Daniel R. Pearson
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Articles by Daniel R. Pearson
Sugar from Mexico: Who's Being Injured?
On March 28, 2014, the U.S. sugar industry filed antidumping and countervailing duty (AD/CVD) petitions against imports of sugar from Mexico. From the time that NAFTA’s sugar provisions were fully implemented in 2008, Mexico has been the only country in the world with unfettered access to the U.S. sugar market. Sugar interests now are hoping to clamp the fetters back on. It is not at all clear whether that effort will succeed.
U.S. Sugar Policy Is Not So Sweet
Today, millions of Americans will give boxes of candy to their valentines. Seeking to strengthen loving relationships is a very good thing; what is not so good is that the candy will cost more than it should because of U.S. sugar policy. The sugar program should be reformed to make sweetness and romance more affordable. The sugar program has become increasingly complicated and market distorting since import quotas were re‐established in the early 1980s.
Dollar Devaluation Will Impoverish Americans, Weaken the Economy
After years of complaining about countries manipulating their currencies, trade protectionists have finally found a country they would be happy to see drive down the value of its money: the United States. Sens. Tammy Baldwin (D-Wis.) and Josh Hawley (R-Mo.) make amazing promises about legislation they have introduced, the Competitive Dollar for Jobs and Prosperity Act.
Protectionism Won't Make America Great
The report proclaims that “enforcement actions undertaken by USTR will be designed to increase our economic growth, promote job creation in the United States, … [and] strengthen our manufacturing base.” That statement flies in the face of economic reality. Economists from both the left and the right of the political spectrum have agreed for decades that a country always will lower its own economic welfare whenever it imposes import restrictions.
Trump protectionism won't make America great-commentary
Economists from both the left and the right of the political spectrum have agreed for decades that a country always will lower its own economic welfare whenever it imposes import restrictions. This means the nation's overall level of prosperity and living standards will fall, not rise. The Trump administration's efforts to tighten import restrictions on behalf of favored industries will harm economic growth, lead to lower employment, and increase costs to consumers.
We should thank China for its foolish steel-dumping agenda
The G20 Leaders’ Declaration called on the Global Forum on Steel Excess Capacity to fix the mind-boggling overcapacity in steel. The OECD Steel Committee estimates worldwide production capacity at almost 2390 million metric tons (MMT) in 2016, far more than the 1629 MMT actually produced. Roughly one-third of all mills simply aren’t needed, and it is no secret that the biggest source of overcapacity is China.
Trump Would Further Damage U.S. Manufacturing if He Restricts Steel Imports
President Trump has asked the Department of Commerce to conduct a seldom-used Section 232 investigation to determine whether steel imports are harming U.S. national security. And although statute allows the study to be conducted over 270 days, Secretary Wilbur Ross’s stated intention is to complete the report by the end of June. The president then would have 90 days in which to decide whether and how to “adjust the imports.” How would those adjustments look?
Who Said There Was Anything Fair about Trade?
Donald Trump has repeatedly emphasized his preference for “fair trade” while casting doubt on the desirability of “free trade”. In his address to a joint session of Congress on 27 February, the president said: “I believe strongly in free trade, but it also has to be fair trade. It’s been a long time since we had fair trade.” This may be news to the White House, but the world has never experienced a trading environment that has been entirely fair.
No, Mr. President, You Don't Have the 'Better Ideas' on Trade
In an interview with The Economist earlier this month, President Trump provided a noteworthy answer to the question, “Do you think you’ve permanently changed the Republican Party’s position on trade?” Trump’s response: “No. Because there’ll always be someone that comes along with another idea but it’s not a better idea.
Trade Deficit: Ask the Wrong Questions, Get the Wrong Answers
President Trump signed an executive order on March 31 requesting an “Omnibus Report on Significant Trade Deficits.” This report “shall identify those foreign trading partners with which the United States had a significant trade deficit in goods in 2016.” The policies of those countries are to be examined, including among others: tariff and non-tariff barriers, dumping, government subsidization, intellectual property theft, and “other factors contributing to the deficit.” Thank heavens for...
Zero-For-Zero Sugar Reform: Offer Zero, Get Zero
Rep. Ted Yoho (R-FL) and 11 co-sponsors recently introduced House Concurrent Resolution 40. It expresses the perfectly laudable “sense of Congress that all direct and indirect subsidies that benefit the production or export of sugar by all major sugar producing and consuming countries should be eliminated.” Things go downhill from there.
A challenging road ahead for our new US trade representative
Robert Lighthizer, appearing today at a hearing focused on his qualifications to lead the Office of the U.S. Trade Representative (USTR). The Senate Finance Committee will evaluate his ability to fulfill USTR’s mission, which emphasizes working “toward opening markets throughout the world to create new opportunities and higher living standards for families, farmers, manufacturers, workers, consumers, and businesses.” Many nations have trade-distorting policies.
A Challenging Road Ahead for Our New US Trade Representative
Robert Lighthizer, appearing today at a hearing focused on his qualifications to lead the Office of the U.S. Trade Representative (USTR). The Senate Finance Committee will evaluate his ability to fulfill USTR’s mission, which emphasizes working “toward opening markets throughout the world to create new opportunities and higher living standards for families, farmers, manufacturers, workers, consumers, and businesses.” Many nations have trade-distorting policies.
Is Manufacturing Employment the Only Thing That Counts?
The Trump administration seems obsessed with stemming the downtrend in the number of U.S. factory jobs. Posted on the White House website is a statement called “Trade Deals That Work For All Americans.” Among other things, it asserts that “blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base.” It’s true that employment in U.S. manufacturing facilities has been sliding.
Lincoln Was Wrong on Trade
In his address to a joint session of Congress this week, President Trump quoted President Lincoln’s views on international trade: “The first Republican President, Abraham Lincoln, warned that the ‘abandonment of the protective policy by the American government [will] produce want and ruin among our people.’ Lincoln was right.” Unfortunately, Lincoln was wrong on trade. He was a great president, a strong supporter of preserving the Union, and a wonderful wordsmith.
Cato Audio: March 2017
You may download the complete issue or select from individual clips from below.
Lincoln was wrong on trade
In his address to a joint session of Congress this week, President Trump quoted President Lincoln’s views on international trade: “The first Republican President, Abraham Lincoln, warned that the ‘abandonment of the protective policy by the American government [will] produce want and ruin among our people.’ Lincoln was right.” Unfortunately, Lincoln was wrong on trade. He was a great president, a strong supporter of preserving the Union, and a wonderful wordsmith.
Dan Ikenson and Dan Pearson on the future of trade policy
Featuring Daniel J. Ikenson and Daniel R. Pearson
Au Contraire, Mr. President: Trade Deficit Is Not a Big Deal
The Department of Commerce announced on Feb. 7 that the 2016 U.S. trade deficit in goods and services had increased slightly. It rose by $1.9 billion (0.4 percent) to $502.3 billion, up from $500.4 billion in 2015. Because the U.S. economy has continued to grow, the trade deficit declined a bit in relative terms. It dipped from 2.8 percent of Gross Domestic Product (GDP) in 2015 to 2.7 percent last year. That’s hardly news, though.
Can Wilbur Ross engineer a turnaround at Commerce?
Wilbur Ross has accomplished impressive business turnarounds during his career. His efforts in the steel, textile and automotive parts industries demonstrate a genuine talent for reorganizing failing operations and putting them back onto their feet. When he becomes Secretary of Commerce, Ross may face his greatest turnaround challenge ever.
Can Wilbur Ross Engineer a Turnaround at Commerce?
Wilbur Ross has accomplished impressive business turnarounds during his career. His efforts in the steel, textile and automotive parts industries demonstrate a genuine talent for reorganizing failing operations and putting them back onto their feet. When he becomes Secretary of Commerce, Ross may face his greatest turnaround challenge ever.
Carrier Revisited
President-elect Donald Trump has claimed victory in his effort to preserve employment for Carrier workers in Indiana. Assisted by $7 million in tax incentives provided by the State of Indiana, Mr. Trump persuaded the company not to move 800 furnace manufacturing jobs to Monterrey, Mexico. This works out to a taxpayer-funded subsidy of $8750 per job. Another 1300 Carrier jobs still will move to Mexico between now and 2019.
The Way Forward for Trade
Since the Franklin Roosevelt administration, the vision of U.S. trade policy has been to expand global commerce by reducing government-imposed barriers. Ambassadors Kantor and Schwab played significant roles in that effort. Ambassador Kantor finalized the NAFTA, and also the Uruguay Round negotiations that established the World Trade Organization (WTO). Ambassador Schwab concluded trade agreements with Peru, Colombia, Panama, and South Korea.
NYT Article Understates the Benefits of GMOs
An Oct. 29, 2016, article by Danny Hakim in The New York Times gives a decidedly skewed view of the benefits of agricultural biotechnology. It is based on the author’s presumption that genetically modified organisms (GMOs) were supposed to accomplish two things: (1) increase crop yields; and (2) reduce the use of chemical pesticides. In essence, Hakim sets up two straw men and proceeds to knock them down using questionable analysis.
Econ 101 for Presidential Candidates
The protectionist trade policies espoused by Donald Trump and Hillary Clinton, on display once again in this week’s presidential debate, demonstrate how little they understand about economics. Economics is not hard; it’s just that key concepts are politically inconvenient. Here’s a remedial lesson in the economics of trade. • All resources are scarce; demand and supply determine their value. Gravel and gold both have limited supplies.
Do Other Countries' Trade Policies Hurt the United States?
The major candidates in this year’s presidential race both believe that trade policies of foreign countries are unfair and serve to damage the United States. Donald Trump says, “The American worker is being crushed” by trade. Hillary Clinton’s take is that, “When countries break the rules, we won’t hesitate to impose targeted tariffs.” Appealing to populist sentiment may prove to be good politics, but is it good economics?
Should Free Traders Support the Trans- Pacific Partnership? An Assessment of America’s Largest Preferential Trade Agreement
After nearly six years of negotiations, a Trans-Pacific Partnership agreement was reached in October 2015. The deal was subsequently signed by the governments of the United States and 11 other parties in Wellington, New Zealand in February 2016. In terms of the value of trade and share of global output accounted for by the 12 member countries, the TPP is the largest U.S. trade agreement to date.
The Protectionist Impulse
The benefits of trade may be all around us, but that doesn’t mean we’re naturally supportive of it. Dan Pearson explains.
What Our Politicians Get Wrong - America Is Not the 'Biggest Loser' on Trade
Donald Trump believes that America is in decline due to a rigged global economy. His view: “We lose on trade.” Hillary Clinton also has become staunchly anti-trade, saying China and other countries have “gamed the system for too long.” The idea that the United States is a loser in the global economy must strike people in other countries as strange. When the rest of the world looks at America, what do they see?
What Are Politicians Get Wrong -- America Is Not the 'Biggest Loser' on Trade
Donald Trump believes that America is in decline due to a rigged global economy. His view: “We lose on trade.” Hillary Clinton also has become staunchly anti-trade, saying China and other countries have “gamed the system for too long.” The idea that the United States is a loser in the global economy must strike people in other countries as strange. When the rest of the world looks at America, what do they see?
What Are Politicians Getting Wrong - America Is Not the 'Biggest Loser' on Trade
Donald Trump believes that America is in decline due to a rigged global economy. His view: “We lose on trade.” Hillary Clinton also has become staunchly anti-trade, saying China and other countries have “gamed the system for too long.” The idea that the United States is a loser in the global economy must strike people in other countries as strange. When the rest of the world looks at America, what do they see?
What are politicians get wrong -- America is not the 'biggest loser' on trade
Donald Trump believes that America is in decline due to a rigged global economy. His view: “We lose on trade.” Hillary Clinton also has become staunchly anti-trade, saying China and other countries have "gamed the system for too long." The idea that the United States is a loser in the global economy must strike people in other countries as strange. When the rest of the world looks at America, what do they see?
On Behalf of Carrier, a Word Regarding Trump's Tariff
Carrier, a manufacturer of air conditioners, has received more than its fair share of attention during this political year. Throughout the campaign, Donald Trump has expressed his displeasure that Carrier and a related firm have decided to move 2,100 manufacturing jobs from Indiana to Monterrey, Mexico, where the company has existing production facilities.
Have Trade Agreements Killed the Manufacturing Sector?
An interesting 80-second video by Johan Norberg, executive director of Free To Choose Media and senior fellow at the Cato Institute, makes the case that trade agreements have not led to the deindustrialization of America. He notes that the share of U.S. workers employed in manufacturing has been falling at an average of 0.4 percent per year from 2000 to 2010, but it also fell at that same rate between 1960 and 2000.
Secretary Pritzker Forgets About Steel Users
Commerce Secretary Penny Pritzker authored an Aug. 12, 2016, opinion piece in the on-line version of the Cleveland Plain Dealer that emphasizes her desire to protect the steel industry from import competition.
Panel 2: Obstacles to Ratification: If Not Now, Then When?
The Trans-Pacific Partnership is a trade agreement reached last year between the United States and 11 other Pacific-Rim nations. The deal was signed earlier this year, but congressional ratification faces substantive and political obstacles in 2016–and possibly well beyond. Like all U.S. free-trade agreements, the TPP is not free trade, but managed trade. It achieves reductions in many trade barriers, while creating and prolonging other forms of protectionism.
Jesse Ventura and Gary Johnson
[Note: Normally I have the good sense to keep my writing focused on trade policy topics. This blogpost is an exception. It would not be wise to place much confidence in my abilities as a political analyst. However, I lived in Minnesota and was politically active during the 1998 gubernatorial election. That experience left me with impressions that are shared below.] Jesse Ventura is an intriguing individual. In 1998 he was nominated by the Reform Party of Minnesota as their candidate for governor.
Financial Times Offers Wrong Response to China’s Steel Overcapacity
The Financial Times (FT) published a June 9, 2016, editorial titled, “Coping with a world of too much Chinese steel.” (Link) The editorial makes the case correctly that China’s steel overcapacity has spilled onto world markets and is having negative effects on steel makers in the European Union and United States.
The U.S. and China Are Both Wrong on Steel
The United States and China have begun a “bilateral steel dialogue” to discuss curbing surplus global supplies. China is the world’s largest steel producer and exporter. The United States is the fourth largest producer and a leading importer, so a useful exchange of ideas ought to be possible. But don’t hold your breath. This exercise is likely to amount to a dialogue of the deaf for the simple reason that neither side gives any indication of actually understanding the economics of the situation.
Big Steel’s Dilemma: Trade Restriction Cure Is Worse Than The Disease
The world is awash in surplus steel. This is due primarily to an eightfold expansion over 15 years in China’s output. Prices are low worldwide. Some U.S. steel firms have been losing money and are seeking additional restrictions on steel imports. There is no doubt that Chinese policies have contributed directly to the low-price conditions. However, limiting imports is the wrong policy response for the United States.
Big Steel's Dilemma: Trade Restriction Cure Is Worse Than the Disease
The world is awash in surplus steel. This is due primarily to an eightfold expansion over 15 years in China’s output. Prices are low worldwide. Some U.S. steel firms have been losing money and are seeking additional restrictions on steel imports. There is no doubt that Chinese policies have contributed directly to the low-price conditions. However, limiting imports is the wrong policy response for the United States.
Steel Tariffs, Trump and Free Trade
Executive Summary One provision of the Patient Protection and Affordable Care Act (ACA) that has been delayed until 2017 is a federal...
Global Steel Overcapacity: Trade Remedy “Cure” Is Worse than the “Disease”
China’s Steel Overcapacity Can Benefit the United States China’s “socialist market economy” has been driven far too much by socialist planning and not enough by the actual marketplace. Decisions at various levels of government within China have encouraged undisciplined investments in steel capacity, which have led to a large gap between China’s ability to produce steel and the demand for it.
Rethinking Currency Manipulation
Interest groups in the United States have focused on the possibility of including provisions in trade agreements with the intent of countering currency manipulation. The concern is that another country may choose to reduce the value of its currency relative to the U.S. dollar in order to encourage its businesses to export more goods to the United States. Such currency realignment also would tend to make it more expensive for the devaluing nation to import products from this country.
How Not to Use the International Trade Commission’s Economic Analysis of Trade Agreements
The U.S. International Trade Commission’s Economic Analysis The ITC is an independent federal agency that is directed by statute to prepare estimates of the economic effects of trade agreements.1 The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 states that: Not later than 105 calendar days after the President enters into a trade agreement under section 103(B), the Commission shall submit to the President and Congress a report assessing the likely impact of the...
The ITC and Digital Trade: The ClearCorrect Decision
The U.S. International Trade Commission (ITC) is authorized by Section 337 of the Tariff Act of 1930 to restrict the importation of articles that infringe patents and other intellectual property rights. In its ClearCorrect decision, which involves clear plastic teeth straighteners, a 5–1 ITC majority found that electronic data transmissions also qualify as articles under Section 337.
Will the Transatlantic Trade and Investment Partnership Live Up to Its Promise? -- Strategies for Navigating the Domestic Politics on Both Sides of the Atlantic | Cato Institute
Whether a TTIP deal is achieved depends on the tenor and substance of the U.S.-EU negotiations. But those negotiations are shaped, to a great extent, by the parameters established through domestic political processes. This session will feature an interview between a host and three discussants who will focus on some of the domestic political landmines within the United States and the European Union, as well as strategies to mitigate risks and bridge political divides.
Patent Rights and Imported Goods
The United States government has granted patents almost from the founding of the country. The First Congress acted in 1790 to provide exclusive — but temporary — intellectual property rights so that authors and inventors could enjoy the financial benefits flowing from their ideas. This legislation was enacted to encourage innovation, which has helped to undergird the success of creative U.S. firms and individuals. Patent infringement also has been part of U.S. history.
Sugar and the TPP
How much Australian sugar should be allowed to enter the U.S. market? That’s a key question the U.S. government must answer prior to concluding the Trans-Pacific Partnership (TPP) negotiations. The United States is the largest sugar market in the TPP, consuming about 11 million metric tons (MMT) per year. It also is the largest producer (7-8 MMT) and importer (3 MMT) in the group. Australia generally is believed to be the most cost-competitive sugar producer among the12 TPP nations.
The Jones Act Strikes Again
People who have heard of the Jones Act (Merchant Marine Act of 1920) generally are aware that its stated purpose is to maintain a strong U.S. merchant marine industry. Drafters of the legislation hoped that the merchant fleet would remain healthy and robust if all shipments from one U.S. port to another were required to be carried on U.S.-built and U.S.-flagged vessels. Unfortunately, things haven’t worked out very well.
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