July, 2001: Players

By Greg Rushford
Published in The Rushford Report

Anne Krueger to the IMF:
Another victory For the steel lobby?

Last month, I reported that Sen. Jay Rockefeller (D-Steel Lobby) had made still another personal attack on a well-credentialed woman. In May, Rockefeller had written to President George W. Bush saying that he found it “disturbing” that the president had picked Stanford University economics professor Anne Krueger to serve as a member of the Council of Economic Advisers. Rockefeller’s complaint was that Krueger — like the respected mainstream economist that she is — has a dim view of steel protectionism. The steel lobby was worried about what Krueger would say at the CEA about the negative impact to the U.S. economy of the quotas it is seeking against foreign steel pursuant to Section 201 of U.S. trade law.

No need to worry any more.

The administration announced last month that Krueger would not be going to the CEA after all. She was tapped to replace deputy managing director Stanley Fisher at the number two position at the International Monetary Fund. A delighted Rockefeller issued a press release on June 7 calling this “another important development for the United States steel industry.” At the IMF, Krueger won’t be involved in the Bush administration’s consideration of steel quotas.

Was this the second time in his new administration that Bush failed to stand by a nominee who was opposed by the domestic steel lobby? Earlier this year, I reported how the president caved to pressure from Washington steel lawyer Robert Lighthizer, Sen. Rick Santorum (R-Pa.), and others to keep Thelma Askey off the International Trade Commission. Askey, like Krueger, is honest and has excellent free-trade credentials. Naturally, the steel guys opposed her. The Bushies found another job for Askey; she is now head of the U.S. Trade and Development Administration.

Is Krueger’s switch from the CEA to the IMF another sign that, once again, Bush has caved to the wrong sort of pressure?

Not necessarily.

“Absolutely not,” replied Assistant Treasury Secretary John Taylor, when I asked him if Bush had taken another dive. “Anne is a terrific economist, and there was no discussion about anything other than full support for Anne’s nomination to the CEA,” Taylor maintains. “The job at the IMF came up subsequently, and Anne was just viewed as a terrific candidate.”

Okay. Give Taylor — another well-regarded economist from Stanford who has a reputation for integrity — the benefit of the doubt. Could be that Rockefeller was mainly posturing. Krueger’s IMF job is a very big one, certainly no demotion.

Still, a well-placed source on Capitol Hill who asks me to swear Omerta concerning his (or her) identity, says he isn‘t sure what appetite George W.‘s political people had for fighting for Krueger‘s CEA confirmation. “I’m not saying that they wouldn’t have done it, but I detected a noticeable sigh of relief from the Bush people that they would not have to fight the steel guys for Anne Krueger.”

We will have to wait and see if George W. finds another economist with a backbone to go to the CEA.

The CEA’s Glenn Hubbard:
Don’t ask me about free trade

Speaking of the CEA and backbone, or lack thereof, take a look at L. Glenn Hubbard, who is Bush’s new chairman of the Council. There is something to be said for the virtue of keeping one’s head down in Washington, D.C. Still, it is somewhat disconcerting to report that former Columbia University economics professor Hubbard does not want to talk about his views on international economics, if that means saying he advocates free trade.

After all, to economists, free trade is not just a theory, but is an important cornerstone of America’s hopes for continued prosperity. Over at the Federal Reserve, Chairman Alan Greenspan clearly understands that it is dangerous to stand aside and let protectionists dominate the debate. Greenspan not only is one of the country’s most outspoken advocates of free trade, he isn’t afraid to explain this even to the know-nothings on the Hill.

Is Hubbard a Greenspan?

Curious, last month I sent Hubbard a letter, asking where he stood.

First, I asked about Anne Krueger‘s switch from the CEA to the IMF. My first question was, “Would you care to try to dissuade me from suspecting that the administration, once again, decided not to fight for a nominee that was opposed by our domestic steel lobby?” I asked if Hubbard agreed with Krueger’s views on economics — particularly on the costs of steel protectionism. I asked if Hubbard agreed with economists like Greenspan and University of Rochester economics professor Steven Landsburg, each of whom have argued publicly that the American economy benefits substantially from imports — including steel imports.

I also asked questions that students of economics at the undergraduate level are expected to be able to explain. “Do you support U.S. antidumping laws on economic grounds?” And, “In your view, is it economically sound to penalize international price discrimination, when domestic price discrimination is generally regarded by economists as praiseworthy?” I also asked if Hubbard would care to comment on what impact quotas and high tariffs on products ranging from clothing to sugar and peanuts had on the U.S. economy.

“Are you a free trader, or an advocate of free-and-fair trade?” I inquired.

A few days later, I got a call from Hubbard’s chief of staff, a very polite woman named Diana Furchtgott-Roth. “Thanks so much for contacting us on free trade,” she said. “But Dr. Hubbard is not available to answer the questions at the moment.” She suggested that I might find “some other subject” to interview Hubbard on.

That‘s not necessary. By his silence, L. Glenn Hubbard has already defined himself.

Grape Lobbying

Usually, foreigners who are accused of “dumping” by the mighty United States act as if they are intimidated Even though they resent the unfairness of dumping cases, often the foreigners keep as quiet as L. Glenn Hubbard.

Not Mexico and Chile. When a group of southern California table-grape growers hit them with a dumping case earlier this year, they fought back.

Collier, Shannon’s Mike Coursey represented the California petitioners. Jeffrey Winton and Thomas Wilner of Shearman & Sterling toiled in the legal vineyards for the Mexican industry. The Chileans turned to Akin, Gump, Strauss, Hauer & Feld’s Warren Connelly, Michael Kaye, and Steve Claeys. They also brought in Riva Levinson at the Black, Kelly lobby shop.

The Chileans and Mexicans proceeded to raise hell.

Mexico’s secretary of the economy, Luis Ernesto Derbez, released a statement in May saying that his government was “troubled” by how the Commerce Department was (mis)handling its part of the case. “The government of Mexico intends to closely monitor the developments in this case, and will take the appropriate steps to contest any antidumping measures imposed by the United States at the proper time,” he declared. That was a nice diplomatic shot across the bow.

Meanwhile, the Chileans drummed up a stream of letters to Commerce Secretary Don Evans and Stephen Koplan, the ITC’s chairman. The Maritime Exchange for the Delaware River and Bay, the trade association that promotes commerce in the Delaware River area, weighed in. Barthco International, Inc., of Philadelphia, let it be known that more that 250 of its employees in Delaware, New Jersey, and Pennsylvania depend upon the foreign grapes. The Food Marketing Institute, Del Monte Fresh Produce Co., Philadelphia Customs Brokers & Forwarders Association, Safeway, the Port of Corpus Christi, and a gaggle of congressmen also were brought in to argue for the American jobs that depend upon imports of Latin grapes.

My favorite was Sen. Arlen Specter (R-Pa.), who wrote to Don Evans “on behalf of the Philadelphia Regional Port Authority.” Specter pointed out that “the imposition of antidumping duties has the potential to impact thousands of jobs in the port of Philadelphia, including teamsters, longshoremen, cold storage operators and others involved in the receiving, storing, and shipping of fresh fruit, which rely on the importation of table grapes from Chile during the winter months.” Specter said the port handled 10 million boxes of grapes from Chile and Mexico between December and April each year.

On June 11, the International Trade Commission voted 5-1 (with Commissioner Dennis Devaney in the minority) that there was “not a reasonable indication” that a group of table-grape growers from southern California were being injured by imports from Chile and Mexico.

The point is not that the lobbying directly influenced the vote.

The point is in the free-trade education value of this for lawmakers. Specter is the co-chairman of the Senate Steel Caucus and one of the most ardent advocates of the antidumping laws in public life. The good senator has never — never! — been heard to complain that antidumping tariffs on imported steel cost U.S. port jobs, although they most certainly do.

Lawmakers like Specter tend to hear more from those seeking trade protection, who are well-organized and desperate. They respond. If more politicians heard from the free-trade side more often, their views would reflect free trade more often.

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