AMERICA'S TARIFF STRUGGLE

THE greatest issue of the session of Congress which begins next month will, barring unexpected develop- ments in the war, be the Hull trade agreement pro- gramme. In June the special legislative authority which has permitted the Administration to negotiate and put into effect trade treaties without ratification by the Senate will expire. Unless the authority is extended, the Hull pro- gramme will come to a slow death. And with it will be sacrificed the conviction that the greatest contribution the United States can make to ultimate peace is the effort to keep open and vital some channels of trade.

Extension of the legislative authority is going to be very difficult indeed. Perhaps it will prove impossible. For partisan reasons the Republicans in Congress are prepared en bloc to oppose extension of the programme, although many Republicans in the country believe in it. Though the Republicans are a minority in Congress, they are joined by a wide fringe of Democrats whose local interests have been trodden upon by various trade agreements. The copper Senators, the lumber Senators, the beef bloc, the cheese cohort (yes, actually)—all these special groups which in the old days raised American tariffs to mountainous levels —are now joining together to cripple the Hull programme.

In the long run, it must be apparent that the trade agree- ment programme is of the very greatest importance to Great Britain and the Dominions. It is the longest step the United States has ever taken toward co-operation with the freer-trade nations of the world. Its continuance and extension could be the greatest contribution to a sound peace. As Mr. Hull said the other day, commenting on a speech by Prime Minister Chamberlain, " I was gratified but not surprised to find that Mr. Chamberlain should emphasise so strongly the idea that ' there can be no lasting peace unless there is a full and lasting trade between nations ' and that ' only by an increased interchange of goods and services can the standard of living be improved.' " The American Secretary of State thus underlined the parallelism of aims of the two Governments. It is, of course, of the greatest importance that such a parallelism should be emphasised. The most fruitful and also possible method of American collaboration in the ultimate world readjust.

ment will certainly be economic. But whether the United States will be able to make such a contribution now trembles in the balance with the fate of the Hull programme.

Secretary Hull grimly recognised realities when he continued: " I can only hope most earnestly that when the time comes to give these economic ideas broad and effective application, our people will be sufficiently united in support to enable this country to make an appropriate contribution (to this effort) which is so important to every phasi of our future welfare."

He challenged his opponents as representing " the short- sighted and mistaken claims of particular interests who are determined to win a completely favoured position for them- selves." But it will require all of Secretary Hull's old political skill to combat his enemies this time. Ranged against him are many Democratic worthies: Senator Key Pittman, chairman of the Foreign Relations Committee ; Senator O'Mahoney, a skilful legislative manipulator from Wyoming ; and many another. The old curse of American tariff-making has descended upon the trade programme— the curse of local interest and selfishness.

It is not entirely certain that President Roosevelt will support the drive for renewal of the Hull programme with the requisite earnestness. He has never given the programme strong and enthusiastic backing. In an election year, the President may not wish to make the issue a party matter. He may say to Congress and his party: " Settle it among yourselves." That would be, virtually, to jettison the programme. Without the most rigid kind of Administration pressure, the renewal of the treaty-making authority is virtually impossible.

In all the circumstances, almost the best to be hoped for is a compromise. There are various proposals in the wind: (r) Straight extension of the treaty-making authority, which has produced such notable results as the Canadian and British treaties—results which have salvaged some trade from the current world economic wreckage, but which have made powerful enemies in Congress.

(2) Full return to the old-fashioned methods of congres- sional tariff-making, which produced the Smoot-Hawley enormity of 193o, and dealt a final crippling blow to world economy in the depression. Unless some legislation is passed, this result will be the only alternative.

(3) Tariff-making by the administrative authority of the Tariff Commission, based on firm orders from Congress to raise duties to equalise costs-of-production in the United States and abroad. This method has been proposed by Senator Vandenberg, a leading Republican.

(4) Extension of treaty-making authority with the re- quirement that treaties be ratified by the Senate—a crippling handicap.

(5) Extension of authority with the Senate given a sus- pensive veto over treaties stronger than that enjoyed at present, and perhaps a larger legislative share in making the treaties through Congressional representation on the negotiating bodies.

The final possibility is, perhaps, the most hopeful that there is justification for expecting. It is too much to look for unhanipered continuonce of present authority. The only encouraging sign is that even Protectionists like Senator Vandenberg say they hope never to go back to the old days of legislative tariff-making. Of course it is true that no trade treaty is better than the will of the Government behind it, and that a Protectionist administration would make Protectionist trade agreements. Likewise, application of the cost-of-production theory could be the basis for mountainous tariff walls. The theory is, of course, enor- mously difficult to apply, and is probably impossible on a big scale. No commission can determine accurately what the costs-of-production are in a foreign country, and the foreign Government is most unlikely to co-operate.

However, if a formula flattering to Congress, giving it a suspensory veto over treaties and a share in their negoti- ation can be evolved, the basis of the Hull programme may be saved. Quite obviously a great deal hangs on the out- come.

As for the rest of American policy toward the war, the situation may be readily summarised: (1) The cash-and-carry programme is in full operation, dependent only on the need and ability of the purchasers. The American aircraft industry is expanding production rapidly. Some ridiculously exaggerated figures have been published, but by next June perhaps as many as 600 planes a month will be available to the Allies if they order them. This is a figure based not merely on hope, but on reasonable expectations.

(2) The United States is not being a difficult neutral as far as the British blockades are concerned. With our ships out of the combat area—and the zone of magnetic mines— most Americans sit back and thank the Neutrality Law. But there is no insistence that the Administration stand up for the " rights of neutrals " diplomatically or otherwise. It is not a particularly glorious thing to record, but the fact is that the United States is not suffering as a neutral in the way the Netherlands, Belgium and Scandinavia suffer—on the contrary, it is prospering.

(3) Our relations with Japan are increasingly in delicate balance, as the date for ending the commercial treaty—late January—approaches. There is evidence that the threat of abrogation is having a real effect on Japanese policy, and that an agreement may be worked out bringing the Chinese War to a close and securing our principal specific demands from Japan. This may be too hopeful a picture, but it is distinctly possible.