The American Spectator

Political Hay

The Sovereignty Canard

By Richard Nadler on 6.1.09 @ 6:08AM

(Page 2 of 2)

But what of taxes imposed by international bodies? The transnational panels that adjudicate trade disputes under NAFTA and the WTO cannot impose taxes -- period. These panels have no power of enforcement apart from the governmental powers of the agreeing nations. Moreover, the "penalties" announced by trade panels authorize nothing beyond an action by the prevailing nation that it might have taken unilaterally, at any time, for any reason.

For example: Nation A brings an action against Nation B, alleging that Nation B's new agricultural law introduces an exceptional subsidy to unprocessed corn exports. After listening to evidence provided by both nations, the panel decides that Nation B's new subsidy exceeds the baseline in the trade agreement. It determines that the Nation B's new subsidy costs domestic corn producers in Nation A annual sales of $30 million.

The panel rules: Nation A can now impose $30 million in tariffs against products of nation B, to compensate for its loss.

But in fact, Nation A could have imposed a retaliatory tariff of $30 million -- or more -- on day one of the dispute. It is a sovereign nation, with absolute control over its ports of entry. No "tax" has been imposed on nation B. Substantively, the panel has delayed a trade war between sovereign powers that want to trade, encouraging them to negotiate their disagreement in advance of a "final ruling."

Theorists like Phyllis Schlafly and Pat Buchanan wish to protect American workers and American industry from foreign competition. By stigmatizing trade agreements as unconstitutional, or as damaging to American sovereignty, they avoid a series of embarrassing questions regarding their position. For instance: one half of American imports are used not by consumers, but by fabricators, who maintain the competitive position of American products abroad by their freedom to purchase the world's most cost-effective inputs. How will import restrictions help them?

Exports support six million American employees, including 20 percent of the total U.S. manufacturing workforce. Forty percent of American manufacturing jobs in computers and electronics are export related, as are 30 percent in machinery fabrication. How will trade wars help these workers, these businesses?

Capital insourcing -- direct investment of foreign-based corporations on American soil, such as the Asian auto plants in our South -- account for 5 million American jobs. How will attempts to restrict capital flows affect this workforce?

Stated simply: How can Schlafly, Buchanan, et al. protect American workers or American capitalists from competition in internationally traded goods and services?

A commitment to protect when one will not is treachery; an offer to protect when one cannot is foolery. Americans should concentrate on policies that will make our labor more productive and our capital more competitive, rather than upon futile attempts to protect both.

Finally, constitutional Sturm und Drang over trade deflects conservatives' attention from actual threats to our sovereignty. Ambassador John Bolton and Deputy Assistant Attorney General John Yoo recently argued that pending international conventions go beyond the rules of international trade and finance embodied in Breton Woods, GATT and NAFTA. Agreements like the Law of the Sea Treaty compromise the ability of the United States to gather and protect military intelligence. Agreements like the United Nations Convention on the Rights of the Child attempt, however toothlessly, to undermine the individual rights guaranteed to Americans under our Constitution.

Patriots from Alexander Hamilton to Ed Meese have clearly articulated both the importance of international agreements, and the subordination of such agreements to the instrument under which they are created. International panels, lawfully instituted, play an important role in our freedom of commerce. But when international arbitrators assume the posture of independent lawmakers, the Congress and the president should exercise what the Constitution guarantees: U.S. sovereignty.

Letter to the Editor

topics:
Trade