Other Nations Do Not Follow U.S. Lead

MANY foreign businessmen like to protest that their success or failure hinges on fluctuations in U.S. tariffs; e.g., when the U.S. boosted bicycle tariffs British businessmen forecast dire effects for their industry. Yet few of them look to see where their own countries stand on tariffs. There is strong evidence that while the U.S. has been steadily reducing tariffs, many other nations have been dragging their feet. Example: after the U.S. cut duties on cotton goods up to 50%, Japanese imports doubled; they poured in so fast that Japan last week clamped on an embargo for fear of U.S. reprisals. At the same time, the Organization for European Economic Cooperation issued a progress report on the situation in France. Charged OEEC: French tariffs are so high that they hamper both international trade and France's own economic recovery.

Free traders among U.S. businessmen are well aware that there are many areas where U.S. tariffs are still too high and should be chopped back.

But they also wish that other nations would recognize the fact that the U.S.

has been well ahead of the march toward freer trade, while many of its partner nations have lagged behind.

From the 1931-1935 period to 1951, the U.S. cut tariffs by 75%, collected only 5.1% of the total value of imports; only eight nations (Japan, Denmark, Belgium, Luxembourg, Argentina, Sweden, Norway, Holland) had lower percentages. Great Britain's trade-to-imports percentage is now 25.6%, Mexico's 20.6%. France's 10.6%, Italy's 8.4%. Canada, which gets more than 70% of its imports from the U.S., collects 10.2% on all U.S. imports, v. 2.7% collected by the U.S. on Canadian goods. Furthermore, according to a study by the General Agreement on Tariffs and Trade (GATT), the U.S. since 1925 has lowered tariffs on 78 key commodities by an average 38%, while Britain, France, Germany and Italy boosted average rates between 6% and 76%.

-In France, the average tariff on all dutiable goods is 19%, some 14 percentage points higher than the U.S.

rate. The purpose is partly to conserve foreign-exchange holdings, but partly, too, to protect inefficient domestic industries whose prices are 10% to 15% higher than world levels. To keep these industries going, France charges low tariffs on raw materials it needs, but imposes duties as high as 33% to 40% on finished goods, then pushes the barriers still higher with additional special taxes and import quotas. Cars, for example, are imported under a modest 20% tariff, but with added taxes, the total bite comes to 60%. Depending on how business is doing, quotas, taxes and tariffs are raised or lowered at the drop of a franc; sometimes one barrier goes down while another goes up simultaneously. Recently. France increased import quotas on Swiss watches by 50% as a help to free trade, then promptly boosted the tariff as much as 150%, more than nullifying the quota change.

Many other nations have high barriers for various economic and political reasons. Japan's high tariffs plus an import quota of 1,000 U.S. cars a year boost the price of these cars up to 110% over the purchase price. To protect its industries, Turkey levies a 100% tariff on sugar, shoes and artificial silk fabrics, goes up to 150% on pure silk fabrics and some foodstuffs, thus assures local companies of a virtual monopoly. West Germany, too, clamps a 35% tariff on imported candy and sugar cane to make life easier for its sugar-beet refiners, also levies a 35% tax on U.S.-made penicillin to bolster its postwar chemical industry.

In underdeveloped nations, where the national production is still small, tariff revenues play a big part in government finance. While the U.S. gets only 1% of its total revenue from customs collections, Peru gets 15%, Finland 11%, Chile, Norway and Brazil all get 9%, while Colombia gets a whopping 30% of all its money from tariffs, which run as high as 50%.

Even highly industrialized Britain puts tariffs to use as revenue producers.

Even nations with generally liberal trade policies find it hard to reduce tariffs on some goods. In Italy, which has been gradually lowering tariff walls, the import duty on autos is 45%. with an additional quota provision designed to discourage imports. For the Italian government, the possibility of Fiat workers being swept out of jobs by a flood of cheap foreign cars and perhaps into the arms of the Communists is enough to keep the tariff wall high.

Even Canada, which has reduced 221 items since 1951 under a low-tariff policy, still has a 30% duty on many items, is constantly badgered by its wool, iron, steel and chemical producers for higher tariffs. Norway, still another liberal-trade nation, is loath to reduce its textile tariff below 15%-25%.

The popular cry has been that the U.S. is hamstringing free trade. Actually, the U.S. has steadily lowered its tariffs, while most other nations have raised theirs.

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