TRADE TARGETS
FEW subjects have been so hag-ridden by doctrine as inter- national trade. The fact that, desirable as it is as an ideal, world free trade has never existed and is obviously • not practical politics at the moment does not prevent general discussion from being pursued on the lines of free trade theory versus preference theory. In Parliament the case is rather worse, for what tends to be discussed there is a distorted political version of economic theory. There was a time during Monday's debate when it seemed possible that even lower depths would be plumbed and the subject would be discussed in terms of the cynical repetition of known political travesties of fallacious economic doctrines. Yet really everything was most harmonious. The Conservatives wanted to make quite sure that Imperial preference would not be dropped. The President of the Board of Trade made it quite clear that there was no intention that it should be dropped. And everybody knew that the real obstacles to freer trade lay elsewhere, in the universal machinery of exchange regulation, in import and export control, and in the sectional domestic policies of every country concerned in the forthcoming tariff discussions at Geneva.
Working inwards from discussion in the popular Press, there are several layers of unreality which have to be pierced before the hard core of rational examination of international trade is reached. Fortunately the traditional treatment of the issue of free trade versus protection, as a conventional plank in party platforms at General Elections, is dying. It should have died sooner. So far as Great Britain is concerned the real issues are much too important to be bandied about like a shuttlecock in an unreal game. The Labour Party is not a free trade party, and free trade is no more an immediate issue than is perpetual peace. It is something which is recognised as a desirable feature of a perfect world, but we are so far away from such a world that practical politics must be con- cerned with more tangible things.
But even when the layers of party politics and unpractical idealism are stripped away, the real issues are still not reached. The debate then turns on the objectives in the middle distance, which Sir Stafford Cripps has so often and so admirably outlined. On Monday he made it clear once again that this country cannot hope to achieve its aim of exports 75 per cent. above the volume of pre-war except in a framework of expanding trade. The main burden for this country must fall on our exports of manufactured goods, and to attempt to increase our proportion of the world's trade in such goods from 20 per cent., at which it stood before the war, to 35 per cent. is sheer foolishness. There is scarcely a country in the world which is not seeking to expand its manu- facturing capacity, and to attempt, in these circumstances, to secure a vastly increased proportion in a static total of world trade is to attempt the impossible. We must get the 75 per cent. increase in our exports, but we can only do it if world trade is expanded in something like the same proportion. But if the search for free trade amounts to reaching for the moon, the search for a 75 per cent. increase in world trade certainly ends somewhere on the further side of the stratosphere. We are still not in the realm of practical politics. It is clear enough that there is immediate room for such an improvement. For example, to raise the standard of life of all Asiatic peoples to a reasonable level and to increase their productive capacity accordingly would in itself entail an expan- sion of world international trade of at least 75 per cent. and probably much more. These things can and will be done—but not in the near future. The immediate and practical issues lie nearer at hand.
The ostensible purpose of the forthcoming meeting at Geneva of the Preparatory Committee of the United Nations Conference on Trade and Employment is to tackle just those issues. The delegates will try to construct a whole complex of tariff bargains whose total result should be an all-round reduction of tariff barriers. That sounds practical enough. But there is a danger here that the mark is being overshot. It is possible to be immensely busy about the minutiae to no purpose whatever, if the necessary measures to make the details operative have not been taken. The conscientious officials at Geneva may find their way through the maze of bargaining to some coherent agreement, but what is the use of lowering the barriers which tariffs present to the free flow of trade if the stream is dammed nearer its source by the powerful devices of exchange control and import and export control? And what of that other dam—dollar shortage? The tariffs can be swept away and the controls removed, but countries which have no acceptable international currency cannot go on buying for ever on credit. Those speakers in Monday's debate who feared that the present talks on tariffs can make little practical difference in the short run were right. It is not tariffs but direct controls which prevent expansion most effectively. The weakness of the present phase of bargaining, and of the draft Charter for an International Trade Organisation and of the whole of the State Department's approach to international economics, is that they assume that inter- national trade can be at once controlled and maximised by an international code of law. It cannot—or at least it cannot until individual nations, and not least the United States, bring the rest of their policy into line with their instructions to the delegates to the Preparatory Committee.
At this point the bogy of United States trade policy looms up, and at this' point it is necessary to take a tight grip and find out just what sort of bogy it is—for a bogy it certainly is, owing as much of its existence to the fears of the beholders as to its own struc- ture of lath and sheeting. Everybody can see that the policy of the United States Government is full of inconsistencies, half-baked theories, hypocrisy and downright ignorance. A country which has a high tariff which it could only reduce with great political difficulty, which has stipulated that the maximum cut it could make in return for the concessions made by other countries is 5o per cent. and which insists on an escape clause which would enable it to get out of any agreement which it deems damaging to its own producers—such a country is hardly qualified to lead a crusade for freer trade. Nor is a country which persistently behaves as if it can export everything and import nothing over a period of years qualified to instruct the British Government, in return for a loan, to make all its current sterling obligations after the middle of this year freely convertible into dollars. He who pays the piper calls the tune, but it is doubtful whether he has any right to throttle the piper as well.
But to pretend to see behind all this the sinister figure of the State Department, scheming to lay the whole of world trade at the feet of a gang of unscrupulous and grasping business men, is to let the imagination run riot. The fashion of regarding the United States as the deliberate enemy of world prosperity is one of the silliest fashions of recent times. American trade policy may be misguided, but it is not ill-intentioned. Americans confronted with such a travesty of their aims have every right to ask—" What kind of a people do they think we are? " The fact is that belief in the desirability and possibility of a rising standard of production and living for all is so essential a part of American national character that they have no hesitation in prescribing it for the whole world. In that they are right. And in saying that total world trade must expand, Sir Stafford Cripps, backed by all reasonable British people, agrees with them. The difference is not one of aim. It is one of method, and American methods are extraordinarily bad. That fact is at the root both of the suspicions of American trade policy and of the revived arguments about Imperial preference. The object is a large expansion of world trade. The test both of American policy and of Imperial preference is the extent to which they contribute to the attainment of that object. If it can be shown that there are elements in American policy which obstruct expansion—and it can be shown very easily indeed—then every device, including the sharp and seldom used device of telling the Americans they are all wrong, must be used. If it can be shown that particular Imperial preferences or the whole policy of Imperial preference obstructs total trade expansion—and that is by no means as easy in the present situation as it would be in more reasonable times, or as Americans seem to assume it is at any time—then let that preference be removed. The solidarity of the Empire has other foundations besides commercial expediency. And, finally, if the only way to achieve these ends is the hard and tortuous way now being pursued in London and about to be pursued at Geneva, then may the attempt be successful. But it is not the best way. There are quicker ways of demolishing walls than taking them down brick by brick.
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