Evening star., 1940-01-14
Discusses Future Value
Of Trade Agreements
By Oicen L. Scott.

ilIS power 10 neROClaCe reciprocal trade
agreements with other nations is power
that is vital to the Nation. This power
expires next June IL unless renewed by
Congress, and Mr.. Roosevelt is prepared
to do battle for its extension.
BY this attitude and action, the Presi-
dent does two things.
One Is to elevate Cordell Hull, Secre.
tary Of State and author of the recipro-
cal trade policy, to the highest ranking
position among oncials who might get
presidential support as a successor. Mr..
Hull now looks like the most probable
compromise candidate for the Demo-
cratic nomination II Mr. Roosevelt is not
drafted.
The other is to reveal that the Presi-
dent definitely is giving up the idea Of
further reform. The reciprocal trade
program is farthest from New Deal
principles of any Of the plans accepted
by the President. 1t is based upon the
idea that the United States should turn
to world leadership in trade and finance
and should try to divert ito course from
that of nationalism, as represented by
New Deal controls.
AS result, the Presidents very strong
stand on the reciprocal trade principle Is
Of great political Importance. It's prac-
tical Importance. so far as affecting re-
covery at home or trends in the world
outside, is negligible. How negligible Is
shown by the fact that negotiation of
agreements with Argentina and Uruguay
has collapsed because this country re-
fused to make any really important con-
cessions. Existing agreements are large
ly destroyed by wartime restrictions in
the countries with which the United
States has dealt.
But, in view of the argument that is
going to occur in Congress, an explana-
ton Of the program is in order.
That explanation goes back to the first
World War for its origin. At the start of
that war, the United States owed money
to the nations that were fighting. She
was a debtor nation, and, of necessity,
had tariffs that were geared to keep out
foreign goods so that funds needed to
pay interest and principal on debts would
not be diverted to paying for goods in
stead. 1t was necessary to export more
than was imported in order to obtain
foreign exchange to service the debts.
After the war, the nations of Europe
owed vast sums to the United States and
the tables were turned. Then they either
had to sell more to the United States
than they bought from the United States,
or they had to ship gold in order to pay
their bills.
Mr.. Hull came forward with trade
agreements as the answer to this trade
problem and as the basis for rebuilding
the old-and more satisfactory-order in
the world. His idea was that the United
States should agree to lower its tariffs in
return for agreement by other nations
to lower their tariffs and to give up vari-
Gus controls over exports and imports
and currencies.
The theory was that, as controls came
of, trade would flow more freely, and
this freer flow of trade would lead to q
return Of world recovery.
Under the trade agreement program,
the United States has made agreements
with 81 nations, including great Britain,
Canada, France, Belgium, Holland, Bra
zil and others. But the expected results
have not followed.
Reasons are many, including these:
l. Trade agreements were sold to the
country as basis of world recovery. In
actual practice, agreements turned out to
be nothing more than vehicles for bring
ing about some very slight reductions in
tariffs, reached by executive negotiation
instead of congressional log rolling
In the case of Argentina, this country
permitted negotiation of an agreement
to collapse rather than make concessions
to that country that would offend Amer
ican farmers. Not much world trade
reform can come from a policy that
cannot function whenever political OBJ
jections are raised.
2. New Deal policies clashed violently
Win the trade agreement principle
Price controls in agriculture, dumping
policies in agriculture, labor controls, all
were in conflict with the policy that the
President now accepts as basic.
3. Mr.. Hull himself did violence to his
program by refusing to deal with the
very nations-Germany, Italy and Japan
whose trade policies had to be altered
if the world was to mend it's ways in the
prewar period. Those nations found
themselves driven deeper and deeper into
nationaliSm, as they found world markets
contracting.
agreement idea was blown sky high. Brit
ish and Canadians and French went in
for all Of the controls that Germany and
Italy and Japan had imposed.
Currencies everywhere now are con-
trolled. Imports are licensed Exports
are subsidized. Prices are controlled by
governments. AS a result, the trade
agreement program today is nothing
more than a paper program with no
practical meaning
Then why the Importance attached to
the program?
The answer, other than a political
the character of the postwar world. Mr.
Hull and Mr.. Roosevelt are wondering
what will happen after war has further
impoverished the nations of Europe and
has left the United States with all of the
goods in the world and with ownership
OF much of the foreign investment Of the
world.
r.