Nation's Largest Taxpayer Group Praises Bush's Steel-Tariff Cut, Calls for 'General Cease-Fire' in Trade Wars

12/4/2003

From: Paul Gessing or Pete Sepp, 703-683-5700, both of the National Taxpayers Union

ALEXANDRIA, Va., Dec. 4 -- The President's decision today to end punitive tariffs on steel imports should also mark the beginning of a broader free-trade policy, according to the 350,000-member National Taxpayers Union (NTU). The non- partisan citizen group contends that a U.S. cease-fire in the trade wars - even a unilateral one -- would benefit taxpayers and consumers here as well as abroad.

"U.S. steel tariffs were just one of many roadblocks to domestic and worldwide prosperity that must still be removed," said NTU Director of Government Affairs Paul Gessing. "Since tariffs are nothing more than taxes on the flow of goods across borders, eliminating these barriers should be a natural extension of the Administration's policy of reducing tax rates and burdens on American families."

Although U.S. tariffs on imports average 1.7 percent overall, Gessing points out that certain goods -- such as agricultural products and textiles -- are targeted for "tremendously destructive protectionist taxes that create mass casualties on both sides of the U.S. border." The steel tariffs alone have imposed an estimated $987 million burden on the U.S. economy during the past two years. Just two weeks ago, Gessing completed a study of protectionism's effects for NTU's research affiliate, which found:

-- By one estimate, U.S. agricultural protectionism (including taxpayer subsidies) costs developing nations more than $8 billion in lost trade revenues. Paradoxically, these subsidy-induced losses in turn leave American taxpayers with a second round of bills to pay -- over $1 billion in food aid each year that is sent to many of these same struggling countries. Ironically, U.S. agriculture is a net exporter of goods, making tariffs (whose rationale is to protect struggling industries) an unnecessary as well as costly exercise.

-- Trade is not only the key to improving developing nations' economies, it is also an essential component in the U.S. economic recovery. According to government statistics, domestic firms with 20 or fewer employees comprise the fastest-growing segment of American exporters -- the very small businesses which are also responsible for most of the overall job creation in the U.S. Roughly 3/4 of U.S. manufacturing growth during the 1990s occurred in trade-intensive industrial sectors like aircraft production, machine tools, and printing equipment.

-- Even as the federal government spends some $300 billion annually on domestic poverty-reduction programs, protectionism toward certain goods like inexpensive apparel, shoes, and food constitutes regressive taxation that hurts the poor and working class. For example, inexpensive sneakers face a tariff rate of 48 percent, compared to just five percent for a pair of leather shoes from Italy.

"Since most polls show two-to-one margins of Americans in favor of freer trade, our unilateral declaration of peace in the so-called trade wars would be the economically and politically honorable thing to do," Gessing concluded. "It is time for the Administration and Congress to stop pandering to the past and look forward to the free-trading future that everyday citizens are enthusiastically embracing."

NTU is a non-profit, non-partisan citizen group working for lower taxes, less wasteful spending, and accountable government at all levels. The group is a member of the World Taxpayers Association (worldtaxpayers.org), a consortium of more than 40 organizations on six continents that are dedicated to these principles. Note: NTU Foundation Policy Paper 146, Free Trade: A Good Deal for American Taxpayers, is available online at http://www.ntu.org.