Trading favors: while Congress debates trade policy, members quietly lift the barriers for their favorite importers - includes related articles - Cover Story

Common Cause Magazine, Spring, 1993 by Peter Overby

While Congress debates trade policy, members quietly lift the barriers for their favorite importers.

Dark-haired, tanned and dapper, Rep. Mel Levine (D-Calif.) took the House floor in July 1991 and condemned the Bush administration's trade policy with China. It would be "shameful," he said, if President Bush ignored the Tiananmen Square massacre and other human-rights horrors and renewed the most-favored-nation (MFN) status that admitted Chinese imports at lowered duty rates.

"If we unconditionally extend MFN this year," Levine warned, "we will be saying to the Beijing leadership that executing pro-democracy activists is okay, that giving Algeria the bomb is acceptable, that selling missiles to the Middle East is fine with us. I do not believe this is the message that we want to send to the People's Republic of China."

But Levine earlier had sent a different message of his own.

Eleven weeks before his anti-China speech, Levine quietly introduced a bill to suspend for a year the 12-percent import duty on dolls, whether or not dressed, other than stuffed dolls." Connoisseurs of dolls - or trade politics - would recognize the crowd Levine had in mind: Mattel's Barbie, Hasbro's G.I. Joe and their friends. Nearly three-quarters of the unstuffed dolls imported in 1990, worth $283.7 million, came from China.

Levine was proposing to exempt importers from paying duty on all those dolls - a $53-million gift from the U.S. Treasury to Mattel (based in El Segundo, Calif., Levine's district), Hasbro, Russ Berrie, Toys "R" Us and a few other corporations. And while it might enable the toy companies to hold down or reduce consumer prices, nothing in the bill required, or even urged, that.

Welcome to the world of trade pork.

Congress uses trade bills - "miscellaneous tariff and trade legislation," as they're known - the same way it uses domestic bills. That is, it lards them up with carefully targeted spending for the folks back home. While members debate the Big Picture - the Uruguay Round, North American Free Trade Agreement and the like - they routinely give out trade goodies to favored corporations.

The goodies are temporary suspensions or reductions of the tariff duties that the United States collects on imported goods. This country, like others, sets tariffs (or fees) on imports both to raise revenues and to protect domestic industries. In the nation's early days, in fact, import duties (the money collected by the Customs Service under the tariffs) were the only source of government revenue. The current list of products and their duties, known as the Harmonized Tariff Schedule, covers more than 6,000 categories of goods.

Free-trade advocates argue that the United States should not try to protect industries with tariffs, but should let market competition determine which industries live or die. When Congress imposes tariffs, it makes trade a political issue, not an economic one, they argue. As trade journalist James Bovard, a strong critic of tariffs, writes: "The tariff code is a precise mathematical measure of the historical-political clout of various Washington lobbies."

And so it is with the miscellaneous tariff bills. One arcane but typical dispute is between Bausch and Lomb, which imports electric toothbrushes, and Teledyne Water Pik, which makes them here. The question? Whether to classify electric toothbrushes under "electromechanical domestic appliances, with self-contained electric motor," with a 4.2 percent duty, or under "brooms, brushes (including brushes constituting parts of machines, appliances or vehicles), hand-operated mechanical floor sweepers, not motorized, mops and feather dusters; prepared knots and tufts for broom or brush making; paint pads and rollers; squeegees (other than roller squeegees)," with a 3.4 percent duty.

Tariff lobbying, like the devil, is in the details.

Miscellaneous tariff bills are big enough to matter to one constituent or donor, but small enough for almost everyone else to miss. They make minute and often indecipherable adjustments to the tariff schedule.

A typical temporary duty suspension will lift the duty on a specific item for two years or extend a previous suspension. It is introduced because a corporation or industry group asked for it; an especially attentive lobbyist will draft the bill personally. The lawmaker sponsoring the bill describes it as noncontroversial, non-threatening to domestic industry and generally inconsequential. The company requesting it benefits, often to the tune of several million dollars. The lawmaker gets a pat on the back, and maybe a little something for the upcoming campaign.

But where did that several million bucks come from? That's right: the U.S. Treasury. In the past six years, government officials say, the number of congressionally mandated tariff adjustments has practically tripled, from about 65 to nearly 200. Their cost, in lost revenue, has soared tenfold, from $28 million to $300 million a year.

These bills are the trade equivalent of "silver bullet" provisions hidden in tax legislation, congressional revenue experts say. "It's kind of like the tax side of things where companies have a problem and they seek a tax break," says one. Another calls them "one more special pleading for special people."