Free Trade Is the Issue IN 1947, the U.S. and 23 other free nations banded together in a trade pact called GATT. To many a plain citizen, GATT is nothing but a baffling set of initials. Actually, its meaning is simple. It stands for the General Agreement on Tariffs and Trade and it is the chief instrument for expansion of world trade and the amicable settlement of trade disputes among the 34 nations—controlling 80% of world trade—that are now members.
GATT was designed to bring order out of a chaotic mass of trade pacts that sprang up after the U.S. Congress passed the first Reciprocal Trade Agreements Act in 1934. Under that act, the U.S. signed bilateral tariff agreements with France, Great Britain, Belgium and 26 other nations. As each of these nations signed similar agreements with dozens of other countries, a tangled net of concessions, quota restrictions, special licenses, etc. was created. To simplify matters, the U.S. helped sponsor a meeting of interested nations after World War II to write a single, broad General Agreement on Tariffs and Trade. GATT contained thousands of tariff concessions and a rule book on trading, e.g., a signing nation would permit free transit of goods covered by the agreement, would not levy discriminatory taxes to keep imports out. It included an escape clause by which any country could protect a domestic industry seriously threatened by imports. GATT was never submitted to the U.S. Congress; it was approved by President Truman under the powers granted the President by the Trade Agreements Act.
World trade grew so rapidly under GATT that the tariff concessions were expanded at a meeting in 1949, and again in 1951. The agreement now covers 58,000 concessions, on everything from locomotives to leather gloves. But GATT delegates, for all their accomplishments, never had a place to hang their hats. They met intermittently, lacked even an adequate secretariat. Earlier this year they decided to set up a permanent secretariat, the Organization for Trade Cooperation, to keep records of rate agreements, provide a forum for participating countries, make arrangements for negotiations, etc. But OTC would conduct no negotiations on tariffs or trade, leave that up to delegates from interested countries.
At President Eisenhower's direction, Assistant Secretary of State Samuel Waugh, a Nebraska banker, signed the OTC agreement for the U.S. last March. Though legally it was probably unnecessary for Eisenhower to submit OTC to Congress, he did it, as Secretary of State John Foster Dulles said, as a matter of courtesy. Moreover, the President knew that congressional blessing for OTC would have a psychological effect throughout the world, i.e., it would prove that not only the U.S. President but the U.S. Congress wanted a permanent policy of free world trade. When he sent OTC to Congress last April. Eisenhower said: "Failure to assume membership in the Organization for Trade Cooperation would strike a severe blow at the development of cooperative arrangements in defense of the free world."