As Cato trade scholars have long lamented, the United States is much more protectionist than our relatively low average tariffs indicate, and one of the biggest offenders in this regard is a US “trade remedy” regime that imposes high duties on imports without regard to how they might harm American consumers, the broader US economy, or other strategic national interests. A recent case in the UK shows just how important such a safety valve could be.

On his Substack, Most Favoured Nation, British trade analyst Sam Lowe highlighted a recent decision by the United Kingdom’s Trade Remedies Authority (TRA) to recommend lifting existing trade remedies (antidumping and anti-subsidy duties) on imported Chinese electric bicycles (e‑bikes). The TRA based its decision (largely) on the grounds that the existing trade remedies don’t meet a cost-benefit analysis—that is, they hurt consumers more than they help UK e‑bike producers. For American trade watchers, such a decision is basically unheard of—but it’s worth emulating.

Here’s the backstory as laid out by the TRA’s Statement of Essential Facts in the antidumping and countervailing duties cases: As the British government was preparing to leave the European Union, the TRA analyzed whether existing EU trade remedies should be scrapped, adopted, or modified by the post-Brexit government. (The TRA has the authority to investigate existing as well as prospective trade remedies). As part of that process, the UK adopted the EU’s antidumping and countervailing duties (AD/​CVDs) on e‑bikes from China at the end of 2020. As Lowe notes, the current antidumping duties range from 10.3 percent to 70.1 percent and the countervailing duties range from 3.9 percent to 17.2 percent on covered e‑bikes. It was estimated that imports of Chinese e‑bikes into the EU fell by more than 90 percent after the imposition of the AD/​CVDs.

In late May of 2023, TRA began a probe into whether the e‑bike AD/​CVDs continue to make sense. In its recently published findings, the TRA noted that if the tariffs were lifted, it is likely the subsidization and dumping of e‑bikes would recur; that such subsidization and dumping would cause injury to UK e‑bike producers; but—most importantly—on net, “keeping [the tariffs] in place would not be in the economic interest of the UK” under the TRA’s ability to make determinations about the broader economic impact of trade remedies known as the Economic Interest Test (EIT).

The TRA determined that revoking the trade remedies would “benefit the UK economy by an average of £51m per year; save consumers an average of £260 per e‑bike; and result in an average of 31,000 more e‑bikes being bought per year in the UK.” In other words, the TRA determined that the consumer benefits and broader economic benefits of lifting the tariffs outweighed the gains for producers that would continue to accrue if the AD/​CVDs were kept in place. What a novel concept!

Following the TRA’s publication of the Statement of Essential Facts, other UK government agencies will have twenty-one days to weigh in on the proposed revocation of the e‑bike AD/​CVDs. If no other agencies oppose the TRA’s decision, the duties will be terminated by a final decision in September.

As Lowe notes, the case has wider implications for the UK, particularly with respect to Chinese electric vehicles (EVs). Could the TRA make a similar recommendation that AD/​CVDs on imported Chinese EVs fail a cost-benefit analysis under the EIT? Though there are substantial differences between e‑bikes and EVs, it’s possible.

Implications for US Trade Policy

Unlike the UK, the United States’ AD/CVD regime specifically prohibits consideration of the broader economic effects of imposing such trade remedies like the TRA’s EIT utilized in the case of the Chinese e‑bike. Instead, it is limited to questions of whether a product was subsidized and/​or dumped into the US market and whether such subsidization and/​or dumping injured a domestic industry (with no regard for other considerations). As a result, US trade remedies are often at odds with wider policy goals—and their costs frequently outweigh their benefits.

Two examples: The US continues to levy aggressive AD/​CVDs on imported solar products—stunting deployment by raising prices—even though politicians argue that climate change poses a grave risk to the United States and the world. Likewise, the Biden administration has recently argued the US needs to build more housing to help alleviate soaring costs, but it continues to maintain decades-long AD/​CVDs on Canadian softwood lumber imports, an essential component of residential housing. And it’s not just softwood lumber. A 2022 Cato paper from Alessandro Barattieri and Matteo Cacciatore found that the US levies numerous AD/CVD measures on a wide range of construction inputs with median duties ranging from 28 percent to 134 percent, all of which inflate the cost of residential building. If policymakers were truly serious about addressing climate change and housing affordability challenges, nixing these duties would be a priority. There are countless other examples.

More broadly, the US AD/CVD regime imposes significant costs on the economy. A 2020 working paper from Barattieri and Cacciatore found US AD/CVD actions between 1994 and 2015 largely targeted industrial inputs; depressed employment in downstream industries like those utilizing steel; and provided little long-term benefits for the jobs protected, such as in steel production.

Not only that, the use of trade remedies has also skyrocketed in recent years. As my Cato colleague Scott Lincicome has noted, there were about 300 AD/CVD orders in place as of 2016. Today, there are more than 675 orders on the books with 123 cases pending. In the next year or so, the US could have more than 800 AD/CVD duties on the books—a massive increase in a short period. See Figure 1 for the composition of current AD/CVD orders, by commodity.

The US trade remedy regime is in desperate need of reform. Permitting a true cost-benefit analysis of potential and existing trade remedies—similar to the UK’s system—is an ideal place to start.

The recent Wall Street Journal article, “Meet the Shirt Maker Who Loves U.S. Tariffs,” is a modern (and frustrating) version of French economist Frédéric Bastiat’s classic parable of the broken window. It praises the “seen” benefits of US apparel tariffs—the handful of American manufacturers whose products have “again become competitive in the global marketplace”—while totally ignoring their many “unseen” costs.

Most obviously, the article refers to the higher prices that American consumers will now pay for clothing as merely something US importers “say” might happen, when in fact we know from recent experience that these costs are real and significant.

According to the US International Trade Commission, for example, the “Section 301” tariffs on Chinese apparel imports—the very tariffs at issue here—increased the price of Chinese apparel by 14.5 percent, the price of US apparel by 3.1 percent, and average US apparel prices overall by 4.3 percent. That’s an invisible tax of more than $3.5 billion in 2021 alone—one that was disproportionately paid by lower-income American consumers and that constituted money that couldn’t be spent on other, more productive US enterprises.

Also unseen is the fact that, again per the ITC, the China tariffs resulted in only a modest (6.3 percent, or about $770 million) increase in American apparel production that same year, because US consumption shifted not to American-made clothing but other import sources (a 25.2 percent increase in 2021). Overall, therefore, the US economy has suffered yearly tariff-related losses more than four times as large as the gains the article cheers—a miserable result that’s anything but surprising given that the same commission in 2017 found that the removal of earlier US apparel tariffs would increase net US welfare by $2.4 billion.

And for what? Suits, t‑shirts, and jeans have no national security implications, so economic losses from forcing their production onshore are not “strategically” justifiable (non-China imports notwithstanding). Production jobs in the domestic industry pay as little as $11/​hour and only a few dollars more in New York City, where the Journal article’s chief protagonist is located (and where fast food workers make almost as much). The manpower and other finite resources directed to tariff-protected industries also now can’t be used for other, more productive business operations in the region—another unseen cost of protectionism.

Call me a heartless globalist if you must, but the US government shouldn’t be in the business of regressively taxing the clothing purchases of Americans still reeling from inflation, all to support—at a substantial net loss—relatively low-paying apparel jobs in the Big Apple. It’s a bad policy, and certainly nothing for a newspaper to cheer about.

Some members of Congress believe that US servicemembers suffer from an excess of choice in the boots they use—and they’ve got the solution.

Last month saw the introduction of the Better Outfitting Our Troops (BOOTS) Act, a bill that would prohibit servicemembers from using “optional boots” manufactured outside the United States or without US materials. While presented as a means of ensuring footwear quality, the legislation appears more concerned with the welfare of US bootmakers—and one manufacturer in particular—than those in uniform.

A comfortable pair of boots is essential for members of the armed forces. But those issued by the military are not necessarily the best fit for each person’s feet. To accommodate individual needs (for example, those with wider feet), the military permits the use of so-called “optional boots” (defined on page 122 here) purchased from retailers that meet military specifications. It’s an approach that enables those in the armed forces to find the best-fitting footwear while ensuring that standards are met.

That ability to find comfortable footwear, however, would become more difficult if the BOOTS Act is passed.

Introduced by Representatives Nikki Budzinski (D‑IL), Mike Bost (R‑IL), and Rick Crawford (R‑AR), the bill restricts optional boots to those manufactured in the United States with domestic materials and components. Although the legislation’s sponsors claim the measure seeks to promote safety, it’s unclear how reducing servicemembers’ options in selecting footwear advances that goal. Indeed, the opposite seems a more likely outcome.

So why was the bill written? A press release announcing the BOOTS Act holds some clues.

Beyond emphasizing safety, the announcement warns that foreign manufacturers have “taken over the market for Army soldier footwear” (“taking over a market” is protectionist-speak for providing a valued good or service at an affordable price). The BOOTS Act’s passage, it adds, would “support domestic military footwear production at places like the Belleville Shoe Manufacturing Company”—a manufacturer with facilities in or near the bill’s sponsor’s districts.

It’s difficult not to conclude that driving business to the company, one highly reliant on government contracts touted by Bost and Budzinski, is a primary motivation for the bill. Even, it seems, if that means members of the armed services are left with fewer choices in critical footwear—choices they like as evidenced by the fact that manufacturers not compliant with the BOOTS Act dominate the market.

Although the BOOTS Act’s fate is uncertain, its passage would be only the latest example of Congress engaging in self-serving protectionism at the military’s expense.

The 2017 National Defense Authorization Act (NDAA), for example, reduced servicemembers’ choice of athletic shoes by requiring that such footwear be American-made. With the military providing $180 million in allowances for those in uniform to buy athletic shoes between 2002 and 2014, firms positioned to meet the restrictions were elated. Shoe manufacturer New Balance said the new rules could increase its annual sales by 250,000 sneakers—not a bad return on the firm’s $500,000 lobbying push for the change.

As with the BOOTS Act, the bill was championed by members of Congress whose districts included companies that stood to gain from the change. Such considerations trumped the fact that Department of Defense officials had previously argued servicemembers should have a variety of brands to choose from to find the most appropriate shoes.

Similarly, the 2020 NDAA mandated that the military purchase 100 percent domestically produced stainless steel flatware. Unsurprisingly, the language was championed by a member of Congress whose district was home to the only manufacturer able to meet the new requirements.

The benefit to companies that produce goods compliant with such protectionism is obvious. The upside to the military from reduced choice and competition, however, is less apparent.

Indeed, former Rep. Mac Thornberry (R‑TX)—ranking member on the House Armed Services Committee when the flatware restriction was added—blasted the measure for its lack of a national security justification and hurting US troops.

Yet the language passed.

Congress has repeatedly given greater weight to the desires of special interests than the military’s needs when evaluating protectionist measures. Let’s hope it doesn’t make the same mistake again with the BOOTS Act. 

Today, the Biden administration announced it is quadrupling tariffs on imported electric vehicles (EVs) from China, while also imposing new tariffs on steel and aluminum, certain critical minerals, solar cells, batteries and battery components, ship-to-shore cranes, medical products, and semiconductors. The tariffs will shield from Chinese competition many of the very US industries the Biden administration showered with protectionist subsidies as part of its industrial policies enacted in the Inflation Reduction Act and CHIPS and Science Act. And they raise several problems.

A (Political) Solution in Search of a Problem

First, the United States already levies a 27.5 percent tariff on Chinese-made EVs—a 25 percent tariff already imposed under Section 301 plus a 2.5 percent most-favored nation tariff—which explains why Chinese producers’ share of the US EV market is currently around 1 percent. New Section 301 tariffs of 100 percent will likely ensure that Chinese-made EVs are effectively banned from the United States, but they were never really here in the first place.

Thus, the new EV tariffs are similar to the steel tariffs also announced today by the Biden administration, which I covered with my Cato colleagues Scott Lincicome and Alfredo Carrillo Obregon last month. In the case of steel, the US has essentially eliminated Chinese products from the market using antidumping and countervailing duties. And like the new steel tariffs—and President Biden’s opposition to the purchase of US Steel by Japanese-based Nippon Steel on bogus “national security” grounds—the new EV tariffs are driven mainly by domestic political calculations and the 2024 presidential campaign, not economics or geopolitics.

Citing anonymous administration officials, Politico confirmed as much last week: with the Trump campaign promising a 60 percent tariff on all imports from China, the Biden administration apparently feels compelled to respond with its own tariffs, in the hope of appealing to unionized auto workers in the Midwest. (Trump, meanwhile, responded to reports about Biden’s 100 percent EV tariff last Saturday with a promise to levy a 200 percent tariff on Chinese EVs made in Mexico.)

It’s truly a race to the protectionist bottom.

Bad Policy

Second, Biden’s EV tariff move is terrible policy.

Most obviously, the EV tariffs will harm American consumers, similar to how US auto protectionism did in the 1980s. Back then, high oil prices had driven American consumers to purchase smaller, more fuel-efficient cars (a segment largely dominated by Japanese producers). The Reagan administration responded to the competitive threat to US “Big Three” automakers by pressuring Japan to impose limits on automobile exports.

As Lincicome explained last year, research shows that those restrictions raised the price of Japanese automobiles in the United States by an average of about $3,700 (in 2022 dollars). But by restricting lower-priced suppliers’ access to the US market, the import restrictions also allowed domestic automakers to raise prices by an estimated $2,138–$2850 per car (2022 dollars). And European automakers raised their US prices even more. Overall, the restrictions on Japanese cars cost American consumers more than $16 billion (2022 dollars) per year throughout much of the 1980s.

Chinese EV imports today raise some different issues than did Japanese cars in the 1980s, but the consumer harms of US protectionism will likely be similar. Today, by many accounts, China is producing some pretty good quality EVs at prices well below those for most EVs in the US market (even with generous IRA subsidies). Effectively banning Chinese EVs will thus give remaining automakers in the United States room to keep EV prices higher than they’d otherwise be, to American consumers’ detriment. And, unlike the case of Japan in the 1980s, it’s all but certain that Chinese automakers will be barred from investing in the United States to jump this new tariff wall.

The tariffs will thus eliminate potentially important competitive pressures on US automakers, which—other than Tesla—are largely laggards in the EV market. (Bloomberg just reported, for example, that Ford lost more than $100,000 per EV during the first quarter of 2024 as demand and prices fell.) That’s also bad for American consumers—and the long-term health of the US industry.

Furthermore, by raising the price—and thereby stunting the deployment—of EVs, the tariffs undermine the Biden administration’s stated goals of reducing carbon emissions (as many US environmentalists and EV fans have recently lamented). In this regard, the EV tariffs (and also-announced solar tariffs) would continue the administration’s habit of choosing politics and protectionism over their environmental agenda.

Consumer subsidies in the IRA, for example, are limited to purchases of a small handful of North American-made EVs, and the Biden administration has already maintained many of the (ineffective) solar tariffs it inherited from the Trump administration and, in addition to increasing tariffs on Chinese solar cells, is actively considering new tariffs on imported solar products from Vietnam, Cambodia, Thailand and Malaysia that are allegedly subsidized and/​or dumped into the US market, as my Cato colleague Jim Bacchus recently explained.

Wrong Legal Tool

Third, Biden’s tariff announcement is legally dubious (to put it nicely). Section 301 of the Trade of 1974 allows the US Trade Representative to investigate and attempt to remedy “unfair” actions and policies taken by foreign governments that violate US trade agreements or unreasonably hurt and/​or burden US commerce. The statute is designed to create leverage to pry open foreign markets by forcing targeted governments to remove the offending actions or policies. Section 301 was widely used in the 1980s but fell out of favor once the World Trade Organization (WTO)—with its binding dispute settlement system—replaced the General Agreement on Tariffs and Trade in 1995. That is until the Trump administration dusted off the statute.

Six years ago, the Trump administration utilized Section 301 to levy its tariffs on imports from China. The crux of the case was that Beijing’s intellectual property abuses harm US commercial interests to the tune of about $50 billion per year, and that tariffs of an equivalent amount were needed to induce changes in Chinese IP policy. Now, as part of the two-year, statutorily-mandated review of those tariffs—during which many American firms thoroughly documented the harms of the Trump administration’s tariffs—the Biden administration will use the same Section 301 authority and findings to levy the new EV and other tariffs. But Chinese subsidies for EVs—and supporting “strategic” domestic sectors—have nothing to do with Beijing’s IP abuses as documented in the original Section 301 Report.

As already noted, the main motivation for new EV and other tariffs is politics, but even more legitimate US concerns about Chinese EVs have nothing to do with IP. Instead, they mostly center around cybersecurity and shielding American’s privacy from Beijing. As the New York Times recently reported, “Mr. Biden has previously raised concerns about Chinese electric vehicles, saying that internet-connected Chinese cars and trucks posed risks to national security because their operating systems could send sensitive information to Beijing.”

If policymakers in Washington want to argue that imported Chinese-made EVs pose a security risk to the United States, they should utilize Section 232 of the Trade Expansion Act of 1962 (which the Trump administration used to impose tariffs on steel and aluminum from virtually every country in the world, including allies like Canada), not Section 301. Section 232 requires the Commerce Department, in consultation with the Defense Department, to investigate whether imports of a particular product pose a national security risk to the United States and if so, grants the executive branch virtual carte blanche authority to restrict the importation of that product.

On the other hand, if the administration wants to argue that tariffs are needed to counteract Chinese subsidies, we have a law for that too: the US countervailing duty law, which lets the US government—consistent with WTO rules—apply remedial duties on subsidized imports (from China or any other country) that injure or threaten to injure American manufacturers of the same product. The European Union is currently considering whether to apply countervailing duties on subsidized EV imports from China.

Taking this sort of blasé approach—flippantly ignoring the procedural and substantive difference between Section 301 and Section 232—for political expedience further undermines the rule of law concerning US trade policy. Such abuse not only dims the substantial benefits of international trade and investment over the long run but also makes it easier for a new Trump administration to further abuse US trade law and impose their tariffs.

Conclusion

New tariffs on imported EVs and other products from China are driven mostly by domestic political calculations in the run-up to the 2024 presidential election. At the same time, the tariffs are bad news for American consumers and broader climate goals, and they’re a blatant misuse of the Section 301 statute. The US desperately needs a return to sound, rule-based trade policy.

Though grocery inflation has moderated in recent months, Bloomberg recently reported that food prices remain at the top of Americans’ inflation concerns. Unsurprisingly, this issue has become a major theme of the 2024 presidential election, with Joe Biden and Donald Trump—and Democrats and Republicans in Congress—pointing fingers at each other and making their case before American voters.

Yet, as I wrote in my column this week at The Dispatch, few people in Washington actually seem interested in lowering grocery prices—instead, some have been actively trying to increase them in recent cases by using protectionist trade policies to restrict available supply of products, such as beef, frozen shrimp, and fresh tomatoes. These recent actions (which are described in greater detail in my column) are moreover just the latest examples of long-standing US food protectionism.

For starters, as Table 1 shows, the United States still maintains high most-favored nation (MFN) tariffs on many food products, including produce that can’t be easily grown in most parts of the country, meats from different animal sources, and various dairy products.

Not included in the table are special tariff rate quotas, which impose additional tariffs on products such as sugar, milk, butter, cheese, baby formula, ice cream, peanuts and peanut butter, canned tuna, chocolate, and many others once imported quantities rise beyond a certain threshold within a specific timeframe. These quotas can significantly raise prices—the US International Trade Commission in 2017 found that Americans pay 12 percent, 15 percent, and 21 percent more for imported tuna, cheese, and butter, respectively, because of these trade restrictions. And altogether, the US Department in Agriculture (USDA) estimated in 2021 that eliminating US agricultural tariffs would increase consumer well-being by $3.5 billion per year.

Yet “standard” tariffs are just the tip of the iceberg when it comes to US agricultural protectionism. As Table 2 shows, there are 38 antidumping or countervailing duty orders on various foodstuffs, some dating back to the 1990s. These duties are additional to any MFN tariffs already in the books, and as I have written previously, they are imposed through laws that are intended to increase domestic prices whilst barring the investigating agencies from considering the harms that any action could cause to consumers, the broader economy, or even other US foreign policy interests.

And then there’s the “regulatory protectionism” that the federal government has long used to restrict the importation of items like beef, tuna, catfish, produce, and biofuels. Though such regulations may be imposed under the guise of protecting humans, animals, and the environment, they often protect special interests without any legitimate health, safety, or environmental basis. Notable examples of such regulatory restrictions include Obama-era mandatory Country of Origin Labeling requirements (which cattlemen and their congressional allies are seeking to revive); Food and Drug Administration sanitary restrictions on infant formula imported from high-standard countries in Europe and Australia and New Zealand; the Renewable Fuel Standard; and USDA-sanctioned produce marketing orders.

On a more optimistic note, American food abundance is very likely to increase in the future if individuals here and abroad remain relatively free to exchange goods, services, and ideas. As the Simon Abundance Index developed by Cato’s Marian Tupy and Gale Pooley documents, the relative abundance of 50 basic commodities, including many foodstuffs, exhibits a long-term increase and bounced back strongly last year after a brief, pandemic-induced decline. Meanwhile, the USDA projects that grocery inflation should continue to decelerate in 2024. (In some cases, prices may even decline.)

Were these gains to materialize, Americans should rightfully celebrate them—while keeping in mind that, in many respects, they happened not thanks to the folks in Washington.

Washington State Ferries (WSF) has certainly seen better days. With over 3,500 canceled sailings last year and just 15 of its 21 vessels reliably operating, a recent Seattle Times editorial described the ferry system as “in crisis” and characterized its fleet as “antiquated” and “depleted.” Such language is apt. With 11 of the system’s ferries at least 40 years old and WSF five short of the 26 vessels it considers ideal, new vessels are badly needed. Unfortunately, none are projected to arrive until 2028 at the earliest.

The ferry system’s troubles have become a topic of this year’s governor’s race, including criticism of the state’s decision to procure ferries powered by hybrid electric engines—a move some observers allege has complicated the acquisition process. At most, however, this is only a proximate cause of WSF’s ferry woes. Far more deserving of blame are protectionist maritime laws that prohibit the purchase of vessels from the international market. Such restrictions mean that WSF—in fact, all US ferry systems—must provide service with one hand tied behind their backs.

That Washington urgently needs to revamp its ferry fleet isn’t news. Five years ago, the state passed legislation allowing a contract extension with Seattle shipyard Vigor—which has built WSF’s last ten vessels—to build up to five more large ferries using hybrid electric technology. But negotiations with the shipyard then hit a snag. While Washington had pegged the cost of new ferries at $188 million each in 2018—an estimate that rose to $249 million in 2022—the price quoted by Vigor for the first such ferry was over $400 million.

Ouch.

Washington responded by rebidding the contract and changing its law so shipyards outside the state could compete to build the vessels. That, however, has meant delays in the acquisition process, mounting frustration among ferry users, and the ongoing exchange of barbs over the new propulsion system.

But this controversy misses the bigger picture. Washington’s chief obstacle to cost-effectively acquiring new ferries isn’t rooted in technology but protectionism. One only needs to look across Washington’s international border to see why.

In late 2019, only two months after Washington announced its plan to purchase new hybrid electric ferries, Canadian ferry operator BC Ferries ordered four vessels with the same technology from a European shipbuilder. All four were delivered before the end of 2021. Featuring a capacity approximately one-third that of the vessels sought by WSF (450 passengers and crew and 47 vehicles versus 1,500 passengers and 144 vehicles), the ferries cost about $38 million each—less than a sixth of the new WSF ferries’ estimated price.

WSF and BC Ferries’ contrasting experiences are largely (if not entirely) due to the latter’s ability to buy vessels from international shipbuilders. When BC Ferries announced its desire to purchase four new hybrid electric ferries, 18 shipyards from around the world indicated their interest (of which 9 were selected to compete). Notably, not a single Canadian shipyard bid on the project.

In contrast, WSF must contend with the 1920 Jones Act, which applies to the domestic waterborne transportation of merchandise (e.g. vehicles), and the Passenger Vessel Services Act of 1886, which restricts the domestic waterborne transportation of people. Both laws require vessels to be constructed in US shipyards that are far less numerous and far less competitive than their international counterparts. Significantly higher prices for WSF’s new ferries are a foregone conclusion.

And the protectionist headaches don’t stop there.

After the vessels are delivered, WSF still faces the task of finding mariners to crew them. That’s unlikely to be easy, with a January report from Washington’s Department of Transportation pointing out that the ferry system faces “severe staff shortages that are unprecedented in its 70-year history.” Maritime protectionism figures here too. While BC Ferries and other international ferry systems can hire skilled foreign mariners to help mitigate such crew shortages, the report points out that WSF is “precluded from doing [so] by the 1920 Jones Act” (US-flagged vessels are restricted in the employment of foreign nationals to green card holders). 

Unfortunately, Jones Act-induced complications to US ferry systems go beyond Washington.

Like WSF, the Alaska Marine Highway System (AMHS) also needs new vessels, including a hybrid electric replacement for its 1964-built ferry Tustumena. Described by the system’s director as thirty years past its prime, the ferry has a history of structural issues and saw its return to service from an annual overhaul recently delayed by the discovery of wasted steel. Just maintaining the vessel costs $2 million per year. As the Anchorage Daily News has pointed out, however, finding the money and a shipyard willing to build the new ferry is proving a challenge:

The replacement vessel is expected to cost around $350 million. Sam Dapcevich, a marine highway spokesperson, said the state has so far secured nearly $243 million, counting around $60 million in expected federal formula funds. That leaves more than $107 million needed to fund the project. The state is hoping most — if not all — of the balance can be covered through a federal grant.

As of March, amid months of delays, the Tustumena replacement vessel has yet to go out to bid. The design was changed to include batteries, reflecting a federal requirement for reduced emissions. A bid attempt in 2022 yielded no takers [emphasis and hyperlink added]. Last summer, [AMHS Director Craig] Tornga said he wanted to select a shipyard by the end of the year. In December, Tornga said he wanted to put out a request for proposals in January. Delays have piled on as Tornga held meetings with several shipyard officials to ensure that unlike in 2022, shipyards would, in fact, bid on the project.

On the East Coast, meanwhile, Massachusetts’ Steamship Authority hasn’t even bothered constructing new purpose-built vessels to replace three of its aging (and deteriorating) ferries. Instead, it purchased three offshore service vessels—all at least fifteen years of age—used to support Gulf of Mexico offshore oil and gas operations and is converting them into ferries. The project has already experienced hiccups, with the conversions’ cost increasing from a projected $9 million per vessel to $13.6 million.

Transporting over 131 million passengers in 2019, ferries form an important part of the US transportation system. They are particularly vital for parts of the country, including Alaska and the greater Puget Sound region, for which land-based transport alternatives are either less direct and more time-consuming or non-existent. For these communities, ferry service is a lifeline and their difficulties demand an effective response from policymakers. Taking aim at costly and ineffective maritime protectionism that impedes US ferry systems’ ability to obtain the vessels and mariners they need would be an excellent start.

April marks the thirtieth anniversary of the signing of the Marrakesh Agreement and the culmination of the Uruguay Round of multilateral trade negotiations, which converted the General Agreement on Tariffs and Trade (GATT) into the World Trade Organization (WTO).[1] Today, the WTO has 164 members (it will expand to 166 as Comoros and Timor-Leste were approved for membership at the thirteenth Ministerial Conference in Abu Dhabi in February), which encompasses 98 percent of global trade.

As Larry Summers once remarked, “The Uruguay Round was the largest tax cut in the history of planet earth.” Indeed, as shown in Figure 1, since the WTO’s founding, tariffs and other barriers have fallen substantially—facilitating a more than fivefold increase in global trade between 1994 and 2023. Over the same span, global trade as a share of global GDP has increased from 19.9 to 29.9 percent.

As global trade has increased sharply with more exports from low-and-middle-income countries, global poverty has fallen precipitously. A recent blog post from the WTO’s Secretariat notes that the percentage of global citizens living in poverty fell from 38.1 in 1996 to 10.6 percent in 2022, as shown in Figure 2.

This is a humanitarian story worth highlighting and much of it is due to the multilateral trade liberalization achieved through the WTO.

Despite these tremendous gains, globalization is facing its most serious challenges since before World War II. Protectionism is clearly on the rise: the two largest economies in the world, the United States and China, took their trade spat outside of the WTO system and imposed massive tariffs on each other. On top of that, trade-distorting industrial policies are once again in vogue around the world.

Last fall, Cato launched its Defending Globalization project, which aims to cut through the noise about globalization while at the same time making an affirmative case for more integration. As part of the project, our Cato colleague Jim Bacchus, a former chairman of the WTO’s Appellate Body, penned an excellent essay dispelling some common myths about the WTO, including showing that the system does not undermine US sovereignty, is not biased against the US, and does not harm the US economy. On the latter point, for example, a study by the Bertelsmann Foundation in Germany found that WTO membership increased US GDP by approximately $87 billion between 1995 and 2020, thus economically benefiting more from the system than any other country.

More multilateral and plurilateral (with some but not all members of the WTO) liberalization is desperately needed to help restore the WTO’s centrality in world trade, particularly better disciplines on subsidies and digital trade. Likewise, reforming the WTO’s dispute settlement system should be a priority. But at a time of growing criticism of the multilateral trading system and creeping protectionism, the WTO has served and continues to serve a vital role in the global economy. And that is worth celebrating.

[1] For an in depth look at the policy and political debates in the lead up to the signing see this excellent history by John Schmidt, the lead US negotiator in the talks