The Press MONDAY, FEBRUARY 17, 1958. American Trade Policy

Press, Volume XCVII, Issue 28513, 17 February 1958, Page 8

The Press MONDAY, FEBRUARY 17, 1958. American Trade Policy

President Eisenhower seems determined to w make the liberalising of American trade a major political issue this year. In his annual economic message he asked for greater opportunities for foreign nations to earn dollars; and he has reminded Congress that “measures aimed at “restricting purchases from the “United States might result be- “ cause of lack of dollars to pay “ for them With Congress balanced between those favouring vigorous economic leadership of the free world and those seeking a retreat to the hightariff practices of the depression period, the President will need to exert leadership to win this battle. He is carrying the fight to his protectionist opponents by seeking this year a five-year extension of the Reciprocal Trade Agreements Act, which will expire at the end of June, with authority to cut tariffs by 5 per cent, in each year. Previously, the Administration has sought only three-year extensions, which have been refused, and it has been forced to make do with temporary extensions passed by ever-narrower majorities in Congress. Even greater opposition is likely this year. Demands by domestic industry for increased protection have increased and a growing number of Democrats is reported to be supporting them. This is not surprising in an election year and at a time when the volume of American business is declining. But the policy-makers are convinced that foreign trade, as well as aid, are essential, and that it would be dangerously short-sighted of Congress to sacrifice the" economic wellbeing of the nations of the free world because a relatively few domestic industries might be damaged.

The policy-makers are right. If the United States retreats further to protectionist policies, Russia will quickly take over its leadership in international trade, as it has taken over technological leadership. This threat is at least as serious as the Soviet military threat. Already some of the uncommitted nations, disillusioned at the success of the American firms in winning tariff protection, have welcomed the Soviet trade

offensive. Nations debarred from trading with the United States are slow to see any risk > to their own political stability in trading with Russia. Other nations will follow them if American trade barriers are not lowered. This is the lesson Mr Eisenhower is attempting .to teach Congress; and, with political interest in the United States now centred on foreign affairs, it may be heeded. A liberal foreign trade programipe is vital to complement American foreign policy. The value of the proposed 3900 million dollars Foreign Aid Bill will be drastically reduced if there is no liberalising of trade to accompany it; and expensive defence measures will be far less effective in a world that turns to the East for trade. Mr Eisenhower has, perhaps wisely, decided to postpone other sections of his trade liberalisation programme until his first battle has been fought. If he wins, there might be a more favourable climate for American ratification of the Organisation for Trade Cooperation, which is designed to provide an efficient administrative arm for the General Agreement bn Tariffs and Trade. If Mr Eisenhower could persuade Congress to take this step, it would be a major victory indeed, for it would persuade the free world that America is determined not to allow protectionist interests to subvert the economic advancement of the Western nations. The O.T.C. would drastically limit the powers of its members to protect domestic industries and discriminate against foreign competition; and it would bring closer the bold ideal of free trade. It is perhaps expecting too much of Congress to join the organisation this year. Indeed, the forcing of the Trade Agreements Act through Congress will tax the President’s initiative fully. It is to be hoped that he does not lose the initiative. Roscoe Drummond, writing in the New York “Herald- “ Tribune”, says that “the “alternative to decisive Presi- “ dential leadership is not deci“sive Congressional leadership: “ the alternative is Congres- “ sional chaos ”.