THE GENERAL AGREEMENT ON TARIFFS AND TRADE by William Hard Every inhabitant of the free world should understand GATT. Those letters stand for the General Agreement on Tariffs and Trade. Thirtyseven nations, including the United States, belong to it. Between them they represent 80 percent of all the international trade among free world countries. GATT holds annual sessions. At these sessions the participating countries negotiate with one another for reduction of the trade barriers which now too often produce conflicts and antagonisms between free peoples who ought to be friends.
Take an example: Britain is the strongest military ally of the United States. It is to our interest that Britain should be strong. We have lent money to Britain.
Britain would like to pay it back. But to do so she has to have dollars.
And how can she get dollars? Only by selling goods in the U.S. dollar market. So what do we do? We impose severe tariff and quota restrictions on imports of one of Britain's most important products: woolen goods.
and so, then, what does Britain do? She imposes severe restrictions on imports into Britain of such U.S. products as fruit and canned salmon.
Outcome: both countries lose. GATT exists to try to abate such acts of economic warfare.
The Communist countries engage only slenderly in acts of economic warfare among themselves. The Soviet bloc is much more a unit in matters of trade than the free world bloc. The free world countries, together, are stronger than the Communist countries. But they have to be together to gain the economic strength which is the basis of strength in war. GATT, therefore, through having an economic value, has also a military value.
We Americans belong to GATT through the operations of our Reciprocal Trade Agreements Act, an act which has been on our statute books for almost a quarter of a century. Under it, in the special negotiating sessions of GATT, we have granted tariff "concessions" to foreign countries on some six billion dollars' worth of their imports into the United States. Reciprocally, they have granted us "concessions" on almost exactly
that same value of our exports to them. This is substantial progress.
But it will tend to cease if our Reciprocal Trade Agreements Act is not renewed. It is due to expire on June 30.
Powerful interests are tumultuously arguing with Congress to try to prevent renewal of this Act or to cripple it with protectionist amendments. That is their right. It should be freely admitted that certain U.S. products are indeed adversely affected by the competing imported foreign products. The picture must thereupon be presented in its proper proportions. How important is our foreign trade to us? And how important to us are the industries that require, or believe they require, protection? Our exports last year amounted to more than 19 billion dollars. Our imports amounted to about 13 billion dollars. It would seem, so far, that we are profiting more from other countries than they are profiting from us. We are "unloading" more goods on them than they are "unloading" on us.
But how can our exporters sell our high-wage goods abroad in countries with lower wage costs? One answer is that some of our mass-production industries, although paying the world's highest wages, have installed such advanced machines and methods that their costs, per unit of product, are often lower than the costs per unit of product in the lower-wage foreign countries to which they sell.
The question, then, arises: If some of our industries can accomplish this, why not all of them? Why should any of them need protection? The response must be: Some foreign countries, in manufacturing some products, have introduced machines and methods equal to ours; and thereupon, with their lower wages, they can send goods into this country at costs so low as to put the competitive U.S. products at a serious disadvantage. Fairness dictates that in such cases some action should be taken by our government.