"All we want is a level playing field." That's the rallying cry of politicians as diverse as Dick Gephardt and Pat Buchanan. "Protectionism beggars consumers." That's the rejoinder of free-trade advocates such as George Bush. But recent disputes with Canada raise questions about whether men like Gephardt and Buchanan would really be happy with a level playing field and about whether the Bush administration can stand fast against protectionist pressure.
Just three years after the two countries signed a treaty that eliminated most trade barriers with each other, Canada is charging the United States with violating the spirit of the accord.
Under the U.S.-Canada agreement, Canadian cars can be shipped duty free to the United States if at least 50 percent of their parts are of North American origin. But in March, the U.S. Commerce Department ruled that 90,000 Honda Civics assembled in Alliston, Ontario, are the equivalent of overseas imports and are therefore ineligible for duty-free entry.
The Commerce Department declared that the Civics' engines are foreign, even though they are assembled in Ohio, because they contain some Japanese parts. But two years ago, when the European Community tried to limit U.S.-assembled Hondas under E.C. quotas for Japanese cars, the U.S. government was playing a different tune. Although the Hondas consisted largely of Japanese parts, the United States argued that the country of assembly should be considered the country of origin.
A few days after nixing the Canadian Civics, Commerce ruled that Canada subsidizes its softwood lumber industry. This decision allows the U.S. government to levy a 14.48-percent duty on most Canadian softwood. This action could cut the throat of Canada's timber industry, the country's largest employer.
Most Canadian timberland is owned by provincial governments, which charge logging companies a fee to cut timber. Commerce charges that these fees are too low, amounting to a subsidy. But the United States provides a similar subsidy for timber companies operating on federally owned land.
The ramifications of these decisions are hard to predict, but they will obviously hurt America's attempts to negotiate other open-market agreements, such as the proposed free-trade agreement with Mexico. America's behavior with Canada raises "serious questions as to what America's word is worth," said Gordon Ritchie, a member of the Canadian team that negotiated the U.S.-Canada pact.
And since the decisions were made by appointees of George Bush, a president nominally committed to free trade, they send other countries the message that open markets are not the great benefit that America claims.
Ask just about anyone in Congress or any presidential candidate and he'll tell you that completely closing our borders to imports would be bad for the economy and bad for consumers. Few would support that sort of isolationism.
But we may be getting it piecemeal. Whenever Lee Iacocca or textile king Roger Milliken squawks, someone in Washington jumps to protect him, no matter what it will cost consumers. On the campaign trail, Pat Buchanan has railed against foreign agents and lobbyists dominating the political process. But the lobbyists costing us the most money are homegrown, and they are not about to settle for a level playing field. Sadly, it seems that even the "free-traders" care more about a few high-profile businessmen than about millions of consumers.
This article originally appeared in print under the headline "Playing Fair".