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Cato Institute on Free Trade

 

 


Ex-im bank replaces market risk with bureaucrats' decisions

Washington has been embroiled in whether to reauthorize the charter of the Export-Import Bank, a government-run export credit agency which provides access to favorable financing for some US companies. Reauthorization buffs contend that Ex-Im fills a void left by private sector lenders unwilling to provide financing for certain transactions. Ex-Im's critics [say that] by effectively superseding risk-based decision-making with the choices of a handful of bureaucrats pursuing political objectives, Ex-Im risks taxpayer dollars.

It turns out that for nearly every Ex-Im financing authorization that might advance the fortunes of a single US company, there is at least one US industry--and often dozens or scores of industries--whose firms are put at a competitive disadvantage because supply is being diverted, market power is being shifted, and the cost of capital is being lowered for their foreign competition. These are the unseen consequences--the collateral damage--of Ex-Im's mission.

Source: Cato Institute 2015-16 voting recommendation on Ex-Im Bank , Jul 31, 2014

Countervailing duties mean higher prices on solar panels

Antidumping duties on solar panels from China are just another example of myopic, self-flagellating, capricious U.S. antidumping policy toward China. But in this instance the absurdity is magnified by the fact that Washington has already devoted billions of dollars in production subsidies and consumption tax credits in an effort to invent a non-trivial market for solar energy. Imposing duties only undermines that objective. With brand new levies on imports to add to the duties already being imposed on the same products to "countervail" the lower prices afforded U.S. consumers by the Chinese government's production subsidies, the administration's already-expensive mission will become even more so--perhaps prohibitively so.

It's not that Congress woke up one morning and agreed to simultaneously promote and deter U.S. solar energy consumption. But that's what Washington--with its meddling ethos and self-righteous politicians--has wrought: policies working at cross-purposes.

Source: Cato Institute 2012 voting recommendation on solar panels , May 17, 2012

Duties on Chinese tires could unleash protectionist backlash

The U.S.-China trade relationship has been on a low simmer since before the start of the financial crisis. But by Sep. 17 President Obama is required to render a decision in a potentially combustible case concerning automobile tire imports from China.

USW and the unions feel that they have earned the president's support. The president is presumed to owe Big Labor for his election last November. Will the president do what is overwhelmingly in the best interest of the country? Or will he do what he thinks is best for himself politically? The president should reject the recommendations of the USITC & deny import restrictions altogether. A decision to reject trade restraints in the tires case would be reassuring to a world that is struggling to grow out of recession. The costs of any protectionism under these circumstances could unleash a protectionist backlash in the US & around the world. It would be far less costly for the president to reject trade restraints altogether.

Source: Cato Institute voting recommendation on Chinese tires , Sep 11, 2009

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