In November last year the us House of Representatives passed a protectionist trade bill, by 215 to 165 votes, which was condemned inside and outside the usa as the worst of its kind since the Smoot-Hawley Bill of 1930. The bill was blocked in the Senate by the pre-adjournment logjam. In January this year Wilbur Mills, chairman of the House Ways and Means Committee, announced he would re-introduce the bill during the current session of Congress.
At the same time, the long-drawn-out talks between the us and Japan on Japanese textile exports to the us have broken down, at least publicly, once again, after already causing intense irritation in both countries. Since America and Japan are the two largest capitalist economies in the world, this conflict—comparable only to that at the time of the Great Depression—demands the closest scrutiny.
First, the contents of the Trade Bill. It imposed quotas on imports into the us of textiles and shoes; it froze flexible oil quotas into law; it opened up the possibility of quotas on 125 (estimated) other products, including motor cars, tv sets and sewing machines, under the ‘trigger mechanism’footnote1; the bill also contained a clause allowing us corporations to channel their export sales through a special subsidiary, Domestic International Sales Corporation (disc)—and profits from such sales
Second, how did the bill coalesce? In November 1969 three small cases were raised under a section of the 1962 Trade Expansion Act. For the first time, the us Tariff Commission found—on tenuous grounds—that increasing imports resulting ‘in major part’ from concessions granted under trade agreements (between 20 and 25 years previously) were ‘a major factor’ in the loss of jobs (some 800) in all three cases. Little attention was paid to this at the time, but it coincided with the beginning of long and difficult talks between the us and the main East Asian textile-producing areas (Japan, Taiwan, South Korea and Hong Kong); from the us point of view, these talks were designed to restrict foreign textile imports into the us.
Moreover, since the Kennedy Round (1964–67), there has been no thorough discussion among the major capitalist states of their monetary, financial and commercial relationships.footnote3 Enormous changes have taken place in these last four years. Of particular relevance here: first, Japan’s economic growth at sustained speed ;footnote4 second, the increased harmonization of eec economic policy (including an agreement to standardize economic policy towards Japan); third, the recession in the United States, with its attendant unemployment (creating the psychological climate for complaints about jobs being jeopardized) and inflation (allowing business to complain that ‘free’ competition is now ‘unfair’).
But the trade bill and Nixon’s stance in the negotiations with Japan only make sense in the light of Nixon’s commitment to the Southern textile interests to protect their inefficient (though exploitative) businesses.footnote5 No one even pretends this is not the case: ‘The basic reason why the Nixon Administration decided to support legislation for unilateral textile quotas is political. President Nixon is anxious to increase his own and his party’s standing in the southern states’ (Anthony Thomas, The Times, June 29th, 1970); ‘Mr Nixon owes his 1968 nomination to South Carolina’s Sen. Strom Thurmond, and he regards that debt as a near-sacred obligation. (Newsweek, March 22nd, 1971).
Furthermore, the vital factor—which has only recently become clear—is that Nixon inserted a secret condition into the 1969 agreement to hand Okinawa back to Japan. At the time this agreement was announced, it was widely understood (although there was some querying) that Okinawa would ‘revert’ to Japan in 1972. Now the