The United States has forfeited the right to call itself a free-trade nation. Its decision to hit lamb imports with both a quota and a tariff was done for one reason only – protection of its home industry. The only good thing that can be said about the US decision was that it was up front. There was no pretence from the US to limit lamb from Australia and New Zealand on spurious health or quarantine grounds.
The US hit imported lamb with a quota set at 1998 levels of 32 million tonnes. The tariff below the quota will be 9 per cent for the first year, 6 per cent in the second and 3 per cent in the third and final year. The tariff is about 1 per cent now. The quota level will rise a trivial 857 tonnes in the second and third years. Imports above the quota will face a 40 per cent tariff the first year, a 32 per cent tariff the second year and a 24 per cent tariff in the third year.
The 40 per cent rate is almost prohibitive. The short lead time, less than two weeks, indicates the US Administration was acting to appease a noisy group of US producers with political clout.
The worst element of it is that Australian and New Zealand lamb producers have virtually created the increased US lamb market which hitherto had been very small. Australian and New Zealand product account for 95 per cent of imports into the US.
The decision was clouded with political and diplomatic double-speak.
The White House said in a statement, “”This package has been carefully designed to help achieve sustained competitiveness for the US industry and is fully consistent with our international trade obligations.”
Twaddle.
The acting US Ambassador to Australia William Bellamy said, “”The United States remains firmly committed to free trade.”
Calling black white.
From the American political perspective the decision was obvious. It is easier to condemn millions of US consumers to inferior and slightly more expensive lamb than it is to ignore a concentrated group of lamb farmers. The consumers are spread throughout the US and will not change their vote on the strength of a slight increase in lamb prices. The farmers, however, have made it very clear to their congressional representatives that they would change their vote. Those representatives have pressured the White House.
This political reality applies in many cases. Concentrated producers bullying and blackmailing their way to get special advantage at the expense of the many. This is why it requires a great deal of political courage to pursue free trade. There is no political reward in the widespread benefits that come with greater free trade. There are votes and political benefits in caving in to protectionism.
The Clinton Administration has flunked the free-trade test. Its decision is that much weaker because it harms the trade of close allies and friends. The US must feel it can take advantage of its close allies, that there is no need to attend to their interests in return for some political favour in the world.
Mr Bellamy had the temerity to say, “”I don’t think we should extrapolate from this case that the United States is not committed to free trade.”
The double negative provides no escape. Australia and New Zealand can only conclude that the US has lost its resolve on free trade. It gets one difficult case domestically and it buckles. The US is only interested in free trade when it benefits the US.
Its attacks on the Europeans and Japanese for restrictive trade practices are now shown to be hypocritical humbug.