Trade Fight: Round I

As a wary Congress prepared to open hearings on John Kennedy's" broad new bill to expand U.S. trade abroad, the President tried shrewdly last week to unstarch the protectionists' arguments. He released the facts and figures of the final tariff-chopping deal under the expiring Reciprocal Trade Agreements Act to show that his Yankee traders did very well indeed.

In a swap with 25 nations (mostly in Western Europe), the U.S. granted tariff cuts on imports that had a 1960 trade value of $2.9 billion, in return got tariff reductions on U.S. exports with a value of $4.3 billion. With Europe's six Common Market countries alone, the U.S. bargainers gained concessions on exports worth $1.6 billion in return for cuts on $1.2 billion worth of imports. "We've won a one-sided deal from the Common Market," said an Administration spokesman, "but we can't do it again. Next time we must be prepared to pay more."

Something for the Girls. The usual tariff cut amounted to 20%, though some were notably higher. In the reduction involving the biggest volume of trade, the U.S. pared the duty on foreign cars by about $21.50, while Europe lowered its tariffs against U.S. autos by $126. Though President Kennedy singled out this deal to crow about, the reduction will scarcely help Detroit because the Common Market's new auto tariff against outsiders is still a stiff 22% O. the U.S.'s 6 1/2%), and exorbitant excise and horsepower taxes increase the European price of Ford's Comet to about $5,000. The U.S. also agreed to tariff easing on certain machinery, electrical gear, steel products, glassware and diamonds. Europe countered with lighter duties on radio and TV transmitters, planes and aircraft parts.

Kennedy timed these details to come out just before the House Ways and Means Committee begins hearings this week on his more ambitious new trade program because, as an aide says, "We expect a rough, bloody fight." Congress is always reluctant to surrender power to the White House. Now it is being asked to empower the President to cut most tariffs in half and to sweep them away altogether in industries in which the U.S. and Western Europe dominate world production, e.g., cars and trucks, farm and office machines, planes, coal, rubber products.

In this campaign, Kennedy is bringing up his heaviest artillery. This week's lead-off witness, Commerce Secretary Luther Hodges, is expected to point out that of last year's $15 billion in U.S. imports, $9 billion worth consisted of raw materials that actually helped to make U.S. jobs. Afterward, Labor Secretary Arthur Goldberg will stress that the Kennedy bill provides for Government "adjustment assistance" to companies, managers and workers who are damaged by trade liberalization. Also going up to testify: Treasury's Dillon, Agriculture's Freeman, Defense's McNamara, and free-trading spokesmen for everyone from the U.S. Chamber of Commerce and the A.F.L.-C.I.O. to the League of Women Voters.

The Administration's great good luck is that Congress now has no articulate and commanding protectionist zealot. But there will be abundant opposition from Congressmen whose home folks stand to feel an import pinch, and from armies of lobbyists from such industries as textiles, chemicals, glass and electronics.

Smashing Some Icons. Much of the controversy swirls around the President's attempts to undermine two oldtime safeguards against import dislocations. One is the "peril point" clause, which permits the Tariff Commission to recommend the lowest "safe" tariff on many items and then pretty well binds the President to accept its recommendation. The other is the "escape clause." which permits the Tariff Commission to recommend higher duties if an industry is able to show substantial import damage. In the wide agreement announced last week, Kennedy bravely pierced the peril point 61 times, and said he did so to save the negotiations from collapsing entirely.

If times were more normal, with neither Communism nor the Common Market to worry about, Jack Kennedy would probably settle for slower change. But with the Common Market radically razing internal tariffs and raising a common external tariff, there is an urgent feeling in the White House that the U.S. needs to take radical measures itself if it is to sell to the yearning European Common Market of 170 million people, and to preserve its $2 billion surplus in trade with Europe. More important, this may well be the last opportunity to keep the Western world from being split into two rival economic blocs--a development that could only benefit its enemies.

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