Free Trade for a Free World

...Unfortunately, the President's specific recommendations for implementing his proposed policy followed closely the very moderate suggestions of the Randall group...

...per capita incomes are much lower, the natural-resource base is much narrower, and, in many instances, the share of foreign trade in national income is higher...

...The choice facing us here is clear...

...In addition, it is a characteristic of our economy that variations in national income result in magnified changes in imports...

...Payment to the United States must ultimately take the form of goods and services imported by us...

...These are the "peril-point" and "escape clause" sections of our trade statutes...

...We should encourage rather than discourage the development abroad of those resource endowments, labor skills, technologies, etc...

...Are we, therefore, being honest with ourselves, and with our friends abroad, when we urge them to limit their trade with Iron Curtain countries to non-strategic goods and, at the same time, restrict their opportunities for trading with us...

...If our object is to secure the highest standard of living of which we are capable, that interest is best served by minimizing trade restrictions and making it possible for foreign producers to compete on an equal basis with United States firms...

...Even though our imports are a very small percentage of our own national product, they are huge in absolute terms...

...Among the principal proposals are renewal of the Reciprocal Trade Agreements Act, modification of the protectionist Buy American Act, simplification of our complex customs procedure, some reduction of tariffs, and tax concessions on earnings from foreign investments...

...Their economic well-being and, to a large extent, their political stability are contingent upon their having access to foreign foodstuffs and other supplies, and to foreign markets...

...As a statement of philosophy, the spirit of the President's message greatly surpassed that contained in the report of the Randall Commission, which was appointed last year by the President to survey and suggest solutions to the problems of foreign economic policy...

...Moreover, the indirect repercussions on other industries, such as those selling to the export industry directly or to consumers who derive their incomes from export activity, may be considerable...

...But there is an alternative here, one which has been proposed before...

...As a result, "foreign exporters who shoulder the considerable initial expense needed to establish themselves in American markets will therefore still be advancing across a perpetual trapdoor...

...The plea for trade restrictions is based in the main on the needs of those domestic industries which are in competition with imported commodities...

...Combined with a policy of gradual removal of trade barriers, the process of human and economic readjustment can be accomplished with a minimum of dislocation...

...In the world trading network today, the United States occupies a very special position...

...It is not surprising that the current moderate economic decline in the United States has caused the greatest alarm in countries with which we trade...

...He stressed or implied many of the arguments for a liberalized trade and investment policy discussed above, and thereby went far beyond the restrictionist trade policy traditionally associated with the Republican party...

...The contribution of extra-territorial trade to our own economic well-being must not be underestimated, but it is not nearly so weighty in our economy as it is abroad...

...It is argued by some that we must protect the producers of certain raw materials, foodstuffs and manufactured commodities in order to keep "in reserve," as it were, a "cadre" of skilled workers and producing firms whose products and skills would be essential to our national defense in the event of a war which deprived us of foreign supply sources...

...This explains why one of the greatest contributions which we can make to the stability and growth of economies abroad is to maintain a prosperous economy here in the United States...

...Are we being consistent when we implore our allies to raise their productivity and exports (and supply them with the technical know-how to do so) while, at the same time, we prevent those exports from crossing our borders...

...It has been estimated that at least 4 million workers (and thus over 10 million Americans) derive their livelihood from international trade...

...The effects upon income and employment in those United States industries which are greatly dependent on exports can be substantial...

...But we have more than security to gain from expanded trade...

...While the message affirms the principle of assisting underdeveloped areas and a continuation of the present very modest United States development-aid program, it contemplates no dramatic expansion of the program...

...While minimal in terms of our policy needs, the proposals would, if adopted, go some distance toward enlarging trade and raising living standards both here and abroad...

...two-fifths of our cotton and rice, one-fourth of our soybeans and tobacco, and a large part of our machinery manufactures...

...Declines in their exports to us cause reductions in income and employment...

...The countries with which we trade suffer in many ways from declines in that trade...

...It is misleading to judge the importance of our foreign trade solely from the fact that our merchandise trade represents no more than 4 or 5 per cent of our national income...

...in the case of those nations which are trying to make a military contribution to the free-world defenses, it means a decreased capacity to do so...

...Foreign trade enables nations to enjoy the productive advantages which are peculiar to their special skills and capacities...

...Trying to duplicate production which others do more efficiently seems a senseless waste of effort...

...Further, reduced imports by us mean a smaller supply of dollars abroad and hence a decreased ability to obtain essential commodities from us...

...Since a reduction of United States grants is proposed, the need for expanded trade and investment acquires particular urgency...

...In defense of the groups seeking protection, it has been argued that it is unfair for a relatively small group of producers to shoulder the "burden" of liberalized trade...

...When we expand our imports and exports, we increase our own productive efficiency and raise our standard of living...

...A large part of some very important United Stales products is exported, e.g., one-third of our wheal...

...There are indications that he plans to press hard for the adoption of his recommendations...

...On our part, this requires that we encourage and promote an expansion in trade and in the movement of United States capital abroad...

...must liberalize old trade policies if it wants to strengthen its neighbors abroad One does not have to be a partisan of the Eisenhower Administration to agree with the President's recent dictum on foreign trade: "If we fail in our trade policy, we may fail in all...

...Inevitably, changes in economic activity here have a heavy impact abroad...

...In particular, United States financial assistance in the economic field is to be confined to loans (rather than grants), the criteria for which are that they be "economically sound within the capacity of the prospective borrower to repay and within the prudent loaning capacity of the [Export-Import] Bank...

...This cautious doctrine may help to allay the apprehensions of many Congressmen, but it is a far cry from a bold or far-reaching plan to ameliorate economic distress in an enormous part of the still-free world...

...and unemployment compensation are some of the possibilities here...

...It is the free world's largest market, its largest supplier—in the aggregate as well as for a host of individual commodities—and its largest source of funds for foreign investment...

...In its declaration of principle, the message which President Eisenhower sent to Congress in March is certainly in accord with our economic policy requirements...

...Of this we may be certain: A total curtailment of our foreign commerce would reduce United States output by considerably more than 5 per cent...

...On the other hand, if our national preference is to protect domestic industries from foreign goods more cheaply produced, trade restriction would seem to be in order...

...Such a policy can contribute to raising our own standard of living, expanding our markets and sources of supply (particularly urgent is the need to begin expanding our sources of industrial raw materials), developing underdeveloped areas abroad, and supporting the preservation of democratic ideals abroad through the strengthening of foreign economies...

...He will have to do so if he is to win his way against determined opposition in an election year, which is not the best time for selling law-makers on constructive trade liberalization, an issue which arouses more passion than understanding in most of our electorate...

...These are some of the major issues which face us in the field of foreign economic policy...

...Direct aid, such as subsidies, in the really strategy-sensitive cases is a more efficient way of achieving the goal in question than protection, which conceals the problem, confuses the issue, and accomplishes the same objective as direct aid but with more destructive effects on us and the world economy...

...On the grounds of both our chosen foreign policy and our domestic economic interests, our requirements in the foreign economic field can best be served by increasing the international flow of goods...

...The goods which our allies need and cannot pay for we must therefore lend them or give them (and then tax ourselves in order to pay for the grants), in part because we make it difficult or impossible for them to acquire the means of payment...

...then, of the argument for trade restriction on the part of the United States today—except, perhaps, for the case of those industries which fall into the "strategic" category...

...So long as foreign goods are priced to reflect foreign production costs, such freedom to compete is necessary and desirable for the achievement of the maximum national-income goal...

...Quite apart from the many specialized goods which we choose to import, there is a multitude of foodstuffs and raw materials essential to our industries which we either cannot produce at home or can secure only at higher cost (or in the form of inferior domestic substitutes...

...Among the factors which have given rise to the dollar shortage are the substantial changes in the structure of world trade which have taken place in recent years, the continuing world crisis which has imposed heavy military requirements upon the economies of the free nations, and the import requirements of underdeveloped countries which have been striving to raise their standards of living...

...If these words have an ominous overtone, there is no denying that there is a great deal of practical substance in them...

...Many of us in this country fail to realize that nations abroad are much more dependent on foreign trade than we are...

...Workers in these industries can be given liberal Federal assistance in order to facilitate their absorption into other industries: Job training, transportation and other relocation aid...

...In order to achieve the greatest possible increase in our national product and standard of living, we must produce commodities at which we are relatively more efficient and import those in which others enjoy a comparative productivity advantage...

...in which those countries specialize...

...It failed also to recognize many requirements of our own domestic economy...

...Whatever this country can do to enlarge the levels of the free world's trade is urgently desirable and clearly essential to our own security...

...On the matter of trade liberalization, the President lost still another opportunity by ignoring the changes required in two provisions of present trade legislation which hamstring foreign industries' efforts to expand their exports...

...tariffs, quotas, inconvertibility of currencies, and other obstacles to world trade—are facets of the "dollar shortage...

...Despite its considerable shortcomings, however, the President's program would, if passed in its entirety, constitute some progress...

...Increased United States trade restrictions hurt not only our trading partners, but ourselves as well...

...Little is left...

...A decline in our imports will, if not compensated by lending, result in a decline in our exports...

...We may take wry satisfaction in the fact that we are now the world's great creditor nation, but if our friends abroad are ever to go out of hock, there is but one way for them to get rid of the incubus of debt...

...Simply stated, this means that foreign nations are unable to sell to the United States as much as they want to buy from us...

...Many of the difficulties confronting the free-world economy today...

...Suppose that we abandon protectionism and that certain of our industries suffer as a result...

...The decision which we face here is whether to protect particular economic groups at the expense of a national interest...

...The Commission report, in striving to appease protectionists, failed to produce a ringing, far-sighted declaration of United States principles in line with our position of world leadership and the responsibilities and opportunities which that position has placed before us...

...In most foreign countries, Harold Pilvin, a Washington, D. C. economist, has long been a specialist on international trade problems...

...Maximum efficiency in the utilization of our resources and the rest of the world's resources is obtained by permitting an unimpeded flow of trade...

...But here, as in the previous case, trade restrictions represent a self-defeating, costly technique for achieving a national objective...

...Obviously, this requires a trade policy that will facilitate imports...

...The case for a greatly liberalized United States trade policy is strong, even when based exclusively on grounds of national security and a prosperous, expanding world economy...