TALKING POINTS ON TRADE POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90B01390R000300370046-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: February 28, 2011
• Sequence Number: 46
• Publication Date: May 23, 1986
• Content Type: MEMO

Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
I ,-e
May 23, 1986
86- Zs73x
OCA FILE A'44 "S1 k
RE R -Record
PT #
MEMORANDUM FOR ADMINISTRATION SPOKESMEN
FROM: TOM GIBSON1'
SUBJECT: Talkings Points on Trade Policy
Attached, for your information and use, are talking points on the
President's trade policy. These materials discuss recent
Administration actions to promote fair trade; the Reagan
Administration's concerns about H.R. 4800, the House Omnibus
Trade bill; and the dangers of protectionism.
If you have any questions concerning the attached, please contact
the Office of Public Affairs at [phone].
Thanks very much.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
o H.R. 4800 is not a fair trade bill, but a less trade bill;
it is not tough, but is defensive and defeatist.
o H.R. 4800 would severely damage the U.S. economy, destroy
American jobs, reduce our international trade competitiveness,
and embroil us in trade conflicts with virtually all our
major trading partners.
Free and Fair Trade
I believe that if trade is not fair for
all, then trade is free in name only. I will
not stand by and watch American businesses
fail because of unfair trading practices
abroad. I will not stand by and watch American
workers lose their jobs because other nations
do not play by the rules.
-- Ronald Reagan
September 23, 1985
o The President's dedication to free trade is reinforced by a
determination to identify and address cases of unfair
trading practices against U.S. producers.
o The Reagan Administration's record in attacking unfair trade
practices is impressive. Over the past nine months, the
Administration has taken nearly two dozen actions to allow
American goods and services to compete on an equal footing
with foreign competitors.
o Examples of U.S. goods and services which stand to benefit
from Reagan Administration trade policy actions:
pharmaceuticals and medical equipment;
computers, electronic equipment, and computer chips;
agricultural products -- wheat and other grains, citrus
products, tobacco;
automobiles and auto parts;
insurance;
leather and leather footwear;
lumber and other forest products; and
intellectual property rights in all sectors.
o The Administration's trade watchword: Open foreign markets,
not close ours.
The freer the flow of world trade, the stronger
the tides of human progress and peace among nations.
--- Ronald Reagan
September 23, 1985
For additional bitorrnaton, cap the Write House Nice at Pubic Affairs; 456-7170.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
May 23, 1986
Executive Summary
o The United States is the greatest trading nation in the
world. We export $200 billion in goods and services each
year; 5 million American jobs are dependent upon exports.
America has more at stake in maintaining a healthy
international trading system than any other country.
o We are dealing with the basic causes of our trade deficit.
Since February 1985, for example, the Japanese yen and the
West German mark have risen more than 60 percent against the
dollar. The yen recently reached its highest level against
the dollar since World War II.
Currency realignments normally take a year or 18 months
to show substantial effects on trade flows. Already,
U.S. firms are seeing improvements in their export sales.
By late 1986, the effects will become more visible;
substantial improvements in the overall U.S. trade
balance should occur in 1987.
o In addition, the LDC debt problem is being addressed,
providing expanded markets for U.S. exports; arrangements
for closer economic cooperation are in place, fostering
improved world economic growth and greater exchange rate
stability.
o The task ahead is to sustain this progress -- not discard
these gains by giving in to protectionism.
House Omnibus Trade Bill
o If enacted into law, H.R. 4800, the House Omnibus Trade
bill, would be a serious step backward for U.S. international
trade policy.
o The big losers under the House bill:
Consumers who would pay higher prices on thousands of
products;
Workers in many of the most dynamic U.S. industries,
who would find overseas markets closed to them; and
Farmers who would face additional financial hardships.
For additional information, call the White House Office of Public Af irs; 456-7170.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
May 23, 1986
REAGAN ADMINISTRATION TRADE POLICY ACTIONS
o There can be no free trade unless there is fair trade. The
President's dedication to free trade is reinforced by a
determination to identify and address cases of unfair trading
practices against U.S. producers.
o President Reagan's record in attacking unfair trade
practices is impressive. Over the past nine months, the
Administration has taken nearly two dozen actions to allow
American goods and services to compete on an equal footing
with foreign competitors.
o Our actions are aimed at opening foreign markets, not
closing ours. Examples of U.S. goods and services which
stand to benefit from Reagan Administration actions:
pharmaceuticals and medical equipment;
computers, electronic equipment and computer chips;
agricultural products -- wheat and other grains, citrus
products, tobacco;
automobiles and auto parts;
insurance;
leather and leather footwear;
lumber and other forest products; and
intellectual property rights in all sectors.
Actions Against Unfair Trade Practices
o Since September 1985, the Reagan Administration has taken
several steps aimed at addressing unfair foreign trade
practices. A brief summary:
o September 7, 1985: The Administration took the unprecedented
step of self-initiating three unfair trade practice cases
(Section 301) concerning:
U.S. informatics sales in Brazil;
U.S. insurance operations in Korea; and
U.S. tobacco sales in Japan.
o October 16, 1985: Self-initiated an additional unfair trade
case against Korean intellectual property right restrictions,
and secured market-opening concessions from Taiwan on tobacco,
wine and beer, in response to the U.S. threat of a trade case.
o November 1, 1985: Retaliated against the EC's failure to
negotiate a settlement to the long-standing GATT citrus
dispute by imposing duties on EC pasta exports.
o December 6, 1985: For the first time, self-initiated an
antidumping case against on 256K RAM semiconductor chips.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
(Trade Policy Actions, continued)
o December 1985: Achieved negotiated settlements of two long-
standing disputes with Japan on leather and the EC on canned
fruit as the result of the imposition of Presidential deadlines.
o March 31, 1986: The President initiated the first case ever
under Section 307 of the Trade and Tariff Act of 1984 against
Taiwan's automotive performance requirements. The President
also ordered a fact-finding inquiry to determine whether the
European Community's meat inspection programs would unfairly
penalize American exports of up to 125 million worth of meat.
o May 15, 1986: Defended U.S. agricultural trade rights by
imposing restrictions on EC agricultural exports to the
United States in response to new EC restrictions.
o May 20, 1986: Ordered U.S. trade negotiators to open talks
with Japan, Taiwan, West Germany, and Switzerland to seek
voluntary export restraint pacts on machine tool imports.
Ongoing Trade Initiatives
o The Tokyo Economic Summit adopted new arrangements for
closer economic policy coordination by the major industrial
democracies. These arrangements should lead to improved
growth, smaller trade imbalances and greater stability in
international exchange rates. The Summit partners also
endorsed the early launch of a new round of multilateral
trade negotiations, targeting the September GATT Ministerial
meeting for decisive progress.
o In 1985, the Reagan Administration successfully conducted intensive
Market-Opening Sector-Specific (MOSS) negotiations with Japan
in four sectors: telecommunications; medical equipment and
pharmaceuticals; electronics; and forest products. Talks in
1986 will focus on additional sectors, including auto parts.
o The Administration introduced legislation to improve
intellectual property protection; follow-up activities
include international consultations and vigorous use of U.S.
trade laws against offenders.
o This Administration is countering foreign subsidized
agricultural exports by concluding over $400 million worth
of sales under the Export Enhancement Program.
o The Reagan Administration has introduced "War Chest"
legislation and is aggressively using existing authorities
to counter foreign subsidized export financing. For the
first time, the Export-Import Bank has extended
concessionary financing to a U.S. firm facing subsidized
foreign competition for a sale in the U.S. market.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
May 23, 1986
o The United States is dealing effectively with the basic
causes of its trade deficit. For example:
Substantial exchange rate changes have occurred,
improving the competitive position of American
producers.
The LDC debt problem is being addressed, providing
expanded markets for U.S. exports.
Arrangements for closer economic policy coordination
are in place, fostering improved global growth and
greater exchange rate stability.
o If enacted into law, H.R. 4800, the House Omnibus Trade
bill, would be a serious step backward for U.S. international
trade policy.
o Many provisions of the bill would undercut the President's
recent success in Tokyo of obtaining endorsements from our
major trading partners to begin a new round of
trade-liberalization talks.
o H.R. 4800 would severely damage the U.S. economy, destroy
American jobs, reduce our international trade competitiveness,
and embroil us in trade conflicts with virtually all our
major trading partners.
o The big losers under the House bill:
-- Consumers who would pay higher prices on thousands of
products;
Workers in many of the most dynamic U.S. industries,
who would find overseas markets closed to them; and
-- Farmers, who would face additional financial hardships.
o As nine members of the President's Cabinet asked in a joint
letter to the Congress, "Why should we jeopardize the livelihood
of the five million Americans whose jobs depend on exports?"
Examples of Unsupportable Provisions of H.R. 4800
o H.R. 4800 would require mandatory quotas against exports
from countries with large and persistent trade surpluses
vis-a-vis the United States. Japan, Taiwan, and West
Germany would likely be subject to this provision. This
violates GATT and invites massive trade retaliation against
U.S. exports, particularly agricultural commodities,
aircraft, chemicals and data processing equipment.
For additional information. as the Wl to House Office of Public Aldus: 456-7170.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
(House Omnibus Trade Bill, continued)
o H.R. 4800 would unilaterally redefine what is an illegal
subsidy, making some subsidies countervailable even if they
are available generally. This provision would invite
retaliation against U.S. timber exporters, for example, who
receive subsidized electricity.
o The bill would make denial of "internationally-recognized
worker rights" an unfair practice actionable under Section
301. This standard would come back to haunt U.S. exporters
-- in right-to-work states, for example. Moreover, the
concept of "internationally-recognized worker rights" is
ambiguous at best -- a Pandora's box.
o The bill would require mandatory Presidential retaliation in
certain Section 301 cases by an inflexible deadline.
Legalism in place of negotiation is no way to conduct U.S.
foreign and trade policy.
o H.R. 4800 would prohibit the President from authorizing
tariff cuts for certain import-sensitive articles. This
would make it hard to get many nations to the bargaining
table in a new GATT round; could make some mandated U.S.
negotiating objectives impossible to achieve.
o H.R. 4800 would require a 40 percent reduction in items
under national security export controls -- a meat-axe
approach to export decontrol that ignores national security.
o The bill would also establish a Council on Industrial
Competitiveness to carry out industrial planning -- a
discredited scheme that would pit one industry against
another. Americans don't want it and don't need it.
o H.R. 4800 could add to the budget deficit. Preliminary
analysis indicates that H.R. 4800 would cost taxpayers an
additional $5.4 billion over the next three years.
Building Blocks of a Bipartisan Trade Bill
o There are a number of important changes to U.S. trade law
that would improve America's ability to compete.
Supportable provisions of the H.R. 4800 include:
-- Expanding protection for U.S. intellectual property
rights; and
Providing the President with negotiating authority for
a new round of multilateral trade negotiations.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
(House Omnibus Trade Bill, continued)
o The Administration supports a number of changes in existing
law, which are not presently included in H.R. 4800:
Amending U.S. antitrust laws to promote competitiveness
of U.S. industries;
Amending the antidumping and countervailing duty law to
provide a predictable pricing test covering non-market
economies; and
Amending our trade laws to put a deadline on dispute
settlement and to contain a fast-track procedure for
perishable agricultural items.
Approved For Release 2011/02/28: CIA-RDP90B01390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
WHITE HOUSE TALKING POINTS
May 23, 1986
PROTECTIONISM IS DESTRUCTIONISM
o Protectionism hurts Americans more than it hurts the
foreigners it is aimed at. President Reagan says, "They
ought to call it destructionism."
o During the past three years, the U.S. has experienced record
trade deficits, yet our unemployment rate has fallen by about
a third and 10 million more Americans have become employed.
o Europe, on the other hand, which has many protectionist trade
restrictions, has experienced economic stagnation for more
than a decade. Total employment in Western Europe is virtually
the same today as it was 10 years ago; since the labor force
grew over the same period, unemployment has increased.
o Protection does not affect total employment. It simply
shifts employment from more efficient industries to less
efficient industries. Net effect: lower productivity; lower
national income.
o Protectionism forces a massive transfer of wealth from
ordinary Americans to the special interests. The cost of
protectionism falls most heavily upon low-income Americans,
because of higher prices on basic consumer goods.
Lessons of History Clear
o The 1930 Smoot-Hawley Act raised duties on nearly 900 items,
from champagne and dolls to hand tools and farm products,
pushing America's tariffs to their highest levels in the
20th century.
o Over 1000 economists signed a petition urging Congress not
to pass Smoot-Hawley, and asking President Herbert Hoover
not to sign it. A total of 59 countries protested to the
U.S. Government about the danger Smoot-Hawley posed to the.
world economy, then reeling from the effects of the 1929
stock market crash.
o Within months of enactment of Smoot-Hawley, our key trading
partners began raising their tariffs and establishing
exchange controls.
-- U.S. merchandise imports fell from $4.5 billion in 1929
to $1.3 billion in 1932, the lowest level since 1908.
U.S. merchandise exports fell nearly 60 percent from
1929 to 1932.
Approved For Release 2011/02/28: CIA-RDP90BO1390R000300370046-7
 Approved For Release 2011/02/28: CIA-RDP90B01390R000300370046-7
WHITE HOUSE TALKING POINTS
(Protectionism is Destructionism, continued)
o Liberal and conservative historians agree that Smoot-Hawley
deepened the Great Depression by encouraging other countries
to erect trade barriers; isolating America's economy behind
a high-tariff wall; and undermining European war debt
repayment efforts.
Selected Quotations on Protectionism
Protectionist moves basically profit special
interests at the expense of the consumer and
at the risk of retaliation -- costing Americans
their jobs.
--- Ronald Reagan
Remarks to the International
Forum, U.S. Chamber of Commerce
April 23, 1986
This philosophy of the free market -- the wider
economic choice for men and nations -- is as
old as freedom itself. It is not a partisan
philosophy.
-- John F. Kennedy
Message to Congress on
Foreign Trade Policy
January 25, 1962
This is the first [shareholders] meeting where
we can report things have never looked better...
The Japanese have already added $1000 to their sticker
prices and I expect they'll be adding $1000 in the next
six months. That awful advantage we've been
complaining about is gone and we think it's a great
time to sell cars.
--- Lee Iacocca
New York Post, May 15, 1986
Protectionism is no solution to the economic
problems we face. A highly industrialized
country like the United States would suffer
greatly if the doors to international commerce
were closed.
--- Senator Walter Mondale
Congressional Record
December 13, 1974
Approved For Release 2011/02/28: CIA-RDP90B01390R000300370046-7