Driving to a "Nixon Round"

TO most Americans, the difficulty of selling oranges, tobacco or computers abroad might not seem to rank among the foremost concerns of foreign policy. Yet just such trade problems dominated the nation's dealings with important allies last week. In Washington, William Eberle, President Nixon's special representative for trade, pressed Ambassador Nobuhiko Ushiba for an agreement to lower Japanese tariffs, taxes or quotas on cars, computers, fruit and other U.S. goods. Then the abrasive-mannered Eberle jetted to Brussels to demand that Common Market officials let in more American citrus, tobacco and grain. He got some moral support from 15 members of the House Ways and Means Committee, who made a rare overseas jaunt to complain in Brussels about Common Market discrimination against U.S. farm exports.

The object of these efforts is to wring out some foreign trade concessions that President Nixon can boast about when he sends to Congress next month the bill formally devaluing the dollar--which came under renewed selling pressure in Europe last week. That, however, is only an interim goal. The current negotiations promise to be the opening gun in a years-long campaign to expand American exports by rewriting many of the rules that govern --and now restrict--world trade.

The ideological underpinning of this drive is Nixon's conviction that "economic power will be the key to other kinds of power"--and that the U.S. has been letting this key slip out of its hands. Speaking to a group of editors in Kansas City last year, Nixon said that "five great economic superpowers--the U.S., Western Europe, the Soviet Union, Mainland China and, of course, Japan" will determine "the future of the world in the last third of this century." He added that American world leadership "can only be maintained if the U.S. maintains its pre-eminent position in the economic field."

Nixon is deeply impressed by a series of charts drawn up by Peter Peterson, his chief international economic adviser and the leading candidate to succeed Maurice Stans as Commerce Secretary soon. Peterson's figures show that the U.S. position is eroding, and that the nation's share of total world production between 1950 and 1970 fell from 39% to 30%. Its share of auto output dropped from 76% to 31%, of steel output from 46% to 20%, and its proportion of world exports from 16% to 14%. As recently as 1964, U.S. exports ran $6.8 billion ahead of imports, but last year imports exceeded exports by about $2 billion.

This slippage reflects a panoply of causes: the strong recovery of war-shattered economies overseas during the 1950s, U.S. inflation and lagging productivity in recent years, and the shift of the American economy from one dominated by manufacturing to one in which 42% of output is now accounted for by services, which are less readily exportable than goods.

But Nixon men place much of the blame on a network of barriers that has been raised abroad against American goods and capital. A few examples: Japanese quotas on imports of computers; auto taxes in several countries that rise sharply with horsepower ratings, thus discriminating against big U.S. cars; the reluctance of many foreign governments to let U.S. firms submit bids on equipment to be purchased by state-owned enterprises such as railroads, banks and oil companies.

"Fair Advantage." Administration officials are shaping a comprehensive trade bill for presentation to Congress this spring. It would authorize the President to negotiate U.S. tariff cuts in return for foreign trade concessions, and to work out agreements liberalizing farm-import quotas and subsidies, product standards and Government procurement policies, all of which have a profound effect on trade. The bill may also include some breaks for U.S. exporters, notably tax incentives for research and development.

Most important, the bill opens the way for a needed "Nixon Round" of world tariff-cutting negotiations, similar to the famous Kennedy Round that reduced tariffs in the 1960s. But the Nixon Round talks probably cannot begin until 1973. The Administration for now only wants to get on record; it is afraid to demand a vote on a bill before the elections, because protectionist Congressmen might festoon it with vote-wooing import restrictions that would stifle rather than expand trade.

When negotiations with other countries do begin, the Administration would do well to change both the tone and tactics of its approach. Certainly, the only way to win better treatment for American exports is an offer of reciprocal concessions, yet Washington has not made clear which of its own barriers to trade it is prepared to tear down. Peterson has spoken favorably of a proposal to negotiate a complete abolition of tariffs on many products, but he has failed to endorse it outright. The U.S. has also been silent on many other restrictive practices that irk foreigners: the "Buy American" act, which generally requires the Government to buy American-made products unless they are 6% more expensive than foreign merchandise (or 50% more costly in the case of goods bought by the Pentagon), and the Jones Act, a prohibition against any foreign-built ship moving between two U.S. ports.

Worse, the Johnson and Nixon Administrations have actively undermined Washington's case by giving in piecemeal to protectionist pressures for restraints on imports. By Peterson's figures, the number of industrial products on which the U.S. enforces import quotas ballooned from seven in 1963 to 67 in 1970; they include oil, steel, textiles, flatware, ceramic tiles and sheet glass. In the same period, the number of quotas imposed by Common Market countries fell from 76 to 65, and the number imposed by Japan has dropped from 132 to 81. The spread of quotas makes the U.S. appear hypocritical to foreigners when it urges the dismantling of barriers against American goods.

In order to overcome this international version of the credibility gap, Nixon and his aides need to be much more explicit about what the U.S. is prepared to give as well as what it wants to get in trade policy. The thrust of their new offensive is in the right direction, but their rhetoric has smacked of Machtpolitik rather than of an appeal for equity. Too often Administration spokesmen have talked as if the U.S. has an inalienable right to be No. 1 in world economic power, and that other nations have a duty to help it maintain that position. Treasury Secretary John Connally, for example, once told a group of economists that in international negotiations, "all I want is a fair advantage." The Nixon Administration has focused attention on some real problems, but the U.S. approach to a more open world of trade must be an appeal for cooperation rather than a demand for continued primacy.

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