Message to the Congress Transmitting Proposed Trade, Employment, and Productivity Legislation

To the Congress of the United States:

I am pleased to transmit today for your immediate consideration and enactment the "Trade, Employment, and Productivity Act of 1987" (the Act). The intent of this proposal is simple: to assure American competitive preeminence into the 21st century. The proposal itself is wide ranging, designed to help American workers, including those who are not yet full participants in our economy, to reach their highest potential and to permit American business to better marshal our Nation's resources. I am convinced that enactment of my proposal will allow American workers and business to meet world competition head-on, and win.

The initiatives in the Trade, Employment, and Productivity Act are under the jurisdiction of a number of different congressional committees. These initiatives all have a common element: they will improve our Nation's productivity and competitiveness. I strongly urge the Congress to consider the Act in its entirety. Failure to enact all of the initiatives would be akin to sending the American worker into the international arena without the proper tools.

The Act has five titles dealing with increasing investment in human and intellectual capital; promoting the development of science and technology; better protecting intellectual property rights; bringing about essential legal and regulatory reforms; and improving the international economic environment. Many of the statutory initiatives I am proposing will be complemented by administrative actions.

Title I of the Act is the Investment in Human and Intellectual Capital Act of 1987. Education and training are truly investments. We must prepare ourselves for the future by taking the opportunity to acquire the talents and skills needed to adapt to the dynamics of the marketplace. To excel in the 21st century, our society must continue the necessary reforms for excellence in our schools. A major part of this effort must include reauthorizing Chapters 1 and 2 of the Education Consolidation and Improvement Act to target resources on the neediest schools and youngsters; foster greater innovation, experimentation, and parental choice; build accountability into the program; and provide incentives and rewards for success. I am also proposing amendments to the Bilingual Education Act to give school districts greater flexibility in designing and operating programs that address the particular educational needs of limited English proficient students. But Federal legislation can only accomplish so much. To complement our legislative initiative, I charged Secretary Bennett with working with our Nation's governors to continue identifying what works in American education and to continue seeking places of excellence that will serve as models. We must improve our children's basic skills-reading, writing, and computation; raise standards in elementary and secondary schools; and instill in our children productive habits and sound values. Together we must, by the year 2000, dramatically reduce illiteracy.

Investment in human capital must be an ongoing process. Training and retraining of the Nation's workforce are a critical part of that process. I am proposing a new $980 million worker readjustment program that will help some 700,000 dislocated workers each year through counseling, job search assistance, basic education, and job skill training. This program will help assure that we will not lose the valuable work experience and talents of workers who are displaced from their jobs. We must provide training and adjustment opportunities to these workers early—before they exhaust unemployment benefits. Another potential source of skills for our Nation is the large number of economically disadvantaged Americans who are not now part of the mainstream of American economic life. To tap this important resource, I am proposing two interrelated initiatives for recipients of Aid to Families with Dependent Children (AFDC). The first is the AFDC and Summer Youth Employment and Youth Training program, which will allow States and localities to use money now allocated for summer jobs for year-round remedial skill training and education for AFDC youth. The funding for the program will be increased to $800 million. The second is a new employment and training program in AFDC called Greater Opportunities Through Work (GROW). GROW will encourage teenage parents and children who have not completed high school to stay in or return to school. Older AFDC recipients will participate in employment and training activities, including remedial education, designed to improve their capacity to support themselves and their families. I am also proposing to give States greater flexibility in developing comprehensive approaches to the problems of the unemployed by decentralizing authority, financing, and responsibility for administering the Unemployment Insurance and Employment Service programs.

Title II of the Act is The National Science Foundation (NSF) Authorization Act, which will authorize appropriations for the NSF for a 5-year period, with a doubling of our budgetary commitment. I will also be taking a number of administrative actions that will make Federal R&D spending more effective, including establishing university-based science and technology centers, which will focus on fundamental science that directly contributes to our Nation's economic competitiveness. I am also creating a private/public Technology Share program at Federal laboratories; initiating a People-to-People Exchange program to transfer knowledge between Federal laboratories and industry and academia; and issuing an Executive order to improve U.S. industry and academia access to the Federal science and technology enterprise. The NSF will work with the Department of Education and State and local governments to assure that our children have the basic scientific literacy needed for the 21st century. I have also directed the Department of Defense to accelerate its efforts to "spin off" technologies to the private sector. To assure continued American leadership in the field of high energy physics, the Secretary of Energy will embark on the siting and construction of the Superconducting Super Collider—a 21st century version of a linear accelerator-that will help us understand the very nature of matter.

In addition, we are interested in exploring with the Congress and industry representatives measures that will provide additional incentives for American business to advance its technology and research and strengthen our international position in the world marketplace. This could include extending the current R&D tax credit beyond its expiration at the end of 1988; making it permanent; increasing the credit rate beyond the current 20 percent; and extending or increasing the current 50 percent automatic apportionment of R&D expenditures between domestic and foreign income and making it permanent. We look forward to discussions with the Congress on these and other possible approaches in an effort to ensure stability, certainty, and appropriate incentives in this vital area.

To continue to generate ideas, innovation, and invention, we must ensure that inventors are rewarded for their efforts. This can be done by protecting the rights of inventors to the economic rewards for their efforts. Title III of the Trade, Employment, and Productivity Act is The Omnibus Intellectual Property Rights Improvement Act of 1987. I am proposing a series of badly needed changes, including omnibus intellectual property reform and a technological solution to the potential problem of unauthorized copying of copyrighted material on digital audio tape recorders. We will also seek to join the Berne Convention and gain copyright relations with twenty countries with which we currently have none.

I am also proposing to broaden the statutory definitions of trade secrets and confidential commercial information under the Freedom of Information Act (FOIA) to permit Federal agencies to withhold information if disclosure would be harmful to commercial interests. In addition I will issue an Executive order to better protect business confidentiality under the FOIA by giving business the opportunity to object to the release of commercial information submitted to the government if release would cause competitive harm.

Title IV of the Act is The Legal and Regulatory Reforms Act of 1987. Outmoded rules and regulations and self-imposed disincentives place us at a disadvantage in the global marketplace. We must pare down the unnecessary costs that American business faces while continuing to protect worker safety and maintain public health and safety standards. I am proposing statutory reforms to reduce the costly product liability spiral, to amend our antitrust laws to reflect the dynamics of world trade, and to deregulate surface transportation (including termination of the Interstate Commerce Commission) and the pricing and transportation of natural gas, including repeal of demand restraints in the Fuel Use Act. I am also proposing oil pipeline deregulation and repeal of corporate average fuel economy standards.

This bill will implement the recommendations of the Vice President's Task Group on Regulation of Financial Services to reform the Federal financial services regulatory structure. I have also asked Vice President Bush to direct the Task Force on Regulatory Relief to take a fresh look at the Federal regulatory structure from the competitiveness standpoint and to improve the cost effectiveness of regulations or eliminate unnecessary regulatory burdens.

I am also proposing amendments to the Export Administration Act that will expedite trade with our trusted international trading partners, reduce the processing times for license applications covering products which are widely available throughout the free world, and, in those instances which require it, allow us to move quickly and effectively to halt technology diversion that is a threat to our national security. In addition, I have asked the Cabinet to report back to me by early March on additional recommendations to improve our export control program.

As part of our mutual effort to ensure that our financial services industry is able to compete effectively, we will work closely with the Congress to enact meaningful reforms of the Nation's banking laws that will promote a freer, more open financial services marketplace, complete with proper government supervision and disclosure. Our work should ultimately seek to remove those prohibitions that prevent greater competition between commercial banks and securities firms. We will also seek the elimination of barriers to effective interstate banking and other unnecessary impediments to an efficiently functioning, modern financial service industry. Fully competitive and economically sound financial services markets are essential not only for a vigorous, growing domestic economy, but also for a fully competitive international trade position for the United States.

In addition, I am proposing changes to the Employee Retirement Income Security Act (ERISA) to enhance the effectiveness of the private pension system in providing retirement income security for American workers. Included in this package is a paper that sets forth the Administration's proposal on funding and termination of defined benefit pension plans.

Title V of the Act is the International Economic Environment Improvement Act of 1987. I am proposing improvements to our trade laws that will enhance our ability to attack other nations' unfair trade practices and open markets abroad without forcing future Presidents to start self-defeating trade wars. Specific proposals I am submitting include: seeking negotiating authority for the Uruguay Round; amending the antidumping law to provide a new predictable pricing test for products from nonmarket economies; establishing a 24-month deadline on dispute settlement cases; improving the Export Trading Company Act; and establishing reciprocal access to foreign markets as an additional factor for consideration in Section 301 cases. My proposal to include reciprocity as an additional factor in Section 301 cases will complement, and be complemented by, aggressive use of Section 301 to attack unfair foreign trade practices. I am also proposing statutory changes to the Foreign Corrupt Practices Act (FCPA). While assuring that bribery to gain foreign sales is deterred through criminal sanctions, we must eliminate the uncertainties and ambiguities in the FCPA. I have also asked the Congress for the additional $200 million for the "war chest" to combat aggressively foreign predatory financing practices.

These initiatives will be complemented by our efforts to improve economic and monetary cooperation on a global scale; to address the LDC debt crisis through structural reforms and private sector investment; and to aggressively use existing trade authorities. I will also be devoting considerable attention and resources to our major market opening initiatives—one bilateral, the other multilateral. We are now engaged in historic negotiations with Canada on a free trade agreement that will improve commercial opportunities on both sides of the border and serve as a model for trade liberalization on a global scale. We have succeeded in our effort to include agriculture, services, intellectual property, and investment in the Uruguay Round of GATT negotiations. We will now push for speedy and comprehensive results.

The Act is a comprehensive proposal for assuring that the Federal government does everything possible to make our workers and businesses preeminent in the 21st century. But we must remember that ultimately it is the decisions of those workers and businessmen that make the market go. We should not intrude unnecessarily upon the decisionmaking of workers or business or impede the effective operation of the marketplace.

Likewise we must avoid protectionist measures that isolate workers and business from the global marketplace. First, our workers and businessmen do not need that kind of help—we can compete without tilting the board in our favor. Second, the protectionist approach does nothing to make our country more competitive. Rather it is a short-term painkiller that will make us less competitive in the future. Protectionism will not save jobs; it will only redistribute them. Moreover, it would trap our workers in areas of our economy where we are relatively weak, instead of allowing us to grow in areas where we are strong. In a sense, protectionism is like an unfair tax—one that hurts most Americans in the interest of helping a few.

Finally, the most important thing we can do in the short term to reduce our trade deficit is to reduce the Federal budget deficit. I have submitted a Fiscal Year 1988 budget that meets the Gramm-Rudman-Hollings target without raising taxes. I urge the Congress to work with me to achieve that goal.

RONALD REAGAN

The White House,

February 19, 1987.