OPINION: If Trump Wants Tariffs, He Must Avoid Loopholes


Joanne Butler Contributor
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President Trump this month called himself a “tariff man.” Me? I’m a tariff woman! I maintain a research account at the U.S. International Trade Commission for the purposes of gathering statistics on trade under certain tariffs.

In the 1990s, I was the lone female in the U.S. delegation to a conference at the World Customs Organization in Brussels. And I made a difference.

The purpose of the conference was to decide on “rules of origin” for certain products. Every product (animal, vegetable, chemical or mineral) has a unique code in the Harmonized Tariff System. But in a globalized trading system, how can a country apply the appropriate tariff if it’s unclear where the product came from?

My particular case involved frozen mixed vegetables. The (male) delegates from the African nations were struggling to grasp why a bag of mixed vegetables was possible or necessary. Surely it was the woman’s job to mix vegetables for a stew! She could choose what she wished and that was preferable to a pre-mixed bag.

Although we were in center city Brussels, I sprinted out of the hall in search of an urban supermarket. Fortunately, I was familiar with the city, found a market quickly, then sprinted back to the conference with my bag of frozen mixed veggies.

Our delegation opened the bag and we passed it around for anyone to look inside. And there was a fair amount of curiosity among the men — of the “oh, so this really does exist” type.

In the United States, mixing vegetables or ingredients from various countries is quite common. Just check the ‘country of origin’ labeling on any processed food product.

In the end, it was decided that the country of origin of a bag of mixed vegetables should be the origin of the vegetable that had 50 percent or more of the content. (Think of frozen succotash: more corn than lima beans, ergo the origin of the corn is determinative.)

If no vegetable has a 50-percent share, then the place where the vegetables were mixed is the country of origin.

Why does this matter? Because the devil is truly in the details.

In the 70s and 80s, there was a tariff loophole regarding fabrics made from “ramie” — an Asian natural fiber. If the fabric contained at least 50-percent ramie fiber, it could enter the United States duty-free.

When the tariff men and women were figuring out which tariffs should apply to fabrics made of certain fibers, ramie must have been considered too exotic. Likely, the negotiators believed there would be little or no trade in ramie fabric, so it received the loophole.

It was a loophole a container truck could drive through — and did! Imports of ramie fabric products rose sharply — so sharply that by 1986, a new multilateral agreement was reached that put a tariff on ramie fabric. As ramie lacks the durability of cotton, it quickly fell into disuse for clothing in the American market.

So, Mr. President, if you want to be a tariff man, take some advice from this tariff woman. Make sure whatever agreement is reached is sealed tight from loopholes, including rules of origin. Instruct your negotiators to look beyond the present to the future — so there will be no more “ramie” mistakes.

This will take time. But it’s better to spend time on the details, then to have an agreement that’s riddled with rules of origin that are favorable to China or are repeats of the ramie loophole. That would be a failure for America.

Trust me, I’m the tariff woman.

Joanne Butler was an international trade specialist at the Office of the U.S. Trade Representative and at the Foreign Agricultural Service at USDA (GHW Bush administration). In the GWB administration, she was the senior adviser/speechwriter for an assistant secretary at the Department of Labor.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.