Suspension Bridge

by Ramesh Ponnuru

The Senate Republican leadership is quietly working on a bill to take a modest step forward on free trade — and also solve a thorny political problem.

Almost every Congress eventually passes a “miscellaneous tariff bill” that suspends various tariffs, usually at the request of companies that would like to be able to purchase imported raw materials and intermediate goods without paying the duties. If no domestic company objects — typically because no domestic company supplies the goods or materials in question — and the tariff raises a negligible amount of revenue, the bill will suspend the tariff.

Senator Jim DeMint (R., S.C.) has in recent months led a charge against this practice. While he is a free trader — unlike both his predecessor in that seat (Democrat Fritz Hollings) and his fellow South Carolina senator (Republican Lindsey Graham) — he considers these highly-targeted tariff suspensions to be akin to earmarks because their direct benefits flow to a small number of companies. With Democratic senator Claire McCaskill of Missouri, he has promoted a bill to have companies request suspensions from the International Trade Commission rather than go to Congress. DeMint’s stand has vexed business groups that want the tariff suspensions to proceed as usual.

The Republican leadership’s proposed solution, which has DeMint’s blessing, is to go further than the DeMint-McCaskill legislation. #more#Its bill, which could be introduced this week, would have the commission review every tariff that could qualify for a suspension under the normal criteria and issue recommendations accordingly. No company would have to ask for the suspension to prompt the commission to act. Republicans express hope that at least some Democrats will support the bill, and think it just might become law before the end of the year.

The bill would not work any dramatic liberalization of trade. Most tariffs would remain on the books, and even the suspended ones could come back. But the legislation is nonetheless notable for a few reasons.

The standard practice of tariff suspensions, though it has the whiff of favoritism, has in one way been an improvement on other, bigger free-trade initiatives: It is implemented unilaterally, and thus represents one of the few instances where U.S. trade policy recognizes that tariffs hurt American interests regardless of other countries’ policies. It overcomes the trade debate’s bad habit of pitting the interests of producers against those of consumers (since in these cases U.S. producers are the consumers). The new bill would build on these features of the old practice, unilaterally liberating more American producers from cost-increasing tariffs.

Also commendable is that Senate Republican leaders are trying to move forward on open trade even in a political climate not especially friendly to the cause — and in an election year. Finally, the leaders have found a creative way to bridge the differences between business groups and tea partiers instead of just letting the conflict fester.

The bill is small, but it’s good, and that’s better than most of Washington produces.

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