Consumer Punishment!
China says U.S. actions unfair! Brazil retaliates against U.S cotton subsidies! Everybody says China’s currency is unfair!
Despite those headlines, most countries have behaved themselves on trade. But that isn’t newsworthy. Editors thrive on threats and unfairness, whatever that is. I hate to disappoint them, but a study released over the weekend concludes that major trading countries have shown remarkable restraint during the recession, keeping protectionism at bay for the most part. The study is a joint production of the World Trade Organization (WTO), the Organization for Economic Cooperation & Development (OECD) and the UN Conference on Trade & Development (UNCTAD). Those three outfits rarely agree on anything, so I have to take notice.
They looked at new import-limiting actions among the G20 countries (the major trading countries) during the past six months, comparing them with the previous six months. They found that new protectionist measures only impacted about 0.4% of world trade, roughly half of what happened in the prior six months. The trend is good, but our friends at Global Trade Alert see no reason to relax. At this point in a recession, there is always pressure to protect damaged industries. Still, it’s good to put such things in perspective.
Habitat of Punished Consumers
To continue with the good news, Canada last week announced that it is unilaterally lowering customs duties on 1,541 tariff lines of industrial equipment. This was part of the annual budget proposal to Parliament, so it isn’t a foregone conclusion, but it prompted a surprising (to me) op-ed piece in the National Post, asking that the Harper government go even further to help the Canadian consumer in tough times. The editorial noted that Canadian manufacturers will get a boost because the lower tariffs will make it less costly to invest in new equipment, and that the lower duties will cut Canada’s customs revenue by only about 1.4%. The author, Terence Corcoran, then wonders about cutting Canada’s tariffs on consumer goods, arguing that customs duties represent $4 billion a year of “consumer punishment”. Corcoran is right, of course, but even in enlightened Canada, it may be tough to find a politician willing to look at things that way. Still, it’s wonderful to see the argument made, even if it will be a cold day when U.S. senators line up to speak against “consumer punishment”. Most politicians seem to think consumers are masochistic non-voters.
