?— the country's top steel-producing states and likely battlegrounds in the 2004 presidential election. Combined, the states account for 46 electoral votes.

In the 2000 election, Bush carried Ohio by about 4 percentage points and West Virginia by about 6 percentage points. He lost Pennsylvania by about 4 percentage points. His decision to end the 30% tariffs on some foreign steel products that he imposed in March 2002 is sure to rankle steelworkers in each of the states, Democrats say.

"The president, unfortunately for him, made a major blunder," said Bill Carrick, a strategist for Missouri Rep. Richard A. Gephardt's presidential campaign. "He didn't have the guts to stick with his original position. I think it's going to leave an awful bitter taste in people's mouths."

UPDATE: Don Evans, the Commerce Secretary, writes in today's Wall Street Journal:

Prior to March 2002, the U.S. steel industry was faced with surging imports of foreign made steel, high costs, inefficient excess steelmaking capacity at home and abroad, and the lack of demand for steel in foreign markets. Decades of government ownership and subsidization of foreign steel mills had greatly distorted this market, leading to an unlevel playing field that cost American jobs. After years of neglect, President Bush responded forcefully by announcing a three part plan that, in addition to launching negotiations to establish disciplines on government subsidies and working to reduce inefficient excess global steel capacity, included a temporary safeguard on steel imports, as authorized under U.S. trade law, to address these problems.

The president's plan has worked.

Are the "unfair trade practices" referred to by Senator Lieberman - the only Democratic contender for the presidency who seems remotely on Herr Doktorprofessor's page - the same ones Mr. Evans cites in this passage? Does the Senator disagree that the president's plan has worked? Why so coy? In any event, the WTO rejected the practices described by Mr. Evans as inadequate justification for the tariffs. Are there other practices and countermeasures that the Senator has in mind? What the heck is he talking about?

MORE: On Maguire. Don't overlook the comments - especially the hilariously disingenuous squib lobbed in by Brad DeLong!