President Reagan recently decried America's apparent shift toward protectionism as a ''bunker mentality'' that is threatening free trade. Is Mr. Reagan truly bewildered by this shift of attitudes? Perhaps he needs a little historical perspective.
From the end of World War II into the early 1960s, the United States economy was largely self-reliant. It grew by leaps and bounds with no limits in sight. Most Americans saw their standards of living rise steadily. American industries and manufacturing workers - producing primarily for the domestic marketplace - were not threatened by imports per se. Free trade was a high-sounding principle which remained something of an abstraction.
Since the early 1960s, the American position in the world economy has changed dramatically. Our easy access overseas to critical raw materials at cheap prices has disappeared forever, while we draw down our domestic supplies. US exports have not kept pace with the flood of imports pouring into the American marketplace. Harvard's Prof. Robert Reich estimates that more than 70 percent of all the goods produced in the US were actively competing with foreign-made goods in 1980.
American business, industry, and labor were not prepared for the onslaught of foreign competition given entry to American markets in recent years by US government adherence to the principle of free trade. Accordingly, the US trade deficit last year rose to a record $47.8 billion. It is proving painful to come to terms with the new dynamics of international trade and with the plain truth that many American consumers now prefer foreign-made products.
There is a second reason why free trade has come under fire. Unlike his predecessors, President Reagan is ignoring an important means of sustaining broad-based popular support for free trade policies. While properly arguing that open markets and free trade serve the US national interest (20 percent of all American goods now produced are exported), he is the first president in the postwar era to deny flatly that the federal government has any obligation or constructive role to play in helping thousands of Americans who are losing their jobs in American industries adversely affected by the ongoing surge of imports. This oversight in the President's perspective on international trade helps explain the surprising support in the Congress and among the American people for legislation like the ''domestic content'' bill.
The Trade Expansion Act of 1962 and the Trade Act of 1974 included provisions to extend assistance to firms and workers adversely affected by increased imports. Presidents Kennedy, Johnson, Nixon, Ford, and Carter all understood that pursuing trade liberalization in the national interest necessarily requires that some American industries and workers risk their markets and jobs to imports. That is why federal assistance has been available during the last 20 years to help trade-sensitive firms get technical assistance and loans to adjust to increased foreign competition. That is why America's labor leaders acepted free trade policies in exchange for what they thought at the time was a commitment by the federal government to provide adequate compensation, training opportunities, and job search and relocation aid to manufacturing workers thrown out of work by imports.
But President Reagan now proposes to abandon thousands of Americans who have lost their jobs in our basic industries (steel, auto, rubber, electronics, etc.) to foreign competition in recent years and to deny them means to reequip themselves to find new jobs. Seeking the benefits of free trade, the Reagan administration callously ignores its human costs in unemployment and bankruptcies across the country.
In his proposed budget for fiscal year 1984, President Reagan is requesting that the Congress abolish both the Trade Adjustment Assistance (TAA) program for firms in the Commerce Department and the TAA program for workers in the Labor Department. Yet it is modest programs of this sort that are so important to maintaining domestic support for free trade and that will allow US industry and labor to meet the challenge of increased imports.
Don't get me wrong. The way the TAA programs were designed in 1974 and later administered had many flaws. For example, when auto industry layoffs soared in the late 1970s, the TAA program for workers operated almost exclusively as an income-maintenance program (more than $1.6 billion in weekly benefits in fiscal '80) with virtually no funds available for retraining workers certain not to be recalled to their old jobs ($5.2 million in fiscal '80).
But that is not sufficient reason to dismiss blithely any federal responsibility, as President Reagan would have us do, for redressing the harmful domestic consequences of free trade policies set in Washington. Last year nearly imports. What would be wrong with setting aside a small portion of that $10 billion collected from foreign manufacturers to finance the costs associated with retraining American workers who lose their jobs to foreign competition?
President Reagan has said that the US and its trading partners are together in the ''boat of open markets and free trade'' in which holes are being shot by neo-protectionists. But to save the ship, he is ready to throw overboard many American workers and struggling businesses.