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Countervailing duties are good for trade. They are a major
enforcement mechanism. A "duty" is a fee imposed on imports. But
a "countervailing duty" is a fee imposed specifically to neutralize
unfair subsidies making those imports artificially cheap. It is
pro-free market because it eliminates the trade distortion. It
brings us closer to the level playing field that does not now exist.
Private
contracts between private parties would not be honored unless a good
system existed to enforce the contract. That is the court system.
Contracts
among countries are treaties - though the trade agreements somehow
avoided this "treaty" designation to get rid of the 2/3rds majority
requirement in the Senate to get a new deal.
Currency
misalignment is an unfair subsidy. China's blockbuster growth is
not natural, at least not to the extent of that fast growth, but
artificially maintained by government currency policies. It can
be neutralized with a countervailng duty, if we pass a law in the U.S.
to do it.
Child and prison labor are an unfair subsidy. It could be countervailed.
Foreign
programs to rebate their domestic taxes when a company exports to us is
a subsidy, taking the tax load off of exported goods while the tax load
remains on domestically sold products. It could be countervailed.
So
the editorial boards of various newspapers should embrace, rather than
oppose, enforcing true free trade through countervailing duties.
If you don't enforce a deal, what good is it?
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