U.S. Trade Representative William E. Brock appealed to the nation's governors today to help defeat "Buy American" legislation at the state and federal level that he said could plunge the world into a depression as serious as that of the 1930s.
Appearing before the National Governors Association, Brock said the "domestic content" legislation, cosponsored by more than half the members of the House, was "the most dangerous step" toward protectionism the country has faced.
The bill, which would require an auto manufacturer to produce a certain percentage of a vehicle in the United States before it could be sold here, "would violate every agreement we have made and break up the international trading system," Brock said.
The Cabinet official recalled that "under very similar circumstances" in the 1920s, Congress passed the Smoot-Hawley tariff, which "brought world trade to a crashing halt. It took World War II to bring the resulting depression to an end . . . to forget that history is dangerous and unwise."
Brock also warned that state "Buy American" laws "won't work--they will only make matters worse."
He cautioned the states not to adopt export subsidy programs that could "blow out of the water . . . the progress we have made" in negotiating against abuse of such subsidies by other countries. He asked the governors to check their export subsidy plans with his office.
Brock was challenged by Texas Gov. William P. Clements (R), who wanted to know what the government was doing to open the Japanese market to Texas beef. "Our cattle people tell me they can't get a steer off the boat in Tokyo, there's so much regulation," Clements complained.
Brock said that Japan is the United States' best customer for agricultural goods and will purchase $7 billion of farm products this year. "Beef and citrus products are the only things they try to exclude," he said.
"We happen to have both of them," Clements shot back.
Clements said "harassment" of beef exporters was so serious that "we in Texas might consider putting some special licensing requirements on for Toyotas."