The U.S. Should Reject a Ruinous New Tax on America's Free Press Tradition

The U.S. Should Reject a Ruinous New Tax on America's Free Press Tradition
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The United States may  impose tariffs on Canadian imports on what is commonly called newsprint. Remember, tariffs are sales taxes, pure and simple. The only thing worse than overt protectionism is protectionism that threatens the exercise of Americans’ First Amendment freedoms.

The U.S. International Trade Commission (ITC) is undertaking an investigation of claims by a paper manufacturer in Washington State that Canada is unfairly subsidizing its paper producers. The company, the North West Paper Company, or NORPAC, alleges Canada’s subsidy programs create an unequal playing field that presents a threat to the company and its employees.  The ITC should conclude that, whatever competitive challenge Canadian newsprint exerts on NORPAC, tariffs will inflict far greater harm on U.S. publishers, printers, and the many companies that supply materials, parts and services to them. As many as 650,000 jobs could be in jeopardy if NORPAC is successful in getting import tariffs as high as 50 percent imposed.

Few issues in the Trump presidency have prompted more debate and controversy than trade policy.   If nothing else, Trump is forcing all stakeholders to revisit assumptions about trade and exposing some areas of common ground.  For example, we should all welcome the President’s tougher stance against China’s disregard for U.S. intellectual property rights and its market access restrictions that hurt U.S. companies.  But there is a difference between updating agreements such as NAFTA and upending a coherent U.S trade strategy by lurching into  piecemeal imposition of tariffs to benefit individual companies.

NORPAC’s petition is an example of protectionist cronyism.  Among U.S. paper producers, the company is conspicuously alone in its petition for protective tariffs. The trade association that represents paper mills, the American Forest and Paper Association, opposes the tariffs. So do scores of newspaper and book publishers as well as printers around the country. They are rightly concerned that if the paper they use becomes more expensive, they will print less.  That would be unwelcome news for ink suppliers, small manufacturers, plus the retailers who use inserts and flyers to advertise and promote sales.

Higher taxes don’t create prosperity.

However compelling the economic rationale against the tariffs, their threat to the full exercise and meaning of the First Amendment is perhaps more urgent and troubling. The shift to online advertising in the last 20 years has shattered the business model of newspapers. Some have been able to reinvent themselves as online entities and developed new ways to bring in revenues. Still, in the last 15 years, some 2,000 newspapers, many of them small, regional dailies have been forced to consolidate or close. If they survive in an online format, they often offer fewer well-reported stories of interest to local readers.

In such an environment, a sharp hike in newsprint, generally the biggest budget item after labor, could force dozens of additional publications to close or survive as mere shadows of their former selves.  The killing of local newspapers by the imposition of tariffs guts a free press.  It is the local newspaper, not cable news networks, which scrutinize how tax dollars are spent on schools, public works, and administration at town hall. Local newspapers are indispensable in uncovering corruption in government. They expose hospitals that mistreat patients and companies that dump chemicals into local streams. For many people of modest means or for those in rural areas, the newspaper is the chief source of community news and information.

The Founding Fathers valued a free press. They understood it was essential in a democracy. If citizens could not read about issues, consider various points of view, and evaluate the performance of public servants, then American democracy could not succeed. Amid today’s abundance of sources for information, the local newspaper has not become obsolete. Rather, it is playing a crucial by providing unique and essential information to millions of Americans.

In a free market, all businesses must adapt to survive. Newspapers are no different. While the government has no responsibility to safeguard newspapers from market forces, it should not hasten their demise by shielding a single company from market forces. But what NORPAC wants is no more than sleazy cronyism - Washington politicians playing favorites by helping the few at the expense of the many. The newsprint tariffs NORPAC wants are simply a new tax on struggling businesses and an unjustified new burden on a cherished institution, the American newspaper.

 Steve Forbes is Chairman and Editor-in-chief of Forbes Media.

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