CANCUN, MEXICO — As the World Trade Organization conducts its 5th Ministerial Conference here this week, familiar voices once again make their demands. Industry groups fight for legal walls against their competitors. Farmers aim to protect the protectionism to which too many of them are addicted. And environmentalists are busy saving the Earth from…well, this week it’s Monsanto’s plot to patent genetically enhanced wheat.
Amid these special-interest pleaders, a few conferees are speaking up for the world’s broadest interest group: consumers.
“Consumers should understand that they enjoy the same rights as do producers or any other sector of the economy,” says Carlos Herrera Calvo, a Libertarian Costa Rican congressman. Like other pro-market advocates and organizations in attendance, he wants to see the benefits of free trade arise in shopping carts and service contracts around the globe.
The Washington-based Consumers for World Trade (cwt.org), for instance, has translated an array of often confounding tariffs and quotas into simple, understandable language. CWT estimates that the average American bride endures a hidden tax of more than 8.5 percent on imported, wedding-related purchases. These include a 17.8 percent tariff rate on luggage, 26 percent on porcelain dishes and 29.4 percent on glassware.
Similarly, a CWT study found, “Thanks to tariffs on a wide range of imported products, we Americans cannot remodel or improve our homes without paying a hidden tax equal to over 5 percent of the retail price.” If the 12 percent tariff rate on slip-joint pliers doesn’t anger Mr. Fix-Its from coast-to-coast, they should hate the 27 percent import tax on Canadian softwood lumber.
This pocket change quickly turns into gigabucks. The U.S. International Trade Commission reckons that trade restrictions hike consumer costs by $12.4 billion annually. They limit choice and create negative unintended consequences. Consider the campaign-donation-driven sugar program. Absent federal price supports, U.S. sugar production rightfully would collapse. While Florida’s politically connected Fanjul family and a few other growers thrive, the chemicals used to farm sugar wash into the Everglades. Cattails, briny shrimp and other flora and fauna don’t particularly enjoy pesticides and phosphates and thus pay the ultimate price for this protectionist folly.
Why don’t these idiotic policies stir mass outrage?
“People feel it in nickels, dimes and quarters, and not in huge amounts of money,” explains Fran Smith, executive director of Washington, D.C.’s Consumer Alert.
Even without a huge clamor for trade liberalization, President Bush should abandon his earlier protectionist juggernauts, namely disastrous steel tariffs of up to 30 percent and a massive $73.5 billion farm bailout. Rather than follow the WTO’s often-glacial pace, Bush should set a global example and lead Congress toward chopping trade barriers on its own.
Unilateral trade liberalization helped once-moribund Chile prosper. Indian consumers also advanced from this approach.
“On manufactured goods, India has been reducing tariffs unilaterally,” says Barun Mitra, director of New Delhi’s Liberty Institute. “For instance, on watches, computers and CDs, India used to have tariffs of over 300 percent.” Massive smuggling ensued. After barriers plunged, consumers bought goods legitimately. Former black-market vendors now hand their customers receipts.
“This is an astonishing change I have seen in my own lifetime,” Mitra adds.
“New Zealand used to be Fortess New Zealand,” says Tom Lambie, a milk producer and president of Federated Farmers, a key lobby. “In 1984, we went broke as a country, and we liberalized.” New Zealand’s government got out of agriculture and stopped funding growers.
“As farmers,” Lambie adds, “we are better off today than we were 20 years ago, and we still are growing. When we had controls and protection, our industry was growing at 1 percent per annum. For the last 20 years, we’ve grown on average 4 percent per annum. As an agricultural industry, we have increased our percentage of GDP from 15 percent to 17 percent of the total New Zealand economy.” Lambie notes that while his wealthy countrymen shopped overseas for what they lacked at home, “Now everyone in New Zealand can afford a range of goods that are sold in New Zealand.”
If unilateral free trade deepened the pockets of consumers and producers in a small country at the bottom of the planet, it is high time that Earth’s economic powerhouse similarly liberated its own people.
— Mr. Murdock is a columnist with the Scripps Howard News Service.