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PASTOR GENERAL'S REPORT, APRIL 19, 1985
like a lightning bolt" and that he was now determined to get his
life "on the right track."
--Richard Rice, Mail Processing Center
ON THE WORLD SCENE
CRITICAL SUMMIT AHEAD; SOUTH AFRICA HYSTERIA At the upcoming annual seven
nation economic summit, to be held this year in Bonn on June 2-4, the threat
of global trade war is bound to be a dominant issue. The leaders of Bri
tain, France, West Germany, Italy, Japan, Canada and the United States will
make expected calls for expanding free trade while issuing dire warnings
against import restrictions, such as echoed recently in the halls of Con
gress.
Last year's economic surmnit in London was a rather dull affair; since then
trade frictions, especially between the U.S. and Japan, have risen alarm
ingly. While it is predicted that in Bonn cool heads will prevail, below
the surface the problems will continue to fester. In THE WALL STREET JOUR
NAL, last November 6, William R. Cline, senior fellow at the Institute for
International Economics in Washington wrote:
The fact is that protection has been on the rise for several
years now. In the past, successive postwar negotiations sharply
reduced tariffs from their prohibitive (Smoot-Hawley) levels of
the 1930s. The Kennedy Round in the 1960s succeeded in reducing
the tariff wall around the European Common Market, and the Tokyo
Round of the 1970s disciplined non-tariff distortions such as
subsidies.
Open trade reached its postwar peak in 1974-76 as
concern about inflation temporarily peeled away some important
quotas (steel, sugar, petroleum, meat). But by 1977 trade pro
tection had begun a relentless upward creep, and major new non
tariff barriers emerged even as tariffs themselves sank to modest
levels in the range of 5 percent-10 percent••••
The costs of protection are high. User industries (autos) become
uncompetitive as they must pay higher prices for protected inputs
(steel). Consumers face a narrower range of goods and higher
p 7 ices as imports are restricted. The Congressional Budget Of
fice . has estimated the� of steel protection� about $180,000
per Job saved. Robert Crandall of Brookings estimates that auto
mobile quotas have raised the price of Japanese cars by about
$900 and bid up the price of domestic cars by nearly $400 (imply
ing a consumer cost of $4.5 billion yearly)••••
But consumers are not organized, and their losses are widely dis
persed, while the gains from protection are concentrated among
well-organized producers and labor groups in the affected sec
tors. Politics and special interests dominate U.S. protection
policy•••• It is difficult for politicians to argue with two mil
lion textile-apparel workers, one million auto workers or 500,000
steelworkers.
The April 13, 1985 ECONOMIST took issue with the singling out of Japan as
the "bad boy" in the trade crisis, saying, in part:
President Reagan's trade negotiators ought not to be persuaded by
a know-nothing Congress into taking up a protectionist blunder-