Security Threats and Trade Barriers
"As defence, however, is much more important than opulence..."
In 1776, even as Adam Smith was championing the ideals of a free market economy, he recognized that the interests of national security far outweighed the principles of free trade. More then two centuries later, that sentiment proves to still be accurate and in use. Since the early 1900s, the United States has used this precept to defend its position on trade barriers to hostile nations, and through the majority of the century, that predominantly referred to the Soviet Union and its allies.
Just as Adam Smith supported the Navigation Acts in Great Britain to protect the navy (their chief means of defense; Smith 1776: 464), the United States has gone to great lengths to protect their chief means of defense: the technologically advanced electronics and machinery areas. The motive for these measures has not changed over the centuries. The desire to maintain superiority over other nations and to retain the ability to defend the sovereignty of the nation have remained an important aspect of both foreign and trade policy. It is the trade policy that we are most concerned with in this paper.
It is the desire of the United States to preserve the technological superiority that we have enjoyed for so long. After all, if no other nation equals our level of technology, then it greatly reduces any threat from another nation simply because we can counter anything they may threaten us with. However, if it is not possible to retain such a lead in technology (and it is not, at least not for long), then it becomes necessary to retain the ability to deal with all subsequent security threats in an efficient manner. Smith advocated, and the United States has implemented, the use of export barriers to make sure that crucial goods or intelligence vital to national security does not leave the country or fall into the hands of our enemies.
Though the Cold War is over, and the threat that has loomed over the United States and the rest of the world that depended on the United States for military support for the better part of this century has largely been eradicated, does not mean that there are no longer any security threats to the United States. The United States remains cautious in regards to the unstable status that Russia frequently seems to be in, as well as security threats from other nations like Iraq, and to some degree China. As long as there are still threats to the United States (and there is no foreseeable abatement of these threats), it will be necessary to maintain export controls on strategic goods.
In the following pages I will be looking at how export barriers have been used domestically and internationally (through CoCom), the effect and effectiveness of these barriers, and what the current needs for export barriers are.
Early Export Controls in the United States
In 1917, the Trading with the Enemy Act was passed. This set the precedent for the system of export barriers that dominated much of this century, that are only now being reduced. The President of the United States, under this act, was permitted to forbid any economic activity in wartime with states designated as enemies (Kemme 1991:5). Restrictions on exports formed a large part of the United States war strategy during World War II. Though rudimentary, the Trading With the Enemy Act was effective in asserting that trade was a powerful tool; not only in denying the enemy potentially needed goods, but also in preventing the enemy from getting its hands on strategic goods. It also set the precedent for the use of export controls by the United States against states that it is unfriendly with.
During the 1940s, both China and the Soviet Union were put on the proscribed list as a result of unfriendly relations resulting from their political regimes. The United States strongly supported an economic system based on the principles of liberalism, but...
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