National Governors' Association Remarks and a Question-and-Answer Session With Members of the Committee on Inter- national Trade and Foreign Relations.

THE PRESIDENT. Last September, in a meeting of a few Governors, including the chairman, Julian Carroll, at the White House, we discussed very briefly the possibility of having a new National Governors' Association committee established to promote international trade.

As a former Governor of a Southeastern State, I probably devoted 25 percent of my time to either recruiting investments in Georgia from other States in the Nation and also from overseas, or trying to sell Georgia products to foreign countries. I visited, I think, 10 different nations when I was Governor to promote international trade. And we established trade offices in different places around the world in a very aggressive fashion.

After I became President, I could see with much more clarity not only the economic advantages of this effort but the political advantages as well, because a basis of friendship, commerce, common visitors, negotiations among even nongovernmental leaders is one of the soundest possible bases on which permanent political alliances can be maintained and peace and harmony can be enhanced throughout the world.

Typically, my own expectations as they related to the National Governors' Association have been far exceeded by accomplishments. I had no idea a few months ago that we would be sitting in a room like this, with a packed audience, 30 or 35 Governors intensely studying the possibilities for the enhancement of international trade. I want to congratulate the chairman of the National Governors' Association, also my good friend, George Busbee, the chairman of this new committee. I think its potential is almost unlimited.

There's no question in my mind that relatively speaking, as a percentage of budget allocations, as a percentage of time invested, many States, perhaps almost all the States, do a far better job of promoting international trade than does the Federal Government. I think this is to be expected, because I cannot possibly devote 25 percent of my total time as President just to promoting international commerce itself. But there's no doubt in my mind either that working as new partners now, we can greatly enhance the ability of both Governors and a President to lead our respective Governments toward reaching a common goal.

There is a great advantage, in my opinion, in having 50 Governors directly involved through this committee and individually in this effort. Because of the diversity of interests of the States themselves, each one of the States is so different-different employment needs, different products evolved, different investment potential, different environment, different attitude—that you all can be, in effect, 50 experiment stations for determining how the Nation's thrust can be oriented to help in this very important realm of national interest.

We have a difficult assignment in controlling inflation in our Nation, in trying to have prosperity, providing jobs for our people, and in cementing, as I said earlier, closer relations with our natural friends and allies throughout the world. And the enhancement of international trade is a partial, sometimes almost a complete answer to some of those specific problems. We have a very high adverse trade balance, as you well know, primarily resulting from our extraordinary and excessive imports of oil from overseas. And the redressing of this trade balance by improved sale of American products overseas with which you can help is very beneficial indeed.

There's another element that ought to be mentioned. When I correspond directly and privately with President Brezhnev of the Soviet Union, I don't believe I've ever received a secret message from him that did not include an emphasis on his desire to improve trade relationships with our country. In my recent visit to Mexico, at the root of all our difficulties and potential successes in the future—the alleviation of tension, misunderstanding, the repairing of historical mistakes—the word "trade" can almost be considered a magic key to open up doors of progress in every one of those areas of question.

Mike Blumenthal is now in the People's Republic of China, a billion people now hoping for and expecting better relationships with our country, a wonderful opportunity if it's handled well. Secretary Kreps will be following his trip with her own. In our dealings with other countries who have historically been our friends, the same thing applies.

I've just left the White House a few minutes ago, having met with the Prime Minister of Egypt, the Foreign Minister of Israel to receive a report from them on progress made at Camp David this week and, hopefully, to prepare for a head-of-state meeting later on this coming week to proceed with these peace negotiations. And again, at the root of basic problems, and as an incentive to further progress, is the question of trade, economic stability, economic prosperity, improving the quality of life of people in those countries.

We are now facing a difficult decision in Congress about how to handle the Taiwan question, to honor our commitments to those good friends. And as you well know, one of the things that I insisted upon in normalizing relations with the People's Republic of China was the continued trade and commerce and cultural exchange with the people of Taiwan.

So, in every one of these areas, the importance of trade cannot be overemphasized. Ambassador Bob Strauss has been negotiating day and night for months to bring about an international alleviation of obstacles to trade through the Multilateral Trade Negotiations, to reduce existing protectionism and to prevent the selfish protectionist tendencies that always exist in every country, including our own, from prevailing in the future. This is not going to be an easy agreement to have ratified or approved by the Congress. And speaking frankly, I hope that all of you will study the details of these agreements and the benefits that we can derive from them, and use your own influence, speaking constructively and soundly and from a basis of knowledge and intelligence, to encourage the Congress to approve these agreements once they have been reached.

I've recognized the limitations on what the Federal Government can do. And your chairman and I use that primarily as the reason for making this move among the Governors. I have tried to improve the quality of service by the Eximbank, for instance. I think in the 1977 budget, the total amount of money available to the Eximbank was about $700 million. In the budget that I've just presented to Congress, it's $4.1 billion, about six times as much. And we would like to make sure that this still limited amount of money is expended in the most efficacious way for our country.

When I made my own trade missions as a Governor, I almost invariably took a representative of the Eximbank along with me, because that is an avenue by which very good, sound investments of taxpayers' money in our own country can be greatly magnified in benefits. And I think your own private study or concerted study of trade opportunities using governmental entities like the Eximbank or OPIC or the Small Business Administration can be very helpful to you and to the people who look to you for leadership in your own States.

I'd like to just say two other things: There has been a study made by Juanita Kreps, under her, Secretary of Commerce, and your role in this expansion of trade will be significant, and she is working closely with you, as you well know.

There will be an analysis given to me in April of the regulatory obstacles to international trade so that we can see clearly what well-meaning regulations in the past established for international trade now have served their purposes or are ill-advised and ought to be removed because they are an obstruction to increased trade. And in these studies, working closely with Secretary Kreps and in concluding the recommendations on regulatory obstacles and other areas of the Federal Government's functions, I would like for the Governors to be a full partner with me.

Obviously, we can't have 50 new Secretaries of State. We've got at least enough Secretaries of State already. [Laughter] But I think that as you want to expand your own contacts with foreign countries, you need to have an intimate knowledge of the political circumstances or military circumstances or economic circumstances in the nations With which you are trying to enhance business. And we have now appointed, as you know, a very highly qualified Ambassador to work directly with you. And Secretary of State Vance, whom I left just 5 minutes before I arrived here, is very eager to participate in giving you detailed briefings and including, of course, you, in the knowledge that we share of other countries who look to us as a stabilizing factor in the world and admire our strength and who know that our own strength can be enhanced, our thrust for peace can be enhanced if your own efforts are successful.

Governor Busbee, I want to congratulate you for your new leadership role here and pledge, again, as I have in the past, my full support as an equal partner with you in this important element of American life.

Thank you very much.

GOVERNOR BUSBEE. We're going to continue with the questions and answers of the other panel members in just a few minutes, but the President says that he has time for two or three questions before he has to leave again for a meeting. So, I'll entertain the first question.

THE PRESIDENT. Or comment. If you all have

GOVERNOR BUSBEE. Or comment. This is Governor Thompson.

QUESTIONS

GOVERNOR THOMPSON. Mr. President, has your administration yet concluded, following Vice Premier Deng's visit to the United States, to what extent substantially increased trade with the People's Republic of China will depend upon expansion of credit available, and if it will depend substantially on that, what plans the administration, perhaps Congress as well, has to expand credit relationships with China?

THE PRESIDENT. We, obviously, have done preliminary assessments of Chinese credit. My own guess is that other than extending most-favored-nation status to the People's Republic of China, that it would not involve any credit directly from our Government. The credit status of the PRC is very good, primarily because of the enormous resources of that country and also because they've been so reticent in the past in accepting any credits whatsoever. And now a multibillion dollar expansion program in their own trade and also a multibillion dollar expansion program in investments, commercial investments in China, could very easily be financed through normal or private business loans because of China's very excellent credit rating.

GOVERNOR BUSBEE. Next question? Representative Conable.

REPRESENTATIVE CONABLE. Mr. President, you announced an export policy last September, and you're going to have a review, apparently, this coming spring. To what extent will there be new legislation suggested, do you think, or are you going to be relying primarily on administrative changes? We've heard a lot here today about the extent to which the Government stands in the way of exports. Of course, if we're going to get through the MTN, we've got to be persuaded that Americans will benefit from an increased export trade.

THE PRESIDENT. I think the Export Administration Act is up for renewal in September.

REPRESENTATIVE CONABLE. It is, yes.

THE PRESIDENT. It will be completely reassessed, and I think in the renewal process, amendments will undoubtedly be proposed and considered. I've not gone into that in any detail yet. I would like to see as much as possible the obstacles removed from international trade and the emphasis be placed on the promotion or the enhancement of international trade.

I would like to express one caution, however. One of the prerogatives of a President is to have authority enough to carry out a major responsibility that the Constitution gives me, and that is to protect the security of our country. There must be times, inevitably, in the life of any President, when some trade restraints can be used effectively to prevail in an altercation or to protect American interests or the interests of our friends as an alternative to possible military or much more serious action. And with that one exception, and the protection of the American free enterprise system, I would like to see all the unwarranted obstacles, regulations to trade removed. And I think there's a lot of area of improvement there to be tapped when the studies are completed.

Secretary Kreps feels that this is so. My own White House staff members believe this is the case, and Secretary Vance feels the same. So, with the exception of protecting our own free enterprise system-and I'm a strong supporter of antitrust laws and deregulation and the protection of the President's prerogative to ensure that our Nation is protected itself—within those very tight bounds, I think everything that can be done ought to be done this year to remove any further obstacles to trade.

GOVERNOR BUSBEE. Governor Link had a question; North Dakota.

GOVERNOR LINK. Thank you, Mr. Chairman.

Mr. President, prior to recognition of mainland China, trade teams have visited and had been visiting individual States, making some purchases of commodities and goods and agricultural products that they wanted and needed.

What is the recommendation and the attitude of the administration regarding continuation of negotiations between the individual States in response to the visits and the trade that had been already established?

THE PRESIDENT. I would like to see those efforts escalated. I might say that I believe that in this particular realm of trade, we are benefiting in both ways. I don't see any deleterious effect on our trade with Taiwan from our new normal relations with the People's Republic of China. And it opens up enormous new possibilities, as you well know, Art, for new trade and enhanced trade with China, mainland, itself.

As a matter of fact, after Japan normalized relations with the People's Republic of China several years ago, their trade with that great country exploded into tens of billions of dollars of presently existing contracts, more than $10 billion. At the same time, they established the same relationship with Taiwan that we have now proposed the Congress approve. And under those circumstances, their trade with Taiwan has more than tripled, almost quadrupled just in the last few years. So, I think we'll have a continuation or even an expansion of our trade with Taiwan and a greatly magnified, new opportunity for trade with the People's Republic of China.

I would hope that when Secretary Kreps returns from her trip to the People's Republic of China, that she could relay, through George Busbee, to all of you her assessment of the advisability of your making individual trips with trade missions to the People's Republic. I think this would be very good for your State. It would certainly be very good for our country, and it would, in addition, let the Chinese people understand us better and vice versa. I think through your own initiative and exploration of possibilities you can uncover opportunities that we could never hope to uncover, even with the best organized and most enthusiastic effort from the Federal Government itself.

GOVERNOR LINK. You see, we've had a standing invitation even prior to the recognition of mainland China, and they indicated they hoped it would continue. And I was interested in knowing what the attitude.-

THE PRESIDENT. I think you ought to accept the invitation.

Maybe one more question.

GOVERNOR BUSBEE. Mr. President, before you depart, the chairman of the National Governors' Association, Governor Carroll of Kentucky, wanted to make a statement.

GOVERNOR CARROLL. Mr. President, on behalf of the Governors, I want to say thank you for your suggestion. This committee would not be sitting here today were it not for this personal suggestion of the President of the United States, and I think the Governors should be grateful to him for his suggestion.

It was made at the White House while we were having lunch one day. And I said to him, "Well, Mr. President, if you're serious, would you mind writing a letter and asking us to do it." And he was that serious. He' wrote the letter and suggested that it be done, and indeed the National Governors' Association executive committee then created this standing committee. And you see how enthusiastic the Governors are responding to it.

And indeed, we believe that it's going to create improved international relations from a resource that has never been utilized before by the Federal Government, and that's the resource of its own States. And we compliment you for it; we thank you for it and look forward to helping you. And as a Governor who's got all kinds of coal, I'm looking for some of those countries that are now burning oil that could burn coal and let us have their oil. [Laughter]

THE PRESIDENT. Well, let me say in closing—I've got to go back to another meeting at the White House—but let me say in closing that I'm very proud of what's been done already. I think this has tremendous, exciting potential.

One of the most delightful and fruitful efforts that I ever made as Governor-and sometimes I was disappointed in my projects—was in international trade. And I've seen a remarkable change take place in Georgia because we've had people come there from foreign countries, and now we understand people much better that were formerly quite alien to us. And the foreigner tag which used to be a source of vituperation has now become a matter of an avenue for new friendships. And nothing could help our Nation more.

I think had this committee been formed maybe back in 1936 or '38, we might very well have avoided the war with Japan—if there were constant, multiple avenues of commerce and trade and trade missions and Governors' exchange and the Congresses working closely, we might very well have avoided our breakdown in relationships with Japan. Nobody knows that. But there's no doubt in my mind that we can alleviate tensions and search out new avenues, not only of commercial benefit, but also new avenues of peace and excitement and an expanded quality of life for all our people by closer relationships between the States and foreign countries.

There are exceptional responsibilities on those State Governors who live on the border, in the south with Mexico and in the north with Canada. I know that historically those interrelationships have been very closely woven, and you can help me in dealing with the problems with Mexico if you give me advice and work closely with me in making sure that I can benefit from the knowledge and the historical interrelationships that have been enjoyed by the Southwestern States. The same thing, obviously, applies to Canada.

So, I just can see many, many opportunities here for this meeting to go down in history as one of the great steps forward for our own great Nation and to let us become even greater in the future.

Thank you again.