Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-16
REVIVAL IN WORLD TRADE
HELD ONLY CURE OF CRISIS
Loans, Short or Long Term, Must Be Paid
In Goods, and Economists Show Neces-
sity of Removing Political Barriers.

| Colombia, Venezuela and Haytt, failed
to meet our terms we imposed penalty
| duties on their goods. Following the
Dingley tariff act of 1897 the United
States threatened to impose a duty on
Brazilian coffee unless Brazil lowered
its duty on American -four. AS re-
! suit an agreement was made whereby
Brazil lowered its tariff on our flour 20
/ per cent below that imposed on flour
from other countries
/ Upon several occasions European
| governments asked the benefits Of the
tariff concessions made by the United
States in these agreements, under the
INSTRUMENTATION clause in their
commercial treaties with the United
States, but we invariably refused to
grant such requests, on the ground that
reciprocal commercial concessions were
not gratuitus privileges, but could be
| given only for valuable consideration.
Saw Gain in Bargaining.
In other words, European govern
ment could not claim the benefits of
our reciprocity agreement with Brazil
unless 1t made to us the same conces-
sions that Brazil had made, and we re-
served the right to refuse such conces-
sionS II offered. In other words, again
the United States accepted the most
tavored-nation clause only in a condi-
tional form. in contrast to the uncon-
dittonal policy followed by Europe APP
parently the United States believed it
had more to gain from tariff bargaining
than from the principle of non-dis-
elimination.
In 1922, however, the policy Of the
United States underwent a change
The Fordney- McCumber act of that
year prohibited the principle of reci-
procity, and subsequently the State De-
| partment deserted the conditional most
favored-nation clause in favor of the
unconditional form. In an exchange
of notes Of October 10, 1928, the United
States and Brazil abandoned their reci-
procity agreement, while the State De-
partment announced its intention of
negotiating new commercial treaties
eTnbodying this change in policy.
One of the first treaties was with
Germany. on December 8, 1928, which
said: ANY advantage Of whatsoever
kind which either high contracting
party may extend to any article, the
growth, product or manufacture of any
other foreign countries, shall sinulta-
neousiy and Internationally, without
request ana without compensation, be
extended TO the like article, the growth
product or manufacture Of the other
nigh contracting party"
PrOtectiOnIst Sentiment Strong,
This adoption by the United States
OF the unconditional favored. ma
lion clause was partly due to the recop-
milton that the policy of discrimination
IS likely to cause international Ill will.
put primarily to a desire to secure
every advantage for American foreign
trade without giving anything in re-
turn. Protectionist sentiment in the
United States Immediately following
the World War cit has since visibly
Weakened was so strong as to pro-
hibit any derogation from a high tariff
even In return for concessions At the
same time, this sentiment wished to
expand our markets.
II, Tor example, France and Germany
made treaty providing for a reduction
o. 70 Per cent in duties the United
states could not claim the benefit of
such a reduction for American goods
under the conditional st-favored-na-
ton clause which we employed before
1928. Today, however, the United
states may claim such a benefit with
out making any changes in its own
rates, provided, Of course we have a
commercial treaty containing the I'M
conditional clause with the nations af-
fected
Europe Voices Objections.
To many Europeans the most. tia
vored-natton clause, thus interpreted,
has many objectionable features. They
point out that If this clause remains in
effect it viii defeat or severely injure
the efforts to develop free trade in
Europe, to give preference to Balkan
or Danubian wheat. For example If a
European conference should conclude
an agreement granting 90 per cent
preference to such wheat Argentina
and the United States might claim the
benefit of such reduction for their own
wheat under the unconditional clause
In practice, however, the State De-
partment has experienced considerable
difIlculty in concluding commercial
treaties accepting this new principle. BY
July, 1881, the United States had
treaties providing for unconditional
nlost-fayored-n treatment with
only 10 States, Of which Germany was
industrially the most important. We
have temporary executive agreements.
subject TO termination at the discrim-
ination Of either party upon a few
months notice with Is other coun-
tries, including Poland, Rumania and
Spain. We have no kind of agreement,
treaty or otherwise embodying this new
principle with France, the British EN-
pire, Italy, Argentina or Japan.
Issue Acute In 1927.
Most nations do not wish to accord
the unconditional. Observation-Disclosures
clause to the United States so long as
the United States maintains what they
regard as an excessive tariff. This issue
arose in rather acute form in 1927. In
connection with its commercial treaty
with Germany, France increased its
duties so that, for example, American
machinery would have to pay duties
four times as high as the same ma
chinery from Germany. Although the
United States has no most-fayored-na
ton treaty with France, It protested
against the discrimination.
France replied however, that IL
would be 9 step backward TO grant the
United States most = favored nation
treatment without taking into account
the ''protectionisnn of some countries
and the liberalism Of others" France
used almost the same arguments in this
dispute that the United States had used
in defending tariff Bargaining between
iTT8 and 1928 The issue is between
tariff discrimination and excessive tariff
walls
II present tendencies continue 1t
seems probable that European govern
ments will ask the United States to
waive its rights under the moSt-fav-
ordination clause. so chat the Euro
pean countries may proceed to some
form of mutual tariff reduction, such
as eny1Sageo in the plan for United
States Of Europe and recommended IN
a limited form by various agrartan
conferences The immediate result Of
any system Of European preference may
be TO inture American foreign trade.
To prevent such injury the American
Government may attempt TO stand on
its rights under the most -favered-natlon
clause.