|by import restrictions -- on both
and tomatoes? Would we be better off with free trade, to encourage "twin
plants", or limited trade, to help foster Indian employment in Flagstaff?
Is it better to permit beef imports which make hamburger cheaper for Arizona
housewives, or to restrict them for the benefit of Arizona cattlemen? These
are complex questions which have no simple answers. But I think it's important
to realize that, just as we see import restrictions from many points of
view in Arizona, people in other states also have their special problems
and their special, and often conflicting, points of view. Since this is
one nation, and not 50, the job of the President and the Congress is to
arrive at policies which are of greatest benefit to the nation as a whole.
And as a congressman I see my job as striving for a delicate balance between
contending interests in my district and between the interests of my district
and of the nation as a whole.
For Arizona and the nation one must ask: where
will all this lead? What are the implications of protectionism and of free
trade for our economy, for domestic wage levels, employment and unemployment,
the stability of the dollar and our role in world affairs?
ARGUMENTS FOR TRADE RESTRICTIONS
One of the most outspoken opponents of free trade
in this country is O. R. Strackbein, chairman of the Nation-Wide Committee
on Import-Export Policy. He sees the U.S. economy as terribly weak and
shaky, unable to meet the challenge of competition from abroad. To those
who might have imagined that competition was the great strength of our
economic system his words may come as something of a shock. Here is what
he wrote in a statement which just crossed my desk:
|The competitive weakness of this country makes
our economy stand like an island plateau against the pounding waves and
tidal flows that beset it from all sides. The natural sequence will be
a leveling process that will continue, unless it is halted, until we are
level with the sea.
Those who view our position in this light argue
that the lower wages paid in other countries inevitably will result in
a drop in the production and sales of the same commodities and products
turned out in this country. In the end, as they see it, our standard of
living will be reduced or our industries will wither and die.
To these people the "reciprocal trade" concept
introduced by President Roosevelt in the 1930s was a terrible mistake,
and the Trade Expansion Act of 1962 was a disaster. The latter set the
stage for negotiations, just completed last year, to reduce the tariffs
we assess incoming products and pay to ship our products into other countries.
Prompted by the severe competition of the European Common Market, that
act -- which, as your congressman, I supported -- gave authority to the
President to reduce existing tariffs by 50% in exchange for concessions
from other nations, and to eliminate tariffs on those products where the
United States and Common Market countries dominated world trade. As a result
of the so-called Kennedy Round of negotiations many of those decisions
are now history, and others are awaiting congressional action on what is
known as the American Selling Price (basically, a "temporary," "infant-industry"
protective tariff established for benzenoid chemicals after World War I
and left untouched to this day).
Without doubt tariffs are the most effective device
for stopping imports. But this tactic is no longer available for most commodities.
Protectionists are now turning to non-tariff barriers, especially
import quotas. The import quota says to Japan, for example: we won't tax
the steel you ship in, but we'll limit your imports to so many million
tons per year. The size regulation on Mexican tomatoes is another form
of non-tariff barrier. The effect is the same -- to lessen competition
and prop up domestic prices. Through pressure on Congress to enact such
quotas industry groups hope to do indirectly what they can't do
|directly through tariffs. Presumably
domestic producers benefit, but domestic consumers pay more
for what they buy.
As the protectionists see the situation, any gain
realized by consumers in the form of lower-priced goods can only be a short-term
advantage because ultimately their own income and jobs will suffer. Scratch
a consumer, they say, and you'll find someone whose income is derived from
U.S. production. Anything that threatens U.S. production of any commodity
or product threatens U.S. consumers, too.
Mr. Strackbein states this case very clearly.
In answer to those who say we can meet the threat of foreign competition
through cost-reduction and modernization of plant facilities he says:
|Also, no one should deceive himself that significant
cost reduction is a mild operation. In terms of employment it is harsh
and drastic. We have a classic example in coal mining. In the mid-'fifties
this industry was moribund because of encroaching competition from diesel
oil, natural gas and imported residual fuel oil. The only hope of survival
lay in cost reduction. The objective was indeed accomplished by the introduction
of machinery that supplanted men in a gargantuan ratio. The coal industry
saved itself but the cost in coal miners' jobs was two out of every three.
Employment dropped at a dizzying rate, falling from 480,000 to 140,000
or less in fifteen years. The problem known as Appalachia was a direct
result. The cost of relief and inhuman misery was 'unthinkable' and had
it been appreciated ahead of time, would no doubt have been avoided as
In other words, he believes we should not have
modernized the coal industry, not made it competitive with coal production
in other countries, but rather subsidized the coal industry in order that
it could continue to employ 340,000 men it no longer needed. The implications
of this philosophy for an economy that prides itself on its efficiency
and competitiveness are rather startling if you think about them.
Significantly, I think, this is not the
position of most American industries, of the U.S. Chamber of Commerce or
the American Farm Bureau Federation. However, it is the position
of many segments of the economy insofar as their own industries are
concerned. In other words, many of these groups favor the principle
of free trade -- but not for their industry. They're happy to lower
or eliminate trade barriers on everything else, but they see a desperate
need to restrict the import of German bicycles or Swiss watches or English
shoes. It's like being against all Federal spending except that in your
own state. And it is from the special appeals of many such segments in
our economy that the campaign for new trade restrictions has taken shape.
The danger is that, acting out of concern for their own special problems,
these industry groups, combined, might succeed in turning back the
clock in our country's trade relations.
Turning back the clock could mean a return to
the protectionist days of the Smoot-Hawley Tariff of 1930. That act, a
reaction to the stock market crash of 1929, not only shut off imports but
reduced our exports -- through reprisals -- to a mere trickle. Coming at
the very start of the depression that rash act robbed us of hundreds of
thousands of jobs just when the economy was least able to handle such a
ARGUMENTS AGAINST RESTRICTIONS
Ever since the mercantile days of Adam Smith and
his Wealth of Nations in 1776 there has been one matter on which
nearly all economists have agreed: that nations benefit from free trade
and are harmed by high tariffs. Yet protectionism remained for nearly 200
years as the prevailing rule in world trade. Only in the years since World
War II have we seen any significant departure from this pattern. The big
break-through, of course, was the