Journal of Commerce

November 2, 1994, Wednesday


LENGTH: 917 words



The Clinton administration is threatening to impose restrictive quotas on
imports of wool coats from Ukraine. This action - championed by Sen. George
Mitchell and a handful of uncompetitive Maine factories - would set a new low
for U.S. protectionism and would make a mockery of all of Bill Clinton's
promises to help Ukraine.

Ukrainian factories that formerly made coats for the Red Army have, as a
result of defense conversion, begun making coats for American consumers.
Journal of Commerce November 2, 1994, Wednesday

Ukrainian coats are proving to be a blessing for moderate-income Americans.
Prior to the arrival of the imports, good wool coats routinely cost more than $
200. Now, wool coats are available for under $ 100. Matthew Burns, chief
executive of the Eastland Woolen Mills of Corinna, Maine, observed that
Ukrainian coats are "an excellent garment. It's well tailored. It's well-
anufactured. It's stylish."

Naturally, some U.S. government officials are horrified at the appearance of
foreign bargains in American department stores. At an Oct. 12 meeting in
Washington, U.S. federal officials pressured Ukrainian government
representatives to agree to restrictions on the number of wool coats they could
sell to the American people. Thus far, the Ukrainian government has staunchly
refused to bow to U.S. demands. U.S. officials have informed the Ukrainians that
the U.S. government could unilaterally impose import quotas on them if they do
not voluntarily accept restrictions.

Many experts fear that the economic chaos in Ukraine could result in a
nuclear civil war. Clothing is one of the few exports in which Ukraine is
competitive on world markets. Yet, officials in the U.S. Commerce Department
seem obsessed with finding a way to throttle the Ukrainians.
Journal of Commerce November 2, 1994, Wednesday

The Ukrainian coat producers already face an extremely tilted playing field
here. The U.S. government imposes a 21.5 percent tariff on wool coat imports,
thereby giving the U.S. industry a huge competitive advantage over foreign
competition. Yet, because the Ukrainians have low labor costs, they can still
compete and win the votes of U.S. consumers.

President Clinton has loudly promised to help Ukraine. Ukraine is the fourth
largest recipient of U.S. foreign aid, scheduled to receive more than $ 150
million this year. President Leonid Kuchma, elected last July, is finally trying
to end the country's addiction to communist economic policies.

It would be tragic if at this vital time the U.S. government sent Ukraine a
message that made a mockery of America's advocacy of free market economics. If
the United States does impose import quotas, the Ukrainian government will be
forced to exercise much more control over its clothing production, dictating
which factories are permitted to export how many coats to the United States.
This would be like a partial revival of Soviet central planning - the last idea
the United States should be championing.

It is surprising that U.S. government officials are even considering slapping
quotas on Ukraine. In the first six months of this year, Ukraine exported only $
18 million worth of clothing to the United States. This is barely one-tenth of
Journal of Commerce November 2, 1994, Wednesday

1 percent of the value of all the clothing the United States imported during
that period.

If quotas are placed on Ukrainian imports, a new crusade likely will be
launched immediately to demand imposing import quotas on Russian wool coats. The
wool clothing industry will never be satisfied unless the U.S. government
hogties all of its foreign competition.

On the other hand, if the Clinton administration abstains from imposing
quotas, Ukraine could become a magnet for foreign investment for clothing
factories. And this could make the difference in helping the Ukrainian economy
rise off its death bed.

This looks like one more case of the U.S. textile industry being the tail
that wags the dog of U.S. foreign policy. On Oct. 21, the Committee for the
Implementation of Textile Agreements (dominated by the U.S. Commerce Department)
imposed quotas on the imports of bathrobes and other clothing from Haiti. At the
same time, the United States is spending hundreds of millions of dollars and
risking the lives of 20,000 troops to rebuild Haiti. Yet, the only thing U.S.
textile policy-makers appeared concerned about was erecting new blockades to
bathrobes from the hemisphere's poorest nation.
Journal of Commerce November 2, 1994, Wednesday

Even without imposing new trade restrictions, textiles are already one of
this country's most protected industries. William Cline of the Institute for
International Economics estimated that textile tariffs and import quotas cost
American consumers as much as $ 40 billion a year. The 1989 Economic Report of
the President concluded that tariffs and quota restrictions produce an average
effective tariff charge of more than 50 percent for clothing imports.

One U.S. textile company executive denounced the Ukrainian imports as "a new
Cold War." But there is nothing in the U.S. Constitution that says American
consumers must be bound in eternal servitude to the interests of the U.S.
textile industry. The wool clothing industry in this nation has been starkly
uncompetitive since the 1820s and does not deserve another few hundred years of

Perhaps it is finally time to require that U.S. textile trade policy-makers
be tested for dementia. The Clinton administration should begin practicing the
same free trade policies that it recommends to other nations. We should allow
the Ukrainians a decent chance to earn an honest buck.

Jim Bovard is the author of ""Lost Rights: The Destruction of American
Journal of Commerce November 2, 1994, Wednesday