America's Declining Industrial Competitiveness: Protectionism, the Marketplace and the State

Abstract

A rising protectionist tide is threatening to undermine the domestic political foundation necessary to sustain America's liberal trade posture through the 1980s. U.S. trade officials and recent administrations remain committed to a liberal trade order, but severe crises in key economic sectors of the economy, regionally concentrated in the traditional industrial region of the country, are cutting the ground from beneath them internationally and domestically.At the recent GATT ministerial meeting in Geneva, for example, the United States pressed hard for expanding international trade liberalization in agriculture, services, and high technology industries—all areas of economic activity in which the United States enjoys a strong competitiye position and trade surpluses. American trade officials in Geneva had the burden of advancing their arguments for further trade liberalization against the backdrop of recent U.S. actions, taken in response to domestic pressures, which imposed import quotas on European steel and Japanese automobiles and which adopted a more restrictive trade regime for textiles and apparel in the renewal of the Multi-Fiber Agreement. While the GATT meeting was in progress, the U.S. Congress was considering a domestic content bill that would require auto-makers selling over 900,000 vehicles in the American market to use 90 percent U.S. labor and parts by 1985. U.S. trade representative William Brock III called this “the worst piece of economic legislation since the 1930s.” The House passed the bill with 215 votes, but it died in the Senate. The bill will certainly be re-introduced in the more protectionist 98th Congress.