May 22, 1986

The House of Representatives this morning passed H.R. 4800, the omnibus trade bill. This legislation, if enacted, would be a major step backward for the U.S. economy. They call it an omnibus bill; it is really an ominous bill. It is trade destroying, not trade creating. The bill would harm American consumers, who would pay higher prices on thousands of products; businesses and workers, who would find foreign markets closed to them; and farmers, who would face additional financial hardships as the result of closed foreign markets. Moreover, the bill would hamper efforts we have underway to create more jobs and more opportunities for Americans through an active program of opening foreign markets, not closing our own.

H.R. 4800 is, in the worst spirit of Smoot-Hawley, pure protectionism. The House of Representatives has failed to learn the lessons of history. Within months of the enactment of Smoot-Hawley, our key trading partners began raising tariffs and imposing protectionist exchange controls to the point where U.S. exports fell some 60 percent in 3 years. H.R. 4800, with its emphasis on retaliation and closed markets, will do the same. H.R. 4800 would reverse the progress we've made. By imposing mandatory quotas against countries like Japan, Taiwan, and West Germany, it would clearly violate our commitments under GATT [General Agreement on Tariffs and Trade] and invite massive retaliation against key American industries. By imposing mandatory retaliation in certain of our trade cases, the law would remove our flexibility to negotiate market-opening settlements. Its meat-ax approach to export control would jeopardize our national security. And it would establish government councils to carry out industrial planning, regardless of what the free market would say.

H.R. 4800 is not a trade policy, but an abandonment of trade policy. This administration is pursuing an activist trade policy grounded squarely on the notion of free and fair trade. Our aim is removing foreign trade barriers and opening foreign markets. In the past year alone we have made more aggressive and creative use of our laws to enforce our trading rights than any previous administration. We have used our trade laws to address unfair foreign practices ranging from European restrictions on our agricultural exports to the dumping of Japanese semiconductors in the U.S. market. Our actions have been aimed at foreign practices which hinder competitiveness and cost us jobs across the full industrial spectrum -- from our most basic industries, such as steel, to the cutting edge in services and high tech.

We will continue to take whatever actions are necessary to protect our trading rights. At the same time, we intend to carry our message -- that market opening, not market closing, is the answer -- to our trading partners through a new round of multilateral negotiations in the GATT aimed at increasing market opportunities for everyone. We are correcting the value of the dollar so as to improve American competitiveness. Since February 1985 the Japanese yen and the West German mark have risen about 60 percent against the dollar. These changes should show up in our trade accounts later this year. This process will continue as the result of efforts we began last September at the Plaza Hotel and continued earlier this month at the summit.

We stand by what the President said in September: We will vigorously pursue our policy of promoting free and open markets in this country and around the world. H.R. 4800 would do neither of these things.