Message to the Congress Transmitting Annual Report on the Trade Agreements Program for 1970.

To the Congress of the United States:

In accordance with Section 402 (a) of the Trade Expansion Act of 1962, I transmit herewith the Fifteenth Annual Report of the President on the Trade Agreements Program. This report covers the year 1970.

World trade in 1970 maintained a high rate of growth for the third successive year, reaching over $279 billion. In the case of the United States, exports rose by approximately 14 percent while imports were up 11 percent. While this performance yielded a merchandise trade surplus of over $2 billion as compared with $624 million and $660 million in 1968 and 1969, respectively, the improvement fell far short of the level required for the United States to restore a sound balance of payments position.

Throughout the year U.S. representatives actively sought the cooperation of our major trading partners in the reduction of barriers to U.S. exports and in other measures that would enable our products to compete with those of other countries in both the U.S. and the world market. Some progress was made, but certain very significant problems remained unsolved. Domestically, monetary and fiscal policies contributed to a deceleration in price increases, but in some of our major product lines U.S. producers were not able to retain their share of the market at home or internationally.

At the close of 1970, the outlook for U.S. trade involved a number of uncertainties. Domestically, the most basic element was our ability to make further progress toward price stability. Abroad, the prospects were not clear with regard to levels of economic activity and rates of inflation in a number of industrialized countries. One of the most basic unknowns was the extent to which our major trading partners would recognize the seriousness and urgency of greater international cooperation on monetary reforms and other measures to facilitate balance of payments adjustment.

While we had hoped that these uncertainties could be favorably resolved without unilateral action, this was not the case and by mid-1971 the United States, for the first time in this century, faced the prospect of a deficit in its balance of merchandise trade. To deal with this situation and to achieve interrelated domestic goals, the New Economic Program was launched on August 15. With the cooperation of other major economic powers, I am confident that the deterioration in our merchandise trade balance, which was threatening at the end of 1970 and which reached intolerable proportions in the spring of 1971, will be sufficiently improved that the present U.S. surcharge on imports can be removed.

This Administration remains firmly committed to the goal of expanding world trade through the further reduction of national barriers to imports, the development of more equitable rules to govern export competition in international markets, and the elimination of discriminatory measures by trade blocs. The Program instituted in August will contribute to our basic trade policy objective by providing essential interim support to the domestic economy while more fundamental arrangements are being worked out to restore sound equilibrium with the rest of the world.

Improvement of the world trade and monetary systems has been given a high priority by this Administration. The United States stands ready to do its fair share in international efforts to achieve these ends. We expect other governments to respond with a similar sense of responsibility in the interest of promoting prosperity and amicable economic relations throughout the world.

RICHARD NIXON

The White House

December 1, 1971