TRADE BARRIERS

Evening Star, Issue 21934, 22 January 1935, Page 7

TRADE BARRIERS

TARIFF EXTREMISM CORDELL HULL’S VIEW AMERICAN EXPERIENCE Under the heading of ‘ Rebuilding International ’Trade,’ Mr Cordell Hull, Secretary of State in the United States Government, contributes a thoughtful article to the ‘ Christian Science Monitor.’ He deals in a refreshing manner with the effects of a high tariff policy and points to the heavy drop which took place in the value of American exports while protection extremism obtained.

Since the Trade Agreements Act became effective on June 12, 1934, and foreign commerce was thul brought to the front as a subject of active public discussion it has been very agreeable to one holding my views to note the marked change which has come about in the attitude of the public towards the excesses, the abuses, and the injuries of high tariff and similar trade barriers (writes Mr Hull). __ . Whereas only a short time ago it would have been regarded by a large part of the industrial world as a profanation to utter criticisms of this policy of tariff extremism, there has recently developed a wholesome scepticism regarding its virtues. Several years of adversity have caused people to do a little hard thinking, and this seems to have brought many previous supporters of a sky-high tariff to the conclusion that perhaps after all it isn’t a perennial sacred spring from which all blessings flow. Doubtless the decline of our exports from a value of over 5,000,000,000d0l in 1929 to 1,675,000,000d0l in 1933 has had something to do with this modification of opinion. If it didn’t it should have. Such an extraordinary falling-off in trade ought to make every thoughtful person pause and consider the cause and meaning of it. To anyone with even a slight logical mental bent it must have been immediately obvious that this collapse of foreign trade had happened under the highest tariff in our history, and consequently it followed that high tariffs did not invariably and inevitably produce prosperity. The doctrine preached for so many years that the more effectively yon kept out foreign goods the greater would be the prosperity of our own country was hero confounded by the facts. Wo had an almost prohibitive tariff, and we had something very different from prosperity. RETALIATION. This fact undoubtedly sank into the minds of a great many people who had hitherto not taken the trouble to study the question and had blindly accepted the assertion of those special interest? which had profited heavily from the virtual monopoly that the tariff gave them. Examining the situation further these people saw that other countries, denied the opportunity freely to exchange their commodities for ours, had at last retaliated upon us by erecting barriers of their own against our goods, afid that the result could not be other than what it was—the reduction of all world trade to a mere gasp of its former volume.

A comprehension of this situation has brought more people to realise that commerce is not a one-sided affair from which one party only benefits, and that attempts to enforce such a policy make economic enemies instead or good customers. It has also taught the necessary conclusion from this, that only by reasonable co-operation among nations can world commerce be fairly and profitably maintained. In addition to this growing knowledge in the public of the fallibility of high tariffs, even “ old believers ” arc beginning to recognise that the new way of dealing with them through the Tariff Agreements Act is preferable to the old way of throwing the entire question into Congress. When the framing of a tariff Bill was undertaken by Congress it immediately became a political and local question. The thousands of items gave opportunities for wire-pulling and logrolling and trading, so that tho resulting measure might be a hodgepodge of sectional grabs naving no resemblance to an economic production and destitute of provisions for the general public interest.

Under the Tariff Agreements Act the question is approached in a scientific method. Since the case of each country is taken up separately and, the commodities entering into our trade with that country studied, there is no opportunity for log-rolling or political trading. Experts examine the questions which arise and pass judgment upon them according to economic considerations, having constantly in view the interest of the country as a whole. This procedure provides the nearest approach to a sound scientific and equitable treatment of the tariff that has ever been attained in this country.

WINNING BACK FOREIGN TRADE. It is by the use of this new instrument that this Government is endeavouring to win back, a substantial part of the Foreign trade which has been lost in . the past few years. Some of .this loss has been duo to the economic de : pression which was spread over all the world. But much of it resulted from the strangulation of commerce by prohibitive tariffs, quotas, embargoes, and other restrictive measures. By entering into reciprocal agreements with other countries we hope to _ remove some of the obstructions which are choking the channels of world commerce. We cannot ask others to reduce the height of their tariff walls unless we are also willing to cut down ours. If we want customers we must be customers. Whatever may have been the attitude of this Government in the past, it is entering upon these trade agreement negotiations with the purpose of getting results which will be mutually advantageous but bring no harm to other countries. We do not expect to secure an exact balance of exports and imports with each country. That would be neither possible nor desirable. The pursuit of such a course by every country would lead to innumerable conflicts of interests and endless, hopeless confusion. But it is possible and it is reasonable in dealing with a country to which we wish to sell our commodities to make it easy for that country to enter into our market with its special products. By such reciprocal action, the purchasing power of both countries is increased and their, aggregate wealth enhanced. MUTUAL ARRANGEMENTS. The operation of mulually-profltable arrangements of this kind over a period long enough to permit a fair trial would, we feel, convince even doubters of their benefits. It would also show them that imports are not the poisonous things they are represented by tariff extremists to be. it would be found that instead of harming our national economy they are really an addition to our wealth, or, at worst, only an exchange of value in another form. If wo trade a commodity which we can produce easily and economically ior

a foreign commodity which we could produce only at great trouble and expense, we gain both materially and in convenience. Likewise, if the country with which wc are dealing has exchanged an'article which it has particular aptitude m producing for ours, which it could produce only with gnat, cost and '’.iiiii \ Jry, it has • be-a, ri*. gainer. It seems clear, therefore, that imports are not the devils they are sometimes painted. As to the charge that imports are detrimental to the interests of American labour, it does not appear to be well founded. In the first place, since imports pay for exports, they aid the production of every industry in the country which has a share in foreign trade. Secondly, the chief portions of our imports are not produced in this country at all, or in sufficient quantities. But besides that, the receipt and distribution of imports give employment in so many directions it would bo tedious to enumerate them. Dock workers, truckmen, railroad employees, and those employed by every agency between the ship and the retailer all have a part in the distribution, and their activity is increased thereby. NEW AGREEMENTS. Under the authority given by the Trade Agreements Act, we' have concluded an agreement with Cuba, and have given notice of intention to negotiate with twelve other countries. The twelve are Belgium, Spain, Sweden, and Switzerland in Europe; and Brazil, Colombia, Costa Rica, El Salvador, Gautemnla, Haiti, Honduras, and Nicaragua in Latin America. Further negotiations will soon be undertaken. Alhtough our greatest trade has not been with the nations enumerated, they have been very important buyers of our products, and have supplied us with some of our most valuable imports. Even at the low level of international commerce existing in 1932, the goods exchanged between the United States and these countries. Cuba included, had a value of approximately 500,000,000 dollars. Through tariff agreements we hope to lift this figure substantially and bring the trade up to its greatest possibilities. The same effort will, of course, be made in the negotiations entered into later with other countries. • 1

The sharpness of the decline of our exports from a value of over 5.000. dollars to about 1.500.000. dollars in 1932, which was the lowest figure in thirty years, accompanied as it was by the rapid setting-up of defensive and retaliatory measures by other countries, brought this question of our foreign trade so bluntly to the attention of the,nation that it is being pondered more seriously and impartially than ever before. Every State in the Union has a big stake both direct and indirect in it, not only those on the coasts, but also those deep in the interior. In 1929 only two States out of ■ forty-eight had less than 1,500,000 dollars direct share in our exports. Each of thirteen had over 100.000.000 dollars, and 23 each had over a 50,000,000 dollar share. At the low mark of 1932 the products of twenty-seven States went into exports to the value of over 10.000,000 dollars for each. The per capita distribution of this trade went as high as 105 dollars and 112 dollars in some States in 1929. and in 1932 was still as high as 38 dollars and 51 dollars in certain States. _ With this immediate material interest of every citizen in foreign commerce, with the increasing recognition by our own people and the people of other countries of the necessity for its revival, we hope and expect through reciprocal tariff agreements to break down the barriers to the attainment of that end.