Address Before the White House Conference on Exports.

Gentlemen:

I am glad to see the members of my Cabinet who I don't see often enough--Secretary Hodges is here, Mr. Hurley, Mr. Wirtz, Mr. Dillon, Mr. Foy. Gentlemen, I want to express a very warm welcome to all of you. We appreciate your coming down here.

It is our hope that out of this meeting will come not only a very candid consideration of what we as a Government are doing to assist you in developing your exports but also some proposals as to what we might do in the future which will improve this program.

The Federal Government is a partner of yours in this effort. We are anxious to do everything we can to make your way easier. What we want from you is a renewed concentration by American industry in expanding our markets abroad. This ties into our foreign policies, it ties into our national security, it ties into the prosperity of our people and therefore we hope that this meeting will be a two-way street.

On the one hand we stimulate those who are not here, because quite obviously your presence here indicates your interest. We stimulate those who are not here to look at what they may now regard as a marginal market and make it a significant market. It can mean economic resources for them, but it can mean even more for our country.

Now, I am quite well aware if a major company has a larger domestic market-and after all, this is the greatest market in the world here in the United States--it does sometimes not appear to be useful to make the concentrated effort to take the risk which goes with building a market which can by your best judgment only amount to 10, 15, or 20 percent at best, of your domestic market. You really may feel that it is better to concentrate here, that this is the area for the future.

I hope that in making that economic judgment and weighing those economic factors you will also consider the national interest. Every dollar you earn abroad is in our interest. As long as we spend what we must spend to maintain our defenses, as long as we spend what we must spend to assist those countries who are in the front line of freedom, as long as we spend what we must spend to maintain our other obligations abroad, then we must earn our way. The Federal Government cannot earn the way for you. You have to do it yourselves. But earning your way, earning helps us. So I regard this as a very important meeting.

We can meet our problem in one of two ways, either by cutting down or by building up. I don't think the cutting down is the way to do it. It may be finally the only way to do it, but I think we have another opportunity, and that is to expand our markets. If we cut down it means reducing defense. It means reducing aid. And I think that, in the final analysis, if you can just add 10 percent to the exports of last year, which should not be beyond the possibilities for this very resourceful group of entrepreneurs in the United States, we could meet all of our balance of payment problems.

Our ratio of exports to gross national product is only 4 percent--about one-half of what it was a century ago. If the volume of our commodity exports last year had maintained the same share of world trade that we had only 6 years ago, we would have exported $4.5 billion more than we actually did, more than enough to eliminate our entire balance of payments deficits.

We are not talking about dumping our great productive resources abroad. The fact of the matter is there are enough dollars to pay for what we want to export through tourists and through all the other means. We spread a good many dollars throughout the world. We are asking that there be a rising tide in trade which will benefit all the countries, which will lift all the boats. We are not novices at export trade. Indeed, one of the factors which led to the American Revolution was an attempt to limit our access to foreign markets. And during much of the 19th century American exports were aggressively merchandised around the globe. As a matter of fact, the motto of the city of Salem is to the farthest reaches of the Indies, so that we have a long tradition.

We still have a larger volume of exports than any other country. Our merchandise exports exceeded imports by over $4 billion last year. Even after deducting those exports financed by Government grants and loans, the favorable balance was $2 billion-not enough--not enough.

There is no reason why this Nation should be able to export only 4 percent of its gross national product when Germany exports 16 percent; Italy, 10 percent; Japan, 9 percent; Sweden, 19 percent; Switzerland, 22 percent; and the Netherlands, a staggering 35 percent.

This performance, of course, came in the most part from sheer necessity. They either had to export or die. We have never had that kind of pressure, but we do have a pressure today and I hope that a country as large as ours, with our large domestic market, will increasingly look abroad.

The Congress of the United States in passing the Trade Expansion Act of 1962 voiced its confidence in the capacity of our Nation and its businessmen to show purpose and determination in selling all over the globe. The act of Congress was an act of faith in the capacity of the United States to compete and compete successfully.

We are now committed in the Trade Expansion Act to full participation in a world market of vast dimensions. We have left the house of partial protection and tariff stalemate to begin a much larger involvement in world trade. We ask other nations to do the same.

There are four reasons, it seems to me, in the national interest why it is desirable for us to expand our exports:

First, export expansion means more jobs. Excess unemployment has plagued us for 6 years because of the insufficient demand for the products of American industry. The tax reduction bill which I hope the Congress will pass, represents our principal attack on this problem, but demand can also be created abroad.

Second, by expanding our exports we can end the persistent deficits in our balance of payments program. This is a far better solution than crippling cuts in vital national security programs or retreat into protection or other measures of restriction instead of expansion.

Third, increased exports mean increased profits, and profits are the basis of the free enterprise system.

And fourth, and finally, the entire free world will benefit from an expansion of our exports. We seek no unfair competition and no injury to others. On the contrary, our efforts rest on the fundamental principle that both parties to a transaction benefit from it. Increased trade increases international income. It sharpens efficiency and improves productivity and binds nations together.

Although export expansion is primarily a task for each individual firm, the Federal Government has special responsibilities:

--to pursue tax policies which promote increased efficiency;

--to negotiate vigorously for the reduction of tariff and non-tariff barriers against our products;

--to refrain from placing unnecessary bartiers in the way of exports; and

--to furnish positive help in the form of credits, guarantees and other technical assistance.

I hope this conference will discuss candidly the extent to which the Federal Government and its representatives overseas are meeting these responsibilities. If we are not doing it, we want to hear from you. If you are not getting the kind of help which you feel you are entitled to get, we want to hear from you. If you feel that the businessmen of other countries are getting more assistance from their government of a particular kind and more assistance from their representatives overseas, in the Department of State or in Commerce or wherever it may be, we want to hear from you. We can't do anything about it unless you tell us about it, but I can assure you that if you tell us about it we will look at it and analyze it, and if we feel it is in the interest of the United States we will do something about it.

The passage of the pending tax reduction bill will aid the competitive position of American industry as it did last year in the case of last year's investment credit and depreciation liberalization. We talked about that for a year. Secretary Dillon will recall, and Governor Hodges, a good many businessmen opposed it. The fact of the matter is, it has done a good deal of good in stimulating investment, making it possible for you to write off some of your machinery and capital investment faster than otherwise. It puts us on a more satisfactory competitive basis with some of your competitors from abroad, but there may be other things.

In the field of credit assistance, we have now provided the same facilities for our exporters as those provided by other industrial nations, through the Export-Import Bank and a program of Government guarantees and insurance. But it is possible that we can improve this program.

The coming round of tariff negotiations at Geneva will determine the climate in which American exporters will operate for years to come. Our objective will be the reduction or the removal of all non-tariff restrictions. But in the final analysis, the success of our negotiations depend on you. Our negotiators can help to create new opportunities but you must take advantage of them.

Western Europe itself offers maximum possibilities. The Common Market countries alone have a gross national product of $218 billion. It is a prosperous and expanding market. With an increased demand for American products, consumer products, our exports concentrate far too much on such traditional items as raw materials, semi-manufactured and capital goods. Consumer products account for less than 10 percent of our sales. Yet it is our consumer goods that have earned the highest reputation around the world.

Other parts of the world offer, too, I think, export opportunities. The developing nations need machinery and transport and capital goods and equipment, and I see no reason why this country should not sell them. This is a valuable market which our much abused foreign aid program has been instrumental in opening up for American business and industry.

I wish American businessmen who keep talking against the program would realize how significant it has been in assisting them to get into markets where they would have no entry and no experience, and which has traditionally been European, and come to the aid of this program in the coming months and years.

Last year 11 percent of our exports were financed under our aid program. And the importance of this aid to our exports is increasing as our developing assistance is increasing, now almost entirely tied to American purchases.

This program which we talk about is tied to the United States. As the program is cut, business is cut and jobs are cut here in the United States. We are not giving away money, we are giving away goods in those cases on a loan basis which will be paid back and which must be spent here in the United States. Almost one-fourth of the railroad equipment exported by American manufacturers was paid for by AID. Ten percent of the trucks and buses sold abroad were sold under AID. One-third of the fertilizer shipped abroad was shipped under ,AID contracts. But the real measure of the impact of these AID-financed exports lies in the future.

Today most of our exports go to industrialized nations. Fifteen developed countries received two thirds of our exports. Ninety lesser countries received one third.

In the long run, the greatest gains for American U.S. exports will come when nations are capable of purchasing our products, and AID can help pave the way.

For example, we began 15 years ago to help rebuild the markets of Western Europe and Japan. Even after their remarkable resurgence enabled us to do away with aid, our markets in those areas continue. Our exports to Europe have doubled and to Japan, have tripled. The same story has been repeated in other lands where AID combined with the efforts of the people themselves has brought strong economic progress.

In the last 5 years, for example, our ports to Taiwan increased 14 percent; to Colombia, by 28 percent; to Israel, by 76 percent. In Iran our share of their imports has grown 2 1/ 2 times since pre-World War II days.

In Pakistan our share of their imports in that same period has increased by over 5 times, and our commercial exports have gone up 50 times.

I stress these facts because I don't think that businessmen and the country realize the role foreign aid plays in acquainting the people and the countries with our goods, and as they move into a period of prosperity and the aid is dispensed with, there is a tradition of dealing with the United States and knowledge of our goods which can lay the groundwork for a sounder export trade. Otherwise, their traditional ties are in Europe and Europe will be the beneficiary.

Too little attention, in short, has been paid to the part which an early exposure to American goods, American skills, and the American way of doing things can play in forming the tastes and desires and customs of these newly emerging nations which must be our markets for the future.

In one country a little over a decade ago, to cite another example, it was extremely difficult for American contractors to bid upon jobs because the specifications were tied to bidders from other countries. Now, largely because of our AID program, American bidders are able to participate successfully in these contracts.

No foreign aid program, of course, can and should substitute for private initiative, but it can assist in breaking the path, and that is one important reason--though there are more vital reasons in this critical year of 1963--for us all to give it support.

These aid expenditures are not the cause of our balance of payments. AID can help our balance of payments by helping exports, and the recent cuts in this program by the House of Representatives saved only $20 million in American dollars on our balance of payments exports. It will have, unfortunately, a severe impact upon our exports abroad--to Latin America and all the rest. That is why even though this meeting is not called for this purpose there is an interrelationship.

I was glad to see the Chamber of Commerce yesterday support the Alliance for Progress. This is a program meshed in with the other actions which the Government can take which I think will assist you in the long run to develop our export markets which assist the United States.

Trade, in short, is not merely a matter of Europe. If we are to reverse the flow of our dollars in gold, we must expand our efforts in Bangkok and Nairobi and Bangalore, in Bogota, in Sao Paulo as well as in Frankfurt and Paris.

There will be difficulties and disadvantages. The domestic market will loom very bright. Our firms will need ingenuity and patience, but the results will be rewarding to the people of America as well as to the business. For an American truck in Pakistan, or a machine tool in Colombia, or a bulldozer in Kenya form a link between our Nation and our people and, therefore, I ask you today to commit yourselves to even more intensive efforts abroad and also to encourage your fellow members of the American business community to look abroad. In looking abroad, I think they can serve their responsibility as businessmen to their companies and also to serve the country.

This is a matter of vital importance. This is a matter which is very high on our agenda, and I cannot think of any way that we can solve our problems more easily, more happily, than to encourage you and to assist you in developing increased exports.

As everyone has said, we are talking about a $20 billion trade, an increase of 10 percent, which is not beyond us. Bringing in an extra $a billion would bring our balance of payments into balance without taking steps which are restrictive.

So, we ask your assistance on it.

As I said at the beginning, what we want to hear from you today is specifically what it is that we are now doing that we could do better; how we can organize our problems to assist you; what it is the United States Government should do. I am sure you heard once in awhile complaints about what is being done in Washington. We want to hear them here. We want you to tell us how to improve our assistance to you. We want you to tell us as much as you can what countries abroad are doing so that we can do the same or better, and we want to ask you on our part to make this a priority issue in the same way that our forefathers did to the benefit of our country and to the benefit of our system.

And I want to particularly thank all of you who have come down here. You are all busy men; you have a lot of other responsibilities. We would not hold this meeting, and it is one of the few meetings of its kind that we have held in the last 2 1/2 years, unless we thought it deserved the attention of all of you. I express our thanks to you.