Message to the Congress Transmitting Annual Report on the Trade Agreements Program for 1972.

To the Congress of the United States:

In accordance with section 402(a) of the Trade Expansion Act of 1962 (TEA), I transmit herewith the Seventeenth Annual Report of the President on the Trade Agreements Program. This report covers developments in the year ending December 31, 1972.

In the period since I last reported to the Congress on our trade agreements program, we have taken major new initiatives to give strong momentum to closer multilateral cooperation and to develop a fairer and more efficient framework for the conduct of international economic relations. As a result of intense preparatory work throughout 1972, nations accounting for the bulk of world trade, meeting in Tokyo last month, opened a major round of new negotiations to reduce tariff and nontariff barriers to trade and to reform the rules by which all can gain from expanded trade. In the related field of monetary affairs, encouraging progress has been achieved on reform of the international monetary system to provide sound underpinnings for a fairer, more open trading system.

Concurrently with work on these basic longer term objectives, U.S. negotiators also pressed actively in bilateral consultations for the early removal of foreign nontariff barriers which have distorted normal trade patterns and restricted U.S. exports. The success of these efforts has, in some cases, opened markets where U.S. exporters have competed at a disadvantage for over two decades. In other instances, prompt U.S. assertion of our rights under the General Agreement on Tariffs and Trade has either deterred the institution of proposed restrictions or resulted in their early termination.

As a result of U.S. representations, our traders are already realizing tangible benefits from the major liberalization of quotas and licensing by Japan and the virtual elimination of Japanese export incentives. Compensatory taxes affecting some $40 million of U.S. agricultural exports were terminated on 98 percent of the products involved. The reduction or removal of these and other trade distortions demonstrates that sound trade policy and vigorous negotiation can create new and better opportunities for American businesses, farms, and workers.

Consistent with our efforts to strengthen the fabric of common interests between this country and the Soviet Union, we concluded a major agreement last year which lays the basis for the normalization of relations in the trade field. Important initial steps also have been taken to reduce barriers to commercial relations with the People's Republic of China. These developments open vast opportunities for long-term mutual economic benefit and for the advancement of world peace through the reduction of political tensions. I again urge the Congress, in considering my request for authority to grant normal tariff treatment to these countries, to work with me in framing an authority which preserves these gains.

While we may justifiably be encouraged by our achievements in trade and monetary negotiations since 1971 and by the reversal of the downward trend in our merchandise trade balance, we must not underestimate the magnitude and complexity of the tasks ahead. The multilateral trade negotiations which have just been opened are a fundamental building block in the foundation of a new world politico-economic structure. The stakes are thus high and the bargaining will be intense.

To realize our objectives in the trade field, I sent to the Congress last April proposals for new legislation entitled the Trade Reform Act of 1973. In my statement of October 4, I expressed my views on the bill which was approved by the House Ways and Means Committee. As legislative deliberation continues, I look forward to working with the Congress on this bill in a spirit of constructive partnership.

The profound changes which have taken place in the world economy and the impact of growing economic interdependence on political relations among nations is now clearly recognized. While formidable problems exist in the trade area and while countries still differ widely on some of the important issues, the will now exists to negotiate the necessary far-reaching changes instead of resorting to confrontation or retaliatory measures which generate political frictions. We, like other nations, will be hard bargainers, but with a shared spirit of mutual commitment to a more open and equitable trading system, the entire world can progress toward a new era of economic well-being and peaceful international relations.

RICHARD NIXON

The White House,

October 17, 1973.