Reverse For Base Metals And For Free Trade

Press, Volume XCVII, Issue 28700, 25 September 1958, Page 12

Reverse For Base Metals And For Free Trade

Because the United States has been regarded as the outstanding champion of freer world trade, its decision to impose quotas on lead and zinc imports (which will be cut by 20 per eent.) has caused understandable dismay. Exporting countries most drastically affected will be Australia and Canada, which have already protested very vigorously. Australia, which now ranks first among the world’s lead producers and third for zinc production,; has special cause to feel aggrieved. Since the Second World War, its lead and Zinc mining industry has developed more than that of any other country. Last year, lead and zinc accounted for 25 per cent, of the total value of Australia's mineral output. In Canada, the Dieftnbaker Administration was re-elected on a policy aimed at lessening the heavy dependence of Canadian industry on American financial support, and at switching a sizeable of the Dominion’s purchases from the United States to Britain. It has been estimated that American capitalists control more than half Canada’s oil, natural gas. non-ferrous metals. rubber products, and motor-vehicle factories. Much of this United States business in Canada is conducted through subsidiaries of United States corporations; and it has been easy for Americans, where they have considered it expedient, to depress Canadian production to protect their home industries. This has contributed to a colossal imbalance in American-Canad-ian trade. In recent years. Canadian imports from the United States have been running at about a billion dollars more than exports. There has been mounting resentment in Canada against the blocking of increased exports to the United States.

When President Eisenhower visited Ottawa in July, he referred to the benefits of

multilateral trade and to the desirability of allowing American firms unrestricted access to the Canadian market “I

“ assume ”, he said, “ that “ Canada is as interested as we “ are in the expansion of world “ trade rather than in its “ artificial redirection Canadians, mindful of United States restrictions on their oil exports and high American tariffs on other goods, gave the President’s comments a chilly hearing. Their feelings have now been exacerbated by the lead and zinc quotas, in the allocation of which they will be prejudiced by earlier acquiescence in reducing Canadian production. Thus Canada, in protesting against the quotas, may stand on firmer ground than Australia, whose own maintenance of import restrictions hardly comports with moves towards freer world trade.

Indicating the strength of protectionist sentiment in the United States, the lead and zinc quotas follow in the wake of the Reciprocal Trade Act, passed last month. The act has been described by the “ Economist ” as “ potentially “ more protectionist ” than any of its predecessors since 1934. For a long time, President Eisenhower has been under pressure to give tariff protection to domestic producers of metals. Last April, the United States Tariff Commission

unanimously recommended that duties should be raised, although members were divided on the extent of the protection to be given. But Mr Eisenhower was unwilling to compromise his adherence to the cause of free trade. In the dying hours of its last session, the House of Representatives rejected, by 182 votes to 159, a bill to subsidise the prices of lead, zinc, acid-grade fluorspar, and tungsten, and to initiate Government purchases of 150,000 tons of copper. The cost of this programme was put at 458 million dollars. The Administration strongly supported the bill; but its defeat was secured mainly through Republican members’ hostility. Pressure for higher tariffs was immediately renewed; one of the biggest domestic lead producers slashed output dramaticaQy; and all the familiar

arguments of unemployment in the mines and the strategic importance of the mining industry were refurbished. The passage of the Reciprocal Trade Act, with wider “ escape ” clauses than ever before in the reciprocal trade programme, gave the President a new opportunity to do something. The changes made in the act may even mean that the Tariff Commission must reconsider its original recommendations. By taking the unusual course of imposing quotas in preference to higher tariffs, the President may consider that he.has salved his conscience in the eyes of free trade advocates. His relief from embarrassment may be only temporary, for already the pressure is on again for “a temporary hike” in tariffs.