Non-Tariff Tricks

While the first batch of Kennedy Round tariff reductions was going into effect last week, a wide assortment of other trade barriers loomed as high as ever. These are nontariff gimmicks designed to impede the inflow of foreign goods. Wine-producing France, for example, puts a crimp on bourbon and Scotch imports by prohibiting all whisky advertising. In Italy, foreign automakers find it difficult to buy prime time on the state-owned television. Switzerland not only restricts imports of milk products but gives special help--including price supports and low-cost feed--to Swiss dairymen whose cows graze in remote areas or on mountain slopes.

Though generally more subtle than tariffs, such practices are often equally effective in locking out the goods of other countries--and nobody knows this better than Lyndon Johnson. "Nontariff barriers," he said in his balance of payments statement last week, "pose a continued threat to the growth of world trade and to our competitive position." In particular, the President expressed concern over foreign--mostly European--nations whose tax systems give "across-the-board tax rebates on exports which leave their ports and impose special border tax charges on our goods entering their countries."

Johnson had special reason to be disturbed about a new European tax scheme pioneered by France and Denmark. Last week West Germany adopted it, and several other European countries are planning to follow suit. An excise-type levy on goods produced (the U.S., by contrast, usually taxes only the profits of companies that make the goods), the new tax figures to streamline the traditional European system, which heretofore has resulted in a maze of overlapping assessments. It thus will make it an easier bookkeeping matter to rebate the full tax paid by exporters and, at the same time, to exact the full tax on imported goods--precisely the practices L.B.J. was complaining about.

Blocking the Whortleberries. Yet tax measures are not always the most far-reaching nontariff barriers to trade. Impoverished Ghana, trying to combat its balance of payments problem as well as protect fledgling native industries, has simply ruled out import licenses for 79 products ranging from suitcases to incense. Industrialized Britain departs from its otherwise liberal trade policy by banning virtually all coal imports. In Japan, which officially restricts imports as disparate as golf balls and electric generators, the government uses friendly persuasion to get importers to cut traffic in other goods that are not formally excluded.

Such protectionism persists even within Europe's supposedly cozy Common Market. Volkswagen has had lagging sales in Italy ever since that counry imposed a temporary tax that craftily penalized owners of the German bug. France, challenged at home by Italy's burgeoning appliance industry, has tried everything from a deliberate customs slowdown, which piled up thousands of Italian refrigerators at the border, to a formal request, now pending before the Common Market commission, for outright import quotas. The French also forbid the import of walnuts before Sept. 25--by which time the remnants of Italy's early-ripening crop have often rotted.

Nontariff barriers, in fact, are usually most ingenious when it comes to food, since they then can be cloaked in health and labeling regulations. In Europe, the amount of fruit required in jams and preserves varies so widely, says Henry Clark, agriculture specialist for the Council of Europe, that "a jam exporter needs a computer to avoid breaking one or another country's regulations." West Germany, whose regulations against preservatives and artificial flavorings keep out such processed foods as U.S. TV dinners, also makes it virtually impossible to import fresh Swedish whortleberries, despite the fact that it does not grow the delicacy itself. For its part, Sweden invariably excludes American apples at Christmas--and even at other times, complains one U.S. official in Stockholm, "won't allow them until they've sold their own."

Edge in Bids. The U.S. weighs in with some nontariff barriers, too. During Kennedy Round negotiations, one measure that came in for wide attack was the "American Selling Price" law, under which certain imported chemicals and footwear must be sold at prices equivalent to competing U.S.-made products. Like other nations, the U.S. also gives domestic manufacturers an edge in bids for Government contracts. A measure that has the unintended effect of dampening trade is the new federal auto-safety law, which went into effect last week; rather than foot the bill for the necessary changes, several foreign automakers have stopped exporting models with limited sales--including the Austin-Healey 3000 and the Sunbeam Alpine--to the U.S.

Notwithstanding such restrictions, the Johnson Administration remains committed to reducing the barriers, even in the face of the tricks of trade practiced by others and a new wave of protectionist sentiment in Congress. The U.S., after all, has long since demonstrated its ability to compete favorably in world markets. Best evidence is the fact that the nation's 1967 balance of payments deficit, fed by military and aid expenditures, would have been far worse had it not been for its trading surplus of some $4.3 billion.

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