Leggett & Platt, an American innerspring manufacturer, has been busy lobbying the Department of Commerce.  The fruit of their labor: a tariff of anywhere from 164.75% to 234.51% on innersprings from China, their biggest competition.

This tariff means that you can expect to pay double for your next mattress.  Because innersprings are the most expensive part of traditional mattresses and the tariff has effectively removed affordable, low-priced mattresses from the market.

This is the result of a petition to the International Trade Commission filed in December of 2007 by Leggett & Platt—a Fortune 500 company based in Carthage, Missouri.  The petition started an investigation into alleged “dumping” by several Chinese spring makers.

For those not familiar with the doublespeak of trade policy, “dumping” refers to the act of shipping large amounts of a product into a foreign market at well below current market prices.  This seems like a good thing for mattress makers as well as consumers who buy mattresses.  Others disagree, namely Leggett & Platt.

The folks at Leggett & Platt argue that laws like these are necessary to protect American manufacturers (namely themselves)  from unfair competition from abroad.  But, rather than protecting American businesses, this policy is killing them.

Small mattress makers—think obnoxious ads on your local televisions stations—add padding, memory foams, lovely flower print coverings and other components to innersprings to make a finished mattress.  These small to medium sized businesses are paying a steep price for Leggett’s “protection.”

Leggett was already responsible for 70 to 80 percent of the domestic innersprings market.  Without foreign competition, they now have a virtual monopoly on the market.  In short, mattress makers are now forced to buy from Leggett at any price they set.

This means many mattress makers have discontinued discount mattress lines.   Almost all have had to raise their prices in order to pay for Leggett’s high-priced product.

Many small mattress makers relied on foreign sources of innersprings in order to compete with their larger competitors. This new tariff means that’s no longer an option, so  many small mattress makers maybe forced to close their doors.

Those with a dark sense of humor may chuckle at the regulatory underpinnings of this tariff.  The DOC has the authority to investigate dumping and enact such anti-dumping tariffs under Title VII of the Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff Act.  Under Smoot-Hawley, exports and imports plunged by over 50 percent, from their high in 1929 to the depressed levels of 1932.  Most economists agree that this policy was one of the major catalysts that led to the start of the Great Depression.

Smoot-Hawley has, thankfully, been reformed several times in the decades since those dark days.  But, thanks to companies like Leggett & Platt, who manipulate trade policy to avoid competition, Smott-Hawley is being put back together piece by piece.

But don’t lose any sleep over it; after all, you paid so much for that mattress.

Full disclosure: The author worked for Leggett & Platt as a shipping clerk for a summer in college .  It was a great job.

Selecting former Dallas mayor Ron Kirk as the nominee for U.S. Trade Representative sends a signal that perhaps President-elect Obama will temper his anti-trade stance in the face of real-world economics. Kirk, a two-term elected mayor of Dallas, doesn’t have much trade experience, but he is a native of the U.S.’s largest exporting state, with Mexico and Canada – those nasty NAFTA partners – as Texas’ major export destinations.

The nominee for one of Obama’s Cabinet positions holds a law degree from University of Texas School of Law and early on in his career worked for Senator Lloyd Bentsen both in his Senate office and when Bentsen was appointed Treasury Secretary by President Clinton.

Kirk served as Texas’ Secretary of State for one year, before running for mayor of Dallas and winning the election. He was reelected by a large majority in 1999, but left after two years to run unsuccessfully for Sen. Phil Gramm’s vacated Senate seat. He is now a partner in the law firm Vinson and Elkins.

What might provide perspective to Kirk’s trade stance is that he comes from a state that has been a powerhouse in exports. State figures show that exports totaled $168.16 billion in 2007. According to a Dallas Fed report,

Compared with the nation, Texas exports a larger share of its output, depends on exports for more of its jobs, sends more sophisticated products overseas and employs higher-skilled workers in export-related jobs. The state has been instrumental in the surge of overall U.S. trade; its port activity has grown more than twice as fast as the nation’s in the past decade.

Although Texas is an export leader, the report noted that state should be more diversified in both its export markets and the goods and services it provides to foreign markets.

The Texas job situation is also buoyed by its exports. Government figures show that 5.5 percent of all non-government jobs in the state are export-related, and 20 percent of Texas’ manufacturing jobs depend on exports, compared to 17 percent for the nation.

With these and other data demonstrating the economic and employment benefits of trade, one would hope that the in-coming U.S. Trade Representative won’t be too anxious to embrace protectionist policies that might stifle more open trade and economic growth.

Four former presidents of Latin American countries and the former president of Spain joined in an ardent plea for the U.S. to strengthen its ties with those countries that share the values of freedom, democracy, and economic progress. In their editorial today in the Wall Street Journal, José Maria Aznar (Spain), Vicente Fox (Mexico), Andrés Pastrana (Colombia), Julio Maria Sanguinetti (Uruguay), and Franciso Flores (El Salvador) also pointed out that “Free trade is one way to help prevent the resurgence of autocracy in the region.”

Poverty is a painful reality in many countries. Millions of people do not have access to health care or education. This is unacceptable. We strongly believe that the benefits of globalization should be available to everybody. We have found in our own countries that strengthening democratic institutions, providing good governance, and opening up our borders to trade is the best way to improve social conditions and economic welfare.

Latin America has much to gain from free trade. Successfully negotiating free-trade agreements will help bring progress and prosperity to Latin American countries, as well as around the globe.

The former leaders called on President-elect Obama to support their efforts in realizing a common dream based on democratic values and principles. That plea is especially apt when these few Latin American countries are surrounded by or adjacent to leftist governments increasingly hostile to the U.S.

As President-elect Obama fills his Cabinet and top-advisor positions, he has not yet named a U.S. Trade Representative, but, as CEI noted, he purportedly has offered the job to Rep. Xavier Becerra (D-CA). Becerra had joined the chorus to redo the North America Free Trade Agreement, even though he did vote for the trade pact in 1993.

To revisit NAFTA and try to include protectionist measures would be a huge mistake. What many NAFTA critics may not realize is that the trade agreement benefits all three countries – the U.S., Canada, and Mexico – and the U.S. has some sweet deals from NAFTA.

Take a look at just one benefit the U.S. would stand to lose if NAFTA were rewritten. It’s likely that the Canadians would try to renegotiate the extremely preferential treatment the U.S. receives in energy imports from Canada. (Canada by far is the U.S.’s largest provider of crude oil and petroleum imports. Mexico has usually been the second.)

Under NAFTA, the U.S. is guaranteed a regular supply of oil and gas from its Northern neighbor at preferential prices except in very limited circumstances.

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Today’s Washington Post and Los Angeles Times both endorse passage of the U.S- Colombia free trade agreement, which many Democratic politicians, pressured by organized labor, have refused to endorse. House Speaker Nancy Pelosi has ducked the issue by refusing to bring it to a vote. President-elect Obama got considerable help in his campaign from labor unions that oppose the deal, but no political debt is worth undertaking such a disastrous course as scuttling this trade deal.

Not only is Colombia the United States’ strongest ally in South America — a fact that would make scuppering the deal a slap in the face for Colombia and a political victory for the increasingly unhinged Hugo Chavez — but the last thing America needs in a time of economic turmoil is a Hawley-Smoot lite in the form of failed trade liberalization.

For all the bailouts and stimulus packages being batted around Washington, what the American economy really needs is greater opportunity to innovate and invest — in other words, less burdensome regulation and more open markets. As the Times‘ editorial argues:

The pact would balance and normalize a trade relationship that is now one-way. Colombia has almost unfettered access to U.S. markets — 91% of its goods enter duty free — but U.S. products face tariffs of up to 35%. Each Caterpillar truck sold in Colombia, for example, is taxed more than $200,000. This is a hindrance to prosperity for both countries. Currently, about 9,000 U.S. businesses export to Colombia, and were this deal passed, that number would skyrocket.

And, as the Post’s editorial says:

The main economic effect of the trade agreement would be to enable U.S. producers — automakers included — to export to Colombia tariff-free. This would simply level the playing field, because 90 percent of Colombian goods already arrive in the United States tariff-free under temporary trade preferences that Congress recently renewed. With U.S. goods exports to Colombia totaling over $8 billion per year, the pact offers a nifty dose of stimulus for U.S. businesses and workers.

Stimulus, indeed! As CEI’s Wayne Crews argues, to stimulate, deregulate. The same is true of liberalizing trade.

For more on the U.S.-Colombia trade deal, see here and here.