Shultz Speaks Out Against Protectionism

Secretary of State George P. Shultz, continuing the Administration’s low-key response to trade tensions with Japan, warned today against protectionism and said all U.S. trading partners should work toward sustained world economic growth.

“We--and other countries--share a responsibility to make some hard political decisions,” the secretary said in a speech at Princeton University, his alma mater. He called for reducing global imbalances in trade, investment and currencies.

Shultz, an economist, gave an address that was partly a basic economics lesson and partly a preview of the position President Reagan will probably take next month at the seven-nation annual economic summit in Bonn.

Shultz warned against turning to protectionism in the face of growing trade tensions, especially moves in Congress and elsewhere to force Japan to shrink its trade surplus.

“Protectionism is not the remedy to an illness,” Shultz said. “It is, itself an illness. . . . Protectionism keeps prices up, reduces living standards and stifles growth.”

The secretary said: “We can break the back of the trade deficit only through a combination of, first, a stronger worldwide recovery, and, second, a strengthening of other currencies in relation to the dollar. . . . Even with movement on these fronts, the effects on the trade deficit will be gradual.”