FOREIGN RELATIONS: Rap from Rich Uncle

Ideally, U.S. policy aims toward a free world of independent nations bound together in growing prosperity by a thriving, dependable free trade. Realistically, the U.S. has poured billions overseas to rebuild the industrial nations and finance the undeveloped, while many a rebuilt, well-financed country has maintained tariff walls against U.S. goods or tight controls on dollar purchases. Samples: Britain still limits or bars a long list of U.S. goods ranging from construction machinery to comic books; France excludes U.S. bourbon while buying British Scotch; Japan requires licensing for 70% of her imports, will not let Japanese businessmen buy some imports from the U.S. even when U.S. prices are cheaper. Last week the

U.S. moved to bring idealism and realism into line, warned the well-to-do that it was time to bring down the barriers and get on with the trade—or else.

Spokesman for the important policy change was the U.S.’s No. 2 diplomat, Under Secretary of State (for Economic Affairs) C. Douglas Dillon. “Either we move ahead to get rid of outmoded trade restrictions,” he told the 54 nations represented at the General Agreement on Tariffs and Trade (GATT) meeting in Tokyo, “or we can expect a resurgence of protectionism and restrictive action.” Two days later he told members of the America-Japan Society: “During the era of the so-called ‘dollar shortage’ we were disposed to be passive about foreign discriminations against our exports and to listen with sympathy, if not always full belief, to the arguments for continuing stringent exchange controls . . . My government believes that recovery has proceeded to a point where restrictions on trade imposed to meet the financial problems of a decade ago can no longer be justified.”

Symbolic Strings. Dillon’s strong statement was part of a massive readjustment of U.S. economic policy to fit the facts of modern economic life. Last year, chiefly because of spending for economic and military aid, the U.S. sent abroad $3.4 billion more than it received for its exports. Faced with a $4 billion gap in fiscal 1960 (ending next June 30), Treasury Secretary Robert Anderson has got the President’s permission to cast a hard eye over next year’s foreign-aid budget and audit the Pentagon’s spending for overseas forces and bases. Last month Anderson gave U.S. policy a new dollar-saving twist: the U.S. announced that, with few exceptions, dollars lent in the future to underdeveloped nations by the Development Loan Fund must be spent in the U.S. (TIME, Oct. 12).

The new strings on the DLF were more symbolic than revolutionary, for the DLF’s annual loans of $550 million are a fraction of the $5 billion in string-free U.S. economic aid (and most of DLF funds have been spent in the U.S. anyway). But the order touched off editorials that the U.S. was moving backward to a “Buy American” program calculated to subsidize high-priced American products that could not otherwise compete in world markets. Arkansas’ William Fulbright, chairman of the Senate Foreign Relations Committee, fired off a barrage of hostile questions to DLF Director Vance Brand in the name of free trade.

Hopeful Signs. The critics had a point if the DLF strings led to a general weakening of the U.S. ideal of free trade. The Administration replied that no such thing was contemplated, that the DLF action was only meant as a sharp rap in the name of realism—a short-term boost for U.S. trade while the U.S. works long range toward freer trade all around.

“There is no countermarching of policy in the U.S. Government,” said the President at his news conference last week. Commented the Times of London: “It is always a shock when a rich uncle says goodbye without pulling the customary £1 note from his pocket . . . We must cease to expect tips from uncle—indeed, now that we are grown up we can afford to pay part of the bill.” Another hopeful sign came at week’s end, when Japan promised to remove all discriminatory restrictions on U.S. goods by April 1, 1961.