44. Special Message From President Nixon to the Congress1
For the past 35 years, the United States has steadfastly pursued a policy of freer world trade. As a nation, we have recognized that competition cannot stop at the ocean’s edge. We have determined that American trade policies must advance the national interest—which means they must respond to the whole of our interests, and not be a device to favor the narrow interest.
This Administration has reviewed that policy and we find that its continuation is in our national interest. At the same time, however, it is clear that the trade problems of the 1970s will differ significantly from those of the past. New developments in the rapidly evolving world economy will require new responses and new initiatives.
As we look at the changing patterns of world trade, three factors stand out that require us to continue modernizing our own trade policies:
- First, world economic interdependence has become a fact. Reductions in tariffs and in transportation costs have internationalized the world economy just as satellites and global television have internationalized the world communications network. The growth of multi-national corporations provides a dramatic example of this development.
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Second, we must recognize that a number of foreign countries now compete fully with the United States in world markets.
We have always welcomed such competition. It promotes the economic development of the entire world to the mutual benefit of all, [Page 144] including our own consumers. It provides an additional stimulus to our own industry, agriculture and labor force. At the same time, however, it requires us to insist on fair competition among all countries.
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Third, the traditional surplus in the U.S. balance of trade has disappeared. This is largely due to our own internal inflation and is one more reason why we must bring that inflation under control.
The disappearance of the surplus has suggested to some that we should abandon our traditional approach toward freer trade. I reject this argument not only because I believe in the principle of freer trade, but also for a very simple and pragmatic reason: any reduction in our imports produced by U.S. restrictions not accepted by our trading partners would invite foreign reaction against our own exports—all quite legally. Reduced imports would thus be offset by reduced exports, and both sides would lose. In the longer term, such a policy of trade restriction would add to domestic inflation and jeopardize our competitiveness in world markets at the very time when tougher competition throughout the world requires us to improve our competitive capabilities in every way possible.
In fact, the need to restore our trade surplus heightens the need for further movement toward freer trade. It requires us to persuade other nations to lower barriers which deny us fair access to their markets. An environment of freer trade will permit the widest possible scope for the genius of American industry and agriculture to respond to the competitive challenge of the 1970s.
- Fourth, the less developed countries need improved access to the markets of the industrialized countries if their economic development is to proceed satisfactorily. Public aid will never be sufficient to meet their needs, nor should it be. I recently announced that, as one step toward improving their market access, the United States would press in world trade forums for a liberal system of tariff preferences for all developing countries. International discussions are now in progress on the matter and I will not deal with it in the trade bill I am submitting today. At the appropriate time, I will submit legislation to the Congress to seek authorization for the United States to extend preferences and to take any other steps toward improving the market access of the less developed countries which might appear desirable and which would require legislation.
[Omitted here are proposals for legislation addressing tariffs and trade.]
The trade bill I have submitted today is a necessary beginning. It corrects deficiencies in present policies; it enables us to begin the 1970s with a program geared to the start of that decade.
As we look further into the Seventies, it is clear that we must reexamine the entire range of our policies and objectives.
[Page 145]We must take into account the far-reaching changes which have occurred in investment abroad and in patterns of world trade. I have already outlined some of the problems which we will face in the 1970s. Many more will develop—and also new opportunities will emerge.
Intense international competition, new and growing markets, changes in cost levels, technological developments in both agriculture and industry, and large-scale exports of capital are having profound and continuing effects on international production and trade patterns. We can no longer afford to think of our trade policies in the old, simple terms of liberalism vs. protectionism. Rather, we must learn to treat investment, production, employment and trade as interrelated and interdependent.
We need a deeper understanding of the ways in which the major sectors of our economy are actually affected by international trade.
We have arrived at a point at which a careful review should also be made of our tariff structure itself—including such traditional aspects as its reliance upon specific duties, the relationships among tariff rates on various products, and adapting our system to conform more closely with that of the rest of the world.
To help prepare for these many future needs, I will appoint a Commission on World Trade to examine the entire range of our trade and related policies, to analyze the problems we are likely to face in the 1970s, and to prepare recommendations on what we should do about them. It will be empowered to call upon the Tariff Commission and the agencies of the Executive Branch for advice, support and assistance, but its recommendations will be its own.
By expanding world markets, our trade policies have speeded the pace of our own economic progress and aided the development of others. As we look to the future, we must seek a continued expansion of world trade, even as we also seek the dismantling of those other barriers—political, social and ideological—that have stood in the way of a freer exchange of people and ideas, as well as of goods and technology.
Our goal is an open world. Trade is one of the doors to that open world. Its continued expansion requires that others move with us, and that we achieve reciprocity in fact as well as in spirit.
Armed with the recommendations and analyses of the new Commission on World Trade, we will work toward broad new policies for the 1970s that will encourage that reciprocity, and that will lead us, in growing and shared prosperity, toward a world both open and just.
- Source: Public Papers of the Presidents of the United States: Richard Nixon, 1969, pp. 940-946.↩