NATIONAL SECURITY AND INTERNATIONAL TRADE A Report of the UNITED STATES COUNCIL INTERNATIONAL CHAMBER OF COMMERCE 1439 FOREWORD As an organization of American businessmen concerned with international trade, the United States Council has been keenly aware of the important relationship between foreign economic policy and national security. In previous publications analyzing the General Agreement on Tariffs and Trade, the proposed Organization for Trade Cooperation and other measures designed to expand trade, the Council has dealt only incidentally with the question of how this expansion would affect national defense. In this latest study, the Council's Committee on Commercial Policy has undertaken to specifically compare the effect on national security of the alternative policies of exposing essential industries to competition or protecting them by restricting imports. We believe the observations and conclusions contained in this report deserve the most careful consideration by businessmen and others concerned with giving our military establishment the strongest possible industrial base. THOMAS J. WATSON, JR., Chairman SUMMARY AND CONCLUSIONS 1. There is a growing awareness of the relationship between national security and foreign trade policy. 2. Certain industries and agricultural groups have pressed vigorously for the restriction of competing imports on the grounds of protecting the domestic defense mobilization base. 3. The national security argument for restricting imports has these serious weaknesses: (a) It is an inefficient method of protecting the defense mobilization base and can be a very costly method even though the cost is concealed. (b) It is a clumsy method which aids firms in the protected industry regardless of whether they need help and regardless of a particular firm's potential ability to contribute to the defense effort. (c) By reducing competition within the domestic market, import restrictions may significantly reduce the vigor of our economy. (d) Import restrictions cannot protect the type of economy we need at present, which is an economy built around engineering and managerial skills capable of transferring resources rapidly and effectively from one use to another as defense needs change. (e) Import restrictions cause us to exhaust our own natural resources more rapidly than we otherwise would. (f) Import restrictions directly damage our system of alliances and friendly relations with other countries which are vital to our own survival, and they weaken these countries. |