Cato Trade

Colin Grabow: If the Biden administration blames a lack of competition in international ocean shipping for rising prices, why does it support the Jones Act, which squelches competition and drives up freight rates in domestic ocean shipping?

White House Bemoans Lack of International Shipping Competition While Restricting It at Home If the Biden administration wants to get serious about promoting ocean shipping competition and driving down freight rates, a logical starting point should be revisiting the costly Jones Act.

"If China and the United States are not both fully engaged in restoring the centrality of the WTO and modernizing it to make it fully fit for purpose in the twenty‐first century, then the next twenty years of Chinese and American membership in the institution may well witness its decline into an afterthought on the margins of the world economy."

James Bacchus explains why WTO negotiations cannot succeed unless both the United States' and Chinas' concerns are on the agenda.

Rescuing the World Trade Organization US concerns cannot be resolved unless Chinese concerns are, too.

Transshipment — transfer of cargo from one vessel to another before it is brought to its final destination — does not take place within the United States because any goods moved between U.S. ports must use expensive and uncompetitive Jones Act shipping.

This lack of transshipment extends to Puerto Rico. Colin Grabow explains why it represents a missed economic opportunity for the island.

Examining the Jones Act's Harm to U.S. Ports The Jones Act has heavily contributed to the lack of transshipment in U.S. ports. That’s a missed opportunity for Puerto Rico.

LISTEN: Scott Lincicome discusses industrial policy on Law & Liberty's "Liberty Law Talk" podcast. https://bit.ly/3xToMaL

Scott Lincicome discusses industrial policy on Law & Liberty's Liberty Law Talk podcast November 30, 2021

Recent U.S. port bottlenecks have revealed myriad systemic policy problems affecting U.S. coastal shipping. These problems include restrictive labor, immigration, and trade policies. Policymakers looking to improve U.S. port efficiency should look at how to fix these bad policies before considering more regulations, writes Gabriella Beaumont-Smith.

More Regulation Will Not Improve Port Efficiency Policymakers would do well to reduce rather than increase regulatory burden, which has artificially restricted essential inputs for port efficiency. Unfortunately, the Ocean Shipping Reform Act of…

"Buried in the Infrastructure Investment and Jobs Act (aka the “bipartisan infrastructure bill”) is tens of billions of taxpayer dollars for subsidies to renewable energy companies, with little regard, it seems, for the bad economics and history of this kind of “green industrial policy” in the United States," writes Scott Lincicome.

Green Industrial Policy Is Back (Again) There are plenty of subsidies for renewable energy companies in the infrastructure bill that just passed the Senate.

"If the G7 countries do not act together in the WTO to reconstitute the appellate body, and if nothing changes, China and other large trading countries will simply employ the heft of their economic leverage to do as they wish in their trade dealings with other countries — and especially those that are smaller and less powerful."

James Bacchus warns that without a functioning WTO dispute settlement system, "the security of the rule of law in international trade will give way once more to the chaos of the rule of power."

Appeals to the Abyss Are Letting China Off the Hook on Trade Violations This dire situation in WTO dispute settlement is not the fault of either China or Australia. It is almost entirely the fault of the United States of America.

"Before overreacting with counterproductive policies that would raise [shipping] prices even further, policymakers need to take a deep breath and understand the economic forces at play," writes Gabriella Beaumont-Smith.

Why Shipping Prices Have Recently Increased Businesses are facing higher shipping costs because ocean carriers are increasing their prices in reaction to current increased demand and limited supply. These changes in demand are driven by…

"In reality, industrial policy, as properly defined, has an extensive and underwhelming history in the United States, featuring both seen and unseen high costs, failed objectives, and political manipulation."

The United States should reject industrial policy.

Questioning Industrial Policy The United States undoubtedly faces economic and geopolitical challenges, including ones related to China, but the solution does not lie in copying China’s top‐down economic planning.

Supply chain disruptions have many causes. The solutions are similarly manifold. Colin Grabow joins the Cato Daily Podcast to detail how rules within federal control have contributed to the slow and expensive movement of goods.

Supply Chain Trouble and the Federal Policies That Make It Worse Featuring Colin Grabow and Caleb O. Brown

"Policies that prioritize and protect narrow political interests over broader, national ones surely didn’t cause the supply chain crisis, but they just as surely exacerbated the situation. Reforming those policies isn’t easy... But doing so would go a long way toward not only having a supply chain less vulnerable to future shocks but also breaking through the broader American sclerosis." -- Scott Lincicome

American Sclerosis A mix of federal, state, and local regulatory policies are behind our supply‐chain woes.

Inu Manak: "What is important, for the time being, is that the United States is engaging with our allies on [the issue of subsidies reform] because they are just as impacted by China’s behavior as we are."

On China’s Trade Practices, the United States Is Ramping Up Efforts with Allies It is important that the United States not go it alone, not least because having more countries on board that support overall reform efforts could encourage China to accept some difficult changes to…