Chemical trade
An active year but increasingly protectionistic Earl V. Anderson, Senior Editor, New York City
H
alf way through the year, as of June 30 to be exact, there were almost 850 tariff and trade bills cluttering up the legislative hoppers of Congress. More than 570 of them were quota proposals of one sort or another. These two figures just about tell the whole story of the year, as far as trade affairs are concerned—very active and increasingly protectionist. In the U.S., protectionism has picked up a lot of vocal support and much equally vocal condemnation, though it hardly merits comparison to the Smoot-Hawley brand of protectionism of the early thirties. Nevertheless, the voices crying for protection have become loud enough and strong enough to trigger fears of trade wars on the part of trade liberals. Whether these fears are real or imagined is beside the point; they are there and they compelled Oliver Long, director-general of GATT (the General Agreement on Tariffs and Trade), to call a special meeting a month ago of GATT's big four trading blocs to discuss ways of avoiding a possible trade war. The four (U.S., EEC, U.K., and Japan) came away from their Geneva meeting without really solving anything (none of the delegates had any negotiating authority) but apparently satisfied that they eased the strain and can avoid future crises. More than anything else, the fourpower trade talks were prompted by the highly restrictive "Mills bill," named after Rep. Wilbur D. Mills (D.-Ark.), chairman of the House Ways and Means Committee, which the committee tentatively approved in slightly modified form in July. The committee's work on the trade bill had been delayed while Secretary of Commerce Maurice Stans made a lastditch effort to convince Japan that she should voluntarily restrain her exports of textiles to the U.S. Unsuccessful in his attempt, Secretary Stans returned to the Ways and Means Committee with the Administration's "reluctant" support of a bill that would place mandatory quotas on textiles. Relief for the textile industry, which has been hard-pressed
U.S. exports of manufactured products will regain a little ground this year U.S. share of world export market, % 30
All manufactures6
Chemicals
a World exports are defined as exports from the 14 major industrial countries. These nations, which account for about 80% of world exports of manufactures to foreign markets, are: U.S., EEC, Japan, Canada, and EFTA, excluding Portugal. Exports to foreign markets are total exports excluding exports to the U.S. b The term manufactures refers to chemicals, machinery, transport equipment, and other manufactures, except mineral fuel products, processed food, fats, oils, firearms of war, and ammunition, c C&EN estimates. Source: U.S. Department of Commerce, International Trade Analysis Division
by import competition, had been one of President Nixon's most publicized campaign promises during the Presidential campaign. The trade bill tentatively approved by the committee not only established mandatory quotas on textiles, it also set mandatory quotas on shoes and contained an omnibus quota provision that called for quotas on any import that captured at least 15% of the domestic market and whose volume was at least 15% greater than in the previous year. In addition, the committee rejected by a lopsided 16-to-6 vote the Administration's request to repeal American Selling Price (ASP) —the controversial tariff valuation method by which tariff rates are set on the basis of selling prices in the U.S., rather than on the more conventional foreign value.
During the Kennedy round, the U.S. agreed, subject to Congressional approval, to repeal ASP in return for additional tariff and nontariff concessions. Since then, both the Johnson and Nixon Administrations have plugged for ASP repeal, claiming that the U.S. would gain more in exports than it would lose through imports and warning that ASP was a major roadblock to future nontariff barrier negotiations. The chemical industry, however, insisted that the ASP deal was a bad one and has fought to keep ASP on the books. The chemical industry thought it had won its ASP battle. President Nixon, however, promptly announced that he would veto the tentative trade bill because it was too restrictive. A series of intense pressure campaigns— by the Administration, by individual SEPT. 7, 1970 C&EN
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committee members, and by some in dustry executives against executives of other industries—brought about some drastic changes in the trade bill when it finally was reported out of the Ways and Means Committee. The most drastic concerned ASP. The committee didn't directly approve the ASP deal of the Kennedy round, but it did give the President authority to agree to the ASP deal or to negotiate a better one. Any ASP agreement, however, must still be submitted to Congress, which will have 60 days to reject the agreement. If it doesn't re ject the deal within 60 days, ASP would automatically be abolished. In addition to clearing the way for ASP repeal, the bill also: • Prohibits the President from sub stituting tariffs for oil quotas as rec ommended by a Cabinet task force. • Establishes quotas on imports of
textiles and apparel made of wool and man-made fibers and on the manmade fibers themselves. However, the President was given ample dis cretionary powers to exempt products from quotas or to suspend quotas in the national interest. • Makes it easier for other industries to obtain import relief through the escape clause. • Improves the prospects for work ers and firms hurt by imports to ob tain adjustment assistance. • Calls for tougher enforcement of present antidumping and countervail ing duty laws. Now the trade bill must go to the Senate, where protectionist sentiment is believed to be stronger than it is in the House and where prospects for still further changes are deemed good. This growing protectionist senti ment, not only in Washington but
within industry and labor as well, has been increasing ever since the Ken nedy round ended in 1967. It has gathered strength and a strong argu ing point as the U.S. trade surplus plummeted from an all-time high of S7 billion in 1964 to a 30-year low of $736 million in 196S. Last year, the trade surplus, which is the excess of export value over import value, in creased slightly to $1.3 billion, but the increase was hardly enough to satisfy many appetites. This year, however, the trade bal ance should bounce back considerably. It hardly figures to return to the glorydays of the early sixties when the trade surplus perennially was greater than $4 billion, but it should almost double and reach $2.3 billion. Through the first half of this year, the trade surplus was running at a seasonally adjusted annual rate of S3.2 billion. Export
U.S. chemical trade: increasing in both directions Standard international tariff classification
Number
Export Import
1967
1968
1969
1970
Millions of dollars
748 219 191 167
850 275 232 201
905 314 246 245
1170
514
Ε I
108 49
117 57
128 58
135 68
515
Ε I
51 16
43 9
103 28
160 23
521
Ε I
29 9
67 13
63 8
60 8
531
Ε I Ε I Ε I Ε I Ε I Ε I
32 37 3 74 6 288 72 44 49 26 13
35 50 3 10 86 8 314 76 49 55 31 13
33 65 3 9 85 9 363 83 51 47 32 17
40 73 5 9 90 8 440 85 55 50 35 20
70 7 231 142 18 41
82 8 268 142 20 41
79 10
90 13
218 137 17 35
180 200 20 28
473 60 416 67
590 93 504 70
590 99 467 68
700 140 575 90
2802
3289 1122 2167
3383 1232 2151
4050 1500 2550
512
Inorganic chemical elements, oxides, including hydroxides, peroxides, and halogen salts Inorganic chemicals, except elements, oxides, hydroxides, peroxides, and halogen salts Radioactive and stable isotopes, their compounds and mixtures, and radioactive elements, except uranium and thorium ores and concentrates Mineral tar, tar oils, and crude chemicals from coal, petroleum, and natural gas Synthetic organic dyestuffs, natural indigo, color lakes, and toners Dyeing and tanning extracts, including synthetic and artificial bates Pigments, paints, varnishes, and related materials Medicinal and pharmaceutical products Essential oils, perfume, and flavor materials Perfumery and cosmetics, dentifrices, and other toilet preparations, except soaps Soaps, cleansing, polishing, and finishing preparations Fertilizers, manufactured
513
Explosives and pyrotechnic products, including hunting and sporting ammunition Synthetic resins, regenerated cellulose, and plastic materials Chemical products and materials, not elsewhere classified TOTAL CHEMICAL TRADE BALANCE a C&EM estimates. Source: Bureau of the Census 34A
Ε 1 Ε I
Organic chemicals
C&EN SEPT. 7, 1970
532 533 541 551 553
554 561 571
Ε i Ε I Ε
ι 581 599
Ε I Ε I Ε I
in
963 1839
385 295 300
Where our exports go—and imports come from Product
Year
Export Import
20 Latin American Repubfics
Canada
European Economic Community
European Free Trade Association
Japan
Total, all a r e a s
Millions of doHa rs
Agricultural products
1967 1968 1969 1970*
NonagricuEtural products
1967 1968 1969 1970-
Chemicals
1967 1968 1969 1970a 1967
AH products
1968 1969 a C&EN e s t i m a t e s . Source: Bureau of t h e C e n s u s
1970*
201
482 1729
1460 330
695 174
865 32
6,383 4,472
Ε I Ε i
595 226 710 244
500 2001 444 1900
1367 368 1269 363
622 210 609 223
933 37 934 37
6,228 5,057 5,936 4,954
Ε I Ε I
680 310 6,504 6,899
530 2520 3598 2124
1400 410 4122 4127
650 250 2506 2708
1140 37 1800 2967
6,250 6,100 24,764 22,344
Ε I Ε I
7,341 8,699 8,246 10,146
4143 2265 4363 2314
4627 5517 5607 5437
2957 3225 3321 3432
1991 4019 2528 4851
27,754 28,057 31,508 31,098
Ε I Ε I
8,370 10,890 421 270
4870 2530 527 84
7550 6190 593 261
4000 3650 267 128
3460 5463 227 70
36,800 34,500 2,803 963
Ε I Ε I
452 292 510 310
624 76 613 58
754 331 328 331
343 163 323 186
248 91 304 121
3,289 1,135 3,383 1,232
Ε I Ε I
540 395 7,059 7,099
730 52 4079 3853
1135 390 5582 4457
415 220 3201 2882
380 185 2665 2999
4,050 1,500 31,147 26,817
Ε I Ε I
7,936 8,925 8,956 10,390
4643 4266 4807 4214
5994 5886 6875 5800
3589 3435 3930 3656
2924 4057 3452 4888
33,982 33,114 37,444 36,052
Ε I
9,050 11,200
5400 5050
8950 6600
4650 3900
4600 5500
43,050 40,600
Ε 1
Sbo
The U.S. trade balance: bouncing back Standard international tariff classification
Export Import
1969
1970b
Millions of dollars
Beverages and tobacco
Ε 1 Ε I
3,733 4,531 713 778
4,000 5,600 800 870
Crude materials, inedible, except fuels Mineral fuels, lubricants, and related materials
Ε I Ε I
3,570 3,460 1,131 2,794
4,500 3,280 1,400 3,170
Oils and fats, animal and vegetable Chemicals
Ε I Ε I
308 137 3,383 1,232
450 130 4,050 1,500
Manufactured goods classified chiefly by material Machinery and transport equipment
Ε I Ε I
4,555 7,893 16,380 9,768
5,500 8,200 18,300 11,600
Miscellaneous manufactured articles, not elsewhere classified Commodities and transactions not classified according to kind
Ε I
2,446 4,128
2,550 4,900
Ε 1
1,227 1,331
1,550 1,350
TOTAL
Ε I Ε I
37,444 36,052 37,314 36,052 1,262
43,050 40,600 42,915 40,600 2,315
Food and live animals
Official trade balance0 BALANCE
a Exports include Department of Defense Shipments. Imports are g e n e r a l i m p o r t s , b C&EN estimates. c Exports exclude Department of Defense S h i p m e n t s . i m p o r t s are g e n e r a l i m p o r t s . Source: B u r e a u of the Census
volume, however, is expected to taper off during the second half and pare the first-half rate considerably. Still, the outlook for exports is rosy. On the year as a whole, exports will likely increase 15%, surpassing the S40 billion mark for the first time, and settle at a remarkable $42.9 bil lion. This despite cries that the U.S. was pricing itself out of world mar kets. Behind the bright export pic ture is a broad base of strong eco nomic growth in many of the major export markets, especially in EEC and other countries of western Europe. Exports to many developing countries also are advancing this year. Imports are making strong gains, too, despite the economic slowdown in the U.S. They, too, will spill over the $40 billion mark for the first time and will likely reach $40.6 billion. That's enough to post a 12.5% in crease over last year and marks one of the few years recently that imports' growth rate didn't outdistance ex ports'. Trade liberals are hoping that this year's improved trade performance may take some of the wind out of the protectionists' sails. It may, indeed, take some of the sting out of their arguments, but it simply won't be enough to silence them completely. SEPT. 7, 1970 C & E N
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