Peril Points & Politics

/f we wish to sell abroad, we must buy abroad.

--President Eisenhower, March 30, 1954 The President's foreign-trade program is, by his own definition, "a minimum program." By now, however, he knows that even the minimum will not get through Congress this year. At most, Congress will approve some customs modifications, some tax incentives for investment abroad and a bare one-year extension of the Reciprocal Trade Agreements Act. Meanwhile, another important part of the freer-trade program has turned up on the President's own doorstep.

Scissors & Shears. A dozen U.S. industries have complained of imports reaching the "peril point" (at which they are theoretically injured or threatened), and have applied for relief through higher tariffs. Two weeks ago, the Tariff Commission sent its recommendations to the White House on two such cases--one involving fish fillets, the other scissors and shears. Recommendations on the other ten cases are due soon.

In such cases the President faces a peril point of his own. He must decide between the interests of industries that seek protection and the nation's overriding interest in freer trade. In this election year some voters are likely to blame local unemployment on foreign imports.

Last week, nonetheless, the President decided against protectionism in the case of scissors and shears. The Tariff Commission had found that imports from Germany and Italy constituted "a definite threat of serious injury," and recommended doubling the present 42% tariff. President Eisenhower canceled the increase on the ground that no imminent threat was proved. Among the other cases: P:Fishermen are aroused by groundfish fillet imports (largely from Norway, Canada and Iceland), up from 9,000,000 Ibs. in 1939 to 107 million last year. P: Lead and zinc producers complain of shutdowns and layoffs in U.S. mines because "a flood of imports has demoralized the domestic mining industry." P: Makers of woolen gloves and mittens charge that cheap imports (mostly from Hong Kong and Japan) have taken more than half the U.S. market, while half the industry's 4,000 workers are jobless.

Political Peril. The President's decision on one current tariff case--the $58 million annual trade in Swiss watches and movements--will directly affect one Republican Senator up for reelection, Massachusetts' Leverett Saltonstall, who has several watchmaking companies in his state. The Swiss make17-jewel movements for around $4, less than half the U.S. production costs, and outsell American makers nearly 4 to 1 (8,600,000 to 2,300,000 annually) in the U.S.

In 1952 President Truman turned down higher tariffs on Swiss watch imports, but Elgin, Hamilton and Waltham have again demanded peril-point protection.

They are opposed by Bulova, Gruen and about 100 other U.S. watch companies which rely on Swiss works. The free-trade argument: Switzerland consistently buys more here than she sells ($458 million in the U.S. favor since the 1937 trade agreements).

Every Senate contest is important this fall and the President's decision, affecting thousands of Massachusetts watchworkers, may hurt Senator Saltonstall's chances.

But the betting is that, in line with his trade message of March 30, the President, regardless of political peril, will reject restrictions in the peril-point cases.

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