POLITICS SEPTEMBER 22, 2009
Earlier this month, Barack Obama apparently completed an anti-free-market trifecta, adding "protectionist" to a rap sheet that already included "deficit spender" and "serial nationalizer." And not just any protectionist, mind you. In the words of former Bush spokesman Tony Fratto, Obama will hereafter be known as "the president who ‘lost' trade for America." The following day, the Wall Street Journal editorial page elaborated: "America now has its first protectionist President since Herbert Hoover."
So what did Obama do to earn this unsavory distinction? Order the Coast Guard to dump a fleet of German cars into the Atlantic? Set fire to a shipment of Malaysian T-shirts? Er, not exactly. What sent the self-styled defenders of capitalism into fits of hysterics was a modest tariff on Chinese tires--a single product accounting for a tiny fraction of both U.S. imports and Chinese exports. If this is what passes for a "whopper" of "geopolitical" proportions, as The Economist's editorialized, then one struggles to describe bona fide protectionism--like, say, the Smoot-Hawley tariff.
In fact, not only is the tire tariff economically trivial. But, unlike the typical restriction, our existing trade agreements specifically permit it. The law dates back to 2000, when the deal paving the way for China to join the World Trade Organization faced significant opposition in the United States. To defuse that opposition, Congress insisted on a provision allowing the White House to impose restraints on a Chinese product if the U.S. International Trade Commission deemed it a "disruption" to the U.S. market. (Basically, too many imports, too quickly.) The Chinese might not enjoy the benefits of WTO membership today--among other things, stable trade relations with the world's richest countries--if they hadn't made this concession.
Fast forward nine years and it is hard not to see the administration's actions in a similar light. With anti-trade sentiment rising in the aftermath of the worst financial crisis since the 1930s, it's become increasingly difficult to resist genuine protectionism--to say nothing of passing new trade pacts. (Bilateral deals with Colombia, South Korea, and Panama have all stalled out in Congress.) Absent a small gesture on behalf of American workers, it's safe to say the trade agenda would be doomed for the foreseeable future. (It may be anyway, of course.) Which is why Obama's decision seemed relatively straightforward once the International Trade Commission ruled that Chinese tires were in fact disruptive. Even so, Obama announced that the tariff would top out at 35 percent, well below the 55 percent recommended by the ITC.
So the tariff is modest, narrow, legal, and designed to preserve the political viability of free trade. The Chinese, of all people, understand this. Beijing initially reacted with barely a murmur, putting out a mild, pro forma statement of protest. Though a domestic backlash eventually forced the regime to take a tougher line, China has pledged to let the WTO adjudicate the dispute--meaning that, among other things, there shouldn't be any broader economic fallout.
Even the free-trade peanut gallery seems to grasp this basic logic. En route to proclaiming the tariff an act of "economic vandalism," The Economist allows that the relative pittance at stake over China's tire exports makes it "hardly the stuff of a great trade war" and that China is a "master of theatrical overreaction." A companion piece in the same issue notes that every U.S. president since Jimmy Carter has imposed trade restrictions of some kind and that Obama's are "mild by comparison." For his part, Fratto concedes that even the ostensibly laissez faire Bush administration "made a determination to impose trade protections on steel in its first term" for reasons similar to Obama's. (What Fratto doesn't say is that the steel tariffs were far more significant economically than the tire tariffs--at least an order of magnitude more costly, if you use numbers the hand-wringers like to cite.)
So how do the likes of Fratto and The Economist justify their histrionics? Not easily. Consider the distinction Fratto draws between Obama and Bush. "The Bush Administration was committed to trade expansion" when it imposed tariffs, he writes. "By contrast, nine months into his presidency, Obama is demonstrating neglect--if not outright hostility--to trade expansion." In a similar vein, The Economist asserts that "Mr Bush's tariffs, like the Reagan-era export restraints on Japanese cars and semiconductors, came from a president who was fundamentally committed to free trade. Mr Obama's, it seems, do not."
But both Bush and Obama were rhetorically committed to free trade at the time of their tariff flirtations, and both men had taken practical steps to promote it. (Bush had sought fast-track authority from Congress; Obama, in a much tougher political environment for trade, scaled back a "buy American" provision in the stimulus.) So pretty much the only way to divine this difference is by peering into the two men's souls. Alas, that's hardly the most reliable method, as Fratto's former boss demonstrated in another context.
Whereas Bush's free trade efforts supposedly revealed his passion for the issue despite the temporary lapse, Obama's efforts to expand trade apparently make him a hypocrite. Around the same time it imposed steel tariffs, the Bush administration was pitching a Free Trade Area of the Americas agreement--something Fratto holds out as a sign of his good faith. But, says The Economist, "For Mr Obama now to take up the no-protection cause at the G20's forthcoming meeting in Pittsburgh would, alas, be laughable."
I think I'm starting to understand how this works. When a Republican engages in protectionism, it's a noble sacrifice for the larger cause of free trade. But when a Democrat deviates from the free trade path--even slightly, even when it's allowed under our existing agreements--he reveals his inner Jimmy Hoffa.
Noam Scheiber is a senior editor of The New Republic.