The Eisenhower administration and the demise of GATT: dancing with Pandora

American Journal of Economics and Sociology, The,  July, 1994  by H. Richard Friman

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By late 1955, the events of the latter half of the year would appear to have suggested four things to the American textile industry and its supporters. First, Dulles was willing to bow to congressional pressure on Japan. Second, Dulles had implicitly admitted that the American textile industry was being injured by Japan. Third, Japan was willing to bow to pressure from the Eisenhower administration. Fourth, greater concessions from Japan and the Eisenhower administration could be had by increasing domestic pressure on the latter.

A case can also be made that, while flawed, Dulles's actions were predictable and could have been addressed by Eisenhower. Dulles's beliefs in the importance of Japan to the United States were a matter of record by 1955, In addition, his track record while working for the Department of State from 1950 to 1952 in dealing with Japan would suggest Dulles's own proclivity for having Japan ease the economic and political concerns of foreign countries through "voluntary action." A prime example here would be Dulles pressuring the Yoshida Cabinet into "voluntary" negotiations over Japanese fishing practices (Pruessen, 1982: 461-71). Finally, Dulles's proclivity for casing political tensions between countries through the use of quantitative restrictions--as opposed to simply using such measures to restrict trade--was evident from his "active" participation as a lawyer in establishing international economic cartels during the 1930s.(14)

Moreover, Eisenhower did have alternative policy options to slow the rise of domestic pressure. Despite rising congressional support for the textile industry, a strong threat of quota legislation had not emerged during 1955, suggesting that the administration still had some leeway in dealing with domestic pressure.(15) For example, in its second session, the Senate had passed resolution 121 calling upon the Tariff Commission to monitor the impact of textile imports. Yet, if Eisenhower had proposed such a step in the aftermath of HR 1 and the secret Japanese negotiations, he could have begun to rebuild trust with the textile industry and its congressional supporters. A second confidence building measure that could have been taken by Eisenhower would have been a pledge to delay negotiations under the 1955 Trade Expansion Act until the impact of the bilateral tariff cuts with Japan had been assessed.(16)

Finally, both Dulles and Eisenhower took steps that ruled out the escape clause provisions of U.S. trade law as an avenue for industry relief. Under the provisions of the escape clause, if the Tariff Commission found injury from imports it was empowered to recommend that the president "withdraw, suspend, or modify" tariff concessions or impose new restrictions "on articles not otherwise subject to duty."(17) In responding to congressional pressure in late 1955, Dulles noted that the Department of State had urged the American textile producers to take advantage of the escape clause provisions of the 1955 Trade Agreements Act in order to prove that the industry was indeed facing "injury" from Japanese imports. Moreover, he chided the industry for its reluctance to file cases in 1955 and noted that the Department of State, therefore, had no basis to judge the industry's calls for relief.(18) Yet, since the impact of the tariff concessions reached in the secret negotiations from Japan would not become apparent until later in the year, it made little sense for the textile alliance to file such cases until early 1956.