watches a crane load a cargo ship.
The Bush administration’s recent proposal to abolish all international tariffs on industrial and consumer goods by 2015 would further spur massive economic changes already occurring in Rhode Island, say experts.
They say most Rhode Island industries would benefit, and so would the state’s overall economy. But local unskilled laborers, and the businesses that employ them, would be hurt by a global free trade policy.
“Overall, it would be a plus. Basically, [the elimination of all tariffs would] give us a great opportunity,” said Edward J. Barr, managing director of World Trade Center Rhode Island. “Every study I’ve seen shows that elimination of trade barriers helps the economy. Of course there are always industries that won’t benefit, and that’s true locally as well.”
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Rhode Island’s economic backbone of manufacturers and technology companies stand to benefit if the World Trade Organization approves the Bush administration’s proposal, said Barr. In particular, the state’s substantial jewelry industry is backing the plan – the Manufacturing Jewelers and Suppliers of America, a national trade group, has publicly endorsed the move.
But local businesses that took no part in the information technology and telecommunications revolution of the 1990s, and those that employ mostly unskilled laborers would be hurt by the shift in trade policy, said Barr.
“In Rhode Island, that would probably be the non-technical industries and small businesses – and there are a lot of them in Rhode Island,” he said.
On Nov. 26, U.S. trade negotiators laid out a plan to eliminate tariffs on non-agricultural goods to the global trade liberalization talks launched last year in the World Trade Organization. These negotiations are scheduled to conclude in 2005.
The U.S. proposal would phase out tariffs on nonagricultural goods in a two-step process. From 2005 to 2010 all tariffs of 5 percent or less would be eliminated. Higher tariffs would have to be lowered to 8 percent or less.
In phase two, the 8 percent tariffs would be lowered each year, starting in 2010 until they reach zero in 2015.
Nationally, big U.S. manufacturers and exporters generally approved of the Bush administration’s zero-tariff move as a way of increasing U.S. exports. They claim high tariffs keep their goods out of poor countries.
“It would be a boost for trade worldwide, so obviously, bringing it down to the state level, any company that has exports as a growing part of their sales would benefit,” said Maureen Mezei, international trade director of the Rhode Island Economic Development Corporation.
But American companies making products like textiles and glassware that traditionally receive government import protection said the proposal would cost American jobs.
Domestically, the textile and apparel industries are the primary beneficiaries of the remaining high U.S. tariffs, and they can be expected to fight tooth and nail against the erosion of their protectionist privileges, said experts when the Bush administration made its proposal to the WTO.
Tariffs have long been used to discourage imports as a way to protect a nation’s weak or fledgling industries. Developing countries rely on them heavily to promote their own production of manufactured goods.
U.S. trade negotiators received a mixed reaction when they presented the 144-member World Trade Organization with the sweeping plan to eliminate all tariffs on industrial and consumer goods by 2015.
George Shuster, chief executive of Cranston Print Works Co., a textile company, and co-chairman of the American Textile Action Coalition, a political action trade group, argued against the notion that the American trade policy is protectionist.
“How could we be protectionist and still have the largest trade deficit the world has ever seen? Our trade deficit is $500 billion a year – over a billion dollars a day leaves this country in exports that doesn’t come back in as imports,” said Shuster.
Shuster gave a cautious endorsement to the Bush plan to eliminate tariffs worldwide. He warned that many countries block U. S. imports by other means.
“The U.S. has been relentlessly outwitted by other countries in sneakily bringing in non-tariff barriers, so that nothing could be exported to them anyway.
“But the theory of, ‘lets have reciprocal access’ is far superior to what we have now,” he said.
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