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The Future of International Trade

Published online by Cambridge University Press:  18 July 2011

Leicester Webb
Leicester Webb
Affiliation:
Australian National University in Canberra
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Extract

Within the last year or so there have been signs of another attempt to halt the drift toward anarchic restrictionism in international trade. Its origins may be discerned in the conference of British Commonwealth Finance Ministers summoned to London in January 1952 to consider the third of the sterling area's postwar crises. This conference, after branding as “palliatives” the measures taken to remedy recurring balance of payments deficits, concluded that a lasting solution of the sterling area's problems was possible only“when the world-wide trade of the sterling area is on a substantially higher level than at present, when sterling is freely convertible into all the main currencies of the world, and its position need no longer be supported by import restrictions.” A year later, another Commonwealth conference reaffirmed these objections in more striking language: “The Commonwealth countries look outward to…co-operation with other countries, not inward to a closed association. It is their common purpose, by their own efforts and together with others, to increase world trade for the benefit of all peoples.” The first formal step toward widening the basis of this initiative took place in March of this year, when Mr. Anthony Eden and Mr. R. A. Butler, acting in this matter for the British Commonwealth as a whole, discussed the economic prospect with Mr. John Foster Dulles, and found “reason to hope for continued progress towards a better-balanced, growing world trade and the restoration of a multilateral system of trade and payments.” From Washington, Mr. Eden and Mr. Butler went to Paris in fulfillment of a promise to “keep in step with the Organization for European Economic Co-operation.”

Type
Research Article
Information
World Politics , Volume 5 , Issue 4 , July 1953 , pp. 423 - 441
Copyright
Copyright © Trustees of Princeton University 1953

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References

1 Press communiqué, Conference of Commonwealth Finance Ministers, January 21, 1952.

2 Press communiqué, Commonwealth Economic Conference, December 13, 1952.

3 Press statement, March 11, 1953.

4 As a New Zealand government official, the writer of this article took part in the discussions leading to the calling of the United Nations Conference on Trade and Employment and was a member of the New Zealand delegation to the Geneva phase of the conference.

5 Harrod, R. F., The Life of John Maynard Keynes, New York, 1951, pp. 567–68.Google Scholar

6 Ibid., pp. 608–9. The extent to which Keynes' attitude changes is measured by comparing the note to Liesching with the following quotation from his posthumous article, “The Balance of Payments of the United States,” Economic Journal, LVI (June 1946), pp. 185–86: “I find myself moved, not for the first time, to remind contemporary. economists that the classical training embodied some permanent truths of great significance, which we are liable today to overlook because we associate them with other doctrines which we cannot now accept without much qualification. There are in these matters deep undercurrents at work, natural forces, one can call them, or even the invisible hand, which are operating towards equilibrium. If it were not so, we could not have got on even so well as we have for many decades past. The United States is becoming a high-living, high-cost country beyond any previous experience. Unless their internal, as well as their external, economic life is to become paralysed by the Midas touch, they will discover ways of life which, compared with the ways of the less fortunate regions of the world, must tend towards, and not away from, external equilibrium. Admittedly, if the classical medicine is to work, it is essential that import tariffs and export subsidies should not progressively offset its influence. It is for this reason that one is entitled to draw some provisional comfort from the present mood of the American Administration…as embodied in the Proposals for Consideration by an International Conference on Trade and Employment. …I must not be misunderstood. I do not suppose that the classical medicine will work by itself or that we can depend on it. We need quicker and less painful aids of which exchange variation and overall import control are the most important. But in the long run these expedients will work better and we shall need them less, if the classical medicine is also at work.” One may reasonably assume that, had Keynes lived through the fiasco of convertibility, he would have gone back to his 1943 position.

7 For a typical expression of this point of view, see Condliffe, J. B., The Reconstruction of World Trade, New York, 1940, pp. 352–53Google Scholar: “…there is no practical likelihood that independent or autonomous monetary policies based on exchange control can be fitted into a system of international economic co-operation and equilibrium. Regulation of credit by control of its price, the rate of interest, might be worked by international consultation or by clearing through an international authority; but centralized rationing cannot be so adjusted. It is significant that the most precise plan yet projected for an International Monetary Authority gives power to that Authority to forbid exchange control and to supervise and gradually eliminate quantitative controls of international trade. Such rationing is impossible of international co-ordination and is, in fact, inextricably bound up with that concentration of economic power in the hands of State officials which is an essential attribute and hallmark of militarist policies.”

8 Charter of the International Trade Organization, Articles 20–24.

9 Ibid., Articles 29–32.

10 Ibid., Article 1.

11 Paragraph 4 (b) of Article 21 recognizes that “domestic policies directed towards the fulfilment of a Member's obligations…relating to the achievement and maintenance of full and productive employment” may involve the Member in balance of payments difficulties and therefore justify resort to quantitative regulation of import trade. It also provides that a Member shall not be required to withdraw or modify restrictions on trade on the grounds that a change in domestic policy relating to full employment would make the restrictions unnecessary.

12 For a fuller examination of the implications of the full-employment' policy in relation to international trade and the ITO project, see Williams, John H., “International Trade with Planned Economies,” Proceedings, Academy of Political Science, May 1947.Google Scholar

13 See “Measures for International Economic Stability,” Report by a Group of Experts appointed by the Secretary General of the United Nations, New York, 1951, Chapter 2, for a discussion of the possibilities of commodity agreements as instruments for promoting economic stability.

14 Suggestions as to how the IMF could be made to function more effectively are advanced in ibid., Chapter 4.