Free Trade Update

The Buy American movement is alive and well. In Granite City, Illinois a shipment of Indian made steel pipe has galvanized the city.

It seems there is a pipeline being built to carry oil from tar sands to Oklahoma from Canada. That pipeline runs through Granite City and some of the pipe that’s been shipped in to build it comes from Canada. A retired steelworker noticed the pipe as he was waiting for a freight train to pass. He took this information to the local union and from there, well you know how these things escalate.

The steelworkers union is using the Indian pipe as a rallying and lobbying point as it pushes for anti-dumping actions and urges Congress to tighten import restrictions. Naturally, they aver that they are not anti-trade, just for “fair trade”, an ill-defined term which I take to mean that if some other country has a comparative advantage the exploitation of that advantage is unfair.

The bizarre thing about the whole episode is that U.S. manufactured pipe is also being used to build the pipeline. When the contracts were let American mills did not have the capacity to provide all of the pipe. They wound up with 30% of the contract. By the way, the steelworkers union doesn’t dispute this fact.

There is a new companion pipeline coming and you can imagine the pressure that’s building to make sure it uses only American steel. The union has joined forces with the Sierra Club to block construction until upgrades are made for prevent ruptures. Naturally, they claim that U.S. manufactured pipe will be much safer. 

I suspect that morality plays similar to Granite City’s are going on all over the globe. The damage to free trade from this recession may be immense. 

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