As this week's Trade Fact goes out, 200,000 young women are getting ready for work in Cambodia's 220 clothing factories. They produce about $200 million of clothes a month
-- sweaters, polyester pajamas, cotton T-shirts, and blouses -- for sale in America's retail outlets. The American tariff system taxes them heavily: 32 percent for an acrylic sweater, 19.7 percent for a cotton blouse. Altogether, the Customs Service charged $30 million in tariffs for $190 million in Cambodian clothes in January.
France's pharmaceutical-industry workers, artists, parfumiers, and vineyard managers get gentler treatment. Cambodia's erstwhile colonial power ships nearly $3 billion worth of goods to the United States every month. The top sellers are medicines, airplane parts, artwork, wine, and perfume. There are no American tariffs on medicine, airplane parts, artwork, or perfume, while wine gets a small fee of 6.3 cents per bottle. Altogether, the Customs Service collected $29 million -- a million less than the fees on Cambodian goods -- on France's $2.9 billion in exports in January.
Why the disparity? Two reasons.
1.) The American tariff system: The 12 international trade agreements since World War II have eliminated most of America's technology- and heavy-industry tariffs. They have, however, left most shoe and clothing tariffs alone, even as employment patterns have shifted. (In 1974, the garment industry employed 1.4 million people; now it has 250,000.) Thus the United States collected about $23 billion in tariffs last year, and over $10 billion came from shoes and clothes, which together accounted for $94 billion in imports. Meanwhile, $307 billion in imported computers, steel, airplanes, semiconductor chips, medicines, and cars raised about $2 billion in tariffs. Cambodia and other low-income countries make high-tariff clothes and get hit hard; France and other rich countries specialize in low-tariff luxuries and technology products that flow freely across borders.
2.) The gap in trade/development programs: Low-income Asian, Muslim, and Pacific island states, unlike low-income African and Latin American countries, have no special tariff benefit. About 15 (e.g. Cambodia, Bangladesh, Fiji, Indonesia, Laos, Mongolia, Nepal, Pakistan, Palau, Sri Lanka) get especially tough treatment.
PPI on the U.S. tariff system and poor countries abroad:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=900010&contentID=253112
Tariffs travel on from the border, magnified by retail markups and state sales taxes, to raise clothing and shoe prices for single moms in the United States. PPI explains:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=900010&contentID=250828
Reform options:
Senators Dianne Feinstein, Max Baucus, and Gordon Smith, and Representatives Jim Kolbe and Joe Crowley, propose exempting 14 least-developed Asian, Pacific, and Muslim countries, plus Sri Lanka, from the tariff system.
- Senator Feinstein on the Tariff Relief for Developing Economies Act:
http://feinstein.senate.gov/05releases/r-ldc0207.htm
- Rep. Crowley on Bangladesh:
http://crowley.house.gov/issues/bangladeshi.htm
International reform possibilities:
The WTO's "Doha Round" talks cover tariff reform in the United States and 149 more WTO members. Last winter in Hong Kong, the WTO's wealthy countries agreed to eliminate tariffs on at least 97 percent of goods from least-developed countries.
- The U.S. Trade Representative Doha Round site:
http://www.ustr.gov/WTO/
Doha_Development_Agenda/Section_Index.html
- PPI's Doha Round testimony at the Senate Finance Committee:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=128&contentID=253606
- The WTO's Doha Round site:
http://www.wto.org/english/tratop_e/dda_e/dda_e.htm
