Chicago Tribune OpEd

Chicago Tribune

June 20, 2003, Op-Ed,1,3830870.story?coll=chi-newsopinioncommentary-hed

There’s No Such Thing As Free Trade

by Huyen Pham and Van Pham, Columbia Missouri

As free market proponents like to point out “there’s no such thing as a free lunch.” Now, from the freest of market economies, comes another piece of wisdom “there’s no such thing as free trade.” Such is the lesson for Vietnam which, since consummating normal trade relations with the U.S. just over one year ago, has found its exports blocked by all available tools of protectionism.

The latest block is the U.S. Department of Commerce’s ruling a few days ago against Vietnamese catfish. DOC claims that Vietnam dumped its catfish in the American market by selling it as much as 64% lower than cost. As we showed in an earlier article (San Diego Union-Tribune 2/25/03, and Asia Times, 2/22/2003), believing DOC’s claim would require believing, incredibly enough, that a Vietnamese person spends nearly half her wages to buy this same catfish in Vietnam or that the Vietnamese government is subsidizing half the income of Vietnamese catfish workers–a subsidy that would be 70 times more than the government spends on health care.

To reach these incredible conclusions requires some creative accounting. Because it is likely that the price of Vietnamese fish is lower because of lower costs, DOC had to use data from other countries to arrive at the higher costs of production for Vietnam that would support the alleged dumping margins. First, India was used as the comparable country, where labor costs are three times higher than in Vietnam. Then DOC used data from Bangladesh. And to reach its final ruling, DOC compared the production of Vietnamese catfish to the production of Russian steel. The process is so convoluted and yields such nonsensical conclusions that it taxes the confidence of even those who are most willing to believe the anti-dumping laws exist to actually preserve fairness in trade.

The dumping ruling followed other protectionist measures: a labeling requirement that says because Vietnamese catfish aren’t “really” catfish, they have to be sold as something else and an audacious (and totally unsubstantiated) claim that Vietnamese catfish are contaminated by Agent Orange left over from the war.

The Vietnamese were taught yet another lesson about “free trade” two months ago when the U.S. imposed stiff quotas on imports of Vietnamese textiles, claiming that these imports hurt domestic producers. The main evidence the U.S. used was the growth in Vietnamese textile imports of over 1700% from 2001 to 2002. But this is again another red herring. The growth rate was so high because imports from Vietnam were virtually non-existent in 2001: a measly $48 million out of $63 billion in total textile imports to the U.S. Even after the 1700% increase, Vietnamese textile imports in 2002 came to less than one percent of the U.S. textile market. To say that Vietnam’s imports threaten domestic producers is like saying that the lemonade sold by neighborhood kids at the street corner threatens the existence of Coke and Pepsi.

What’s most vexing, though, is that according to the U.S. International Trade Commission, from 2001 to 2002, total textile imports to the U.S. actually fell! The increase from Vietnam was more than matched by drops in imports from Bangladesh, Costa Rica, Hong Kong, Pakistan and Taiwan. So, in fact, domestic textile producers faced less competition in 2002, not more. Claims that domestic producers were hurt by Vietnamese textile imports are, at best, mistaken.

The reality is that the U.S. is the biggest consumer of world production. This affords us extensive powers to make, interpret, and enforce trade rules. But with such power comes the responsibility to be fair. An abdication of that responsibility not only makes our proclamations for free trade not credible, but also makes our exhortations for fundamental principles like democracy and human rights ring hollow too. We should be mindful of the fact that, like the proverbial lunch, credibility is not free either.


Copyright 2003, Chicago Tribune

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