The Trust-Nixon Bill

The first full outline of the new trade legislation that Congress will consider this year came last week in a speech by House Ways and Means Chairman Wilbur Mills and the first annual report of President Nixon's Council on International Economic Policy. The two sets of proposals are mirror images of each other--and they add up to what could be called a trust-Nixon bill. The proposals cannot be characterized as either free trade or protectionist; they would give the President unprecedented authority to move just about as far as he chose in either direction.

Mills' stated belief is that the U.S. should be "showing the way in international economic cooperation." To that end, he would give the President power to 1) raise or lower tariffs at his discretion, with the eventual goal of eliminating them altogether, 2) grant tariff breaks to developing countries, and 3) negotiate away such nontariff barriers to international commerce as discriminatory health and safety regulations, subject to congressional O.K.

Mills would also like to empower the President to use a whole arsenal of devices to "safeguard" American industries threatened by rising imports and retaliate against countries that discriminate against U.S. goods or run a "chronic" surplus in trade with the U.S. An obvious target would be Japan, which accounted for $4.1 billion of the $6.8 billion deficit that the U.S. suffered last year in world trade. If Mills has his way, Nixon could raise tariffs against the goods of specific countries, establish quotas or negotiate agreements under which those nations would "voluntarily" restrain exports to the U.S. He also could grant tax credits, low-interest loans or even direct subsidies to American manufacturers who compete against subsidized foreign goods in the U.S. or "third markets." Further, Mills would let the President impose a short-term surcharge on all imports in a U.S. balance of payments "emergency."

Shift. Nixon has argued lately that he needs exactly such flexible authority to get other countries to tear down barriers to U.S. goods. Just how such authority would work out in practice is difficult to predict, because the only consistency in the President's record on trade is that he has seemed to shift with the political winds. Recently, he has loosened U.S. quotas on imports of meat and oil, in response to rising public worry about inflation and the shortage of fuel. But he has also bowed to business pressure and restricted imports of textiles and steel. Some foreigners, at present, do not quite trust Nixon to use a new and flexible authority wisely. Early overseas reaction to the Mills proposals focused on their protectionist rather than their free-trade aspects. Italian executives, for example, warned that if Nixon invoked the protectionist devices contained in the Mills proposals, he would spur foreign retaliation that could touch off a disastrous trade war.

Despite such potential problems, the Mills-Administration proposals stand an excellent chance of becoming law--though probably not in time for the round of world trade talks scheduled to start in Tokyo in September. First reactions in Congress, where Mills is little short of all-powerful on economic matters, were favorable; New York Republican Representative Barber Conable, a member of the Ways and Means Committee, said that the proposals could be "our magna carta of trade." More important, Nixon has been weaning AFL-CIO Chief George Meany away from the much more protectionist Burke-Hartke Bill. A Nixon-Mills-Meany alliance would be practically unstoppable.

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