Economic Foreign Policy on the New Frontier

Courtesy Reuters

THE completion of the first hundred days of life on the New Frontier provides an occasion for an appraisal of the program of the new Administration in the area of economic foreign policy. These hundred days were an exceptionally difficult period for formulating long-term policy. The cold war had entered a state of acute tension, and earlier hopes that there were opportunities for fruitful negotiation, mutual accommodation, mutual understanding with Russia now seem utopian. The American economy was undergoing a recession separated from a preceding recession by a disappointingly brief period of moderate prosperity. Aside from the recession, the long-term aggregate and per capita economic growth rate was low, in fact one of the lowest ones in the world, and yet the American economy was not free from the threat of at least creeping inflation and of persistent unemployment; something structurally wrong clearly was operative, but there was no agreement in diagnosis. Europe, though flourishing economically as never before, was involved in a dispute between the Six and the Seven which threatened to split it into two trade areas manœuvring against each other and united only in making access to the European market for overseas products more difficult than before. The United States, on the other hand, was committed to bestowing blessings on any preferential tariff arrangements provided they could present claims, even of doubtful legitimacy, to the labels of "customs union," "common market" or "free trade area"--labels which in the best of circumstances designate mixtures of trade liberalization and of aggravated protectionism in uncertain and unascertainable proportions.

Our federally mismanaged agriculture was in its chronic state of growing surpluses, growing reliance on Treasury subsidies, growing dissatisfaction with its results on the part of the farmers themselves, growing resentment by agricultural-exporting countries against our massive export-dumping in the world market; only the patient consumers and taxpayers remained silent and without benefit of effective and dedicated spokesmen. An old, respected and politically influential industry, the textile industry, was in real

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