Remarks to Business Leaders at a White House Briefing on International Trade

 

March 11, 1988

 

Thank you all very much, and welcome to the White House complex. White House complex -- that's what they call these buildings. That's because nothing in Washington is ever simple. [Laughter]

 

Well, we're here to talk about America's strength in international trade. And seeing each of you -- manufacturers large and small, people who know about trade not just in theory but in practice, people who don't hide from a challenge but compete with the best of American ingenuity and energy -- yes, knowing you and knowing America's working men and women, as well, I know why today American exports are the highest they've been in the entire history of the United States of America.

 

Now, to see the charges that some of our critics throw around, you'd never guess that we export so much as a paper clip. You've heard their charges: the deindustrialization of America, the decline of the middle class, the loss of American jobs. We keep knocking them down with facts. We hit them with the more than 15 million jobs created since our recovery began. We keep pounding away at the fact that these are better, higher paying jobs, as well as that after years on a falling roller coaster the real income of the average American has risen steadily now for 5 years. We throw at them a three-punch combination of surging manufacturing exports, the longest peacetime expansion on history, and the reality that more Americans are at work today than ever before. And after all this, you'd think they'd stay on the mat and wait for the bell, slip back into the locker room in shame. But, no, they just keep coming up with new charges and new demands for a return to old and discredited policies. You know, this Washington sparring match -- in one form or another, it's been going on since the day I took office.

 

And it reminds me of a story back in my Hollywood days, happened to be a fight that took place outside a party that was going on at some Hollywood personality's home. And the fight was between the late John Huston, the director, and Errol Flynn, the actor. Now, if any of you remember the shape that Errol was in and John Huston and his belly, you can guess how the fight went. Two punches and John was flat on the ground. So, Errol splashed some water on him and helped him up, and John started hitting him again. Errol decked him again and threw water on him again, helped him up. And John took a swing again, dropped to the floor. Finally, Errol doused him with one last bucket of water and, when Huston came around, leaned over and whispered very kindly, ``John, you have no chance. I was a professional fighter. Please don't be a fool.'' And you know, as Huston told it later, he said, ``When Errol said that to me, I knew I had him.'' [Laughter]

 

Well, today we're here to knock down again some of those fellows that are taking the wild swings. And the wildest is that American manufacturing and American workers are losing out in international trade. As Al Smith used to say: ``Let's look at the record.'' Over the past 15 months, the volume of exports has been growing four times as fast as the volume of imports. And much of this export surge is in manufacturing exports. Today industry after industry is finding itself in an export boom. As Business Week magazine reported recently: ``Basic manufacturers, once considered a dying breed, are selling products many thought wouldn't even be made in the United States any longer -- escalators to Taiwan, machine tools to West Germany, lumber to Japan, shoes to Italy.''

 

The dollar has helped, of course, but what's happening here goes beyond the dollar. On one hand, since 1980 the United States manufacturing economy has increased its productivity more than three times as much as in the previous 7 years. The result is that, as one German manufacturing expert put it recently, the United States is, in his words, ``the best country in the world in terms of manufacturing costs.'' The other reason for our manufacturing export boom is, in a single word, entrepreneurship -- smaller businesses that are growing rapidly and seeking new markets. Since our recovery began, businesses with 100 or fewer people and businesses that are 5 years old or less have created most of the new jobs in America. They are also responsible for many of our exports, like one small furniture manufacturer from St. Louis who visited Europe late last year. It was kind of a busman's holiday. He started looking at European furniture. And he said, ``I discovered that my products were a lot better and cheaper.'' Now he's selling tables and chairs to Scandinavia.

 

All of this adds up to one thing. As economics writer Warren Brookes reported recently: ``One of the best kept secrets in economic circles these days is that the Reagan administration could end with a bang, not a whimper, as the Nation makes an apparently successful shift to an export-led economy.'' Well, I'm very grateful to Mr. Brookes for saying that. Those were his words, not mine. You'd think this would all be cause for rejoicing here in Washington -- not among our critics. They've been predicting economic disaster for 5 years. They've waited; they've been patient. Now they're tired of waiting. Some of the provisions they've put in the trade bill now before the House-Senate conference would hurt American jobs, American competitiveness, and the entire American economy.

 

For example, when David Birch, MIT's expert on job creation, asked why the United States has so much more entrepreneurship and, therefore, so much more job creation than Europe, he found some straightforward answers. Among these were, as he's written: ``Regulations are much more onerous in Europe than in the United States, eliminating much of the flexibility that is the bread and meat for entrepreneurs.'' And to point out the principal villain, he added: ``Europeans face a host of rules governing their right to close down facilities, fire workers, and relocate operations . . .'' So, what does our trade bill include? Well, America's first national rules restricting a company's right to close down facilities and relocate operations.

 

Another example, this week Honda began exporting its first cars from America to Japan. Foreign investment has helped create new American jobs and American exports. It has contributed to the rising productivity of American manufacturing that I mentioned earlier. So, what does the trade bill include? New disclosure requirements that would dampen and discourage foreign investment from coming into this country.

 

One final example, potentially the most serious: Today over 10 million American jobs depend on imports, exports, or both. We're continuing a pattern that began in our first days as a nation. In periods when our total international trade has expanded, the number of jobs has risen. When trade has fallen, so have jobs. Since the end of World War II, the expansion of international trade has been in the framework of the General Agreement on Tariffs and Trade, the GATT. Not 5 people in 100 can tell you what GATT is, but without it the world would long ago have fallen back into the cycle of protection and retaliation, every country for itself -- a cycle that helped to bring on the worldwide Great Depression of the 1930's.

 

Mandatory retaliation provisions could require me and future Presidents to take actions in direct violation of the GATT. If enacted, they could weaken the international trading system and could require the President to start trade wars. It's a bad proposal under any circumstance, but it's particularly bad now that American exports are soaring and American manufacturers are exporting as never before and so are vulnerable to retaliation as never before. Yes, too many backers of the trade bill talk about making America more competitive but support provisions that would bench some of the best competitors on our team. They talk about saving jobs, but they want provisions that have the potential to destroy thousands if not millions of American jobs. They talk about learning from the Japanese, but why did they have to take their lesson from Kamikaze pilots? [Laughter]

 

I've mentioned three problems we have with the trade bill. There are many, many more -- more than there's time to touch on here. But we've listed them in detail for the conference members and said how strongly we feel. My veto pen remains ready and available if the final work product of the conference remains antitrade, anticonsumer, antijobs, and antigrowth. But my hope, which I believe you share, is that I won't have to use that pen. The administration is working diligently with the Congress to avoid that, to get a trade bill that will complement our efforts to promote trade, exports, jobs, and productivity, not stymie them.

 

Now, you all know that the House-Senate conference on the trade bill is working away and plans to finish its job by Easter. While there's much left to do in this process, it got off to a good, constructive start earlier this month by throwing overboard many objectionable provisions. We just hope that the rest of the other 16 subconferences will follow the example of flagship subconference number one and that the flagship subconference will continue on this constructive course. As they continue their work, I would note that on Tuesday those who had predicted that protectionism would be embraced in the South were proven wrong. The American people know that putting up walls around our country is a prescription for ruin, not renewal.

 

 What the world and the United States need now is more trade and more open trade. And that's why we've pushed for a new GATT round that includes the most ambitious multilateral trade negotiation agenda in history. That's why we've negotiated an historic trade agreement with Canada that will expand jobs, growth, and opportunity on both sides of the border.

 

As Congress considers the Omnibus Trade bill, it can either help or hinder a free and open trading system. Let me suggest that provisions on the trade bill stick to five rules. One, that they're GATT legal. Two, that they not provoke retaliation against our bombing export business -- wait a minute -- our booming export business -- [laughter] -- or U.S. firms abroad. Three, that they not restrict the flexibility of U.S. business to adjust to foreign competition. And four, that they not tie the hands of U.S. negotiators who are working to open markets abroad. And five, sort of summing it all up, a kind of golden rule, don't pass any trade law that we wouldn't want another nation to pass in just the same form, regulating Americans who do business there. The golden rule -- it's not a bad way to do business, in the home or in the marketplace, around the world. I hope we can count on the support of each of you in the next few weeks. Now is not the time to turn out the lights on America's export boom.

 

Now, before I stop, I thought I'd tell you one final story. In hearing all the incredible doomsday talk from the critics about our economy and their equally incredible talk about how they're going to fix things, I couldn't help remembering an old Hollywood story about Sam Goldwyn and his studio's advertising office. The advertising director took a poster to Sam promoting ``We Live Again,'' which starred Anna Sten. The poster read, ``The directorial genius of Mamoulian, the beauty of Sten, and the producing genius of Goldwyn combined to make the world's greatest entertainment.'' Goldwyn looked it over solemnly and said, ``That's the kind of ad I like.'' He said, ``Facts, no exaggeration.'' [Laughter] And now I can use that word I used before. By the way, the movie bombed. [Laughter]

 

Well, that's all I have to say except to thank you all for being here and for what you're doing, and God bless all of you.

 

Note: The President spoke at 1:18 p.m. in Room 450 of the Old Executive Office Building.