Free Trade v. the New Protectionism

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WRISTON: I have just been over to Europe, and I got this curve ball thrown into every conversation. They would say: "Why don't we join hands against Japan?" I would say: "You have textile quotas against Japan; why don't we join hands and lower those, too?" And they would say: "You don't understand the problem."

KENDALL: Through its import quotas and other barriers, Japan now maintains import restrictions on 80 items that are in violation of the General Agreement on Tariffs and Trade. Under the GATT arrangement, we can project what these violations cost our industries in total dollars and then stop an equivalent amount of Japanese goods at our own borders.

FLANIGAN: It would be nice to take that proverbial two-by-four and get somebody's attention. But Japan has reduced its items in violation of GATT from 120 to 80, and we expect the number to be down to 40 by September. Meanwhile, we are attempting to negotiate an extension and tightening of the voluntary limitations on steel imports. We have negotiated a voluntary limitation on stainless-steel flatware. We are now talking about shoes, and we may attempt to solve that problem by a voluntary limitation. Is it appropriate that while we are discussing these voluntary limitations with the Japanese, we take off after them on their remaining GATT violations, when they are already reducing them?

What is the case for free trade?

LAZARUS: When you put up a barrier and there is retaliation, the consumer ends up losing something. I am not sure all industries should be protected when they are threatened by foreign trade. For instance, in the shoe situation: Italy knocked the socks off the U.S. by developing shoe styles that hit right with the trend of dress and the predominant fashion today. They beat our industry not nearly so much in price as in style. That kind of thing is important to the U.S. consumer. You have to put the consumer's interest first. BRADSHAW: The question ought to be, what are the goals that we are trying to accomplish? Are we trying to protect every industry in the U.S. in its present form? Are we trying to maintain full employment by erecting trade barriers? Are we trying to protect high labor wages? Are we trying to protect our current technology? Are we trying to freeze our economy? I could not agree with most of these objectives. We can start with selecting of certain industries that are essential to the basic economy of the U.S., and they must be protected in some way. Beyond that, I don't think that we should hamper the free flow of trade to the building in of rigidities that are likely to strangle us in the end.

WRISTON: I am not sure that we should throw away the benefits of free trade because at the moment we haven't found the levers of power to pull to compete against Japan. To remedy our present problem, we will have to examine many things: our antitrust policy, our policy of excluding unions from antitrust legislation, our tradition of the natural antipathy of business and Government. The way to fix our problem is not through an escalating trade war but through opening up markets of the world to more goods. Protectionism is a losing game any way you play.