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Letter to the Chairman of the House Committee on Ways and Means on United States Trade Policy.

May 11, 1970

Dear Mr. Chairman:

It is gratifying to me that you are today beginning hearings on trade legislation. The Administration welcomes the chance to testify on behalf of the trade bill which I submitted last November, passage of which we believe to be necessary to provide a start in adjusting U.S. trade policy to meet the problems of the 1970s. These hearings will also be useful in giving all interested citizens a chance to explain their views on a subject which is of great economic and foreign policy significance for this country.

I urge speedy enactment of the proposals which I have sent to the Congress. The proposals are modest in scope, but they provide needed flexibility for U.S. trade policy in a number of significant ways. They would:

--Restore the authority needed by the President to make limited tariff reductions. This authority is not intended for major negotiations, but rather to permit minor adjustments, such as would be required to extend compensation to other countries hurt by U.S. escape clause actions-thereby avoiding retaliation against U.S. exports.

--Recognize the very real plight of particular industries, companies and workers faced with import competition, by providing for a readier escape clause and adjustment assistance relief where justified.

--Eliminate the American Selling Price system of customs valuation, a major obstacle impeding progress toward the reduction of non-tariff barriers.

--Strengthen the hand of the President in his efforts to ensure fair treatment for U.S. exports.

Since I submitted this legislation to the Congress in November, there have been a number of developments which add to its urgency. I cite only the important decisions taken by the European Communities on the future evolution of that great trading area, and the consideration by the Congress of new U.S. farm legislation, which would further increase the importance of our access to foreign markets. At a time of rapid movement in international trade relations and patterns, the U.S. will find itself at a disadvantage unless we have the added flexibility which I have requested.

Progress toward freer trade should continue. We must encourage it. Without the strong support of the United States, the world's largest trader, this progress could falter. Passage of the legislation I have submitted will keep us headed in the right direction.


The legislation proposed by the Administration represents an interim step toward developing the flexible trade policies needed for the world of the 1970s. For the long range, it is important to reexamine our entire approach. Changes in production, trade and investment patterns, and the rapid progress in communications, transportation and technology impel us toward a basic reassessment of our trade policy. I have recently announced the appointment of the chairman of my Commission on International Trade and Investment Policy, which will assist in this reexamination, and I will shortly announce its full membership. The Commission is charged with examining the entire range of our trade and related policies, and of preparing recommendations for the next decade.

We need more information regarding the competitive position of U.S. industries. So that we will have an adequate factual base, I am requesting that the Tariff Commission make a broad survey of the competitiveness of particular industries. I believe that such a broad study, which the Tariff Commission is best suited to conduct, will be of great assistance to us in our future policies and trade actions and in the work of my Commission on International Trade and Investment Policy.

It is my intention to marshal the forces of the executive branch to expedite efficient adjustment to economic changes brought about by increased imports. I intend to activate the Trade Adjustment Assistance Advisory Board called for in the Trade Expansion Act of 1962 to lead a broad coordinated executive effort to make adjustment assistance more effective in opening opportunities for workers and firms. I also intend to request additional funds for adjustment assistance as they are needed.

Certain aspects of our trading relations have been of particular concern in recent years. The decline in our trade surplus, from about $7 billion in 1964 to only $0.8 billion in 1968, and $1.3 billion in 1969, stems from a variety of causes: the inflationary forces which have dominated our economy in the late sixties; the growing economic strength and technological progress of our trading partners; the increase in agricultural self-sufficiency abroad; and the increasing demand of American consumers for goods made in other countries. As I mentioned in my balance of payments statement of April 1969, it is appropriate to deal with fundamental problems by the use of fundamental remedies. One of the required fundamental remedies has been the reduction of inflationary pressures. With the steps we have taken to gain control of inflation, there has been some modest evidence of improvement of our trading position. As our anti-inflationary policies continue, we expect a further improvement. At the same time, it is important to take vigorous steps to improve our exports.

One of the most disquieting trade developments has come in the field of agricultural trade. Although there has been a general reduction in trade barriers in recent decades, there have been contrary trends in agricultural trade. In particular, high trade barriers in a number of countries, used to protect high domestic prices, have created difficulties for our agricultural exports. We have protested against these measures as each new barrier has been raised and have on occasion been reluctantly forced to threaten or to actually take retaliatory measures.

During the past decade, there has been a major integration of the economies of Western Europe. We see ahead the prospect of an enlargement of this community. We wish our friends in Europe well in their efforts toward economic and political unity and will watch their steps toward this end with sympathetic interest-remaining alert, however, to the need for respect for our commercial interests. We would expect, of course, that in the process of enlargement of the European Community, due regard will be given to the rights and interests of the United States and other third countries.


For a number of masons it is possible that American industry has been less export-minded than that of other major competing industrialized countries. Attractive alternatives to export sales development-in our very large domestic market for example, and in the alternative of direct foreign investment abroad for manufacture of products in locations closer to the foreign markets being served--have existed for American industries to a greater degree than for foreign companies. Furthermore, our tax laws tend to favor sales by foreign subsidiaries of U.S. corporations over exports from the United States. Administration witnesses will submit a legislative proposal to improve the tax situation for income earned on exports.

United States exports have increasingly shown a concentration in capital goods and other technologically advanced products. It is customary in domestic as well as international trade in such items for the seller to provide credit on comparable conditions with those provided by his competitors. Important steps have been taken by the Export-Import Bank in the past year to make U.S. Government export credit and guarantee programs as flexible and useful as possible to a wide range of American producers. These steps include a complete revision of the commercial bank discount program to encourage banks throughout the country to respond favorably to financing requests from exporters on a continuing basis, and initiation of an advance commitment procedure that has been most useful to buyers, suppliers and manufacturers.

Significant steps also have been taken to assist U.S. engineering and contracting firms in achieving contract awards for major projects. Money sources from outside the United States have been attracted to finance American exports as a result of the extension of the Export-Import Bank's guarantee authority. Special attention has been given to small business and agriculture through modification of the export insurance operations and through specific program assistance. The American aircraft industry and nuclear power developments have been substantially aided through the actions of the Bank. The key aspect of the Export-Import Bank's new look is greater cooperation and flexibility. Our exporters can look forward to continued expansion of Export-Import Bank activities.

The export programs I have just described, when taken together with the stepped up trade promotion programs of the Department of Commerce and the opening up of foreign markets through the reduction in foreign tariffs and other obstacles to trade, provide strong incentives for American industry to export more. These programs take into account the advice received from all segments of American business, both large and small, as represented by the National Export Expansion Council, as well as other groups. The benefits of an increase in exports should be felt throughout our entire economy. One statistic alone makes this point very strongly: in 1969, about 2.7 million jobs were attributable to U.S. exports.

As you begin hearings on this most important legislation, I want to express my appreciation for your careful attention and my high hope for results that will greatly enhance the U.S. trade position.



[The Honorable Wilbur D. Mills, Chairman, Committee on Ways and Means, House of Representatives, Washington, D.C.]

Note: The text of the letter was made available to the press.

Richard Nixon, Letter to the Chairman of the House Committee on Ways and Means on United States Trade Policy. Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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