TIME: Almanac 1993/TIME Almanac 1993.iso/time/082691/0826005.000

Text File | 1992-08-28 | 3.8 KB | 86 lines

                                                                                WORLD, Page 33

AMERICA ABROAD

Least-Favored Nations


By Strobe Talbott


    Free trade is vital to the world order, old and new. It
is based on the venerable principle of laissez-faire: when
people are buying and selling, governments should stay out of
the way. Since the early 17th century, nations have been
conducting commerce on the theory that lower tariffs mean lower
prices for consumers, higher profits for merchants and greater
prosperity for all. Countries that are busily shipping goods
across their borders may be less likely to dispatch armies. And
opening markets to imports is a way of opening societies to
ideas.

    Despite lapses into protectionism, the U.S. has generally
been both a promoter and a beneficiary of free trade. It grants
159 of the 170 countries on earth most-favored-nation status,
or MFN, subjecting their products to roughly the same
relatively low import duties.

    The problem is with the other 11, relegated to what might
be called LFN, or least-favored-nation status. They were all
connected with the now defunct Soviet bloc, and they have been
discriminated against for reasons that have nothing to do with
economics and everything to do with ideology. The U.S. didn't
like their political systems, and the denial of MFN was intended
to force them to change.

    Totalitarian countries, however, are better at
withstanding trade sanctions than democracies are at imposing
them. Fidel Castro's regime, for one, has easily survived a
29-year ban on selling sugar, cigars or anything else to the
U.S.

    Whenever American politicians try to use trade as a carrot
or a stick abroad, the result is almost always a domestic
brawl. "There are simply too many voices and competing interests
on our side to deliver a clear, coherent, timely message," says
Paula Stern, a former head of the U.S. International Trade
Commission. A fire-breathing anticommunist on Capitol Hill may
want to starve America's enemies into submission, but a
farm-state legislator would prefer to sell them his
constituents' grain.

    Congress and the White House have been bickering all
summer over whether to attach human-rights conditions to MFN
status for China, and there could be another fight this fall
over President Bush's recent promise to grant MFN to the Soviet
Union. The very subject of the U.S.S.R. sends the American body
politic into spasms of divisive debate. That eternally troubled,
troublesome country is the oldest and most vivid example of how
unsuccessful the U.S. has been at using tariffs as punitive or
coercive instruments of diplomacy. In 1912 the Taft
Administration revoked a commercial treaty with czarist Russia
to protest the persecution of Jews. A few years later, the
pogroms stopped, but not because of U.S. pressure: the
Bolsheviks came to power and began repressing the entire
population. Washington resumed normal trade when it recognized
the U.S.S.R. in 1933, even though Stalin was already cranking
up the Great Terror.

    In 1974 Congress passed legislation withholding MFN from
the Soviet Union in an attempt to induce Leonid Brezhnev to
permit more Jews to emigrate. Largely to spite the U.S.,
Brezhnev cut exit visas for Jews by nearly two-thirds. Then, in
1980, the U.S. granted MFN to China. Beijing's treatment of its
citizens was hardly exemplary, but its defiance of Moscow made
it a "strategic partner" of the West.

    As a result, the butchers of Tiananmen still have MFN
today, while the struggling reformers in the Kremlin don't. The
solution to this absurdity is simple: the very concept of
least-favored nation, which never worked well in practice
anyway, is a relic of the cold war and should be junked.