168. Memorandum From the President’s Assistant for International Economic Affairs (Flanigan) to President Nixon1
- Description of the Trade Reform Act of 1973, with Options Papers on two remaining decisions
The proposed Trade Bill provides authorities and tools for the following purposes:
To negotiate more open and more equitable
- Five-year authority to reduce, raise or eliminate most tariffs over a period of time, for use during the upcoming multilateral negotiations. Authority to eliminate tariffs is essential to get an open, as opposed to restrictive, solution to the problem of preferential discrimination (particularly by the Common Market) against our exports. Import restrictions on some sensitive products or categories (e.g., textiles) would be exempt from change, either temporarily or permanently.
- A declaration of Congressional intent that you negotiate agreements reducing, eliminating or harmonizing non-tariff trade-distorting measures (used by the Common Market and Japan to restrict imports of our agricultural commodities), and a new procedure to assure prompt Congressional action where changes in US law are needed to implement the agreements.
- A more flexible authority for retaliation against those countries which balk at removing unfair restrictions against our exports.
To guard against disruption of our market, to
facilitate orderly adjustment to fair competition, and to assure
that imports compete fairly with our domestic producers.
- A new domestic safeguard procedure to enable us to act promptly (within four months or sooner) and effectively to restrain the rise in imports causing serious injury for periods up to seven years, if needed, to give industry and workers time to make orderly adjustments to import competition. The criteria for availability of this relief would be eased relative to current law to permit us to respond promptly to real problems.
- Reform of existing unemployment compensation programs and establishment of minimum pension provisions, through separate legislation as you have proposed before. Pending implementing action by the States on such reform, workers unemployed from trade related causes (using less stringent and time-consuming processes than in current law) to be given benefits equivalent to those they would receive under the new unemployment compensation standards. Training and relocation grants to facilitate worker adjustment would continue, as under broader manpower programs. The existing adjustment program for individual firms would be repealed, but a modest program of studies and technical aid (already authorized under existing programs) would be used to encourage private initiatives by an industry to improve its productivity and competitiveness.
- Changes in antidumping, countervailing duty and related laws to assure prompt action, and fair and effective procedures in handling cases of unfair import competition.
To strengthen our capacity to manage trade policy
and respond effectively to problems created for our economy by
international or domestic imbalances.
- New authority to raise or lower tariffs or quotas across the board, or to impose these restrictions selectively against particular countries, to help correct an imbalance in our international payments position.
- New authority to reduce trade barriers to fight domestic inflation.
- Other permanent authorities to provide flexibility in international bargaining after the main negotiating authority expires.
To open up and take advantage of new trade
- Authority to fulfill your commitment to set up a system of generalized preferences for LDC’s, with adequate provisions for exceptions and safeguards. This scheme will help to bring pressure on Europe and Japan to liberalize their programs, open their markets to Latin American and Asian countries, and remove reverse preferences that discriminate against U.S. exports.
- Authority to grant MFN to communist countries in the context of a trade agreement. This would permit you to meet your commitments to the USSR and Romania, and give you flexibility to deal with the PRC and others.
To put American exporters on a more equal basis with foreign competitors, the Message will note separate legislation to be submitted calling for changes in the Webb–Pomerene Act regarding the antitrust exemption for Joint Export Associations, and extension of its coverage to include exports of certain services connected with the sale of goods (e.g., engineering, construction, management counseling).[Page 637]
To deal with the Burke–Hartke challenge to American investment overseas, the Message will stress the interrelationships among the trade, monetary and investment systems and the need to avoid unilateral action now which would compromise our ability to negotiate a balanced reform. The Message will also note certain changes in our laws concerning taxes on foreign source income which will be proposed as part of a tax reform package to improve our tax policy as well as to counteract the Burke–Hartke approach.
The two remaining issues for Presidential decisions, on which Option Papers are attached, are:
- Whether the President’s authority to impose, on a non-MFN basis, a surcharge or quota for balance of payments purposes should be constrained by international agreements (Tab A), and
- The form in which Congress should be requested to give the President authority to grant MFN status to the USSR (Tab B).
- Source: National Archives, RG 56, Records of Secretary of the Treasury George P. Shultz, 1971–1974, Entry 166, Box 6, GPS Trade—Volumes I & II 1973/74. No classification marking.↩
- On March 21, Mills spoke in the House of Representatives on his desiderata in a new trade bill. (The New York Times, March 22, 1973, p. 65)↩