Despite US economic boom, pressure for protectionism grows
Boston — The United States economy is booming. Unemployment has dropped decidedly. Protectionism should be weakening. But that's not what has happened. ''The pressures for protectionism now are greater than at any time since the 1930s,'' says C. Fred Bergsten, director of the Institute for International Economics.
However, something of a countervailing force has sprung up in Washington. The nation's leading retailers this summer formed a new group, the Retail Industry Trade Action Committee (RITAC), to do battle with protectionist forces.
Representing some 2 million stores and about 17 million employees, the retail organization already can claim a partial victory - the Reagan administration's decision last week to delay enforcement of new customs regulations that would have hurt imports of textiles and garments from developing countries.
J. Robert Brouse, managing director of RITAC, promises that his group will fight on behalf of the consumer in other trade disputes. RITAC has a million-dollar budget, and already has hired lawyers and a public relations firm to help it persuade the public, Congress, and the Reagan administration of the merit of its positions.
That's far more money than Doreen L. Brown, president of Consumers for World Trade (CWT), has in her organization's budget. She says she's concerned that when Congress returns to Washington Sept. 5, protectionists may succeed in passing one of several bills that would restrict imports.
''I don't know if we can depend on a presidential veto,'' says the deep-voiced head of this small group promoting a liberal trade policy. ''This is a dangerous year until after the election.''
Mr. Bergsten's view of what will happen when Congress returns from its recess differs somewhat from that of Mrs. Brown.
He says Congress is unlikely to pass any protectionist measure in its short preelection autumn session. He says he's more worried about what President Reagan will decide to do in dealing with trade matters coming up this month, particularly those involving steel. And he says he's concerned that the protectionist wave could inflict more damage next year, especially if the value of the US dollar remains strong relative to foreign currencies.
Bergsten says he regards the overvaluation of the dollar - ''by 25 to 30 percent'' - as the leading cause of the surge in protectionism. It makes imports cheap and exports expensive.
A trade deficit this year of $125 billion to $130 billion could reach $150 billion next year, he predicts.
Philip Tresize, a senior fellow at Brookings Institution and a former State Department economist, says: ''The (protectionist) danger is almost entirely in the White House, and it is pretty palpable there.''
If protectionist measures do prevail, the cost to consumers in higher prices could be huge, free-trade enthusiasts charge.
Already, according to CWT, the hidden tax of protectionism is costing each family of four at least $1,500 a year.
CWT's Brown says she is concerned that the Senate might attach the domestic content bill (requiring cars sold in the US to have as much as 90 percent domestic-made parts by 1986) or the Trade Remedies Reform Act in the House (tightening up ''unfair trade'' provisions of the law) to either the Senate trade bill or another measure that President Reagan might be reluctant to veto in an election year.
Altogether, there are more than 100 protectionist bills before Congress, according to CWT.
Brown says she feels that industries sometimes win special protection because ''consumers in America don't know what it is about.''
''They don't realize the effect of protectionism on their pocketbooks.'' she says.
Indeed, surveys of the public often show that a majority support specific protectionist measures. For instance, the United Steelworkers of America last week released a survey showing that 76 percent of the voters in the nation's major industrial states believe that the US should be ''tougher'' on restricting foreign steel imports.
To provide the public with more information, Mr. Tresize of the Brookings Institution suggests that protectionist proposals should be required by law to include a consumer impact statement. But he doesn't expect Congress to pass such a law.
Over time, growing US economic interdependence with its trading partners should reduce protectionism, says Bergsten, former assistant Treasury secretary for international affairs under President Carter.
More industries and employees are deeply involved in exporting or servicing imports.
For instance, although the agricultural community benefits from protection against imported tobacco, soybeans, etc., it has joined the fight against protectionism by industry out of concern over retaliation by other nations against US farm exports.
The proportion of manufacturing employment facing import competition rose from 8.4 percent in 1970 to 14.7 percent in '80.
The proportion of manufacturing employment related directly and indirectly to exports rose from 8.1 percent to 14.5 percent in the same period.
Trade experts are uncertain as to whether Reagan or a President Mondale would permit more protectionism in the next four years.
Mr. Mondale backs the domestic content bill sought by the United Automobile Workers of America, but he had a strong liberal trade stand when a member of the Senate.
President Reagan talks much of free enterprise, including free international trade, but has had a mixed record on trade while in office.