Bipartisan failure on infant formula shortage

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“But starship captains do or die, and they promote me if I fail”

What inspired me to write this couplet in Starfleet Program Manager? Things like what we saw in Congress last week.

In response to the government-mandated baby formula shortage, Democrats and Republicans have come together to completely ignore the causes while retreating to their separate safe political spaces. Meanwhile, the very agency that was unable to fix the problem could still be rewarded with more taxpayer money.

The causes of the current infant formula shortage are few and uncomplicated. It starts, as Scott Lincicome notes, with heavy restrictions on imports.

… US policy has exacerbated the national infant formula problem by reducing potential supply. First of all, as my colleague from Cato, Gabby Beaumont-Smith, has just documented, the United States maintains high tariff barriers to imports of infant formula from other countries, all within the framework of subsidies and our government’s longstanding protection of the politically powerful American dairy industry. Infant formula imports from most countries, such as the European Union, are subject to a complex system of “tariff quotas”, under which the already high tariffs (usually 17.5%, but it depends on the product ) increase Even further once a certain quantity threshold is reached.

We even restrict infant formula imports from most “free trade” agreement partners (scary quotes!), including major dairy producing countries like Canada. In fact, a key provision of the renegotiated NAFTA—the United States-Mexico-Canada Agreement (USMCA)—actually tightened infant formula restrictions in Canada…

If tariffs were the only issue here, then high prices in the United States right now could induce alternative supplies from overseas producers looking for new customers and new profits. Unfortunately, the United States also imposes significant “non-tariff barriers” on all infant formula imports. Most notable are the strict FDA labeling and nutritional standards that any formula producer wishing to sell here must meet.

Labeling standards are so restrictive that even preparations from the European Union, which actually meet nutritional requirements, cannot enter.

As usual in a market where imports are blocked, American consumers have become dependent on a few oligopolistic infant formula producers. American families have suffered the consequences de facto taxes largely silently, but when one of the oligopolists had to shut down (in part because the FDA didn’t react quickly enough to a whistleblower report), well, things got real. So, in typical Washington fashion, the FDA should get another $28 million, even after being unable to figure out what was wrong.

This is a typical Democrat reaction. The party has a habit of throwing money at the problem and hoping it will go away. On the other side, however, the GOP would normally be happy to take aim at the protectionism that caused this. That, however, would mean running into Donald Trump, who has grafted his protectionism onto the party and made matters worse with the USMCA.

The solution – relaxing non-tariff barriers and lowering tariffs – remains there. Unfortunately, this seems to be too far off the beaten path for my previous evening and my current evening.

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