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November 11, 2003

THANKS A LOT, WTO....A few years ago we had a little spat with the EU over the taxation of multinational corporations. The case went to the WTO, we lost, and Congress then took up the task of fixing our tax laws to comply with the WTO ruling.

The result, in retrospect, was predictable given the way Republicans react to just about everything these days: in what way, they asked themselves, can this problem be turned into a way to help out all of our big corporate donors?

The answer was pretty simple: craft a bill that ends the tax break as mandated by the WTO, but replaces it with a laundry list of tax breaks worth twice as much for favored industries. In other words, a technical dispute with Europe was swiftly turned into an excuse to continue the Republican tax cut jihad. What a surprise.

Now the WTO has struck again, ruling that George Bush's Pennsylvania And West Virginia Vote Protection Act of 2002, aka steel tariffs, violates international trade law. Normally this would be good news, since the steel tariffs were bad policy, but I think I'll wait for the other shoe to drop before I breathe a sigh of relief. After all, how long do you think it will take for this to be used as an excuse to enact yet another bevy of corporate welfare handouts? And this time maybe they'll be able to do it right and shovel a bunch of taxpayer dough to both the steel industry and the steel consumers, who were so unhappy with the tariffs in the first place.

My guess: the tariffs will go, but a few weeks later they'll get replaced with something a bit more subtle and far ranging. Watch the legislative calendar closely....

Posted by Kevin Drum at November 11, 2003 02:30 PM | TrackBack


you are wise. prepare for cynical pension overhaul, or new additions via conference committee to the energy bill.

Posted by: praktike at November 11, 2003 02:41 PM | PERMALINK

I dunno. I can't think of any Republican interest group that favored the tarriffs -- they were a sop to a swing group that probably won't vote for GWB in '04 anyway. Hopefully we'll just scrap 'em (the tarriffs, not the swing group) and call it a day.

But I could be wrong.

Posted by: Tacitus at November 11, 2003 02:44 PM | PERMALINK

See, Kevin, this is why we like you - insightful commentary that reveals to us things we may not have already known, based on evidence and facts. Stuff like this is what sets you apart. Please stick to this and not working to re-elect Bush by making baseless, speculative attacks on a Democratic front-runner.

The WTO has been more trouble than it's been worth, it seems, but of course there's no real thought of abandoning it. I am all for protecting steel workers, but the WTO doesn't care much for American labor.

Posted by: foolio at November 11, 2003 02:50 PM | PERMALINK

Well, in fairness, the WTO isn't supposed to care about American labor. It's supposed to care about enforcing the rules. (Whether it does so wisely is another question, of course.)

Posted by: Kevin Drum at November 11, 2003 03:08 PM | PERMALINK

Steel tarriffs going? Good!

Posted by: spc67 at November 11, 2003 03:18 PM | PERMALINK


I believe there are a bunch of sugar growers in Florida who vote Republican and love tariffs.

Posted by: Rob at November 11, 2003 03:23 PM | PERMALINK

As a new reader, I'm afraid I can't make out your tone, Kevin.

Are you saying tariffs were bad, and thanks for pointing it out, WTO?

Or that BushCo. will only make things worse, so please don't poke the hornet's nest?

Posted by: Niall McAuley at November 11, 2003 03:33 PM | PERMALINK

They don't grow steel, do they Rob?

Posted by: Tacitus at November 11, 2003 03:44 PM | PERMALINK

Sorry read your post wrong-missed a "the"

Posted by: Rob at November 11, 2003 04:10 PM | PERMALINK

Niall: both. I couldn't make up my mind.

Posted by: Kevin Drum at November 11, 2003 04:19 PM | PERMALINK

Pennsylvania And West Virginia Vote Protection Act of 2002?!
Is this really the name of the thing?
I wonder what that means? He's protecting the potential vote? As much as I despise him, Fake President Bush is a master of the incomprehesible, ass-backwards act-name. He should get together with Quentin Tarantino.

Posted by: garth at November 11, 2003 04:50 PM | PERMALINK

Free trade is always great when you don't have to live with the consequences of it. Steel plants in most undeveloped nations pay their workers next-to-nothing and could care less about pollution and what it does to the local population. Multinationals (including those with auto plants in the US) don't care about where the steel comes from just so long as it is cheap. Too bad we'll also have to wipe out the pensions of workers who have put 30+ years into a basic American industry. I'd write more but I need to run out to my local WalMart and wipe out more American jobs.

Posted by: Waner from WV at November 11, 2003 06:07 PM | PERMALINK

I can imagine that the uberparanoid republican set (cheney, et al) might rationalize propping up the steel industry out of tactical concern--presumably out of fear of not being able to count on any other steel-producing imports when the proverbial and ever-impending (I didn't say imminent) shit hits the fan.

Maybe if mommy hadn't been so cold and detached..........

Posted by: bend it like cheney at November 11, 2003 07:02 PM | PERMALINK

Well, we could easily bring back those manufacturing jobs. Just use the pre-emptive doctrine to lay waste to most of the developed and developing world. This will leave us with nearly all the world's available capital plant, just like 1945. Ozzie and Harriet could come back. Who can argue this is not in our national interests? If you want to talk about "imminent threat" this is the grand-daddy of them all.

On the other hand, we could take a deep breath and get beyond the blame game for "loss of jobs overseas", and tackle this issue seriously. Absent the logical extension of the bush "doctrine" alluded to above, what can we do?

Posted by: bobbyp at November 11, 2003 07:31 PM | PERMALINK

From a Wall Street Journal article last week:

"Unless the Administration drops the illegal [steel] tariffs, the EU will slap tariffs of its own on more than $2 billion of US exports by early December."


in reaction to other illegal US export subsidies (per the WTO), called foreign sales coroporation tax breaks (FSC's), the EU is expected to impose 5% tariffs beginning in March on $4 billion of US exports to Europe. Products affected are agricultural goods, paper products, cutlery, clothing, citrus...The tariff rate will rise by one percentage point a month to a maximum of 17%.

The article hints that the Admin. might find the WTO ruling useful as political cover for repealing the tariffs and subsidies.

This "cover" is what's known as "insulation" from domestic political pressures among globalization advocates, and antidemocratic measures among the anti-globo crowd.

Posted by: andrew at November 11, 2003 07:50 PM | PERMALINK


i think there was a robert reich article just recently that discussed how china's losing manufacturing jobs just as fast as we are, because manufacturing jobs are simply becoming more scarce as people are replaced with machines. couldn't find it on first google search. maybe i should talk to a librarian........

Posted by: multitimbral at November 11, 2003 07:56 PM | PERMALINK

Is this the Reich article you were talking about?

Posted by: Kent Lind at November 11, 2003 09:39 PM | PERMALINK

I think that the Bush admin was pandering on too short of a time scale. When Bush began his war rumblings about Iraq, I was sure that he'd 'allow' himself to be delayed until the fall of '03 (since Saddam was sure to be relatively uncooperative, the longer Bush waited, the easier it would be to deflect the charge that he hadn't tried to work with the UN)...
I was wrong. But, in another way, I was right- he should've waited. Saddam would've been no more dangerous this year than he was last year. Whether it was the mid-term elections, or whether he just completely misunderestimated the longer-term results (thinking that things would go so well he'd be ever-more-popular), he screwed the pooch. Maybe he didnt understand that his 9/11 bounce was a bounce, not
Here, again, Bush would've been well-served, in an *obviously* political act, to wait until right about now to install the tariffs. They would've stayed tied up in the WTO until after the election...

Maybe he was hoping that the bad press about the tariffs would've faded by now, while the swing voters in those swing states would remember his porcine generosity... in which case, he again badly misunderestimated the situation, and his opponents (the EU, this time).

The beautiful thing now, IMO, is that he's screwed either way. If he goes to the mat with the Euros, it's bad and ugly. If he gives up the tariffs, he just pisses off the very swing voters he was trying to buy in the first place. Probably worse than if he'd just left well enough alone...


Posted by: Carleton Wu at November 11, 2003 10:03 PM | PERMALINK

In my constant search for politicians and party platforms that I can support I must ask, do any of the current candidates for President support the repeal of these tariffs other than to comply with WTO rules?

Posted by: Mike Smith at November 11, 2003 10:06 PM | PERMALINK

I liked this headline from Forbes, says it all:

Ineffective Steel Tariffs Now Illegal, Too

Posted by: novakant at November 12, 2003 04:50 AM | PERMALINK

The WTO is the perfect foil for the Republican/isolationist/black helicopter crowd. If they don't want to have the WTO, they'll have to withdraw from the GATT. The WTO was designed to enforce the GATT. If they don't want the GATT, then they should prepare themselves for more than a few trade wars.

Posted by: raj at November 12, 2003 07:34 AM | PERMALINK

As far as I can tell, if you're a free trader, the only pony we've got in the race is Clark.

The political insulation theory is interesting; the only danger i can foresee for Bush politically is that he risks looking like he's caving to the Euros. Get ready for a lot of hilarious and tortured Neville Chamberlain comparisons.

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