Trading American Interests

Alfred E. Eckes

From Foreign Affairs, Fall 1992

Article preview: first 500 of 6,439 words total.

Summary:  Now that the Cold War is over, the USA should stop conceding trade favours (access to the US market) in return for foreign policy favours. The security environment is henceforward likely to be one in which trade policy issues are paramount.

Alfred E. Eckes is Ohio Eminent Research Professor at Ohio University, where he teaches contemporary history, business administration and journalism. From 1981-90 he was a commissioner, and chairman, 1982-84, of the U.S. International Trade Commission.

In the aftermath of the Cold War the United States has the opportunity to stop trading access to the American market for foreign policy favors. Import concessions should generate reciprocal export opportunities for American goods and services in foreign markets, not votes in the United Nations or goodwill in diplomatic negotiations.

For 45 years a succession of presidents, beginning with Harry Truman, have consciously subordinated domestic economic interests to foreign policy objectives. To strengthen free world economies and help contain Soviet expansionism the executive branch has rolled back tariffs and removed trade restrictions, opening the giant American market to the world?s manufacturers.

This strategy produced some impressive foreign policy victories, but also much domestic dislocation. Trade liberalization accelerated recovery from World War II in Europe and east Asia, and ignited export?led growth in many developing countries. It helped revive international capital flows and hasten the globalization of production. Consumers found that the market system could produce and distribute goods at affordable prices, while state planning could not. The success of free markets therefore exposed the failures of the Soviet empire and contributed to its collapse.

Freer trade has its costs. The record suggests that for diplomatic and national security reasons the U.S. government sacrificed thousands of domestic jobs to create employment and prosperity elsewhere in the noncommunist world. Bowing to external pressures and foreign policy concerns, presidents from Truman to Reagan refused to grant import relief to trade?sensitive industries in the interests of winning the Cold War. In doing so they may have compromised America?s future competitiveness and alienated public support for international cooperation in the post?Cold War world.

II

Introduced in 1934 as a temporary recovery measure to restore the American living standard, the reciprocal trade program acquired new significance after World War II?becoming a powerful tool for reshaping international economic relations. From 1947 to 1972 the United States agreed to reduce its tariffs from an average 32.2 percent ad valorem on dutiable goods to a negligible 8.5 percent. Thus by January 1972, when the Kennedy Round concessions were fully implemented, tariffs no longer sheltered high?wage American workers from low?paid labor abroad. American producers and workers now found themselves competing in a relatively open international economy at a time when other improvements in transportation and communications and the emergence of many new suppliers intensified competition.

Former Senate Finance Committee Chairman Russell Long (D?La.) was one of the first to perceive that the executive branch?s enthusiasm for free trade to assist overseas allies clashed with this nation?s long?term economic interest in maintaining high?paying jobs and a viable manufacturing base at home. For nearly twenty years, until his retirement from Congress in 1987, Senator Long regularly criticized the State Department for using trade concessions as bargaining chips in foreign policy negotiations or to buy votes in the United Nations. He charged that to "save the world from a great war" the State Department believed "it would be worth giving away every industry we have."

The trade agreements program increasingly became ...

End of preview: first 500 of 6,439 words total.