Commercial Policy


By CHARLES BUNN, Special Assistant to the Under Secretary of State and Consultant to the Division of Commercial Policy and Agreements, Department of State

Delivered before the Political Science Association, Washington, D. C., January 31, 1943

Vital Speeches of the Day, Vol. IX, pp. 347-348.

YOUR chairman has asked me to discuss the connection between the American trade-agreements program and the economic hopes and principles of the United Nations. That connection is clear and specific and is expressed in the fundamental documents.

The United Nations came into existence with the promulgation of the Declaration by United Nations, January 1, 1942. By that Declaration the signatory governments, "Having subscribed to a common program of purposes and principles embodied in the Joint Declaration of the President of the United States of America and the Prime Minister of the United Kingdom of Great Britain and Northern Ireland dated August 14, 1941, known as the Atlantic Charter" made certain declarations concerning the conduct of the war.

The Atlantic Charter, so adopted by the United Nations as their own, contains the following economic clauses:

"Fourth, they will endeavor, with due respect for their existing obligations, to further the enjoyment by all States, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity;

"Fifth, they desire to bring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labor standards, economic advancement and social security;

"Sixth, after the final destruction of the Nazi tyranny, they hope to see established a peace which will afford to all nations the means of dwelling in safety within their own boundaries, and which will afford assurance that all the men in all the lands may live out their lives in freedom from fear and want;

"Seventh, such a peace should enable all men to traverse the high seas and oceans without hindrance;"

In other documents a growing number of the United Nations have been even more specific. I refer of course to the master agreements concerning the principles of mutual lend-lease, which have been signed between the United States and—in the order of signature—the United Kingdom, China, the Soviet Union, Belgium, Poland, the Netherlands, Greece, Czecho-slovakia, Norway, and Yugoslavia. These agreements are substantially identical. Their principles have been accepted by the separate and independent action of New Zealand and Australia as applicable to their lend-lease relations with this country. The part which I shall read has also been accepted, quite outside lend-lease, by our great northern neighbor, Canada. I shall read from the agreement with Great Britain because that is the one "the provisions and principles of which" were made applicable to our lend-lease relations with the Government represented by our guest of honor of today, the Honorable Walter Nash, the Minister of New Zealand, by a note of September 3, 1942, over his signature.

Article VII of the mutual-aid agreement between the United States and the United Kingdom is as follows:

"In the final determination of the benefits to be provided to the United States of America by the Government of theUnited Kingdom in return for aid furnished under the Act of Congress of March 11, 1941, the terms and conditions thereof shall be such as not to burden commerce between the two countries, but to promote mutually advantageous economic relations between them and the betterment of world-wide economic relations. To that end, they shall include provision for agreed action by the United States of America and the United Kingdom, open to participation by all other countries of like mind, directed to the expansion, by appropriate international and domestic measures, of production, employment, and the exchange and consumption of goods, which are the material foundations of the liberty and welfare of all peoples; to the elimination of all forms of discriminatory treatment in international commerce, and to the reduction of tariffs and other trade barriers; and, in general, to the attainment of all the economic objectives set forth in the Joint Declaration made on August 14, 1941, by the President of the United States of America and the Prime Minister of the United Kingdom.

"At an early convenient date, conversations shall be begun between the two Governments with a view to determining, in the light of governing economic conditions, the best means of attaining the above-stated objectives by their own agreed action and of seeking the agreed action of other like-minded Governments."

These are brave words, and they express high hopes. Whether they are merely words and hopes, or whether they in fact become reality, depends on what we do from here on in. To make them real will need not only international negotiations and agreements but domestic legislation and administrative action in many countries and on many subjects, the continuous support of democratic peoples everywhere, and their continuous refusal to surrender to shortsighted and sectional self-interest. It will not be an easy task, nor yet a short one, but on the wisdom and success with which it is accomplished we must bet our children's lives and fortunes.

In this long and hard job the trade-agreements program takes its perhaps humble, but surely necessary, part. The program is based on the Trade Agreements Act of 1934. That act, as is well known, consists chiefly of an authority vested in the President to make agreements with foreign governments concerning tariffs, quotas, and the like, and to proclaim the changes in American tariff rates provided for in such agreements. The President's authority is hedged about with a careful body of restrictions, of which the most important are a requirement for public notice and hearings, a limitation of reduction to 50 percent of the rates that would otherwise prevail, and a requirement that reductions provided in agreements shall apply, on a most-favored-nation basis, to goods of the same sort from all friendly foreign countries. The act, with its renewals, and the experienced and expert organization operating under it furnish an existing and efficient tool, the only one this country has at present, for the long-standing effort of this Government to eliminate discriminations in international trade and to reduce unreasonable and burdensome trade barriers by international negotiation and agreement. Until some better tool is found and put in operation, this one is an essential part of the equipment for the total job ahead. That it can work, even in the midst of war, is shown again by the agreement with Mexico, signed last December and effective yesterday (summary in the Bulletin of the Department of State, December 26, 1942, Supplement). And we can be quite sure that whatever is attempted in many other fields—to expand production and employment, to stabilize exchange and currencies, to develop the world's resources, to improve the lot of working men and farmers, to control the machinations of cartels, to promote international investment—depends in the long run, for an important part of its success, on the facilities for interchanging goods.

Most of us in this room are not professional economists, and few of us are businessmen. But surely neither the professionals of economic theory nor the managers of business will object if we agree with them that markets are essential to the solvency of business enterprises. Markets often are abroad and are affected by the trade restrictions imposed by other countries on our goods and by the lack of buying power which may result from our own restrictions upon theirs. And, on the other side, surely this war has taught us—if we did not know it before—that the welfare of the American economy and the living-standard of us all depends on many products imported from abroad. What the submarine and the shipping stringency have done in war to our second cup of coffee and what the Japs have done to our supply of tires, could be done equally in peace by unreasonable trade restrictions, if we were so silly as to embark on that path. The trade-agreements program proposes simply that we continue to move, as we have since 1934, in the opposite direction. That is also not the whole proposal but an essential part of the proposal of the Atlantic Charter, the Declaration by United Nations, and the lend-lease agreements.

The President's authority under the last renewal of the act of 1934 will expire next June unless extended by thepresent Congress. I have no doubt that the Congress will find it proper to consider, sometime between now and June, whether to extend it or to let it lapse, and if it is to be extended, whether to amend in any respect or in either direction the existing limitations on the President's authority. The reaction of the Congress and the country to those questions will be an acid test of our position and intentions. It will let all other countries know whether they should plan their own economies, so far as relations with this country are concerned, on the basis of increased freedom of exchange or of heightened barriers and autarchy. Those of us who view the partnership and principles of the United Nations as a great hope of the future will have no doubt where we stand in the debate.

Perhaps you will let me close with a personal reference. Twenty-six years ago this month I was invited to become for a period the secretary of Mr. Justice Holmes. The other war deprived me of that chance, but it did not deprive me of my admiration for his character and work. Before that, back in 1913, he spoke to a Harvard meeting in New York and said some things which are not without their present-day analogy. He is speaking about the Supreme Court of the United States:

"I do not think the United States would come to an end if we lost our power to declare an Act of Congress void. I do think the Union would be imperiled if we could not make that declaration as to the laws of the several States. For one in my place sees how often a local policy prevails with those who are not trained to national views and how often action is taken that embodies what the Commerce Clause was meant to end."

The world has grown smaller since Holmes spoke. "What the Commerce Clause was meant to end" between the States has become a burning question between nations. The men who try to solve that question and the peoples who give them power and support them must indeed be trained to more than local views.