The law must also face the problem of the industry that is seriously injured by an increase in imports resulting from a reduction in a tariff rate. Here, the criteria for action should be stiffened, and remedies other than restoration of a higher duty should be tried. Injury should be held to exist only when the domestic industry suffers a sudden and substantial reduction in the absolute volume of its sales. And it should be regarded as serious only when this development destroys profits, not for a few marginal firms, but for the industry as a whole. Remedial action should be taken only in those cases where alternative employments for the resources in question are not readily at hand. And this action should preferably take the form of extended unemployment compensation and retraining benefits for labor and of technical assistance, loans, and grants for the conversion of industry. Reductions in duties should not be suspended unless it can be shown that other remedies are not available. And here, effectiveness of the lower rates should merely be postponed. The President should be authorized to raise tariffs, but only as a means of retaliating against nations that deliberately discriminate against the trade of the United States.
These proposals contemplate a sharp reversal of existing policy. They emphasize legislative rather than executive action, and reliance on unilateral rather than multilateral instruments. With nontariff barriers removed, exorbitant duties cut, duties on essential military goods abolished, and further reductions assured by law, negotiators of future trade agreements would be left with weakened bargaining power. With past reductions given statutory effect, other parties to existing agreements would be relieved of such restraint as is imposed upon them by the fear that, by tightening their restrictions, they would forfeit concessions granted them by the United States. For many years, this country has sought to influence commercial policies throughout the world by building a structure of precise commitments having the effect of law. Since 1947, it has worked through an international medium—the Contracting Parties of the GATT—where these policies are debated and these commitments interpreted and enforced. Now it would put its reliance less in agreement and organization and more in the force of the example it would set.
This shift in emphasis would involve some loss. Continuing consultation, through meetings of the Contracting Parties, has contributed to international understanding and to the peaceful settlement of differences. If the GATT survives, these meetings could be continued. If not, some of their advantages could be retained by authorizing the government to join with other nations in setting up an international trade organization with purely consultative and recommendatory powers.
Instead of acting unilaterally, some of the critics of the trade agreements program would have us adhere to our present course, but bargain more skillfully, obtaining more binding commitments, and enforcing them more effectively. It may be doubted, however, that further progress can be made this way. The other nations of the world are not prepared, as a quid pro quo for tariff cuts, to alter their plans for industrialization, to abandon their welfare programs, to forswear nationalization, or to forsake economic planning. A commitment to do any of these things, if made to us at all, would evoke resentment and ill will, providing the opposition party with a point of attack and the government that made it with an alibi. It would lead to endless quibbling over the letter of the law, to departure from its spirit, and to defiance of its terms. And, though we
might protest, we would do little more. The United Kingdom, despite an explicit commitment to eliminate her preferences as we substantially reduced our tariffs, has steadily refused to do so. And we have acquiesced, having no real alternative. The plain fact is that this country needs allies. However our friends behave, we cannot and we will not cut them off. Tighter commitments, even if obtainable, would be of dubious enforcibility.
Given this situation, we can make more progress toward freedom of trade throughout the world by moving, swiftly and dramatically, to clear the international atmosphere. The American market can exert a powerful pull, inducing liberal policies abroad where tariff bargaining has failed. We should open this market to the world, not as an act of charity, but because it is in this way that our national interest will best be served. What are the prospects that we shall have the sense to do so? An open break appears to be impending within the business community between those industries that have long been sheltered by the tariff and those whose continued prosperity depends upon a thriving foreign trade. The American Tariff League, the National Labor-Management Council on Foreign Trade, and innumerable trade associations are still at work, representing the interests of weak and privileged industries. The importers and the bankers, as usual, are faithfully supporting the cause of freer trade. But there are growing signs that the exporting industries, too, are coming to political maturity. Reduction of tariffs, enactment of the customs simplification bill, repeal of the Buy American Act, and removal of the quotas on cheese and other goods have been recommended in recent weeks by spokesmen for important business interests. The National Association of Manufacturers has taken up the slogan of "Trade, not Aid." The National Foreign Trade Council has been told that "it is necessary now for this country to make painful economic adjustments, even if it means having a few of our domestic industries decline and die. If such industries can offer nothing better than the desire to continue operating behind tariffs and other restrictions, it might prove more economical if they were written off." The Detroit Board of Commerce has declared that "the essential and major industries in the United States today are well established! Mass production and efficient industries throughout the nation have nothing to fear from foreign competition." The Board has therefore recommended the enactment of a tariff law "consistent with the economic facts of our time—leading towards the eventual elimination of all tariff barriers in the United States." The division in the ranks of industry is likely to be reflected within the government. . . .
• • • • • . . . It should not be forgotten that Congress voted in 1947 to increase the duty on wool, failing only to override the President's veto, that the Senate cast a tie vote in 1949 on a bill to curtail imports of petroleum, the project being defeated by the vote of the Vice President, that the House voted in 1951 to impose a duty on tuna fish, and that Congress attached a rider to the Defense Production Act in 1951, and continued it in 1952, providing for the imposition of quotas on cheese on the ground that imports amounting to less than 5 per cent of the domestic output would endanger the nation's military security. Of all the fights that lie ahead, this promises to be the toughest one. . . .