Posts Tagged ‘Cap and Trade’


The War On Trade

October 2, 2009

The War On Trade

IBD: 2 Oct. 2009

Commerce: Last month’s tariffs on Chinese tires were explained away as just upholding U.S. law, not the first shot in a trade war. So why are special interests now flooding the president with demands for more tariffs?

When the White House slipped in an order to slap 35% optional tariffs on Chinese tire exports late on a Friday night last month, an anonymous official quickly justified it to the Los Angeles Times.

“This is certainly not an action directed against globalization . .. . The president is very committed to open and free trade,” the official said. “Part of that is being committed to enforcing trade laws and trade agreements.”

In fact, that tariff opened a floodgate for new demands for protective tariffs on steel pipes, solar panels, chemicals, glossy paper, truck tires and more. Big Labor and industry groups heard the starting gun, and are now barreling forward with protectionist wish lists.

It’s not surprising: They have a friendly White House that has let trade technicalities be used to impose tariffs.

Section 421 of the 1974 Trade Act, used to place tariffs on Chinese tires, is a law China signed off on to enter the World Trade Organization. It lets a president raise tariffs on anything if some sort of market “disruption” from foreign competition can be shown.

“The 421 special safeguard law has a very low threshold,” notes trade expert Daniel Griswold of the Cato Institute. “All you have to do is show that imports have gone up and markets have been ‘disrupted’ — as if trade and competition were not about disrupting markets.”

What the provision ultimately says is that other countries can trade with us, but only so long as they don’t make better products.

It’s an outrageous use of a loophole that shouldn’t be there at all.

Not only has it stimulated new candidates for Section 421 claims, it’s stimulated other protectionist claims for relief on issues like dumping. It’s all likely to trigger retaliation abroad, Griswold adds.

“One of the biggest negatives of the tire tariffs is that it has opened floodgates to copycat actions,” he warns.

That’s not hyperbole. Global Trade Alert, a panel of experts working with the World Bank, warned last month that 130 new measures to restrict trade worldwide are in the pipeline.

Russia, Japan, Ecuador and South Africa are all joining in. Fifty-five acts of protectionism are directed at China, 49 target the U.S and 46 hit Japan.

Manufactured goods and food are hit the hardest, but 90% of all goods traded globally are hit by some sort of protectionist measure. In an atmosphere like this, is it any wonder that global trade is expected to shrivel 10% this year?

Griswold says American families — the poor and the middle class — will be hurt the most. Imported goods make up a larger part of their consumption than they do for upper-class families.

Moreover, producers will lose key markets overseas. World GDP is roughly $60 trillion — vs. $14 trillion for the U.S. A trade war shrinks our companies’ potential global market sharply. And if foreigners sell less in our markets they’ll buy less, too. It’s lose-lose — or, as liberal economists say, a zero-sum game.

Well, maybe not so zero sum. A small slice of protected industries that employ very few Americans will emerge as winners.

A trade war is nothing but a bunch of carved out set-asides for Big Labor unions and uncompetitive industries.

It may look like tiny exceptions and compromises, but it snowballs with each measure and countermeasure. It’s what happened in 1930 with the Smoot-Hawley tariffs and it’s happening now.

A trade war is no different from Ernest Hemingway’s description of going broke: “It occurs at first very slowly, then all at once.” The result of this mudslide of punitive trade tariffs is the same thing.



July 16, 2009

Is Cap-And-Trade Just Political Posturing? If Not, It Could Mean Economic Suicide

By GUY SORMAN IBD 15 July 2009

President Obama’s climate change legislation, the so-called “clean energy” bill, has passed the House of Representatives and is now being debated in the Senate. The president claims the bill will “spark a clear energy transformation that will reduce our dependence on foreign oil and confront the carbon pollution that threatens our planet.”

In reality, the bill will have no impact whatsoever on global warming.

If global warming is in fact real and man-made, the bill’s imposition of a “cap-and-trade” permitting system on heavy emitters and the oil and gas industries will have only one consequence: the creation of a huge environmental bureaucracy in charge of implementing it. Europe’s experience with a similar cap-and-trade system since 2005 makes this clear.


If global warming is a real threat, such political posturing is deeply irresponsible. If it is not, then such postures can be safely ignored. In either case, however, in the name of global warming, it appears that we’ll have to pay for a bureaucratic army of green zealots in charge of useless regulation.

Guy Sorman is a contributing editor to City Journal and author of the new book, “Economics Does Not Lie: A Defense of the Free Market in a Time of Crisis” (Encounter Books, July 2009).


Green Jackets, Brown Shirts

July 8, 2009


Green Jackets, Brown Shirts


Cap And Trade: Al Gore has likened his crusade against global warming to the world’s struggle against Nazis. He said this while speaking in a country that is organizing a team of environmental storm troopers.

Related Topics: Global Warming

Gore didn’t come right out and call global warming skeptics Nazis while addressing an audience at Oxford University in England. But then, he didn’t have to. By simply violating Godwin’s Law — which essentially says that an argument dies the moment someone makes a comparison to Nazis — in the way he did, Gore labeled anyone who opposes his agenda a fascist.

While the former vice president was delivering his sermon, the British were busy creating a para-police squad that will enforce government-imposed carbon dioxide emissions limits. Take a good look, because the formation of this team could well be a preview of what we’ll get if the Democrats’ climate change bill becomes law.

So far, the cap-and-trade global warming legislation — known as the Waxman-Markey bill — has been passed only in the House. The Senate still has to take it up, and then a conference committee would write a version that both chambers would agree to vote on should the Senate approve legislation that has differences.

Any bill passed will of course have to be signed by President Obama. But the only question there is not whether he’ll sign it but whether he’ll turn the event into a circus bigger than Michael Jackson’s memorial.

*What comes next is the legalized extortion of the American people. Some analysts estimate that this scheme to save us from ourselves could by 2030 cost each American family as much $4,300 a year and destroy 2.5 million jobs. That’s even counting the “green” jobs the bill’s supporters claim it will create.

In return for that sacrifice, people living in our world a century from now will experience a global temperature that is projected to be one-tenth to two-tenths of one degree Celsius cooler than it would have been without the legislation.

While the loss of economic liberty is chilling enough, how much more freedom will be lost if Washington follows London’s lead and establishes a cap-and-trade police force?

The United Kingdom’s Carbon Reduction Commitment, which applies to nonenergy-intensive businesses, goes into effect next year. Ahead of that, the government’s Environment Agency is establishing a squad of 50 auditors that will be charged with catching companies that exceed their CO2 emissions limits.

If news reports from Britain are to be believed, this will not be a collegial staff of ordinary green-eyeshade auditors riding desks. This group will be armed with warrants and have the power to search private grounds, snoop through energy bills, carbon-trading records and receipts from suppliers, and seize evidence.

The auditors will be granted the authority to spy on businesses without their knowledge as well as to show up at a company’s doorstep for what is likely to be an intimidating visit if, the London Times reports, the company’s numbers “do not add up.”

It’s not clear if the auditors — who are to wear green jackets — will be able to charge private businesses that overstep their carbon output allocations with criminal offenses. But no one should be surprised if they do.

This sort of crackpot scheme is yet another case of foolishness that makes it seem like the world has gone mad. It hasn’t. Still, enough pockets of hysteria and second-rate thinking are out there, especially in places of influence, to cause us concern.

When we see benign behavior, such as emitting CO2, become an offense worthy of the attention of a national government, we know we are in a dangerous era. We hope enough rationality remains in the Senate to keep this madness from spreading to the U.S.


Cartoon: Cap & Trade

July 6, 2009