IN THE PAST 10 years, the volume of world trade has doubled and the American standard of living has risen by nearly one-fourth. There is a relation between these two developments. The steady expansion of trade among nations has been one of the driving forces behind the economic growth that has continued here and in most other countries. To keep these trends going, most of the world's governments have joined in negotiating the new trade rules that some of them began initialing last week in Geneva. For the United States, the debate over these rules will come home in a big way next month when the administration asks Congress to enact them into law.
In the past, this kind of trade negotiation has been directed at reducing tariffs. But tariffs are now so low for most kinds of goods that they have little effect on trade. This time the negotiators have attempted to address the other, much more complex devices that can give one nation's products an unfair advantage and hurt the sales of others.
Most of the rich nations, for example, subsidize their exports with cheap loans to foreignbuyers. The competition in providing bigger and cheaper loans rapidly becomes self-defeating, and governments have come to see the need for limits. But then other and more subtle issues arise: Exactly what constitutes a subsidy? What about the low-interest loan by a government-controlled bank to an industry producing for export? What about the continuous deficits of state-owned European industries? Subsidies and tax breaks are deeply engrained in all of the advanced economies. Until now, there has been no consensus on what is and is not acceptable in world commerce.
Most countries enforce extensive health and safety standards on imports. Some of these standards are so onerous that they keep out the imports altogether. Then the arguments start over whether some of the American automobile safety requirements were not devised with the thought of making it a little more expensive to import foreign cars. With the vast expansion of trade in recent years, very large amounts of money are at stake in this kind of question.
Trade, of course, is never solely a foreign-policy issue. The benefits of trade are real and important; but when imports rise, it means that they are taking customers away from domestic industries. So Congress is shortly to be confronted with a painful pradox: To advance the national prosperity, it is going to have to vote for policies that inflict specific and local damage on some of its constituents. If President Carter intends to argue the casefor the national interest in trade, he cannot begin too soon.