Duck-Duck-Goose
Does this children’s game sound familiar? In this game, children sit down in a circle. One person is “it” and walks around the circle. As the person who is “it” walks around, they tap people's heads and designate them as "duck" or a "goose". When someone is tapped as a "goose" they get up and chase "it" around the circle. The goal is to tag that person before they can sit in the "goose's" spot. If the goose does not tag the person before they do this, they become "it" for the next round. If the goose tags the "it" person, the person tagged has to sit in the center of the circle. Then the goose becomes “it” for the next round. The person in the middle has to stay there until another person is tagged and they are replaced. Kids probably enjoy the game, but from an adult’s perspective, it seems like a pointless exercise of running in circles. So, what does this silly game have to do with international trade? Well, think about the pending free trade agreements with South Korea, Colombia and Panama. FTA’s are allegedly great for the U.S. economy and allow for most of the goods imported from these countries to enter the U.S. at reduced or duty-free rates. The three new FTA’s are almost ready for Congressional approval. Now, we have the Trade Adjustment Assistance “TAA” program that extends extra unemployment and health care benefits to workers who lose their jobs because of globalization. Some of our government representatives have indicated they won’t support the passage of the new FTA’s unless the TAA is extended. However, additional funds will be needed to support the benefits provided by the TAA. It has been suggested that the additional funds should come from raising customs user fees. User fees are generally paid on the importation of goods into the U.S. and other services performed by Customs & Border Protection officers. Public Law 111-344 signed by the President in December 2010 already extended the collection periods in order to raise additional user fee revenues. Do you see the circle? First, the new FTA’s reduce and/or eliminate duties on imported goods, which in turn lower the tax revenues. Second, the extension of the TAA provides benefits to workers who lose jobs because of trade. The TAA requires funds, which much come from somewhere. Fourth, the government raises customs user fees to pay for the TAA expenditures. However, raising user fees will increase the costs of importations and counteract some of the savings from the new FTA’s. So, you figure out who is the “duck,” “goose” and “it.” In the end the American public is probably stuck in the middle of the circle, while government representatives take turns playing the being the goose and “it,” chasing each other around the circle.
P.S. What is CBP going to do with the $640 million in unobligated funds gathering dust in the user fee account?
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