by Craig A. Butler
Daily Lobo Columnist
Yesterday, a plan to eliminate tariff barriers on imported manufactured goods was unveiled by U.S. Trade Rep. Robert Zoellick and Commerce Secretary Donald Evans.
This move reaffirms the commitment of the United States, and specifically the Bush administration, to free trade around the world. The plan will soon be presented to the World Trade Organization in Geneva.
What this would mean is that manufactured goods would no longer have tariffs levied on them upon import. It would have the greatest effect on industrial economies like the United States and the European Union, where manufactured products make up an enormous percentage of overall trade. It would have less effect on less developed nations whose primary trade is in agricultural goods.
However, some developing countries like India and Brazil oppose the plan. These nations have manufacturing industries that are not yet ready to compete in a world market without the protection of trade barriers. Eliminating tariffs would mean that foreign-produced goods might be cheaper to buy than the local variety, putting those industries in serious danger.
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The elimination of tariffs would also have a huge impact on the textile and clothing industries, another mainstay of industrializing nations. China, for example, which produces almost all of the world's silk and commands much of the market in other textiles as well, may come out in favor of the U.S. plan. With tariff barriers on manufactured goods between the United States and China eliminated, the price of Chinese clothes in the U.S. would drop dramatically.
Prices on many non-agriculture products would drop in the U.S. as well. What the Bush plan promises for the average citizen in the United States is lower prices on manufactured consumer goods. Trade Representative Robert Zoellick estimates that the plan will save the average family of four about $1,600 per year.
The purpose of the World Trade Organization has always been to create fairness and predictability in the realm of international commerce, and the elimination of tariffs and non-tariff barriers to trade has always been one of its priorities. Although tariffs are often erected under the premise that they protect a country's jobs, they are also harmful to consumers because they result in raised prices on consumer goods.
By embracing the concept of free trade in such a dramatic way, the Bush Administration is taking a dramatic step in the right direction for higher standards of living around the world. Lower tariffs will mean lower prices for consumers in every country.
The plan, if it goes through, would also hurt U.S. textile and clothing manufacturers. These companies have been lobbying in recent years for an increase in tariff barriers to stem the tide of low-price clothing entering the country from China and other developing nations. The United States plans to eliminate all textile tariffs by 2005 anyway. If this plan to eliminate tariffs on all manufactured goods goes through, it might face similar opposition from other industries within the United States.
This problem is even more severe in developing economies, where industries have been able to thrive because of import barriers. Although the elimination of tariffs would be good for consumers, since prices would fall, those industries may have a difficult time adjusting to competition from overseas.
The Bush-administration plan calls for the total elimination of tariffs on imports by 2015. At that time, if the plan is adopted by the WTO, nations would be able to bring disputes against other countries if tariffs have not been removed. Although the WTO has been successful in resolving international trade disputes so far, such a difficult subject could strain the loyalties of many nations to the organization.
Nevertheless, this plan is in line with the WTO's mission to eliminate trade barriers in an effort to improve the ability of nations and corporations to trade all over the world. If this plan is successfully adopted, look forward to lower prices on your favorite non-agricultural items.
