Backward March

Five months ago, after the U.S. and 52 other nations concluded the Kennedy Round and agreed on wide-ranging tariff cuts, the pact was hailed as a historic step forward in world trade. Yet last week the U.S. verged on a backward march. Pending in the Senate were seven bills--the central one pompously called "the Orderly Trade Act of 1967"--that would establish stricter quotas on imports ranging from steel to strawberries, from textiles to goat meat. If enacted, the bills would set limits on $12 billion worth, or 50%, of total U.S. imports. Liberalized-trade advocates compared the Orderly Trade Act proposal to the restrictive Hawley-Smoot Tariff Act of 1930. Secretary of State Dean Rusk, in a rebuttal that skillfully invoked diplomacy and the dollar sign, pleaded with the Senate not to "retreat into protectionism."

Vortex of Battle. The Senate is the vortex of the trade battle because it must ratify agreements on grains and chemicals before the Kennedy Round tariff cuts can be implemented. Aware of this, a high-tariff bloc, concerned over competition from rising imports, got congressional attention first with measures designed to bypass the Round's tariff cuts, averaging 35%, with a system of stricter quotas on goods allowed into the U.S.

Meeting with Illinois' Republican Senator Everett Dirksen at his Virginia home, six steel executives--whose companies had just increased domestic steel prices--persuaded the minority leader to back a bill that would slash imports of 125 kinds of foreign steel products by as much as 40%. South Carolina's Democratic Senator Ernest Rollings meanwhile got 68 Senate cosponsors for a bill that would reduce imports of textiles from 2.7 billion sq. yds. a year to 1.7 billion sq. yds. In all, the seven bills would lower imports on a range of products including beef, mutton, veal, mink skins, zinc, footwear, oil, watches and dairy products. Even liberal Senators, under badgering from home, seemed sympathetic. Wisconsin Democrat William Proxmire sided with the dairy interests. Both Kennedys agreed to sponsor quota measures opposed to the spirit of the Kennedy Round, which was named after their older brother.

Bobby backed Rollings' textile bill, while Teddy cosponsored a proposal by fellow Massachusettsan Edward Brooke to protect New England electronics firms.

Legislative Ploy. Lobbyists, signing up in record numbers to support the bills, pushed a legislative ploy to accomplish it. The quota legislation ended up in Louisiana Democrat Russell Long's Senate Finance Committee as riders on a bill raising social security benefits 12.5%. The reasoning was that President Johnson would be loath to veto the social security provisions. Jubilantly, Oscar R. Strackbein, who as chairman of the Nationwide Committee for Import-Export Policy is the chief lobbyist for high tariffs and has been around Washington longer than many a legislator, predicted that this time trade restrictions would be adopted.

That was before last week, however, when Long and the Senate began to get flak from the anti-protectionist side. Angry protests poured in from Britain, Australia, Canada, Japan, Denmark, Finland, Sweden, Norway and 14 Latin American nations. The six Common Market members sent six separate notes of protest. The complainers intimated that if the U.S. insisted on being protectionist, they would refuse to ratify the Kennedy Round agreement. Moreover, under present GATT regulations, they are free to put quotas of their own on imports from the U.S.

Smaller Markets. The size of those U.S. exports and the effect of a cutoff made up the ammunition hurled at the Senate last week by a platoon of Cabinet members sent up the Hill by President Johnson. Agriculture Secretary Orville Freeman pointed out that one acre of every four of U.S. farmland grows food for export, and exports provide work for one out of every eight U.S. farmers. Interior Secretary Stewart Udall argued that oil import quotas should be less rigid in order to give the Government flexibility in maintaining the national security. Rusk cited some U.S. annual exports--$369 million worth of computers, $188 million worth of farm tractors (or 20% of total output), $371 million worth of fruits and vegetables. "Which of these sectors," asked he, "do you think is prepared to have a smaller market in exchange for insulating other sectors of our economy from import competition?"

Despite such pleas, some sort of import quota restrictions seem likely to go through the Congress. And if that happens, the result can only cause incalculable damage to the cause of world trade, upon which the U.S. itself increasingly depends.

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