Tuesday, December 15, 2009

Seeing Hypocrisy

Often, I disagree with a position adopted by U.S. Customs and Border Protection. That is the nature of my job. Sometimes I am right, sometimes, I am wrong, and often reasonable minds may differ. What I don't do is see everything that CBP does through the lens of Washington policy makers. That is primarily a result of years of experience dealing with the agency and also my Midwestern practicality. Rarely do I see any coordinated conspiracies.

For example, there was a lot of hubbub a while back about a CBP proposal that would have effectively banned the importation of a category of pocket knives that have spring assisted opening mechanisms but have not heretofore been classified as illegal switchblades. Some people believed this to be a stealth effort by the Obama administration to slowly limit personal rights which would ultimately result in the repeal of the Second Amendment and the loss of gun rights for all Americans.

I seriously doubt that. In fact, I am willing to bet that no one outside of Customs or possible the Department of Homeland Security knew anything about that proposal before it showed up in the Federal Register. I just don't believe that anyone in the White House is paying close attention to the details CBP admissibility decisions. There is a war going on, health care to sort out, and an economy in shambles. Pocket knives seems pretty far down the Oval Office agenda.

The same goes for the current controversy over the tariff classification of solar panels equipped with electrical diodes are classifiable as generators. Apparently, similar panels have long been classified as photovoltaic cells, which are duty-free. However, earlier this year, Customs noted that solar panels with diodes are excluded from that classification when they incorporate elements to control the flow of electricity. Consequently, it ruled that such solar panels are properly classified as electrical generators and subject to a 2.5% rate of duty.

This caused the people who have been exporting solar panels to the United States and those who purchase them to cry foul. Yesterday, Scott Lincicome, a trade lawyer in Washington wrote on his blog that the classification decision is inconsistent with the Administration's efforts to support green business and encourage trade in environmentally friendly products. In a post accusing the White House of hypocrisy, he asks "Is the Obama Administration publicly pushing for free trade in "environmental goods," while quietly raising tariffs on a key "green" product to protect domestic businesses from losing market share?" He answers the question by saying that it looks that way.

I have no beef with this thesis if the "Obama Administration" is taken in its literal sense of everyone who works for the executive branch. On the other hand, I think it is extremely unlikely that anyone from "the Administration" applied any political pressure that made its way to the National Import Specialists in New York who issue routine classification decisions. If a policy decision were made to protect or encourage the U.S. production of solar panels, wouldn't the easier process be to pass a tax incentive or some other more direct incentive? More likely, this is a case of one hand not watching the other hand and probably purposefully so.

Maybe I am wrong. I just don't buy that there is actual affirmative hypocrisy at work. Rather, I think the folks at CBP are trying to do their jobs properly applying the tariff schedule without regard to larger policy questions. If that bumps up against some larger economic or environmental policy, Congress or the "Administration" will have to fix it. And that is exactly what happened with the knife issue. Congress amended to law to prevent CBP from making the change. End of controversy. If anyone feels this is a big enough issue to push, it should try and get duty suspension or some other legislative relief. Otherwise, CBP is going to move ahead, doing its job.

1 comment:

Anonymous said...

Good comparison to the knife classification issue. The solar panel reclassification probably had nothing to do with any green/protectionist "hypocrisy" and more to do with longer term trade negotiating tensions, including the EU reclassifying newly developed IT articles into different HTS headings with higher rates, and the long term loss of any US multilateral tariff negotiating leverage vis a vis BRIC countries. Thus, CBP looks more closely at classification of technological advances under a static HTS nomenclature. A vocal US assembler is just added cover for the approach CBP is already following. Another interesting point is that the critical blogger is a former McCain advisor and Cato Institute analyst, more likely to find conspiracy in such Democratic inconsistencies than, say, a thirty-year customs lawyer who has been trying to get White Houses since Jimmy Carter to pay attention to anything that goes on at Customs other than drug interdiction.
I think I'll stay anonymous on this one!