A revival of protectionism in Congress came close in the Senate on Wednesday to sidetracking important trade talks with Canada, is moving a dangerous bill toward approval in the House and has pushed the Reagan Administration into a posture that invites a trade war with Western Europe. All this is bad news.
President Reagan was able to rescue the Canadian negotiations only with extensive lobbying, and then he produced only a tie vote in the Senate Finance Committee--the minimum required to assure so-called “fast-track” talks with Canada to complete arrangements for a free-trade zone between the two nations.
The opposition to the Canadian free-trade proposal had nothing to do with the merits of the freeing of trade between the world’s largest trading partners. There is overwhelming support for the plan. The proposal was seized by some senators, led by John C. Danforth (R-Mo.), to punish the President for what they said was a failure to involve them enough. What they really meant was that the President was not buying their brand of protectionism.
The House bill, moving toward a vote in the Ways and Means Committee, is a blatant move by the Democrats to embrace protectionism as a way of attracting votes in November in states where foreign competition has contributed to unemployment. The proposals, including mandatory retaliation, would only serve to disrupt the rules of fair trade and inspire trade wars at the very moment when new negotiations for better rules are beginning. Furthermore, the promise of help to American workers is a cruel illusion, for the legislation would protect few jobs, if any, while postponing the serious restructuring of the U.S. economy that is the only effective long-term strategy to maintain U.S. competitiveness abroad.
The President’s firm stand against the blatant protectionism in Congress is a significant contribution to national economic vitality. Unfortunately, however, the political pressure from members of his own party in farm states has encouraged a counterproductive confrontation with the Western Europeans over American farm exports. There are indeed serious problems in agriculture, but they are on both sides of the Atlantic, where massive subsidy programs distort markets and fuel unfair trading practices. The policy of threats and confrontation may excite voters in Iowa and Kansas, but the reality is that such talk places in jeopardy the largest market for American farm exports. Negotiations last weekend showed that there is room to moderate abuses both by the United States and by Western Europe, but the abuses are better abated by quiet negotiations than by hurling insults and threats.