Tariffs And Trade Policy In our consideration of the broad subject of tariffs and trade policies in relation to international trade, our starting point of course must be our present tariff structure. The world, including the United States, has had no experience for any considerable period of time with our present tariffs under conditions which might be termed relatively normal. The Trade Agreements Act was enacted while we were in the middle of a depression. Many bilateral trade agreements, involving many reductions in our duties, were made during the first 5 years the act was in effect, but there had been limited opportunity to observe their effect before our trade, already distorted, was further disrupted by the outbreak of war. Since the termination of World War II the patterns of both our exports and our imports have been abnormal. There was an unusually large demand for our exports both for consumption and for rebuilding a war-torn world, and an interruption in the growth of our imports, arising out of the same causes. The Korean War resulted in a further distortion. Resulting imbalances were financed largely through our foreign loan and grant programs. During this period we continued to make further agreements involving still greater reductions in our tariffs.
Now, we find ourselves facing demands for further opening of our markets at a time when our commercial exports are in approximate balance with the highest level of imports ever reached, while the world as a whole has considerably rebuilt its holdings of gold and dollar reserves.
The subjects of tariff rates, tariff policy, and customs administration have had perhaps more public attention than any which the Commission has had to consider. Oral and written submissions to us in this field exceeded in aggregate volume all those relating to all other fields that we were directed to consider. No other single field produced such directly divergent statements of alleged fact, so many shades of opinion, or such diversity of recommendation.
Within the limits which the Commission has set for this report, no detailed discussion of such submissions is possible. Nor are we charged, as many people seem to believe, to recommend actions with respect to particular tariff rates applicable to the products of a single unit or industry.
We are fully aware of the arguments for free trade. It is sufficient to say that, in our opinion, free trade is not possible under the conditions facing the United States today. Even in moving toward greater freedom of trade we must consider all of the rigidities, both here and elsewhere, which negate some of the premises upon which the arguments for free trade rest. We must take into account that while the United States employs impediments to trade, primarily through tariffs and in only limited fields through quotas, other countries also employ these devices. Beyond
this, they employ the quota procedure far beyond our use, and against other countries as well as against us, and also employ exchange controls and many other devices not used here.
The record clearly indicates that, from a psychological and econnomic point of view, United States policies in fields connected with the tariff have come to be regarded as of key importance by both the American and the foreign public. We believe this is an overemphasis, for it must not be assumed that any measures which the United States might take in the fields of customs administration and tariff policy, taken by themselves, could provide the full answer to the problem of imbalance described earlier in this report.
Any adequate program requires appropriate policies on a broad front, in foreign countries as well as here, including but not limited to policies with respect to convertibility and investment. Nor should any assumptions be made as to the key position of United States tariffs and customs procedures, relative to the many impediments which exist in the world to the international movement of goods and to the most effective application of capital and labor. It is clear, on the evidence examined by this Commission, that although many United States tariffs are high and many of our customs procedures are slow and cumbersome, many other United States tariffs are low and more than half our imports enter free of duty.
We fully recognize the dangers of using averages; yet it seems clear by any test that can be devised that the United States is no longer among the higher tariff countries of the world. Taken by and large, our trade restrictions are certainly no more of a cause of payment imbalances than the rigidities maintained by other nations. Restrictions on import and export trade, in turn, are probably no more important than, and in a measure are bound up with, the rigidities maintained inside foreign economies through cartel restrictions, the immobility of labor, and ingrained resistance to technological change; and the rigidities maintained inside the American economy through farm price-support programs, minimum wage legislation, resale price maintenance laws, and the like.
The fact is that we have moved far from a world in which complete international specialization of labor is possible. Some of the rigidities mentioned above are here to stay. Other rigidities, such as those necessary for the defense of the free world, cannot be eliminated as long as the threat of communist aggression continues. This means that completely free trade is not feasible.