Considering the troubled state of U.S. housing markets, why would the federal government try to drive up the price of any essential component of every American home? Like nails. There is nothing fancy about Certain Steel Nails from China and the United Arab Emirates, an anti-dumping case that is as common as they come. Yet, looking into just this one case is important, as it illustrates how one of the most important, if perhaps the least understood, tools of U.S. trade policy work — or don’t work — at ground level.

Dozens upon dozens of imported products that are in everyone’s daily lives — popular seafood delicacies like shrimp and salmon, chemicals and fibers that go into everything from toothpaste and clothes to fertilizers; garlic, honey, mushrooms, apple-juice concentrate, tomatoes, pencils, notebooks, computers, bicycles, beds, plastic grocery bags at the checkout counter, gift boxes and wrapping paper, garbage cans and sewer pipes, the rebar foundations and steel beams that are part of every skyscraper in America, home appliances including refrigerators and televisions, automobiles and everything else that has some steel in it, and even the softwood lumber that goes into every home — are, or have been in the recent past, subject to special taxes upon entry at U.S. ports. The duties are slapped on when the federal government determines that the foreign wares have been offered to American consumers at “dumped” prices that are “unfairly” low. On Capitol Hill, the two emotionally charged pejoratives — “dumped” and “unfair” — are the beginning and end of the political debate. Many lawmakers, from West Virginia’s liberal Democratic Sen. Jay Rockefeller to Utah conservative Republican Sen. Orrin Hatch, routinely condemn “illegal dumping.” And in the White House, President George W. Bush regularly tells audiences that he is for “free trade,” as long as it “is fair.” Bush’s predecessors from Bill Clinton to Ronald Reagan all said the same. The bipartisan common denominator is that the politicians all know that they can get away with saying such things without fear of being challenged.

Not that most residents of Capitol Hill really understand the details; most don’t pretend to — and find it politically convenient not to ask questions that might question their own rhetoric. Apart from the handful of bureaucrats in Washington, D.C. who administer the trade laws, and also the members of the international trade bar who litigate the cases, few people really understand how the anti-dumping laws actually work, and whether, as advertised, they save American jobs from competition that is really unfair. The exception would include mainstream economists in virtually every university in the country who regard the basic theory that drives the anti-dumping laws with disdain. But not many academics follow the details of how dumping cases play out. No major American newspaper has an investigative reporter — not a single one — assigned to dig into the arcane world of anti-dumping. The wire services report the headlines, but rarely the full context. So it’s no wonder that very few Americans know very much about these laws that are embedded in their lives.

When Americans who live outside the Washington beltway hear politicians rail against “illegal dumping,” they would have no way of knowing that there is no such thing. Nor would the average American know that the anti-dumping tariffs tend to cost more American jobs that are intended to be protected. So this article about Nails is for them, the folks who are getting hammered all the time by the anti-dumping laws and don’t even know it.


Read the rest of this article »