Tsunami Aid Creates Trade Bind

Can a good deed be bad trade policy?

U.S. efforts to lower trade barriers for tsunami-ravaged countries have triggered fierce opposition from American textile manufacturers and shrimpers unhappy at being asked to open their markets further to low-cost competition, even for a good cause.

That places the Bush administration in an awkward position -- caught between countries whose fishing and tourism industries were devastated by last month’s tsunami and U.S. industries fighting for survival.

The outcome is being watched closely because the Bush administration was criticized for being stingy in the early days of the relief effort, before increasing its aid pledge to $350 million.

“This is really untested waters,” said Katherine Daniels, trade policy advisor for Oxfam America, the U.S. arm of the London-based anti-poverty group. “It’s going to be shrimp and textiles having to decide whether they want to go up against giving assistance to tsunami-devastated countries.”

Given the textile industry’s political clout, any effort to open up its market further is likely to face a tough battle.

Edward Gresser, a trade analyst with the Progressive Policy Institute, a Democratic think tank in Washington, said there didn’t seem to be “a lot of momentum” in Congress for providing trade assistance to tsunami victims. Any deal that changes import tariffs would require congressional approval.

Gresser said the attitude in Congress could change if President Bush went to Capitol Hill and told leaders, “This is why it’s important and here’s why I need you to do this.”

Under pressure from the World Trade Organization, the United Nations Trade and Development Program and anti-poverty groups, the United States and Europe have begun considering requests to provide easier access for goods from countries damaged by the tsunami.

Thailand’s wish list included the reduction or elimination of tariffs on key exports from six of its most devastated southern provinces. The Southeast Asian country, which estimates its damage at $1 billion, also asked for the removal of U.S. anti-dumping penalties on shrimp and canned pineapple.

“We highly appreciate” the Bush administration’s interest, said Songsak Saicheua, minister counselor at the Thai Embassy in Washington. He said measures to expand exports were “more important and more sustainable” than aid to rebuild roads and buildings.

Sri Lanka, which lost nearly all its coastal fishing fleet, requested tariff relief for its textile and apparel exports.

But American textile manufacturers and shrimpers contend that they are suffering severe economic pain and shouldn’t bear the brunt of U.S. humanitarian efforts.

“We’ve already been bled white,” said Lloyd Wood, a spokesman for the American Manufacturing Trade Action Coalition, a textile lobbying group. He said the U.S. had lost 363,200 apparel and textile jobs since January 2001.

In addition, shrimpers said, the U.S. would be rewarding bad behavior if it rescinded an anti-dumping measure that was imposed this month on Thailand, India and four other countries accused of illegally selling goods in the U.S. below cost.

From 2002 to the first half of 2004, shrimp imports from the six penalized countries increased 71% and average prices fell to $3.14 a pound from $5.12, according to the Southern Shrimp Alliance, a group of Southeastern shrimpers who filed the anti-dumping action. They claim that thousands of American jobs were lost during that period.

“You cannot use a bad means to a good end,” said Jerry Schill, an official with the North Carolina Fisheries Assn., which counts 600 shrimpers among its members. “These tariffs were put in place because countries violated a law. That would be sending a terrible message, not just to domestic shrimpers but to U.S. citizens.”

But pressure is increasing for the U.S. and other countries to provide assistance that could have an immediate effect on trade and last long after refugee camps have been dismantled and roads repaired.

In a letter, WTO Director General Supachai Panitchpakdi asked the organization’s members to “reflect deeply and expeditiously” on using trade policy “to help the worst-affected economies.”

The European Union has said it will consider changes in tariff rates and anti-dumping penalties.

Richard Mills, a spokesman for the U.S. trade representative’s office, said Friday that “trade will be an important part of the U.S. post-tsunami reconstruction effort.” He said U.S. trade officials had been consulting with officials from the tsunami-affected region to develop proposals using “available trade tools and initiatives.”

The International Trade Commission, an independent agency that adjudicates anti-dumping complaints, has said it will consider launching a review of damage suffered by shrimpers in India and Thailand. That could lead to an exemption for those countries from anti-dumping penalties.

Oxfam America has urged U.S. trade officials to immediately reduce textile and apparel tariffs for Indonesia, Sri Lanka and the Maldives, whose economies depend heavily on exports to the U.S. Those countries also could lose thousands of apparel jobs to more-efficient producers in China and India because of the Jan. 1 phaseout of apparel and textile quotas, which freed up trade in those areas.

When Congress reconvenes this week, Sen. Gordon Smith(R-Ore.) said, he will submit a bill providing duty-free status for imports from 14 poor countries that don’t receive preferential access under any other special program. The Maldives, an island archipelago that suffered severe damage, was already among that group, and Sri Lanka was added through an emergency provision.

“Whether it is the result of tsunami devastation or general economic adversity, the poor and disadvantaged of the world must know the United States is in their corner,” Smith said.

Because Sri Lanka is a relatively small exporter to the United States, removing tariffs on its products is not likely to add significantly to pressures on U.S. companies, explained Daniels of Oxfam. But, she said, it could significantly boost the economy of Sri Lanka, where apparel and textile companies employ 450,000 people, mostly women. In 2002, the U.S. levied $244 million in tariffs on Sri Lankan textile and apparel imports.

“Sri Lanka is not going to be the death knell of North Carolina,” she said.