August 6, 1983
My fellow Americans:
I'd like to talk to you today about trade -- a powerful force for progress and peace, as you well know. The winds and waters of commerce carry opportunities that help nations grow and bring citizens of the world closer together. Put simply, increased trade spells more jobs, higher earnings, better products, less inflation, and cooperation over confrontation. The freer the flow of world trade, the stronger the tides for economic progress and peace among nations.
I've seen in my lifetime what happens when leaders forget these timeless principles. They seek to protect industries and jobs, but they end up doing the opposite. One economic lesson of the 1930's is protectionism increases international tensions. We bought less from our trading partners, but then they bought less from us. Economic growth dried up. World trade contracted by over 60 percent, and we had the Great Depression. Young Americans soon followed the American flag into World War II.
No one wants to relive that nightmare, and we don't have to. The 1980's can be a time when our economies grow together, and more jobs will be created for all. This was the spirit of the Williamsburg summit in May. The leaders of the industrialized countries pledged to continue working for a more open trading system. But sometimes that's easier said than done.
Take the case of our own economy. Things are looking up for America. Inflation has been knocked down to 2.6 percent. Economic growth in the second quarter reached 8.7 percent, and 1,700,000 Americans have been hired since last December. Yesterday we learned that total unemployment has dropped to 9.3 percent. Nearly 500,000 of our fellow citizens found jobs in July. More Americans are working than any time in this nation's history. This good news restores confidence in our economy and our currency.
Some people dislike our strong dollar and blame it on our interest rates. Well, we do not want disorderly currency markets, and we've intervened to bring back order to otherwise disorderly markets. But let's remember something. Other countries have higher interest rates than we do, yet their currencies have fallen in relation to ours. One good reason is inflation. It's not the interest you earn from holding a currency that matters most; it's the confidence you have that the value of your money won't depreciate from higher inflation.
America's inflation rate has declined dramatically. Now a strong dollar makes our purchases from abroad less expensive, and that's good.
Winning the war against inflation is probably the best economic legacy we could leave to the next generation. Remember what life was like only a few years ago when the value of the dollar was being talked down and inflation was going through the roof?
But a strong dollar also brings problems. It makes the goods our exporters are trying to sell more expensive. Still, we're tough competitors. Some $200 billion worth of goods were sold by Americans last year. So, do we listen to those who would go back to dead end protectionism and to sabotaging the value of our currency, or do we go forward, keeping our faith in the American people who made this nation the greatest success story the world has ever known?
I believe our challenge is to marshal the power of this country's best minds and create the technology that will restore America's economic leadership. I have appointed a Presidential Commission on Industrial Competitiveness, asking distinguished leaders from business, labor, and academia to advise us on how best to strengthen our ability to compete in world markets.
We believe the U.S. trade position would be strengthened by uniting many of this government's trade responsibilities under one roof, so we proposed legislation to create a department of international trade and industry. We're also taking action to create opportunities for trade.
Ten days ago, our negotiators reached a new, long-term grain agreement with the Soviet Union. Since 1981 we've ended the unfair embargo that had been slapped on American farmers. And now we have an agreement that obligates the Soviets to increase their minimum purchase of wheat -- or grain, I should say -- by 50 percent.
This, along with the likelihood of substantial purchases from China, represents a major step forward for our farmers. It symbolizes our determination to help them regain the markets they lost. It also proves that while we oppose Soviet aggression, we seek to promote progress and peace between our peoples.
Yesterday I signed legislation to stimulate more trade and opportunity -- the Caribbean Basin Initiative. This package of incentives will establish new commercial relationships between the people of the Caribbean and the United States. Stimulating trade will mean new jobs for their citizens as well as ours. It underscores our belief that economic development based on free market principles is the key to helping our neighbors build a future of freedom, democracy, and peace.
Finally, let me mention an important agreement on textiles we've just reached with the People's Republic of China. No free market currently exists in textiles, and only what is called the multifiber arrangement, signed by 46 countries. We're a party to that arrangement, but China is not, and our bilateral agreement with them expired last December. To prevent a flood of imports from harming our struggling textile industry, we imposed unilateral quotas on China's products. They responded with large reductions in their purchases of American farm products.
We faced three options: option 1, end our restrictions on Chinese textiles, which would help our farmers but risk further damage to our textile workers; option 2, cut back Chinese exports even further, which would cost our farmers billions more in lost sales; or option 3, negotiate a tough but fair 5-year agreement with China to permit controlled, moderate growth of Chinese exports. We chose option 3.
Our textile producers can be assured there will be no flood of imports, and they can get on with the task of modernizing their industry, which is the best long-term assurance of jobs for our own people. This new agreement will mean more business for our farmers, and it promises China the opportunity to sell its products here. That's important for good relations between our two countries.
Bit by bit, we're restoring America's reputation as a reliable supplier and as a supporter of free and fair trade for progress and for peace.
Till next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, Md.