End of Reciprocal Trade?

The keystone of U.S. trade policy since 1934 has been the Reciprocal Trade Agreements Act, under the terms of which eight successive Administrations have reduced the nation's tariffs from 18 1/2% of the total value of imports to only 6%. Next June the Reciprocal Trade Act expires, and a knee-and-gouge battle over its renewal is already looming in Congress. The word in Washington is that the Kennedy Administration is presently minded not to try to extend the act.

Trouble from the South. The act is under the sharpest attack from the protectionists since World War II. Last week 18 Senators joined to co-sponsor a bill, dropped in the hopper by New Hampshire's Republican Styles Bridges, that would oblige the President to accept every tariff-boosting recommendation put forward by the U.S. Tariff Commission. (Presidents Truman and Eisenhower rejected nearly two-thirds of the commission's proposed tariff increases.) Alarmed, New York's Republican Jacob Javits prepared a counterattack urging the Administration to take the initiative in fighting to uphold reciprocal trade.

Paradoxically, the attack on freer trade comes at a time when protectionist sentiment in the business community seems to be declining. Dun's Review, querying 260 corporation presidents, reported that nearly 60% of them firmly oppose tariffs. But protectionists wield increasing political influence. Southern Congressmen who used to be major advocates of free trade have become increasingly protectionist. The cause: the once agrarian South is now more interested in building a tariff shelter over its burgeoning industries than in finding overseas markets for its cotton.

Help from Outside. If the Kennedy Administration renounces the Reciprocal Trade Act, it must find something better that it can put through a reluctant Congress. President Kennedy is expected shortly to appoint as his foreign-trade adlviser Howard C. Petersen, 51, vice chairman of the free-trading Committee for Economic Development and president of Fidelity-Philadelphia Trust Co.

Petersen favors a shift in U.S. emphasis from case-by-case tariff reductions to multilateral deals, through which whole groups of nations (in particular, the six-nation European Common Market) would agree to freer trade. Further, he urges that all industrialized nations jointly lower their tariffs to permit a greater flow of imports from developing nations. The question is whether the Administration can sell such a policy to Congress and to U.S. allies--or if it can shift to any new policy without losing much that has been won in getting reciprocal trade extensions through successive Congresses.

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