Free Trade v. the New Protectionism

Monday, May. 10, 1971

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AT the highest levels, U.S. Government and business leaders are reappraising the nation's foreign trade policy.

The challenge of Japan is the major reason for this rethinking, but it is not the only one. A feeling has been growing that many nations are taking commercial advantage of the U.S. As a result, the movement toward freer trade

—which the U.S. has championed ever since World War II

—is in danger of stalling. The pendulum appears to be

swinging toward protectionism.

To assess the situation in trade, and to analyze some policy steps that the U.S. could take, TIME invited twelve top business decision-makers to an all-day meeting with editors of the magazine. The guests included eleven corporate chiefs, representing a spectrum of divergent interests and opinions, and an assistant to President Nixon (see box). Excerpts from the discussion:

Is protectionism rising in the U.S.?

DONALD KENDALL: I don't think anybody could possibly say that there has not been a move toward protectionism. There are more than 100 industries asking for protection. Another indication is what has happened in the labor movement. Labor has historically been on the side of freer trade, but the unions, except for the United Auto Workers and the aircraft unions, have pretty much switched to active protectionism.

PETER FLANIGAN: The U.A.W. stand is probably more a memorial to Walter Reuther than an expression of the sentiment of the members. Clearly, there is a great degree of protectionism in Congress. Agriculture has put up a strong barrier against protectionism in the past, but there is substantial erosion even there. Should there be an effort to expand meat imports substantially, I think you will find as big a split starting in agriculture as occurred in the unions.

DONALD McCULLOUGH: I would hope we could go through this symposium without drawing lines: protectionism v. free trade, the black hats v. the white hats. In this year 1971, the issues regarding international trade are much too complex to make such sharp distinctions.

ELY CALLAWAY: Rather than call it U.S. protectionism, I would call it a beginning toward an enlightened and reasonable economic nationalism. The rest of the world has practiced economic nationalism, but we have not.

THORNTON BRADSHAW: Each one of us is, I suppose, a free trader except with regard to his own industry.

RALPH LAZARUS: I am not sure that the public is aware of protectionism as such or free trade as such. Certain businesses are hurt because of inequities or because of more efficient competition from foreign countries. But if consumers were locked out from low-priced Japanese apparel, if the supply became limited and they had to pay higher prices, you would begin to influence them the other way.

What accounts for protectionist power?

C. PETER MeCOLOUGH: Along the freeways in Los Angeles, in the space of 15 minutes, you see six Japanese companies with large signs. You see Toyotas everywhere on the road, and everybody's second television set is a Sony. At the same time, the public is aware of the restrictions that are placed upon us in trying to make investments in order to bring our products to certain other countries.