USA’s Trade Deficits and Warren Buffett’s Proposal
Warren Buffett’s proposal to significantly decrease U.S. trade deficits appeared within the November 2003 issue of Fortune Magazine. Senators Dorgan and Feingold submitted a trade proposal in 2006 that was based upon Buffett’s concept. Exporters would be issued transferable IMPORT Certificates for the assessed value of their goods leaving the U.S. Importers would be required to surrender IMPORT Certificates for the assessed value of their goods entering the U.S. Surrendered certificates are canceled.
The 2006 draft did not reach a senate floor vote. Many of us regret the draft was not self-funding. We prefer that goods leaving the U.S. be assessed and certificates issued only for exporters that choose to pay fees covering all government expenses due to this trade act. The open market value of transferable import certificates would sufficiently motivate exporters. (Refer to www.govtrack.us/congress/billtext.xpd?bill=s109-3899).
We also regret that assessments would not be adjusted to exclude the value of specifically listed scarce or precious minerals integral to the goods being assessed. We should discourage the export of cast gold paper weights encrusted with gems in order to facilitate importing high-tech or labor intensive goods. [This should be a deal buster. The absence of such an exclusion would undermine, (if not completely evade) the act’s purpose]. The 2006 draft did completely exclude assessment of gas and petroleum products within the five years duration after the act’s initial enactment.
This trade policy grants government no discretion of policy. Other than the exclusion of specifically listed minerals integral to the goods being assessed, this proposal does not choose winners or losers. It favors no foreign nation or industry or classification of goods. Unlike tariffs this trade proposal is self regulating and due to the motivation of exporters, it’s an indirect and effective export subsidy.
It should be noted that our trade agreements provide for a six month notification of resignation. They are not foreign treaties approved by a 2/3 senate vote and our resignation requires no constitutional amendment.