Courtesy Reuters

Taxing the Poor

Congressional trade debates since 2000 have revolved around a series of individual free trade agreements (FTAs), and the presidential campaign is shaping up the same way. The agreements are worth arguing over, but a debate centered on FTAs has a drawback. These agreements cover less actual trade than most people realize, and they tend to steer argument away from a fundamental question: is our basic trade regime worth keeping?

In fact, most imports arrive not under FTAs but through the permanent tariff system, which receives far less attention in Congress. Rather than raising money and protecting jobs, permanent tariffs tend to increase clothing and shoe prices at home while creating especially high trade barriers that deter goods from approximately twenty poor countries across Asia and the Muslim world from entering the U.S. market.

About $1.94 trillion worth of goods flowed into the United States last year: Nine million cars, 30 million tons of steel, 1.5 billion roses, 2.4 billion T-shirts, $27 billion worth of semiconductor chips, $350 billion worth of oil and natural gas, and more. About $400 billion worth of goods arrived under free trade agreements, and another $50 billion through special duty-free programs for poorer regions made possible by legislation such as the African Growth and Opportunity Act. The remaining $1.5 trillion--80 percent of all imports--arrived under the permanent tariff system.

The tariff system is the smallest of the government's six major taxes, which also include income, payroll, corporate, excise, and estate taxes. It imposes an average 1.3 percent tax on imports, raising an average of $26 billion each year. This is the result of nine postwar tariff agreements, from the first General Agreement on Tariffs and Trade (GATT) in 1947 to the World Trade Organization's (WTO) Information Technology Agreement in 1997. Tariffs have vanished on high-technology products such as semiconductor chips, as well as on resource products such as natural gas. In sectors such as the automotive industry, most tariffs are now low.

But the low average of 1.3 percent conceals astronomically high tariffs on certain goods. The tariff system traces its

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