"I was nurtured on the free-trade concept in college during the Roosevelt years," says former Democratic Party National Committee chairman Robert S. Strauss, nominated by President Carter to be his special trade representative.
"My concept was that free and open trade is needed to provide peace in our time," he said in a recent interview. But the time has come when even dedicated advocates of free trade must realize that it is not an end in itself, but involves tradeoffs and options for the economy, Strauss noted.
The administration's top trade negotiator says he is not about to abandon the goal of eliminating barriers to trade among nations, but cautions that in pursuing "a free-trade course we must take into consideration the needs of our own economy," including jobs, investment and inflation.
In this cautious and circuitous way, Strauss acknowledges that the free-trade movement which filled the United States in the 1960s - nurtured by postwar prosperity, low unemployment and low inflation - has been replaced by a growing protectionist tide when, ironically, the nations of the world have been meeting in Geneva for more than a year to negotiate reductions of barriers to trade.
Unions, manufacturers and many congressmen have learned that foreign imports which replace American products also supplant American jobs. They also contend that the United States has played the free-trade game by the rules while its trading partners often have not. In the courts and in the federal agencies, big and well-organized assaults on imports have been launced by industry, unions and alliances between the two.
Arrayed against the industrial-union alliances are loosely organized consumer groups who worry about inflation and retailers who sell the imported products. The White House's inflation watchdog, the Council on Wage and Price Stability, also argues that protection is a very expensive way, from the consumer's point view, to protect jobs.
"The constituencies line up a little different than they did when I was chairman (of the Democratic Party)," Strauss commented. Then labor and consumer interests were allied. "It's the same bunch of cats chasing a different goal this time."
Protectionis sentiment among industry and labor has been reinforced by the recession. Because the United States has recovered faster than Erope, the nation's demand for foreign products has picked up, far outstriping foreign demands for U.S. products. The big trade surplus of 1975 (which was due to a deeper slide here than abroad lowering U.S imports) dissipated into a big deficit in 1976, and experts expect more red ink this year.
But protectionist decisions here, even minor ones, could trigger worse protectionist problems abroad. "There is a real risk that with a couple of restrictive decisions here, foreign governments might not be able to resist even stronger pressures," a trade official said. "We've got our troubles (economically), but we are relatively strong" compared with Europe and Japan.
The Carter administration will have its first go at an important trade decision within a month.
In February, the International Trade Commission ruled that imports of shoes were substantially damaging the domestic industry and recommended that a big 40 per cent tariff be levied on all imports in excess of 265 million pairs. If the President affirms that decision, imports from Italy, Spain, Taiwan, Korea and Brazil will be affected seriously. In April, Carter must decide whether to impose quotas on sugar imports and tariffs on black-and-white and color television sets, remedies recommended by the trade commission last week. Most televsion imports come from Japan and, to a lesser extent, from Taiwan and Korea.
The nation's major trading partners are watching Carter's decision on shoes to get a clue to the administration's overall trade policy. They profess worry that increasing U.S. protectionism could hurt world trade seriously. Poor countries, although usually not major suppliers of manufactured products, are worried, too.
"Brazil may be far from our leading supplier of shoes," one trade expert noted, but Brazil's share of the American market may be more important to its well-being than the much bigger share of a country such as Spain is to overall Spanish well-being.
"The trade issue is part and parcel of the North-South dialogue," the official said, referring to the relationship between the rich countries and the poor ones.
Even though the shoe and other trade cases are important to foreign governments, these countreis have not applied much pressure, fearing that it could boomerang, an official said.
Some Japanese manufacturers have suggested a voluntary limit on steel exports to the United States to forestall tougher action, and Japanese officials want government-level talks on the television issue before the President takes action.
The President can accept the recommendations of the International Trade Commission as is, modify them or reject them. Unless he approves them as is, Congress can override. The trade commission was set up by Congress to adminster the 1974 trade law. That law, which paved the way for the Geneva trade negotiations, also made it easier for industries to obtain government protection without having to prove that foreing competition was acting illegally. Foreign industries whose exports are increasing because they are more efficent are just as likely to be hit by the trade commission as are industries who dum be hit by the trade commission as are industries who sump products at below-market prices simply to maintin employment at home or to wipe out competition to build new markets.
Carter officials are aware of this - as were Ford administration economic officials. While Ford gave in to heavy pressure and imposed quotas on imports of specialty steels last year, he resisted other trade commission relief recommendations, including one to the shoe industry. There was no congressional override, but the shoe industry filed again late last year, and the trade commission again found in the industry's favor.
The President will be slow to make a decision and will balance domestic employment, inflationary impacts and foreign reaction in doing so, his aides affirm. But pressures are strong - although some administration officials do not think the labor-industry alliances are as strong as they appear on the surface. Strauss cautions against trying to read too much of the adminstration's long-term trade policy from the short-run decisions it will make in the next few months.
In doing its balancing act, administration officials must decide whether the industry problems are even solvable by protection. Protecting shoes merely may postpone the death of a declining industry. There is almost no domestic black-and-white television industry left.
In sugar, the problem appears to be due as much to increased competition from corn sweeteners and oversupply due to heavy planning in 1974, when usually volatile sugar prices were three times what they are today, as it is to increased imports.
Even if the shoe and television industries can be helped by protection, society may lose far more than the industries gain. The Council on Wage and Price Stability estimates the trade commission recommendations will add $2.4 billion to consumer shoe bills. Because only 21,000 jobs will be created, that translates to a per-job cost to shoes buyers of $114,000.
The International Trade Commission estimates that its proposed quintupling of television tariffs will raise consumer prices by about $200 to $250 million if domestic makers also raise prices - as they have said they must. The commission estimates at least 4,000 jobs will be created. Even if twice that many television workers find employment, it still will cost consumers $31,000 per job.
Carter could face a serious run-in with Congress if he fails to grant "relief" to either the shoe or television industries. It is a Washington truism that the smaller the interest, the better-organized the lobby.
One hundred and thirty-three House members already have written the President, urging him to take action to help the shoe industry. White House operatives think that the 11 unions and dozen television manufacturers have orchestrated an even stronger campaign than shoe makers.