Trade disputes tend to proliferate when times are hard, and it takes only a quick glance at the current roster of trade issues to see how hard times are, not only in the United States, but around the world.
Congress is under heavy pressure to enact protectionist legislation for the auto industry. Farmers, facing a bumper crop and weak markets, are seeking government subsidies to help them sell their grain abroad. Producers of steel, mushrooms, small airplanes, and a hundred other products are seeking tariff protection against imports.
Maritime interests are supporting legislation to give American-registered vessels a guaranteed share of bulk cargoes. Domestic apparel makers are trying to reduce this country's imports from China, but large volume retailers such as K-mart, seeking to hold costs down, oppose their proposals as "wnwarranted, unfair and unnecessary." A group of trade associations and manufacturers ranging from Motorola Inc. to the Poultry and Egg Institute is pressing for enactment of measures to force foreign countries to open their markets to U.S. products.
At the same time, many nations -- especially in the developing world -- are insisting that U.S. suppliers either take payment in goods instead of cash or make investments in their countries to offset the value of their sales. In a recent classic example, Greek controls on imports obliged a Greek manufacturer of plexiglass motorcycle windshields to resort to a barter deal to import chemical feed-stocks. The supplier, an American company, was paid not in cash but in goods -- discount motorcycle windshields.
The United States, which was preparing to go to the ministerial meeting of the General Agreement on Tariffs and Trade (GATT) in November seeking negotiations for international rules governing trade in services as well as commodities, may have to drop the idea because its European allies are so angry over the Soviet pipeline dispute, that they would rebuff any new proposals from Washington.
The Reagan administration, inevitably, has been caught in a three-way squeeze between its professed free trade philosophy, the demands of business and labor for trade measures that would help the economy, and its own penchant for using trade sanctions as a political weapon abroad.
"We are far more open than any other country," Special Trade Representative William Brock said last week. "But what we are saying is that doggone it, it's about time we got trade back as a two-way street. And if we're going to keep our markets open and we're going to make the commitment that we have to our foreign partners to oppose protectionist legislation in the Congress, we expect them to open up their markets for our products."
The use of trade sanctions to deliver political messages to the Soviet Union, he said, is not inconsistent with the Reagan administration's open-market philosophy because "we have always made a distinction between national security and strategic or critical materials of that sort and the kind of materials that would generally be classified as agricultural goods, consumer goods . . . the bottom line is that we just have to do certain things in this country to demonstrate our conviction that people have a right to join a church or a labor union, or whatever else, whether it's in Poland or around the world. And if we don't stand up for some basic principles, we have no leadership role at all."
Trade issues have always been difficult by nature because they involve not only the interests of producers and consumers, but the conflicting aims and economic systems of different nations. But the current crop of disputes is intensified by the sweeping changes that have occurred in the world economy during the past 20 years.
The major industrialized nations, including the United States, feel obliged to shore up the aging smokestack industries," such as steel, which are the traditional backbone of their economies. Developing and Third World nations, in their first or second generation of independence, are creating their own industries and seeking export markets for their products. And industries in the developed nations are now facing competition from new factories in Third World and communist nations for which they supplied the materials and technology.
Chemical exports from Eastern Europe to the United States, for example, rose from $48 million in 1975 to $308 million in 1980, after U.S. companies sold $3.5 billion worth of equipment and know-how to COMECON nations, according to a report by the International Trade Commission.
Thibaut de Saint Phalle, director of International Business and Economics at Georgetown University's Center for Strategic and International Studies, said "the reason the pressure is so great now is that we are going through a technological revolution. We are going to have the same kind of revolution we had in agriculture, but the latter took place so gradually that nobody really noticed it. In manufacturing, this irreversible process is going to take place in 15 years or less. All the old smekestack industries are in trouble, not just in themselves but from the competition we have created in developing countries."
He said traditional government responses to trade pressures, such as subsidizing exports or shoring up failing industries, fail to recognize that "the workers are not going to go back into making steel or automobiles. We are going from a labor- and energy-intensive world into a knowledgeand capital-intensive world," where the economy will be based on new kinds of jobs and products.
That long-range view underlies the desire of such service-industry giants as American Express Co. to expand the GATT's international framework to cover trade in services -- banking, accounting, engineering, transportation -- as well as manufactured goods and commodities.
Legislation apparently nearing enactment in Congress that would greatly expand the president's authority to retaliate against nations that exclude U.S. goods from their markets also includes a mandate to the special trade representative to seek GATT coverage or similar rules for the service industries. Supporters argue that the United States now has primarily a service-based economy and the future growth of exports will be in services, so international rules are needed to fend off protectionist measures by other nations.
Also under consideration is a measure strongly supported by the United Auto Workers that would require Japanese car makers to assemble many of their cars in this country and use as much as 90 percent American-made components. Brock said last week that the administration strongly opposes this measure, and hopes to have it killed in the Republican-controlled Senate.
The most immediate trade issue, however, is much more tangible and old-fashioned. Before the end of September, the International Trade Commission must decide whether imports of subsidized European steel have caused "material injury" to the domestic steel industry.
If, as expected, the commission finds injury, duties up to 26 percent will be levied on steel from several Common Market countries. The steel issue, along with the dispute over the Soviet natural gas pipeline to Europe, has cast a deep chill over U.S. relations with its Western European allies, and the administration is still hoping for a negotiated settlement that would head off the imposition of duties.