ONE OF THE big issues next year, it's becoming apparent, will be trade. Will this country erect more trade barriers, and will other countries, in retaliation or acting in behalf of what they see as their own interests, do the same? Most Americans today are too young to remember the political debates of the early 1930s over trade issues, and few remember how the Smoot-Hawley tariff of 1930 and the protectionist measures of economically troubled European countries helped to produce the prolonged economic downturn that continued until we went to war. One of the great achievements of the postwar world was the establishment of something reasonably close to free trade between the major developed nations. It was one of the main engines of the unprecedented economic growth of the 1950s, 1960s and 1970s.
This system of free trade is now in danger of being eroded, here, in Europe and in Japan. One reason is that free trade is an abstract position, without enthusiastic mass backing, while proposals for protectionism are all too concrete and have powerful political constituencies. Protectionism will not come, as it did in the 1930s, in the form of an omnibus tariff bill, making its way through the House Ways and Means and the Senate Finance committees; one reason is that there are staunch free-traders among their leaders. Instead, protectionism is sold piecemeal as an emergency measure to help industries in special trouble: the local-content bill for the auto industry, steel import quotas for big steel, textile import restrictions, and so forth. For each measure, there is a strong lobby, made up of businessmen and union leaders, strongly based in one part of the country but with backers in other regions as well.
Who is on the other side? This recession has been particularly tough on those interests -- multinational corporations and agricultural exporters -- who have been the natural opponents of trade barriers; in their distress, even some of these are seeking protection. The Reagan administration may be the leading institutional force against protectionism today; yet the administration itself, under political pressure, does what administrations under pressure usually do and has supported protectionist measures, forcing on Japan "voluntary" limits on auto imports and strengthening the steel import quotas in the month before the midterm election. The pressures will be strong for protectionism as we move into a fourth year with no economic growth. Most of the policy-makers know that in the long run, trade restrictions hurt more than they help. Are they prepared to stand up and say no to those seeking protection?