Monday, January 21, 2008

Sock it to me Baby!

Thank goodness that the Shrub is not too busy waterboarding that he can't stop and save us all from the scourge of cheap Honduran cotton socks!

What's that you say? Honduras is in CAFTA? Surely we can't unilaterally stop exports from a country with which we have a free trade agreement? Of course we can! The deal allows us to put tariffs on apparel items (I believe at the pre-CAFTA levels) "temporarily" if the domestic industry is harmed or threatened. We just have to give them 60 days notice and then announce our final decision.

Supposedly this is all because of one Congressman, Robby Aderholt, who represents Ft. Payne Alabama the erstwhile (and future??) sock capital of the world. He was the swing vote on CAFTA and his price was sock protectionism.

"Why in the world would President Bush go along with reinstating the tariff?

(Ed: Because he's a spineless moron?)

There's only one reason: a deal President Bush struck late one night in July 2005.

The Deal

That July night, Bush met with Fort Payne's congressman, Robert Aderholt, to talk about tariffs and the sock business.

That meeting was, most likely, the moment Aderholt had more power than at any other time in his life. The House was voting on CAFTA, the Central America Free Trade Agreement. The vote was an exact tie. Aderholt was the holdout. And President Bush very much wanted CAFTA to pass. So, Aderholt offered the president a deal: He could get his big free-trade deal only if he rolled back free trade on one industry, the sock industry.

"I told him this was what I needed," Aderholt said. "This was the one thing I had great concerns about."

That night, President Bush agreed to Aderholt's deal. CAFTA passed. And the White House gave itself a self-imposed deadline of Dec.19, 2007, to put back tariffs on sock exports from Honduras.

There is a further bizarre twist to this story. According to NPR, Ft. Payne isn't really hurting from the decline of the local sockmakers:

"Jimmy Durham, the county economic development officer, shows just how grim things have been for the sock business here.

On street after street, he points to buildings that used to house sock mills, most of which are now gone. With all these businesses shuttered, you might think Durham is in despair about the future of Fort Payne. He isn't.

Those closed sock factories are reopening as new businesses.

He points to Steadfast, which makes bridges; Ferguson, a major plumbing supply company; a distribution center for Children's Place; two new metal tube manufacturers; a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. These jobs pay more than sock-making jobs.

In fact, most of 4,000 recently laid-off sock workers quickly found new jobs. It's an irony that reversing this tariff — fought for so hard by some in Fort Payne — will likely have its biggest impact thousands of miles away in Honduras."

Ya, but the bridgemaker and the plumber and the label maker aren't going to be beholden to Rep. Aderholt, now are they? And them damn Hondurans sure aren't going to put money in his coffers either.

So here it is people, in order to save free trade, Shrub was forced to destroy it.

Bonus fun fact: Speaking of Vietnam, did you know that William Westmoreland was the son of a textile manufacturer?


John Thacker said...

So here it is people, in order to save free trade, Shrub was forced to destroy it.

Talk about making the perfect the enemy of the good. "Destroy it?" Such hyperbole. In order to get most of the agreement passed, he had to agree to start the process of possibly suspending the sock part of it with Honduras. CAFTA was already so close because of the (small) increase in the sugar import quotas causing all sorts of Congressmen to vote against it.

Would it have been better to have the sock tariff at the pre-CAFTA level plus everything else higher than it is now because CAFTA didn't pass? Is the situation now, where there's no chance of any trade deals passing, really better?

Of course, listening to the Democrats right now debating trade is really frightening.

John Thacker said...

Obama just said NAFTA was a mistake, and he's the relatively pro-trade one who actually thinks trading with Peru is a good idea-- but only if a Democrat is President to ensure that Peru passes the sorts of laws that we want them to, like it or not.

John Thacker said...

Also, apparently according to Obama and the rest of our Dem trio, the only problem with the steel tariffs is that they weren't high enough and didn't last long enough.

Angus said...

maybe he shoulda told the hondurans he was just kidding before they ramped up their sock production. plus if the socks don't come from honduras, they will come from asia. aderholt cannot win his sleazy game.

Shawn said...

...of course, though, he gets to get re-elected because he was "fighting for his constituents", and was "instrumental in protecting indianite (wtf?) jobs", due to the "one thing [he] had great concerns about."

Let's expand that sentence...the 'one thing' is 'getting reelected', and he'll manage it.

John Thacker said...

maybe he shoulda told the hondurans he was just kidding before they ramped up their sock production.

Maybe Congress should've been willing to vote for CAFTA without stupid protectionism. I'm most annoyed that CAFTA has the opt-out provision in the first place, apparently without as much face-saving boards to rule against tariffs as some of the other agreements do.

A pox on both their houses, although the Democrats are worse on trade. (Nice little natural experiments with Senate seats, since two have the same constituency, uphold this. There's even a close link between other forms of conservative views and voting for free trade. The socially liberal free trader is quite unusual in Congress-- more moderate Republicans tend also to be more protectionist from the same Senate seats. At some point one must blame the voters.)

I suppose it's far too much to ask for the sudden ramping up of sock production to point out to people just how distortionary the tariffs have been.

The really sad part is that that's about as good as it gets.

John Thacker said...

Speaking of trade, something about sugar in the WSJ today. The Administration's Agriculture Secretary is saying that Congress's attempts to protect sugar are idiotic, but sadly it seems like more transparently stupid protection is the response to free import of Mexican sugar.

John Thacker said...

Fun fact:

Did you know that Dr. Ron Paul voted against NAFTA because it wasn't perfect? If he hadn't, then ole' Rep. Aderholt's vote wouldn't have been necessary, and this proviso wouldn't have been inserted.

So here it is people, in order to save free trade, Ron Paul was forced to destroy it.

John Thacker said...

Err, he voted against CAFTA, I meant to say. I'd have to check his NAFTA roll call vote, but I noticed less since that one wasn't a tie.

Angus said...

Hi John: yes I knew that RP voted against CAFTA, but didn't think of the implication you (correctly) draw.

Par for the RP course. He's the guy who puts earmarks in a bill, votes against it knowing it will pass, takes credit in his district for the disbursement of the funds, but then tells the general electorate "I've never voted for an earmark".