The Chemical World This Week
CARTER UNVEILS EXPORT PROMOTION POLICY President Carter took the wraps off his long-awaited export promotion policy last week. Billed as a "first step" in reversing the U.S.'s escalating trade deficit, the policy has three main phases—to provide increased direct assistance to U.S. exporters; to reduce domestic barriers to exports; and to reduce foreign barriers to U.S. exports, while securing a fairer international market for all exports. Chemicals are blessed with a healthy trade surplus and account for 9% of all exports. Thus, the chemical industry, as one spokesman says, is always interested in anything that increases exports. But on the whole it is not "too excited" about President Carter's new policy. The industry is taking a wait-and-see attitude toward the program, wanting primarily to see how effectively it is implemented. However, the industry is aware that previous trade expansion programs have not been very effective. One disappointing, though not unexpected, aspect of the new trade policy is the Administration's continuing insistence on doing away with DISC (Domestic International Sales Corp.). The chemical industry has been fighting to keep DISC, which permits exporters to defer taxes on qualified export income, if, and only if, those deferred taxes are reinvested in an export business. However, in announcing the trade policy, Carter said that DISC simply does not meet the basic test of being an efficient use of taxpayers' money. He argues that it is a costly (more than $1 billion a year) and inefficient incentive for exports, and he continues to urge Congress to either phase out DISC or make it simpler and less costly. The new policy appears to settle one controversy that has been raging in Congress and the courts as well as within the executive branch. That is whether U.S. Environmental Impact Statements should be required on exports to other countries. In his statement, Carter promises to issue soon an executive order saying that EIS's will not be required for federal export licenses, permits, approvals, and other export-related actions that have potential environmental effects in foreign countries. However, abbreviated environmental reviews will be required with respect to nuclear reactors and fi4
C&EN Oct. 2, 1978
Chemlcals have healthy trade surpii, account for 9% of all U.S. exports
nancing of products and facilities whose toxic effects can create serious public health risks. And, in a statement that has a potentially ominous ring for the chemical industry, Carter says that there may be areas in which new regulations are warranted, such as in the export of products that pose serious health and safety risks. Among the actions that will be taken to provide direct assistance to exporters is raising the loan authorization of the Export-Import Bank $500 million to $4.1 billion in fiscal 1980. The bank makes loans to foreign countries to facilitate their purchase of U.S. goods, technologies, and services. In addition, the Small Business Administration will channel up to $100 million of its current authorization to small business exporters to provide seed money for their entry into foreign markets. SBA loans of up to $500,000 will be available for companies to meet needs for expanded production capacity and to ease cash flow problems involving overseas sales or initial marketing expenses. And the Office of Management & Budget will allocate an additional $20 million to revitalize the export programs of the Department of Commerce and the State Department. In another area, Carter is ordering
the Justice Department to clarify and explain the scope of antitrust laws in relation to cooperative arrangements between U.S.firmsthat are necessary or desirable to improve export performance. According to Justice, most such ventures, particularly one-time joint ventures created to participate in a single activity such as a large construction project, would not violate antitrust laws. However, many businessmen are uncertain on this point and are reluctant to undertake such joint ventures. The Administration hopes to overcome this reluctance. D
NCI plans clinical trials for Laetrile "For science, times have never been better," Dr. Arthur C. Upton said last week, assessing his first year as director of the National Cancer Institute, Bethesda, Md. In the midst of his even-toned, largely optimistic appraisal of NCI's performance, Upton remarked that several controversial issues—among them, Laetrile—faced him when he took over NCI leadership. "I've arrived at a decision to make a trial" of Laetrile, Upton announced
in a matter-of-fact voice. His action follows within days the recommendation by a committee of NCI physicians and scientists that Laetrile undergo clinical trials. That recommendation came in the form of a split decision—14 members of the group for, and 11 members against, testing Laetrile clinically. Split decisions regarding drug trials are unusual, according to an NCI spokesperson. The split reflects on the controversial history of Laetrile and the inconclusive nature of the data before the NCI committee (C&EN, Sept. 11, page 22). Before a clinical trial may begin, the Food & Drug Administration must grant an IND (Investigational New Drug application). FDA Commissioner Donald Kennedy has been an outspoken critic of Laetrile. But he has informed NCI that he will not "reject an IND out of hand," Upton says, adding, "I don't want to take an action that pits NCI against FDA. "The crux now is design of a protocol" for conducting the trial, Upton continues. FDA will reserve judgment until such a protocol is designed and reviewed. Though details aren't worked out, the test will involve about 300 patients suffering from 10 different cancer syndromes. Design also may involve special "metabolic regimens" that pro-Laetrile groups say are needed for the drug's efficacy. Upton does not recommend that enforcement of statutes now restricting use of Laetrile be lifted. "We're not saying that Laetrile is effective," he notes, "just that we can't resolve the issue without a trial." Patients in the trial must give "informed consent," and they'll be picked from among patients for whom ordinary treatments have failed. "The issue isn't whether Laetrile helps one in a million," Upton says, "but whether it can help a lot of cancer patients." If the project goes ahead smoothly with FDA approval, results might begin to emerge next spring, according to Upton. Whether the results will quell or merely nurture the Laetrile controversy is anyone's guess. But Upton's appraisal and his apparent and growing confidence make him optimistic about the future. NCI is "living through an adjustment to overexpectations" engendered by the National Cancer Act, Upton says. Instead of a quick solution—the elusive "magic bullet—we can count on steady progress." That will entail long-range effort and long-range spending. NCI is "extraordinarily visible," according to Upton, and its public role is changing. "We no longer stand clearly separated from regulatory
Upton: crux now is protocol for trial
agencies," he says. While called upon by many such agencies for its expertise, NCI also is sought by many public and private interest groups, particularly to watch over problems such as environmental toxicology. Upton sees NCI's role as continuing to grow in such areas, noting that the institute is a "public resource." •
British company buys engineering firm McKee A long-time, presently ailing major U.S. company in chemical engineering and construction, McKee Corp. of Cleveland (formerly Arthur G. McKee & Co.), soon will become part of a British engineering and construction firm, Davy International Ltd. of London. McKee's board of directors has approved a proposal from Davy International to make a tender offer to buy McKee's 3.2 million shares for $33 per share for a total purchase price of $106 million. Success of the tender offer would result in McKee's merging into a subsidiary of Davy International. The offer from Davy International comes at a slack period in McKee's cyclical business, which has been declining two years in terms of revenue and three years in employment and in backlogs of orders. McKee has been one of the first U.S. chemical engineering firms to feel the current weakness in capital spending for new chemical plants. The company reported first-half revenues this year of $290.2 million, down 22% from firsthalf 1977. Net income fell 36% to $2.9 million. For all of 1977, revenues dropped 6% from 1976 to $725.4 mil-
lion, and net income declined 4% to $8.1 million. McKee's revenue, like Davy International's, comes from far more than chemical construction. McKee provides a wide range of engineering and construction services throughout the process industries worldwide, including oil, chemicals, nonferrous metals, minerals, mining, iron, steel, food, drugs, synthetic fuels, coal, and natural gas. In McKee's first-half 1978 stockholder report, the company attributes the revenue drop to "continuing low demand in the capital goods sectors which form the market for McKee's services, particularly in iron and steel and copper and other nonferrous metals." However, the company also expresses optimism for its currently thin stream of new orders. "There are indications from clients that selected planned projects will be released in the near future. As a result, the nearand intermediate-term new business outlook in certain markets is more favorable than it has been in recent months." For Davy International, McKee's present position creates an attractive buying opportunity. McKee's stock, which reached $35.50 per share in the boom days of 1974 (adjusted for two splits since then), slipped to a low of $14,125 per share in the past 12 months. The takeover proposal resulted in a quick spurt to about $32 by last week. McKee would not be Davy International's first U.S. engineering and construction operation. The U.K. firm has three other U.S. units: Davy Powergas, the well-known chemical construction concern in Lakeland, Fla.; Hallanger Engineers of Orinda, Calif.; and Olsen Inc. in Houston. •
McKee's revenues are in second declining year
a Revenues at annual rate through June 1978; backlog as of June 30, 1978
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