United States Export Policy Statement by the President.

It is important for this Nation's economic vitality that both the private sector and the Federal Government place a higher priority on exports. I am today announcing a series of measures that evidences my administration's strong commitment to do so.

The large trade deficits the United States has experienced in recent years have weakened the value of the dollar, intensified inflationary pressures in our own economy, and heightened instability in the world economy. These trade deficits have been caused by a number of factors. A major cause has been our excessive reliance on imported oil. We can reduce that reliance through the passage of sound energy legislation this year. Another factor is that the United States economy has been growing at a stronger pace in recent years than the economies of our major trading partners. That has enabled us to purchase relatively more foreign goods while our trading partners have not been able to buy as much of our exports. We will begin to correct this imbalance as our trading partners meet the commitments to economic expansion they made at the Bonn summit.

The relatively slow growth of American exports has also been an important factor in our trade deficit problem. Over the past 20 years, our exports have grown at only half the rate of other industrial nations, and the United States has been losing its share of world markets. Until now, both business and Government have accorded exports a relatively low priority. These priorities must be changed.

The measures I am announcing today consist of actions this administration has taken and will take to:

(1) provide increased direct assistance to United States exporters;

(2) reduce domestic barriers to exports; and

(3) reduce foreign barriers to our exports and secure a fairer international trading system for all exporters.

These actions are in furtherance of the commitment I made at the Bonn summit to an improved United States export performance.

DIRECT ASSISTANCE TO UNITED STATES

EXPORTERS

1. Export-Import Bank. I have consistently supported a more effective and aggressive Export-Import Bank. During the past 2 years, my administration has increased Eximbank's loan authorization fivefold—from $700 million in FY 1977 to $3.6 billion for FY 1979. I intend to ask Congress for an additional $500 million in FY 1980, bringing Eximbank's total loan authorization to $4.1 billion. These authorizations will provide the Bank with the funds necessary to improve its competitiveness, in a manner consistent with our international obligations, through increased flexibility in the areas of interest rates, length of loans, and the percentage of a transaction it can finance. The Bank is also moving to simplify its fee schedules and to make its programs more accessible to smaller exporters and to agricultural exporters.

2. SBA Loans to Small Exporters'. The Small Business Administration will channel up to $100 million of its current authorization for loan guarantees to small business exporters to provide seed money for their entry into foreign markets. Small exporting firms meeting SBA's qualifications will be eligible for loan guarantees totaling up to $500,000 to meet needs for expanded production capacity and to ease cash flow problems involving overseas sales or initial marketing expenses.

3. Export Development Programs. I am directing the Office of Management and Budget to allocate an additional $20 million in annual resources for export development programs of the Departments of Commerce and State to assist United States firms, particularly small and medium-sized businesses, in marketing abroad through:

—a computerized information system to provide exporters with prompt access to international marketing opportunities abroad and to expose American products to foreign buyers;

—risk-sharing programs to help associations and small companies meet initial export marketing costs; and

—targeted assistance to firms and industries with high export potential and intensified short-term export campaigns in promising markets.

4. Agricultural Exports. Agricultural exports are a vital component of the U.S. trade balance. Over the past 10 years, the volume of U.S. farm exports has doubled and the dollar value has nearly quadrupled. Trade in agricultural products will contribute a net surplus of almost $13 billion in fiscal year 1978. This strong performance is due in part to this administration's multifaceted agricultural export policy, which will be strengthened and which includes:

—An increase of almost $1 billion (up from $750 million in FY 1977 to $1.7 billion in FY 1978) in the level of short-term export credits.

—An increase of almost 20 percent in the level of funding support for a highly successful program of cooperation with over 60 agricultural commodity associations in market development.

—Efforts in the Multilateral Trade Negotiations to link the treatment of agricultural and nonagricultural products.

—Opening trade offices in key importing nations in order to facilitate the development of these markets.

—Aggressive pursuit of an international wheat agreement to ensure our producers a fair share of the expanding world market.

—Support of legislation to provide intermediate export credit for selective agricultural exports.

5. Tax Measures. I am hopeful that Congress will work with the administration to promptly resolve the tax problems of Americans employed abroad, many of whom are directly involved in export efforts. Last February, I proposed tax relief for these citizens amounting to about $250 million a year. I think this proposal, which Congress has not approved, deals fairly and, during a time of great budget stringency, responsibly with this problem. I remain ready to work with the Congress to resolve this issue, but I cannot support proposals which run contrary to our strong concerns for budget prudence and tax equity.

My administration's concern for exports is matched by our obligation to ensure that government-sponsored export incentives constitute an efficient use of the taxpayers' money. The DISC tax provision simply does not meet that basic test. It is a costly (over $1 billion a year) and inefficient incentive for exports. I continue to urge Congress to phase DISC out or at least make it simpler, less costly, and more effective than it is now, and my administration stands ready to work with Congress toward that goal.

REDUCTION OF DOMESTIC BARRIERS TO EXPORTS

Direct financial and technical assistance to United States firms should encourage them to take advantage of the increasing competitiveness of our goods in international markets. Equally important will be the reduction of Government imposed disincentives and barriers which .unnecessarily inhibit our firms from selling abroad. We can and will continue to administer the laws and policies affecting the international business community firmly and fairly, but we can also discharge that responsibility with a greater sensitivity to the importance of exports than has been the case in the past.

1. Export Consequences of Regulations. I am directing the heads of all executive departments and agencies to take into account and weigh as a factor the possible adverse effects on our trade balance of their major administrative and regulatory actions that have significant export consequences. They will report back on their progress in identifying and reducing such negative export effects where possible, consistent with other legal and policy obligations. I will make a similar request of the independent regulatory agencies. In addition, the Council of Economic Advisers will consider export consequences as part of the administration's Regulatory Analysis Program.

There may be areas, such as the export of products which pose serious health and safety risks, where new regulations are warranted. But through the steps outlined above, I intend to inject a greater awareness throughout the Government of the effects on exports of administrative and regulatory actions.

2. Export Controls for Foreign Policy Purposes. I am directing the Departments of Commerce, State, Defense, and Agriculture to take export consequences fully into account when considering the use of export controls for foreign policy purposes. Weight will be given to whether the goods in question are also available from countries other than the United States.

3. Foreign Corrupt Practices Act. At my direction, the Justice Department will provide guidance to the business community concerning its enforcement priorities under the recently enacted foreign antibribery statute. This statute should not be viewed as an impediment to the conduct of legitimate business activities abroad. I am hopeful that American business will not forgo legitimate export opportunities because of uncertainty about the application of this statute. The guidance provided by the Justice Department should be helpful in that regard.

4. Antitrust Laws. There are instances in which joint ventures and other kinds of cooperative arrangements between American firms are necessary or desirable to improve our export performance. The Justice Department has advised that most such foreign joint ventures would not violate our antitrust laws, and in many instances would actually strengthen competition. This is especially true for one-time joint ventures created to participate in a single activity, such as a large construction project. In fact, no such joint conduct has been challenged under the antitrust laws in over 20 years.

Nevertheless, many businessmen apparently are uncertain on this point, and this uncertainty can be a disincentive to exports. I have, therefore, instructed the Justice Department, in conjunction with the Commerce Department, to clarify and explain the scope of the antitrust laws in this area, with special emphasis on the kinds of joint ventures that are unlikely to raise antitrust problems.

I have also instructed the Justice Department to give expedited treatment to requests by business firms for guidance on international antitrust issues under the Department's Business Review Program. Finally, I will appoint a business advisory panel to work with the National Commission for the Review of the Antitrust

Laws.

5. Environmental Reviews. For a number of years the export community has faced the uncertainty of whether the National Environmental Policy Act (NEPA) requires environmental impact statements for Federal export licenses, permits, and approvals.

I will shortly sign an Executive order which should assist U.S. exports by eliminating the present uncertainties concerning the type of environmental reviews that will be. applicable and the Federal actions relating to exports that will be affected. The order will make the following export-related clarifications:

—Environmental impact statements will not be required for Federal export licenses, permits, approvals, and other export-related actions that have potential environmental effects in foreign countries.

—Export licenses issued by the Departments of Commerce and Treasury will be exempt from any environmental reviews required by the Executive order.

—Abbreviated environmental reviews will be required only with respect to (1) nuclear reactors, (2) financing of products and facilities whose toxic effects create serious public health risks, and (3) certain Federal actions having a significant adverse effect on the environment of nonparticipating third countries or natural resources of global importance.

Accordingly, this order will establish environmental requirements for only a minor fraction (well below 5 percent) of the dollar volume of United States exports. At the same time, it will provide procedures to define and focus on those exports which should receive special scrutiny because of their major environmental impacts abroad. This Executive order will fairly balance our concern for the environment with our interest in promoting exports.

REDUCTION IN FOREIGN TRADE BARRIERS AND SUBSIDIES

We are also taking important international initiatives to improve U.S. export performance. Trade restrictions imposed by other countries inhibit our ability to export. Tariff and especially nontariff barriers restrict our ability to develop new foreign markets and expand existing ones. We are now working to eliminate or re- duce these barriers through the Multilateral Trade Negotiations in Geneva.

United States export performance is also adversely affected by the excessive financial credits and subsidies which some of our trading partners offer to their own exporters. One of our major objectives in the MTN is to negotiate an international code restricting the use of government subsidies for exports. In addition, I am directing the Secretary of the Treasury to undertake immediate consulations with our trading partners to expand the scope and tighten the terms of the existing International Arrangement on Export Credits.

I hope that our major trading partners will see the importance of reaching more widespread agreements on the use of export finance to avoid a costly competition which is economically unsound and ultimately self-defeating for all of us. These international agreements are essential to assure that American exporters do not face unfair competition, and this administration intends to work vigorously to secure them.

CONCLUSION

While these initiatives will assist private business in increasing exports, our export problem has been building for many years, and we cannot expect dramatic improvement overnight. Increasing our exports will take time and require a sustained effort. Announcement of my administration's export policy is not the end of our task, but rather the beginning. To ensure that this issue continues to receive priority attention, I am asking Secretary Kreps, in coordination with officials from other concerned Government agencies, to direct the continuation of efforts to improve our export potential and performance.

I will shortly sign an Executive order to reconstitute a more broadly based President's Export Council to bring a continuous flow of fresh ideas into our Government policymaking process. I expect this Council to report to me annually through the Secretary of Commerce.

Increasing U.S. exports is a major challenge-for business, for labor, and for Government. Better export performance by the United States would spur growth in the economy. It would create jobs. It would strengthen the dollar and fight inflation

There are no short-term, easy solutions. But the actions I am announcing today reflect my administration's determination to give the United States trade deficit the high-level, sustained attention it deserves. They are the first step in a long-term effort to strengthen this Nation's export position in world trade.