A Solid Trade Policy Now at Risk

This Congress and the Clinton administration have racked up a respectable record on open trade. The historic deal with China and legislation to open U.S. markets to African and Caribbean imports are among the biggest trophies. But that record would be badly damaged if two last-minute legislative proposals became law.

One--already enacted by Congress--would virtually invite anti-dumping litigation by steel companies; the other, contemplated by Senate Majority Leader Trent Lott, would give a single company, Chiquita Brands International, the run of U.S. trade policy. Both measures would make mockery of the government’s trade policy and its obligations under international agreements.

Anti-dumping cases are the steel industry’s weapon of choice against cheaper imports, and the law is a rigged game. A surge in imports is enough to trigger dozens of cases that charge foreign steel companies with selling in the United States at a loss--known as dumping--and that seek high import tariffs to jack up the price of the imports. Formulas for determining what constitutes dumping favor domestic producers. The injury standard is low, and the penalties are prohibitively harsh.

Steel mills have filed close to 300 dumping cases since the 1980s, and rulings from many of these are still in force. An amendment to the agricultural appropriations bill introduced by Sen. Robert C. Byrd (D-W.Va.) would make steel dumping cases even more popular by turning the dumping duties--totaling about $200 million a year--over to the steel companies. This subsidy would almost certainly violate World Trade Organization rules. It is riling the governments of Canada, Japan and the European Union, which urged President Clinton to veto the measure or face “another serious trade problem.”

Lott has an even more appalling idea. He wants to propose an amendment to a yet undetermined appropriation bill to give Chiquita veto power over the settlement of the seven-year banana trade war with Europe. Chiquita, whose chairman, Carl H. Lindner, is a major contributor to both political parties, has had a restricted access to Europe for sale of its Central American bananas and is obviously keenly interested in the outcome of U.S.-EU negotiations. Lott’s bill would give Chiquita the power to block any solutions it didn’t like.

Byrd’s amendment, which already passed both houses of Congress, and Lott’s intended Chiquita rider represent bad trade policy. They tarnish the 106th Congress and diminish its and Clinton’s otherwise impressive legislative trade record.