Nixon v. Mills: Showdown on Trade Policy

As chairman of the House Ways and Means Committee, Wilbur Mills swings almost as much power as the President on many domestic issues. Lately, the cherubic Congressman from Kensett, Ark., has also been moving into foreign policy, opening a one-man campaign to solve a long-festering problem in relations between the U.S. and Japan and avert an international trade war. Last week his well-intentioned efforts led to a direct confrontation with President Nixon, who was clearly annoyed. The break could develop into a power struggle that would unsettle U.S. trade policy and possibly affect the fate of revenue sharing, welfare reform, and other major Nixon proposals for which Mills holds the key to congressional action.

What Mills did was to undertake his own negotiations with the Japanese government and textile industry. Succeeding where the Nixon Administration had failed in two years of formal talks, Mills persuaded the Japanese to declare that they would unilaterally restrict their textile shipments to the U.S. If the deal had stuck, it could have stopped a congressional drive to legislate mandatory import quotas on textiles and many other foreign products. But the Japanese offer did not satisfy Nixon's Southern supporters in the textile industry, and some White House aides were incensed by what they saw as Mills' protocol-dodging efforts to run his own State Department.

Nixon, feeling that his authority was being challenged, rejected the Japanese offer. To his advisers, he said that the precedent of a Congressman negotiating with foreign interests "could lead to chaos in bilateral government talks." He added: "As much as I want my legislative program passed, I can't compromise." In a public statement, the President pointedly criticized the "unorthodox action" of the Japanese in dealing privately with Mills on a matter of foreign policy and reiterated his support for mandatory textile quotas. Mills warned that he would block any attempt to write quotas into law. That was an exceptionally strong stand for Mills, who usually says only that he will not support bills that he dislikes --not that he will try to kill them.

The Lever That Failed. The trouble dates back to the 1968 election campaign, when Candidate Nixon promised Southern voters protection against textile imports. Last year, at the Administration's request. Mills introduced a textile-quota bill. As Mills explained it to TIME Correspondent Neil MacNeil, he never expected the bill to become law but had been led by the Administration to believe that it would merely give U.S. negotiators "a lever" to move the Japanese to accept voluntary quotas. When the Japanese balked, Nixon urged Congress to pass the bill. Mills, who did not want the stigma of having started a world trade war, felt that he had been had by the Nixon tactic. The bill whipped through the House, and on its way picked up provisions that would also have set quotas on shoes and many other products--thus inviting retaliation not only from Japan but from Europe as well. The highly protectionist bill was lost in a Senate logjam at the end of the last session.

In January Mills introduced another bill that would put quotas only on textiles. Mills considers himself a free trader and dislikes mandatory quotas, but says he still figured that the introduction of a bill could pressure the Japanese. Again, however, the official Administration talks with the Japanese got nowhere. So Mills decided to push his personal diplomacy.

First. Mills in early February handed to Japanese Ambassador Nobuhiko Ushiba a stern protectionist speech that he had drafted for delivery. The shaken ambassador asked Mills not to deliver it until he could consult his government in Tokyo. Worried about the possibility that Mills would really push his textile bill, a delegation of Japanese textile magnates called on the chairman. Mills proposed that instead of negotiating an agreement between the two countries, the Japanese textile men issue a unilateral declaration that they would hold down shipments to the U.S. At Mills' suggestion, Michael Daniels, a Washington attorney, went to Tokyo to help iron out details of the statement. The Japanese brought the finished document to Mills. After suggesting some changes, which the Japanese agreed to, he pronounced it acceptable.

Example of Egoism. The Japan Textile Federation, backed by the Tokyo government, proposed to restrict shipments of cotton, wool and synthetic textiles to the U.S. for three years beginning July 1. Exports would be permitted to rise only 5% the first year and 6% in each of the next two years. (Japanese textile shipments to the U.S. increased 15% in 1969 and 11% in 1970, to a total of $527 million, which amounted to 2.5% of the total U.S. textile market.) The new policy would take effect only if South Korea, Taiwan and Hong Kong agreed to similar restrictions --and that would require intense pressure from both the U.S. and Japanese governments. One South Korean official dismissed the Tokyo declaration as an example of "Japanese egoism."

U.S. textile men were furious that the Mills-Japanese deal contained no explicit item-by-item restrictions on textile imports. They feared that under the overall quota, the Japanese could continue to achieve something like the 25% increase in synthetic-textile sales that they registered in the U.S. last year by concentrating shipments in synthetics rather than in cotton goods, which are selling poorly.

Secretary of State William Rogers and Foreign Affairs Adviser Henry Kissinger counseled Nixon to accept the Japanese declaration. On the other side, Commerce Secretary Maurice Stans and White House Aide Peter Flanigan, both of whom had conducted the official negotiations with the Japanese, were mad at Mills for bypassing them. Nixon appeared to be especially angry at Japanese officials for announcing that, in light of their deal with Mills, no further government-to-government talks were necessary. The President, who senses that protectionism is politically popular in the nation right now, declared that the Japanese offer "falls short of the terms essential to the U.S." Mills urged Nixon to reconsider, sarcastically observing that the President might know another way of protecting the U.S. textile industry while heading off a trade war, "but I do not."

In the absence of any deal, Asian textiles can continue to pour freely into America. That will benefit the U.S. consumer, because quotas would lead to higher prices and narrower choices in textiles. But the present impasse is dangerous. It is hard to see how any quota bill can pass as long as Mills, the most influential man on Capitol Hill, is opposed to it. It is equally difficult to envision how the U.S. can evolve any coherent trade policy while Nixon and Mills remain locked in their classic confrontation. A prolonged deadlock threatens to further strain relations between Washington and Tokyo, and to fan protectionist sentiment, which has been rising alarmingly among U.S. businessmen and unionists. To bring the situation under control, Nixon, Mills --and free-trading U.S. businessmen --must rethink their positions and seek some new initiatives.

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