Duties have been sharply cut. But the cuts have never been enacted into law. They are embodied in the trade agreements. And these agreements stand on shaky props. The Trade Agreements Act itself expresses a protectionist philosophy. Its purpose, as stated, is to increase our export trade. To this end, we offer "concessions" to other countries (i.e., to let them bring us goods) and ask them to make "concessions" to us (i.e., to take our goods away) and we excuse the concessions we give (i.e., our gain of goods in imports) by advertising those we get (i.e., our loss of goods in exports). And when the trade agreements program is attacked, we argue that no American producer has been harmed by the concessions we have made. This may be true. Since 1934 our national income has steadily increased; imports have grown while domestic output has grown still more. But the argument goes further, suggesting that American goods should never be displaced by foreign goods, whatever the difference in quality and cost. In a situation where we obviously need to narrow the gap between our exports and our imports, it is still contended that the trade agreements program does not increase our imports (which would be desirable) but does increase our exports (which is not).
The protectionist flavor of the Act was strengthened when it was renewed in 1951. The peril point amendment, reinserted in that year, requires the Tariff Commission to fix a level below which a duty cannot be cut without "causing or threatening serious injury to the domestic industry producing like or directly competitive articles. . . ." The President must inform the Congress if a deeper cut is made. Such cuts may or may not be perilous to industry; they will certainly be perilous to the negotiators whom Congress holds responsible. An escape clause, now given statutory effect, provides for the restoration of higher duties or the imposition of quotas whenever a product covered by an agreement is "being imported into the United States in such increased quantities, either actual or relative, as to cause or threaten serious injury to the domestic industry." Under this clause, the American watch industry sought a higher tariff, though its sales had doubled since the Swiss agreement, on the ground that they had not kept pace with those of its Swiss competitors. Section 22 of the Agricultural Adjustment Act has long authorized the imposition of import fees or quotas when any agricultural product is entering the country "in such quantities as to render or tend to render ineffective or materially interfere with any program or operation" administered by the Department of Agriculture. In 1951, the Congress provided that this section should override the commitments contained in all trade agreements, old as well as new. As a result of these amendments, Americans negotiating future agreements will probably offer less. And they will certainly get less, since it will be clear that anything they offer may shortly be taken away.
Not only are future tariff cuts made difficult; there is danger that rates already reduced will be restored. This might be done through resort to the escape clause or through action under Section 22. So far, escapes have been approved in only three cases: women's fur felt hats and hat bodies, hatter's fur, and dried figs. In seven cases since the law was amended, the Tariff Commission has voted against the applicants, its Republican members usually finding injury while its Democratic members did not. In two others, garlic and watches, a majority recommended higher duties which President Truman declined to proclaim. But many cases are pending. And if a new Commission and a new President prove to be more generous, their numbers will be multiplied. Under Section 22, an import fee has been imposed upon shelled almonds, and the Secretary of Agriculture has recommended that a fee be added to the duty on wool, raising the burden on this product—if set at the figure suggested in the press—from 25% cents to 42 cents a pound.
Under our trade agreements, such measures entitle other countries to retaliate. And they do so. When we withdrew our concession on hatter's fur, Belgium withdrew her concession on industrial wax. When we restricted imports of figs, Turkey raised her duties on typewriters, washing machines, refrigerators, and many other goods. When Congress took action to curtail imports of fats and oils and dairy products, in the so-called "cheese amendment" to the Defense Production Acts in 1951 and 1952, the Netherlands cut imports of American flour and a number of other nations announced their intention to retaliate. If the tariff on wool is raised, the basis of our agreement with Australia will be destroyed and the whole structure of our agreements with the nations of the British Commonwealth may well be lost.
The GATT may be worn away through erosion; it can be leveled by a single blow. This instrument was to have been administered by the International Trade Organization. In the absence of such a body, the responsibility has been assumed by the Contracting Parties, an annual conference of thirty-four member states. This group has no secretariat of its own, relying for such service on the Interim Commission set up by the United Nations for the never-to-be-existent I.T.O. Commitments to the GATT have been provisional, pending action on the Havana Charter. Any signatory, on giving notice, can withdraw in sixty days. In England, there is agitation to denounce the GATT and thus to escape from rules that prevent increases in preferences and hamper discrimination in the use of quantitative controls. In the United States, Congress wrote the following words into the Trade Agreements Extension Act of 1951: "The enactment of this Act shall not be construed to determine or indicate the approval or disapproval of the Executive Agreement known as the General Agreement on Tariffs and Trade." The GATT thus lives on sufferance, as welcome as a bastard child.