Landsburg on the Safeguard Clause
The Safeguard clause–Article XIX of the GATT–allows any member country such as the United States to impose immediate tariffs or import quotas on a good or service, even at extremely high rates, without having to demonstrate that a foreign country or business is engaged in any sort of anti-trade or anti-business practices such as dumping. The Safeguard clause is often referred to as the Escape Clause because it allows countries to escape from having to prove that they were harmed by someone other than themselves.
The only two proofs required by the Safeguard clause are that any one company can demonstrate that it has experienced harm, serious injury, or threat of serious injury, and that the country’s imports of goods generally related to that company’s production increased in the preceding year.
This is from Lauren Landsburg, “Taken to the Cleaners,” Featured Article, Econlib, March 5, 2018.
An economist friend asked on Facebook over the weekend whether President Trump had the authority to take his actions on tariffs without Congressional action. I answered that he did and that when Lauren’s piece came out he would see why.
This article does two main things: (1) lays out the dismal economic effects of tariffs and (2) explains the law under which those tariffs can be imposed. It’s a nice treatment even for those who understand the economics of tariffs because we don’t usually see that degree of detailed institutional understanding.
An excerpt on the economics:
Economists are skeptical of dumping arguments on a second ground as well. Why would it be so bad for American citizens to be able to buy goods cheaply? If a foreign government wants to tax its own citizens to subsidize U.S. consumers, who are we to look that gift horse in the mouth? Every single person in the United States is a consumer. We all eat, we all buy clothes, we all wash our laundry and dishes and faces, we all breathe, we all live in an apartment or house, we all try to stay warm and safe, we all listen to music or read or do other entertainment or enrichments when we can, we all try to thrive as well as survive. We also all use rubber bands and aluminum foil. We are all consumers first. If some foreign government wants to give us a boon, which might even keep us from having to use our own taxpayer money to help our own poorest citizens buy inexpensive goods or have more choices, we ought to say, “Yes, thank you!”
The whole piece is well worth reading.