Free and Fair Trade Policies: The United States and World Trade

FREE AND FAIR TRADE POLICIES: THE UNITED STATES AND WORLD TRADE Malcolm Baldrige Xnternational trade is an increasingly important component of the U.S. economy. Over the past ten years, U.S. exports of goods have more than doubled, while U.S. exports of services have grown even more rapidly. Jobs and income are generated with each expansion of trade. As it has become clear that international trade contributes to the development and maintenance ofa strong U.S. economy, the trade policies of the Reagan administration have come under increased scrutiny and have been the object of criticism by some foreign and domestic groups. Two themes are evident in these criticisms. First, that U.S. trade laws and policies are used inappropriately as foreign policy tools and without regard to the economic consequences for U.S. interests; and second, that the administration's trade policies and implementation of U.S. trade laws have been protectionist, and are designed to shelter uncompetitive U.S. industries from the realities of the international market. These criticisms are inaccurate and unfounded. The administration recognizes that trade sanctions are sometimes necessary to support crucial foreign policy and national security objectives. However, this Administration's trade policy is intended to further economic, not political, goals and to have commercial trade, as far as is practicable, governed by economic considerations. In the vast majority of trade issues, economic considerations predominate . Open and fair world trade is one of our foremost economic goals, as is improving U.S. industrial competitiveness internationally. Neither of these goals is advanced through a policy of protectionism. Our policy can be more fully clarified by responding in some detail Malcolm Baldrige is secretary of commerce for the United States. 179 180 SAIS REVIEW to each of the above criticisms. In response to the first contention that U.S. trade laws and policies are used inappropriately as foreign policy tools and without regard to the economic consequences, the administration 's position is: Because trade actions can have such powerful economic effects, every trade action also has international political consequences. However, this administration's policy is to limit the use of international economic and trade policy as a tool to further other U.S. international political aims. When used to that end, policies are implemented according to clearly identified statutory criteria. This administration adheres to the philosophy that government intervention in the international and domestic market should be limited. Notable statutory exceptions to this general policy are the president's authorities to control exports under the Export Administration Act and to control imports under Section 232 of the Trade Expansion Act of 1962. The Export Administration Act authorizes the imposition of export controls for reasons of national security, foreign policy, and short supply; Section 232 authorizes import controls in the event of a threat to the national security. No one would argue against the proposition that national security objectives can be paramount to other U.S. objectives. It is equally clear that trade sanctions are one of the weapons in our policy arsenal that can be employed to achieve our critical national security objectives. The control of exports of militarily relevant goods to potential adversaries is broadly accepted and is practiced worldwide. The importance of the Section 232, which authorizes control of imports to avert a threat to the national security, is equally apparent. The General Agreement on Tariffs and Trade (gatt) authorizes national security controls as a justified exception to the open market system. Even given the acknowledged importance of national security objectives , the administration has been sparing in its use of the authority to take trade-restrictive actions for national security reasons. The president has restricted imports on national security grounds in only one (the case of oil imports) of the five Section 232 cases he has considered. One of the most important trade actions of this administration is the recent decision to place China in a less restrictive export-control category, easing the flow of trade to that country. Consistent with our essential security needs, the United States intends to participate fully in China's modernization efforts, and this policy change will enable us to do so. This action is an excellent...