Competition For World Markets

August 12, 1970

Report Outline
Developing Threat of Global Trade War
Emergence of Modern Trade and Tariffs
Growing Competition for Global Markets
Special Focus

Developing Threat of Global Trade War

Rise of Protectionist Sentiment in Washington

Competition' for world markets is increasing at a time when the winds of free trade appear after 35 years to be blowing out. The leading international trade organization, the General Agreement on Tariffs and Trade, reported in mid-1970 that protectionist influences were being felt throughout much of the world more strongly than at any time since the early 1930s, Protectionism has arisen especially in the United States as a growing tide of imports contributes to the woes of domestic industries already troubled by inflation and of a government concerned about the nation's imbalance of international payments.

But the threat of protectionist action in Congress brings on talk of retaliation from abroad against American exports. The possibility of a trade war involving the United States. Japan and the European Common Market hangs over congressional consideration of a bill to impose quotas on foreign-made textiles and shoes. A quota on textiles would hurt Japan primarily and a quota on shoes would hurt several European countries, Italy especially. The implications of a trade war involving America, Japan and the Common Market are enormous. They dominate world markets, together accounting for one-half of all exports by non-Communist countries.

Despite yearly gains in the volume and value of its exports, America's share of world trade has been in persistent decline. The six member nations of the Common Market exported twice as much as the United States in 1969—some $76 billion in comparison to $38 billion. While American sales abroad amounted to only 4 per cent of gross national product, they represented a politically sensitive and not insignificant sector of the economy.

ISSUE TRACKER for Related Reports
Economic Development
Exports and Imports
General Agreement on Tariffs and Trade (GATT)