US President George W. Bush's administration looks set to go down in history for the most disgraceful trade record since the Great Depression. There is something bitterly ironic about the fact that while "anti-globalization" protestors take to the streets to denounce his government, Bush's own trade policies seem to conform to an anti-globalization agenda almost indistinguishable from the one his hooligan opponents are demanding.

Rather than learning from the fiasco of its steel tariffs, now shown to have cost the domestic US economy more jobs among steel users than it saved (temporarily) among producers, Bush's trade team has immediately turned its protectionist blunderbuss on the Chinese textile industry. This is only the latest sign that with protectionist attitudes gaining strength across the US political spectrum and unprincipled populism taking the driving seat, the period up to the US presidential election in November 2004 looks set to be a free-trader's nightmare.

Under pressure from special interests in the US textile industry, which (like the steel industry) is utterly marginal to the overall economy, import quotas were imposed on Chinese lingerie. The absurdity of this measure defies imagination. Economists have long understood that import quotas are the most irrational type of trade barrier available (among a range of irrational alternatives), since they serve merely to generate artificial monopoly profits for both domestic and overseas producers, without even the partial compensation of tariff revenue.

Like all protectionist measures, they raise prices that act as a regressive tax on consumers, delay necessary industrial restructuring, boost inflation (thus threatening the low interest rates that support economic growth), disrupt international capital flows and invite retaliation. Protection can be reliably expected to cost jobs, even within the "protected" economy itself, with the jobs saved being typically lower paying and lower skilled than the jobs sacrificed.

To add the final surreal twist, the Chinese brassieres subject to these quotas face no domestic US competition at all - US bras, without exception, are imported.

The one encouraging aspect of this hideous picture is that informed US opinion is totally aligned with the outraged response from overseas. In an important speech on November 20, the chairman of the US Federal Reserve, Alan Greenspan, re-emphasized the importance of free trade to both US and world economies, warning about the serious danger posed by trade barriers, and arguing forcefully that: "It is imperative that creeping protectionism be thwarted and reversed."

In the conservative US journal, The National Review, influential supply-sider Bruce Bartlett (of The Wall Street Journal) writes:

"[The measure's] principal impact will be to further enrich a few wealthy Republican businessmen by protecting them from competition, while further impoverishing the poorest members of our society by making them pay more for clothing. This action is utterly unjustified, and disgraceful."

Bartlett's fellow economic commentator, Larry Kudlow, remarks in the same journal: "The Bush administration's protectionist stance on trade is wacky. The steel tariffs were stupid, although they'll hopefully be repealed in the next few weeks. New import quotas on Chinese lingerie are more than stupid - they're an embarrassment."

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