356 WORLD POLITICS cause such barriers are nullified by exchange-rate changes.3 Others maintain that flexible rates augment protectionist pressures by increasing risk,and that fixed rates are best for ensuring free trade."It seems fair to say that the exchange-rate systems operating in both periods did little to provide a stable environment for international trade. A related issue is whether the value of U.S.exchange rates had a dif- ferent effect on trade policy in the two periods.The argument is that the level of exchange rates was driving trade policy,especially in the 197os. Thus,the relative undervaluation of the dollar in the late 197os weakened protectionist pressures,while its overvaluation in the early 1g8os led to new pressures for barriers.5 The problem with this argument is that the Igzos look similar:after World War I,the U.S.dollar appeared to be undervalued,supposedly mitigating protectionist pressures.But later in the decade,the dollar seemed overvalued relative to the mark,lira,franc, and gold,although undervalued relative to sterling.Differences in ex- change-rate levels,then,do not seem to distinguish the two periods. Despite these differences,the similarities between the Ig2os and 197os in terms of economic difficulties and the relative economic position of the United States might lead one to expect that U.S.trade policy in the 197os would look like that of the 1gzos.The 197os,however,were not marked by the extensive closure of the U.S.market that occurred in the Igzos. American trade policy remained oriented toward a relatively open mar- ket.Although it is commonly believed that protectionism grew substan- tially in the 197os and the early 198os,U.S.trade policy actually had mixed currents.Overall,there was probably a small net increase in trade barriers relative to the 1g6os,but these new barriers never reached levels near those attained in the 1920s.Moreover,unlike in the 1930s,these bar- riers had little effect on the volume of trade:global and U.S.trade con- tinued to grow throughout the decade of the 197os,and to grow faster than production.In addition,tariffs had been reduced to their lowest lev- els,about 5 percent on average,through the GATr Tokyo Round negoti- ations.7 On the other hand,some non-tariff barriers(NTBs)were growing. 3 Herbert Grubel,International Economics (Homewood,IL:Irwin,1977),chap.22;Charles Kindleberger and Peter Lindert,International Economics,6th ed.(Homewood,IL:Irwin, 1978),chap.21;Robert Baldwin and J.David Richardson,International Trade and Finance, 3rd ed.(Boston:Little,Brown,1986),chap.21. 3C.Fred Bergsten and William Cline,"Overview,"in William Cline,ed.,Trade Policy in the 198os(Washington,DC:Institute for International Economics,1983). Kindleberger and Lindert (fn.23),chap.21,esp.Fig.21.5. Ibid.,chap.21,Fig.21.3.Note how all other currencies rise in value against the dollar after the change in 1931. 27 U.S.Tariff Commission (fn.3),81-82.- - 356 WORLD POLITICS cause such barriers are nullified by exchange-rate Others maintain that flexible rates augment protectionist pressures by increasing risk, and that fixed rates are best for ensuring free trade.24 It seems fair to say that the exchange-rate systems operating in both periods did little to provide a stable environment for international trade. A related issue is whether the value of U.S. exchange rates had a dif￾ferent effect on trade policy in the two periods. The argument is that the level of exchange rates was driving trade policy, especially in the 1970s. Thus, the relative undervaluation of the dollar in the late 1970s weakened protectionist pressures, while its overvaluation in the early 1980s led to new pressures for barriers.>s The problem with this argument is that the 1920s look similar: after World War I, the U.S. dollar appeared to be . . undervalued, supposedly mitigating protectionist pressures. But later in the decade, the dollar seemed overvalued relative to the mark, lira, franc, and gold, although undervalued relative to sterling.26 Differences in ex￾change-rate levels, then, do not seem to distinguish the two periods. ~es~ite these differences, the similarities between the 1~20s and 1970s in terms of economic difficulties and the relative economic position of the United States might lead one to expect that U.S. trade policy in the 1970s would look like that of the 1920s. The I~~OS, however, were not marked by the extensive closure of the U.S. market that occurred in the 1920s. American trade policy remained oriented toward a relatively open mar￾ket. Although it is commonly believed that protectionism grew substan￾tially in the 1970s and the early 1980s, U.S. trade policy actually had mixed currents. Overall, there was probably a small net increase in trade barriers relative to the 1960s, but these new barriers never reached levels near those attained in the 1920s. Moreover, unlike in the I~~OS, these bar￾riers had little effect on the volume of trade: global and U.S. trade con￾tinued to grow throughout the decade of the I~~OS, and to grow faster than production. In addition, tariffs had been reduced to their lowest lev￾els, about 5 percent on average, through the GATT Tokyo Round negoti￾ation~.~' On the other hand, some non-tariff barriers (NTBs) were growing. '3 Herbert Grubel, International Economics (Homewood, IL: Irwin, 1977), chap. 22; Charles Kindleberger and Peter Lindert, International Economics, 6th ed. (Homewood, IL: Irwin, 1978), chap. 21; Robert Baldwin and J. David Richardson, International Trade and Finance, 3rd ed. (Boston: Little, Brown, 1986), chap. 21. '4 C. Fred Bergsten and William Cline, "Overview," in William Cline, ed., Trade Policy in the 1980s (Washington, DC: Institute for International Economics, 1983). "5 Kindleberger and Lindert (fn. 23), chap 21, esp. Fig. 21.5. 26 Ibid., chap. 21, Fig. 21.3. Note how all other currencies rise in value against the dollar after the change in 1931. '7 US. Tariff Commission (fn. 3), 81-82