Free Trade

In regards to trade, America was a highly protectionist country during the 19th century but has more recently ascribed to the doctrine of free trade. In spite of that free trade posture, since World War II, America has often given other countries trade benefits at the expense of our own industries in exchange for support of our foreign policies, especially those policies and military actions against communist countries during the Cold War: "The postwar global trading system, however, never functioned as de­signed. With the outbreak of the Cold War, the Soviet Union and its satel­lites formed their own economic bloc. During the Cold War and after it, the United States subordinated its preference for a liberal global trading system to the imperatives of keeping its European and Asian allies within the American-led alliance, even if that meant sacrificing the interests of particular American industries. "The United States made one-way trade concessions in order to secure the cooperation of other countries needed as allies, first in the struggle against the Axis powers and then against the Soviet bloc during the Cold War. Between 1939 and 1943, the United States offered unbalanced trade concessions to Iceland, a number of Latin American countries, and Tur­key, in order to lure them away from Nazi Germany and its allies. "Following World War II, the United States provided $33 billion in nonmilitary aid between 1946 and 1953. Because of the limits to foreign aid imposed by American public opinion, American foreign policy mak­ers suggested what the historian Alfred E. Eckes calls a policy of 'trade, not aid.' In an unpublished page for his memoirs, President Harry Tru­man wrote: 'American labor now produces so much more than low­ priced foreign labor in a given day's work that our workingmen need no longer feel, as they were justified in feeling in the past, the competition of foreign forces.' In December 1946, the State Department instructed its officials to help the countries in which they were stationed to export to the United States: 'In general, a Foreign Service officer should give the same attention to serving United States importers as he would give to United States exporters.' A commission on trade headed by Daniel W. Bell, the former budget director of the Roosevelt administration, proposed to in­crease exports of manufactured goods even if that led to unemployment for an estimated sixty thousand to ninety thousand American workers: "'In cases where choice must be made between injury to the national interest and hardship to an industry, the industry [should] be helped to make adjustments by means other than excluding imports -- such as through extension of unemployment insurance, assistance in retraining workers, diversification of production, and conversion to other lines.' President Eisenhower argued that measures 'which tend to drive away an ally as dependable as Great Britain ... do much more harm in the long run to our security than would be done by permitting a US industry to suffer from British competition.'

Contrary to popular belief, the Gilded Age was characterized not by wide-open free trade but by aggressive tariff legislation, spearheaded by Republicans such as Benjamin Harrison. (Cornell University Library)

"Not content to sacrifice American industries to help Cold War allies prosper, the United States in the 1960s sought to use access to the Ameri­can market to drive development in the postcolonial world. In 1963, Presi­dent Kennedy called on the United States and its allies to open 'our mar­kets to the developing countries of Africa, Asia andLatin America.' Kennedy warned an AFL-CIO convention in Dallas that protection of US industry risked 'driving potential trading partners into the arms of the Soviets.' In March 1964, a Johnson administration task force on for­eign economic policy called for a 'war on poverty -- worldwide .... The whole country would be the gainer if, over time, we could shift resources away from textiles, shoes and other unsophisticated manufactures into more advanced items where we have a comparative advantage ... [such as] capital, scientific and technological research, skilled and educated la­bor.' "One of the few government officials who dissented from the prevailing orthodoxy was George Humphrey, Eisenhower's secretary of the Trea­sury. A veteran of the mining industry, Humphrey declared at a 1954 cabinet meeting, according to another participant, that 'we were protec­tionists by history and had been living under a greatly lowered schedule of tariffs in a false sense of security because the world was not in com­petition. That has changed now and the great wave of competition from plants we had built for other nations was going to bring vast unemploy­ment to our country.' "By the 1970s, America's policy of tolerating foreign mercantilism was harming American industry. US manufacturers like Detroit's Big Three automakers were being battered by imports from Europe and especially from Japan, which had devised a superior just-in-time (JIT) system of assembly-line production. America's embattled automakers claimed cor­rectly that they were excluded from the Japanese automobile market by various subtle forms of Japanese protectionism."