National Reports
KILBY, PETER
NATIONAL REPORTS Will Reciprocal Trade Survive This Congress? By Peter Kilby Washington Since March 27, when the Administration held its International Trade Conference in Washington, reciprocal...
...exports, are listed as dutiable (subject to tariff...
...its Board of Directors is interlocked with the Committee for Economic Development and the U.S...
...In 1955, the program came within three votes of extinction...
...Russia now buys 27 per cent of her exports...
...The present Administration has been forced to make many damaging compromises as the price for survival of its formal policies: the Chief Josephs Dam decision under "Buy American" legislation, the invocation of anti-dumping provisions against British soil pipes, the watch and bicycle escape-clause decisions, the national security clause, "voluntary" quotas on oil and textiles, and, finally, Tariff Commission appointments...
...Among the other groups supporting renewal are the major farm organizations, the leadership of the AFL-CIO, coastal port interests, importers and exporters, ship lines and the six major importing oil companies...
...More sophisticated is the Nationwide Committee of Industry, Labor and Agriculture on Import-Export Policy...
...But as our exports tend to come from our most efficient industries, the weight of import competition tends to fall on the less efficient industries...
...For the protectionists on the Hill, the proposed legislation contains greater safety measures for domestic producers...
...Oil, textile and mineral interests are heavily represented in the Senate committee in the persons of Lyndon Johnson, Robert Kerr, Chairman Harry Byrd, Mike Mansfield and Wallace Bennett...
...Headed by Oscar Strackbein, a former Tariff Commission official reputed to be one of the most effective lobbyists on the Hill, this Committee has selected as its rallying cry Executive usurpation of Congressional power...
...failure to extend liberal trade policies...
...If the inflation factor is removed, the average reduction is 50 per cent— from 24 per cent in 1934 to 12 per cent in 1957...
...Long before Russia absorbed 40 per cent of Egypt's exports, U.S...
...With every renewal the Reciprocal Trade Program has been weakened by "peril-points," an ever-widening escape-clause, quotas under the guise of national security, and ever-shrinking tariff-reduction authority for the President...
...If a one-year renewal is obtained, the chances are good that in 1959, with no elections to be faced and a less acute employment situation, Congress will extend the Trade Agreements Act for the full three years...
...If unemployment gets worse, this number would decline sharply...
...A few items on which we depend on foreign sources from 25 to 100 per cent include crude petroleum, iron ore, copper, rubber, wool, tin, nickel, aluminum, newsprint, cobalt, zinc and lead...
...The political realities remain...
...There.are two major lobbies on the protectionist side...
...Although the legislation could probably get through the Ways and Means Committee, despite such protectionist crusaders as Daniel Reed, Richard Simpson and Noah Mason, it would have little chance in the Senate Finance Committee...
...If these dutiable imports were spread evenly over all categories, there would be no problem of protection...
...import quotas denied a market to Egyptian long-staple cotton, mainstay of Egypt's economy...
...Supporters of reciprocal trade now feel that the best they can hope for is a one-year extension with no tariff-reduction authority granted to the President whatsoever...
...However, because of their political strength, the protectionist groups have been able to resist the forces of change...
...It is indisputable that no appreciable tariff reductions have taken place since 1951...
...The protectionist tide in Congress has been rising since 1948...
...But the big question is: Will the reciprocal trade program survive this year...
...We are 100 per cent dependent on imports for coffee, tea, bananas and cocoa...
...Cabinet members have made numerous speeches in support of the renewal...
...Nevertheless, renewal of the Trade Agreements Act remains one of the major legislative tasks of Congress...
...As it now stands, the President's bill could not get more than 160 votes in the House of Representatives...
...The American Tariff League, supported mainly by the chemical and glass industries, has this year issued a hundred-page study, "The United States and World Trade...
...Depressed world prices have not helped...
...There is also the factor of economic self-interest...
...trade...
...In Strackbein's words, "the State Department uses the domestic market as a continuing means of oiling through difficult international problems giving to imports the right of eminent domain...
...The Committee for a National Trade Policy is the leading free trade lobby...
...Pressure-group activities are running at a new high...
...Many claim that, up to now, we have merely cut the fat off the protectionist Smoot-Hawley Tariff of 1930...
...Now that the Government has reached its stock-piling limits of lead, zinc and copper, the pressure is on the Western states...
...The United States imports 20 per cent of all its raw materials (compared to 10 per cent fifty years ago...
...And finally, the influence of the internationalist State Department in trade matters has been diminished by the creation of the Trade Policy Committee composed of seven cabinet members and headed by Secretary Weeks...
...in 1957, it is slightly less than 12 per cent...
...To a large degree most of the non-Communist world depends on U.S...
...Similarly, Japan, which buys twice as much as she sells in U.S...
...From 1948 to 1953, when a majority of the Tariff Commissioners were Democratic appointees, there were seven recommendations for escape-clause action...
...And Secretary of Commerce Sinclair Weeks, notwithstanding his recent "conversion" to reciprocal trade, is known to favor mandatory quotas on oil and textiles...
...The Administration has made an extensive effort in support of the 1958 extension...
...has placed "voluntary" quotas on Japanese fish, textiles and (more recently) flatware...
...It is expected that the recent Tariff Commission escape-clause recommendation (by a 3-to-3 vote) for quotas on lead and zinc will be accepted by the President—thereby allowing Western legislators to vote for the extension...
...In the case of Iceland, after repeated attempts by the New England fishing industry to invoke the escape-clause against Icelandic fish, our northern ally started looking for new markets...
...However, much of this reduction is a result of inflation...
...Council of the International Chamber of Commerce...
...Exports provide 7 per cent of U.S...
...Therefore, a mandatory quota on oil imports, as a "'national defense" precaution, will be the minimum price the Administration will have to pay...
...By Peter Kilby Washington Since March 27, when the Administration held its International Trade Conference in Washington, reciprocal trade has been pushed into the shadows by the recession...
...The growth of dutiable imports relative to duty-free imports, from 40 per cent in 1934 to 51 percent in 1957, indicates the moderate effectiveness of tariff reductions...
...Dislocations of this size are insignificant when compared to the adjustments caused by changes in technology, consumer demand and Government fiscal policy...
...When the reciprocal trade program was launched in 1934, the ratio of duties collected to the value of dutiable imports was 53 per cent...
...Studies were made by the Department of Commerce of 30 Congressional districts which showed that in each district there was a greater export interest than threat of import competition...
...Included in this group are segments of the chemical and mining industries, glassware, leather products, cutlery, watches, bicycles, paper, jewelry, parts of the textile industry and related light manufacturing in specialty lines...
...coupled with the emergence of the European Common Market, would result in major changes in international trade...
...employment and enable us to buy the imports which we must have...
...As was the case with Eric Johnston's campaign for foreign aid, the Administration's effort to enlist support for its program appears to have been an exercise in moral suasion...
...To complicate the situation, since 1955 Russia has been pursuing an aggressive policy of economic penetration, including foreign aid, technical assistance and long-term trade agreements...
...Each year, we export $5 billion worth of goods and services more than we import—which means a net addition of $5 billion in wages and profits which we would not have under a protective system...
...Many workable plans of graduated tariff protection or direct subsidy have been proposed to facilitate the shift to more profitable lines of production...
...Estimates indicate that, if all barriers to trade were lifted, imports would increase by about $2 billion, affecting between 20 and 40 products, causing a maximum loss of employment of 400,000 (compared to the 4.5 million whose jobs depend on exports...
...The man who can prevent this is Speaker Sam Rayburn, who, like the majority leader of the Senate, comes from the oil state of Texas...
...The first obstacle is the power of certain key legislators on the House Ways and Means and Senate Finance Committees who, either because of personal credos of economic nationalism or special interests, oppose the renewal...
...Restrictive trade policies put us in the paradoxical position of distributing vast sums of foreign aid to increase productive capacity, while at the same time undermining the ability of the recipient nations to pay us through their own sales in the dollar market...
...It is the latter group that has placed a protectionist stamp on our trade policies...
...Recipients include Yugoslavia, India, Egypt, Syria, Indonesia, Burma, Afghanistan and Argentina...
...Half, or about $6.3 billion worth, of U.S...
...from 1953 to 1957, after the Commission was packed with high-tariff advocates, there were 17...
...Organized labor is also pushing for a bill known as the Trade Adjustment Act, which calls for direct Government aid to import-injured industries, helping them make the transition to other lines of production...
...The bill will have a short life if it is opened to amendments from the House floor...
...Although international trade constitutes but 5 per cent of the American economy, this represents 20 per cent of world exports and 15 per cent of world imports...
...markets, has been turning to Red China as an outlet since the U.S...
...Second, there is the apprehension generated by high unemployment...
...It recommends that the Tariff Commission become the supreme authority on trade policy, that the whole tariff system be revised, that GATT be abandoned, that greater protection be provided through higher tariffs and more quotas...
...The most striking fact is that, for the first time, supporters testifying in favor of the extension have outnumbered the protectionists—and by a ratio of two to one...
Vol. 41 • June 1958 • No. 22
