Washington's iron curtain against East European exports - trade quotas

IN THE LATE 1940s, the Marshall Plan poured millions of dollars into Denmark, the Netherlands, and other European nations to help them rebuild their dairy industries. Then, in 1951, when they were getting back on their feet, Congress bushwhacked aid recipients by imposing quotas that slashed European cheese and butter imports. Today, Washington has developed a similarly hypocritical policy--government aid, but not free trade--for the new democratic nations in Eastern Europe.

Western government aid to Eastern Europe is proliferating. The International Monetary Fund disbursed approximately $5,000,000,000 throughout the region in 1991, and the World Bank plans to lend $3,000,000,000 to Eastern Europe over the next three years. The U.S. provided almost $2,000,000,000 in aid to East European governments in 1990 and 1991. Washington has created Enterprise Funds (with a total capitalization of $360,000,000) to promote the development of the private sector in Poland, Hungary, and Czechoslovakia. The U.S. Export-Import Bank is financing export sales of American goods and services through loan, guarantee, and insurance programs, and the Overseas Private Investment Corporation is subsidizing US. private business investment in the region with loan guarantees, direct loans, and political risk insurance. Eighteen separate Federal agencies are conducting assistance programs in Eastern Europe.

America's trade policy has made a mockery of those efforts to "aid" Eastern Europe. While Washington is donating billions of dollars to governments in the region, it is maintaining pervasive trade barriers that will prevent significant increases in East European exports to the US. While Pres. George Bush publicly proclaimed American generosity toward Eastern Europe, those trade barriers are stifling the chances of that region's 130,000,000 citizens to build better lives.

As a 1991 US. International Trade Commission (ITC) report observed, East European "exports to Western countries were generally dominated by clothing and raw materials, reflecting in part the poor performance of consumer goods and more technologically advanced merchandise in Western markets." Yet, Washington continues to impose stranglehold clothing and textile export quotas on most East European countries. Wool clothing is one of Poland's strongest industries. Yet, in 1992, Poland was allowed to sell Americans only 144,000 women's and girls' wool coats, 198,000 men's and boys' wool suit coats, 132,000 men's and boys' other wool coats, and 210,000 men's and boys' wool suits. (Such quotas are haggled out by US. trade officials and foreign government officials. There is no consistent rule for determining them.)

Czechoslovakia was forced to sign an agreement restricting its clothing exports to the U.S., even though they amount to a mere 0.05% of the American clothing market. Czechoslovakia is allowed to ship 198,000 men's and boys' wool coats and 160,000 suits to the U.S. each year.

Hungary is permitted to export just 50,000 women's and girls' wool suits, 155,000 men's wool suits, and 168,000 men's wool coats to the U.S. annually. Yugoslavia is allowed 93,915 women's and girls' wool suits and 2,268,450 pounds of blankets; Bulgaria, 140,000 women's wool coats; and Romanian exports to the U.S. are restricted to 32,665 women's and girls' wool suits, 82,512 men's and boys' wool coats, and 75,182 pounds of wool bathrobes, night-shirts, pajamas, underwear, ski suits, shawls, mufflers, hats, ties, and other miscellaneous wool apparel each year.

Even when import quotas do not close the borders to East European clothing, the U.S. tariff code often does. The tariff is 22.3% on women's wool suit jackets, 24.3% on men's wool overcoats, 22.6% on women's overcoats and cloaks, 21.5% on men's wool trousers, and 24.1% on women's blouses.

The 1989 Economic Report of the President concluded that the tariff and quota restrictions on apparel imports, all told, produce an average effective tariff charge of more than 50%. William Cline of the Institute for International Economics estimates the combined costs to American consumers of textile tariffs and Multifiber Arrangement quotas (for all countries) at $20,300,000,000 on the wholesale level and as much as $40,000,000,000 at the retail level.

In 1984, Pres. Ronald Reagan imposed import quotas, formally termed "voluntary restraint agreements" (VRAs), on most major steel-exporting nations. Even though East European countries were not major players in the American steel market, the Reagan Administration pressed them, too, into surrendering market access through the negotiation of VRAs.

The text of many of the VRAs concluded in 1984 begins: "The purpose of the Arrangement is to create a period of stability in steel trade between the United States of America and" the foreign country. The fine print explains that "stability" can be achieved only by severely reducing imports. The arrangement between Washington and East Germany mandated that exports of steel plate would fall from 80,000 tons in the first year to 13,000 in 1989. In 1990, when East and West Germany officially merged, the US. Customs Service celebrated the event by abolishing the East German quota on steel exported to the U.S., rather than by combining the quotas of East and West Germany. Washington also commanded Czechoslovakia to reduce its steel exports by 40% between 1985 and 1989. Poland, in turn, was ordered to reduce its exports of barbed wire from 2,500 tons in 1985 to 1,500 in 1989 and its exports of nails from 29,000 tons in 1985 to 11,000 in 1989. Yugoslavia, too, was forced to restrict its steel exports, even though they amounted to just 0.02% of American steel consumption. US. quotas currently dictate that Poland is permitted to export 350 tons of alloy tool steel; Czechoslovakia, 100 tons of stainless steel bars; and Hungary, 200 tons of stainless steel rod to the US. each year.