Remarks to the National Chamber Foundation

 

November 17, 1988

 

The President. Thank you, Paul. And let me begin with a special greeting to the ambassadors and officials of the 96 nations that are contracting parties to the GATT. I thank you for accepting my invitation to be with us this morning.

 

It's always a pleasure to appear before a chamber audience. For 8 years, through all our toughest fights, the chamber and the National Chamber Foundation have been our steady allies -- there when the trumpet sounded, there when others grew faint of heart, there in the cause of freedom. And when I think of all we've accomplished together, I can't help remembering what a great Hollywood producer, Samuel Goldwyn, once said about a script. Sam had a way with words. He said: ``That story is wonderful! It's magnificent! It's prolific!'' [Laughter]

 

Well, that's our story too -- wonderful, magnificent, and prolific. I've told our economic success story a hundred times across our nation -- how we came into office to find the worst economic mess in over 50 years; how we rolled up our sleeves, cut taxes and cut regulations; and how the economy responded as inflation and interest rates fell from near-record highs to the lowest they'd been in more than a decade, while growth, productivity, and incomes all seemed to wake from the dead. And more people are at work today than ever before in the history of the United States of America.

 

Yes, we've made a special kind of history these last few years, a history written in numbers straight out of Ripley's Believe It Or Not: 6 full years, 72 months, of continued economic expansion, the longest peacetime expansion on record; 18\1/2\ million jobs created during this expansion, more than the rest of the nations of the industrial world put together; manufacturing productivity growing at one-and-a-half times its post-war average. And one other thing. I had to come to Washington to learn that what statisticians call the potential workforce is everyone, male, female, young and old, from 16 years of age and up. Now that includes all the students still in school, mothers who stay home with their children, older people who've retired. And today a greater proportion of that workforce is employed than ever before, 62.7 percent.

 

But the history we've written is more than economic history. The philosopher Ludwig von Mises once wrote, in his words: ``A nation is the more prosperous today the less it has tried to put obstacles in the way of the spirit of free enterprise and private initiative.'' Well, in the years before we took office, much of mankind had lost sight of the enduring and fundamentally moral link between freedom and prosperity. Nations that had once known the full fruits of freedom had fallen into a kind of statist trance and saw their material standards slowly drift downward. Others fell even deeper into the stagnating pool of state-commanded economic life.

 

Two hundred years ago, a minuteman stood at Concord Bridge and fired the shot heard round the world. And sometime in these last 8 years, our modern minutemen -- America's entrepreneurs -- fired another shot heard round the world. Yes, when we cut taxes, regulation, inflation, and interest rates, all we were really doing was what Paul Revere did after seeing those two lanterns in the Old North Church. We were riding through the countryside, calling on brave souls to come out and risk all and to help build the Nation anew. And like the minutemen, they came running. Most of the new jobs created in our expansion were created by companies 5 years old or less and companies with 20 or fewer people -- entrepreneurial companies, companies that are the product of American freedom.

 

And around the world, people heard their story, America's story, and began to awaken from their statist trance. From Britain and Germany to India and Japan, tax rates fell and needless regulations were reduced. In Europe, the Common Market will soon become a market that its members truly share in common as it moves to the elimination of internal trade barriers by 1992. And even in China, the Soviet Union, and Eastern Europe, word of our example has echoed within the citadels of communism and sparked a transformation that many would have thought impossible only a decade ago. Yes, a truth you heard in a recent debate, I've heard from the leader of one country after another: Today, America is the envy of the world. And if I may add a personal note, I'm mighty grateful that -- with George Bush picking up the lease on the store, after Nancy and I have packed our jalopy and headed West -- [laughter] -- this truth will go marching on.

 

Yet though we have transferred the world these last 8 years, we still have work to do. And in no area is the march ahead more critical to the future of America and the world than the area of international trade. The great 19th century British historian and statesman, Thomas Macaulay, once noted that, ``Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular.'' But not in America. In the past year of campaigning nothing was a surer kiss of death than protectionism and taxes. And why not? From George Washington's time to the Depression of the thirties to this very moment, when America's total international trade has expanded, the number of jobs has expanded; when it's contracted, so has the number of jobs. And today, more than 10 million American jobs depend on imports, exports, or both; and we're exporting more than ever before in our history.

 

And as for consumers, only 2 years ago, the headlines gave us all a lesson in the cost of protection. That was when, under pressure from our Federal Trade Commission, New York State abolished a domestic trade barrier. It let in milk from New Jersey, and in no time, the average price of a gallon of milk on the Lower East Side of Manhattan dropped by 40 cents. Now, that was just one product traded not between two nations but between two States. Put that on a world scale and you can see why Americans have said over and over again this year that protectionism is destructionism, and they don't want any part of it. It's just this simple: America and the world need more trade, not less. And we're determined to keep trade alive.

 

Today we're pursuing a three-pronged policy. From the Plaza agreement to the Tokyo summit to the Toronto summit this year, we have worked with the other major industrial nations on the first prong -- expanding international coordination in monetary, fiscal, and macroeconomic policy.

 

And meanwhile, as the second prong, we've been using every tool that our existing international agreements allow to pry open foreign markets. We've become the first administration ever to initiate unfair trade practice cases, not waiting for industry to take the first step. And not long ago, we added up all the cases administration and industry initiated and found that during this administration, the United States has challenged more unfair trade practices than in any other administration in our country's history. And from agricultural products and legal services to construction contracts in Japan, to insurance and intellectual property in Korea, to agricultural trade with Europe, we've got results. Markets have been opened.

 

Four decades ago, America accounted for half of the world's economy. We were so big compared to everyone else that we could ignore most unfair practices abroad. Today we're down to about a quarter. And it's time for everyone to play by the rules, if they want to play with us. This is not, as some would have it, a case of American decline. In fact, our share of world output has risen since 1980. But the Depression and the Second World War taught us that our peace, prosperity, and freedom are secure only when the peace, prosperity, and freedom of our friends are secure. In trade, everyone ends up a winner as markets grow. It's not a fight, and you're not going for a knockout, although that's the way some critics seem to think about trade.

 

Yes, mutual benefits are why we've pursued the third prong of our three-pronged strategy -- bilateral and multilateral negotiations. In a couple of weeks, the Uruguay round of trade talks will have its mid-term review in Montreal. I can't think of any matter in the last 8 years that has achieved the same breadth of support within our government as these talks. In putting fast-track provisions into the trade bill, Congress showed its support. President-elect Bush has been on board every step of the way. And anyone who thinks that American policy in this area might shift with the new administration or the new Congress is deluding himself. In fact, the President-elect and I intend to meet with Trade Representative Clayton Yeutter and Agriculture Secretary Dick Lyng before the mid-term review to reiterate our mutual support for this negotiation. Yes, as far as the trade talks are concerned, it's steady as she goes and full steam ahead.

 

Before I took up my current line of work, I got to know a thing or two about negotiating when I represented the Screen Actors Guild in contract talks with the studios. After the studios, Gorbachev was a snap. [Laughter] But I found that there's nothing like a deadline to concentrate bargaining wonderfully. And that's what's happened here. The fact that the mid-term review was coming up has focused and accelerated talks so much that, in my judgment, by the time the meeting convenes, it will have already succeeded.

 

Now, we aren't trying to negotiate the entire Uruguay round in Montreal. We're taking this thing one step at a time, and the steps for this meeting are simple. Like mountaineers getting ready for the final stage of the big climb, we want to make sure we all agree on just where the summit is, on the path we're taking to it, and on when we intend to arrive.

 

The agenda includes intellectual property, services, investments, reducing trade barriers abroad for our products, and improving the way GATT resolves disputes. These are the big thorns in the side of international trade today and the big gaps in the GATT system. For example, although trade in services is growing more rapidly than almost any other areas of international trade, GATT has no rule covering it, and intellectual property protections simply don't exist. In 1986 alone, the computer and software industries lost over $4 billion due to the lack of intellectual property protections. Well, it's time we did something about this, and I'm confident we will.

 

One of the biggest areas we must talk about is agriculture. Who can be happy with government policies in agriculture around the world today? Has there ever been a better example of how bad things can get when governments get too involved? Expensive, destructive, taken together the role of governments in agriculture hurts consumers. It hurts the economies of the less developed countries. It even hurts farmers. What Von Mises said about nations also goes for industries and sectors -- the fewer the obstacles to private initiative, the better off they are.

 

We've said that the GATT parties should agree to end, by the turn of the century, policies that distort agricultural trade. Some other nations say that timetable is unrealistic. Well, they may have a point. And so I'm announcing today that when our team shows up at Montreal, they'll be ready to discuss flexible adjustment. They'll be flexible about timetables, so long as everyone agrees on nailing down an adjustment plan with specific dates for ending trade-distorting subsidies and market access barriers. The final goal is what is important.

 

Some countries are also worried that if trade barriers in agriculture disappear, they'll be left at the mercy of others if food supplies run short. Well, again, they may have a point. And so, in Montreal we'll be ready to talk about government stockpiles, land purchases, and other ways of dealing with what has been called food security. You might say that in Montreal we'll be ready to talk turkey, and wheat and sorghum and whatever. We've been told that the truck of agricultural trade talks is stuck in the potholes of rigid timetables and food security. Well, this proposal represents a major effort by the United States to pull the truck out, fill in the holes, and make sure the talks hum along to their 1990 destination.

 

What's at stake here is more than a few products or a few sectors. The world is perched on the threshold of a new era. New technologies, new opportunities beyond all imagination just a few years ago are coming into being. They hold unparalleled promise for humanity. Biotechnologies, information technologies, medical technologies and more might conquer disease, end world hunger, and do all the work we're doing now and even more, while doing less to the environment. Yet nothing is more certain than to the way to cut this new era short is to start throwing up trade barriers again around the world.

 

Think of the computer. In the 1960's, a computer handling a million instructions per second cost nearly $2 million; today it's around $1,000. Today's typical desktop PC is not the product of one country but three or four, and its semiconductors may come from any of more than 10 nations, with no one knowing for sure just which one. We can't separate the blooming of new technologies from the world marketplace that has nurtured them.

 

Some years ago, Friedrich Hayek, the economist and philosopher, wrote that, and I'll quote: ``While there is nothing in modern technological developments which forces us toward comprehensive economic planning, there is a great deal in them which makes infinitely more dangerous the power a planning authority would possess.'' And yet the current technological revolution may be making central authority less, rather than more potent. Today's desktop PC has more computing power than a whole roomful of 1960 computers. And yet one of America's leading research directors predicted not long ago, that in less than 15 years, a single computer chip would equal the power of 20 of today's most advanced supercomputers. Author George Gilder has argued that putting such power in the hands of every hacker and entrepreneur will make the calculations of central planners more and more meaningless. The greater the pace of innovation, the more futile it will be for state authorities to try to keep up, to push, or to guide. The most governments will be able to do is provide broad and unfettered markets that can fertilize innovation and give invigorating home bases for companies that want to compete in international commerce.

 

That's why, even as we have been working on lowering trade barriers around the world, we have sought to eliminate most barriers with our most important partner -- Canada. As far as the United States is concerned, the free trade agreement is an example of cooperation at its best. It is a testament to the commitment of our two governments to the principles of the open market and to economic cooperation. It is also, as the leaders of the major industrial economies concluded at the Toronto summit, a catalyst for the rest of the world trading system.

 

As we pursue global trade negotiations, the United States believes that the future belongs to those who lower trade barriers. These are the countries that will be in the forefront of technology. These are the countries that will see their living standards rise most quickly. And these are the countries that will lead the world in the years ahead. We can go forward into the future or slip back into the protectionist past. It comes down to this: Every time countries any place in the world have taken a step together toward freer trade, the results were just what was expected -- more productive and competitive economies, more jobs, and greater benefits for the citizens of each country.

 

All the nations of the world face this same question -- move forward or turn back? And I believe that there's something in the human soul -- a spirit of hope, a yearning for a brighter future for one's children, a prayer for peace -- that will finally, after much hesitation perhaps, propel all of us forward. It'll give us the courage to face the future, to turn to the morning light, and, as our forefathers did for us, to build a better world for our children and their children and generations to come.

 

Thank you all, and God bless you.

 

Note: The President spoke at 11:04 a.m. in the Hall of Flags at the U.S. Chamber of Commerce building. In his opening remarks, he referred to J. Paul Sticht, chairman of the National Chamber Foundation, an affiliate of the U.S. Chamber of Commerce.