Made-in-America madness

Back in the early 1930s, when the world was in the grip of depression, nation after nation slammed shut its doors against overseas imports. Instead, political leaders sought to protect domestic industries, in part by encouraging citizens to ''buy American,'' ''buy French,'' ''buy German,'' and so on. Such policies, of course, worked against the very upturn in world economic conditions sought by everyone concerned.

In light of this historical experience, one cannot but be disturbed by the misguided and potentially dangerous trade legislation now working its way through the US House of Representatives - and likely to be passed by that chamber. Called the Fair Practices in Automotive Products Act and sponsored by the United Automobile Workers union, the act is neither fair to consumers nor likely to encourage production of auto parts or stimulate world trade in general. The legislation would require that cars of foreign firms selling 100, 000 or more vehicles in the US contain US-made parts. In short, in order to be marketed in the US, an overseas-owned car would have to be substantially built in the US.

The legislation should be rejected out of hand. That is not to say that overseas producers should not build factories in the US, as Volkswagen has done, as Honda is on the verge of doing, and as Datsun has promised to do. Or that the US should not build plants abroad. Nor is it to imply that quotas against foreign-made car products (such as the self-imposed quotas on Japanese imports) are necessarily unwise. But to in effect limit the US market only to domestic-made products is to invite the protectionism of the 1930s.

Washington is justifiably concerned, of course, that Japan - at whom the made-in-America legislation is basically aimed - still has far to go in carrying out the trade-liberalization measures announced by Tokyo last May. There have also been hints that Japan may abrogate the current quotas on car exports to the US when that agreement comes up for review next March.

At talks to be held this fall, the US should do all it can to prod Japan into fulfilling its promises to reduce trade barriers to US imports. Failure to do so will simply encourage such unwise measures as the ''made in America'' legislation. With such a law in place, both nations would be the losers.