Mixed Bag

"Modest in scope, but significant in impact," said Richard Nixon of the foreign-trade proposals that he sent to Congress last week--and so they were. While his message reaffirmed the nation's 35-year-old commitment to freer trade, the President sought only minor new authority to cut tariffs. In effect, he promised that any Nixon Round of trade negotiations would consist only of hard-headed international horse trading.

Nixon requested tough new powers to retaliate against countries that erect "unfair" barriers to American exports, or unfairly subsidize their own foreign commerce. Nixon also asked Congress for changes in current law to make it easier for industries, companies or groups of workers that have been hurt by imports to win relief through temporary import restrictions. "To be fair to our trading partners does not require us to be unfair to our own people," he said.

The Administration has sound reason to bolster the nation's exports. In the long run, the strength of the dollar greatly depends on that effort. The U.S. trade surplus used to average $5 billion a year. This year the surplus will total less than $1 billion, mainly because imports have risen 50% over the past three years, twice as fast as exports. Much of the blame can be laid to U.S. inflation, but not all of it. Farm exports have fallen sharply, largely because Common Market countries have unloaded surplus grain, chickens and other produce abroad at subsidized prices.

Second Try. As the Johnson Administration vainly proposed last year, Nixon asked Congress to end one venerable U.S. barrier to trade that is regularly cited by foreign governments as justification for their own barriers. That is the "American selling price," which allows duties on benzenoid chemicals used in dyes and vitamins to be set not on the price of the import but on the cost of making the same chemical in the U.S.

The Administration is also asking for a "clear statement of congressional intent" on eliminating domestic protectionist devices, notably the 1933 "Buy American" legislation, which prevents the Federal Government from purchasing foreign goods unless the price is more than 6% below that of comparable U.S. products. Repealing the law would help the Administration to press foreign countries to end equally ingenious barriers to trade, including European border taxes, health regulations and artificial technical restrictions.

Much of Nixon's tough new trade policy bears the imprint of Commerce Secretary Maurice Stans, who calls it the first "fullscale attack" against "covert forms of protectionism which discriminate against American exports." In a talk last week to the National Foreign Trade Convention in Manhattan, Stans also promised U.S. exporters additional measures of practical aid. One would add some $750 million to the Export-Import Bank's funds. Exporters can now borrow only limited amounts at the bank's 6% interest rate, and must finance the rest of their sales with private loans at 9% or more. Many foreign competitors can borrow all they need from their governments at low rates--and save a crucial 1% or 2% in financing costs. A second measure would allow U.S. corporations to defer income taxes on export profits--so long as the money is reinvested to generate more exports--without setting up a corporation abroad, as the law now requires.

The President offered no proposals intended to help the import-troubled U.S. textile industry. The omission was tactical. U.S. and Japanese negotiators are dickering in Geneva over voluntary quotas for Japanese mills. The U.S. has made it plain to Tokyo that a protectionist-minded Congress might well adopt even harsher measures unless Japan agrees to limit its textile exports to the U.S.

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