March 12, 1988
My fellow Americans:
I'd like to talk to you today about our nation's trade policy. I can't think of a recent economic issue that has generated more heat and less light, yet has more importance to our long-term national interest, than trade.
Throughout the 7 years I've been in office, professional doomsayers have latched onto one issue after another as evidence of an American decline. They can't seem to acknowledge the obvious good news that surrounds us -- the low inflation, the over 15 million new jobs since November 1982, and the longest peacetime economic expansion of the century. Trade is only the most recent subject of lamentation by our critics. For them, our trade deficit is an excuse for getting the Government more involved in private business decisions. They say that Americans can't compete with foreign workers, so we should slow imports by erecting protectionist trade barriers. As usual, the doom merchants are wrong. The United States economy remains the most dynamic and exciting one on the globe. Our entrepreneurs, our can-do spirit, and our economic freedom are the envy of the world. The pessimism used to justify protectionism is totally unfounded.
Let's clear up a few myths. First, the trade situation is improving far more quickly than people realize. Economists may disagree on the impact of the trade imbalance, but there is no disagreement that there has been a remarkable turnaround in the real trade deficit. Since the third quarter of 1986, the merchandise trade deficit in real terms has declined 18 percent. And over the past 15 months, the volume of exports has grown over 4 times as fast as the volume of imports. Clearly, we are in an export boom. American industries, particularly manufacturers, are setting records. Unfortunately, there's a threat to all this good news. I'm talking about the trade bill pending in Congress. Adopting protectionist measures and starting trade wars now would be like closing the barn door just as the horse is trying to get back in. The best way to keep our exports growing is to keep international trade expanding. And that brings me to another myth: that Congress can pass a law that will reduce the trade deficit without destroying our prosperity. Legislation can reduce a trade deficit only if it reduces economic activity. If people are not working, they're not trading. We had a trade surplus and 25-percent unemployment in the Great Depression.
A protectionist trade bill is a serious threat to our export boom. It's a serious threat to the millions of American jobs that depend upon international trade. It is filled with scores of provisions that are protectionist and defeatist. My veto pen is ready if the final bill remains antitrade, anticonsumer, antijobs, and antigrowth. However, the administration is willing to work diligently with Congress to produce a bill that would increase our international competitiveness and complement our efforts to promote trade, exports, jobs, and productivity, not stymie them.
All those working on the bill should take a deep breath, take another look at the trade outlook, and work together in a constructive spirit. It is still possible to write a bill that I can sign. Indeed, I'm encouraged by reports on the status of the trade bill negotiations. The conference committee working on the final draft of the bill has already eliminated a number of troublesome provisions, including illegal quotas, budget-busting giveaways, and protectionist measures. Many objectionable provisions remain, including proposed procedural changes in the law, but I'm hopeful that in the next phase these will be jettisoned. Only wholesale elimination of many of the existing items will produce a bill I can sign.
Regardless of whether I sign trade legislation this year, we will continue our free and fair approach to trade policy. We will challenge unfair trade practices of other countries in order to achieve a level playing field for American industries. We will negotiate to knock down trade barriers on a bilateral or multilateral basis. In that regard, we will seek early enactment of the U.S.-Canada free trade agreement and push for concrete progress in the upcoming Uruguay round of trade negotiations. Finally, we will continue to coordinate economic policies with our major trading partners, thereby helping to maintain a favorable international climate for trade expansion.
America's open market is its great strength, not its weakness. International trade has helped bring unparalleled prosperity to the American people. It would be a tragic mistake to surrender to doubt and defeatism just when our prospects are looking so bright. I have confidence in America, and I'm sure you do too.
Until next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.