Chemical & Engineering
NEWS JANUARY 13, 1969
Prognosticating on President-elect Nixon's trade policies ECAT committeemen Watson (left), chairman Kendall, Rockefeller
NIXON FACES PROBLEMS IN TRADE The time has arrived to make educated guesses as to what directions President-elect Nixon will take in guiding U.S. trade policies with other nations for the next four years. First order of business will be what to do about American Selling Price, but the major headaches will continue to be the deficit in the U.S. balance of payments and rapidly vanishing trade balance. President-elect Nixon's team will also have to cope with the gap in trade growth between the developed and less-developed countries. Donald M. Kendall, president of PepsiCo, Inc., is one of the early prognosticators. He predicts that President-elect Nixon's trade policies will not differ markedly from President Johnson's. In assuming the chairmanship of Emergency Committee for American Trade ( E C A T ) , a free trade group of 53 top-level executives concerned about U.S. trade problems, Mr. Kendall warns that protectionist measures being pressed on Congress could cause retaliation and spread to a full-fledged trade war. His predecessor at the helm of ECAT, Arthur K. Watson of IBM, says that the new administration is taking office at a pivotal time. "We may be on the verge of a great turning
point in international economic affairs," he adds. The Kennedy round of tariff reductions was a milestone in President Johnson's trade program. The Kennedy round and its overall effects will come in for close scrutiny by the Nixon Administration, and the question of real gain or loss to the U.S. economy will take some time to define. The Kennedy round involved tariff reduction averaging 35% on about 6300 industrial products accounting for nearly $40 billion of the total external trade of industrial countries. Last year was the first year that the Kennedy round reductions were in effect. It was also a year in which the U.S. trade balance dropped from $4.1 billion to less than $1 billion on the credit side. A recent study by the National Industrial Conference Board covering 47 countries on the outlook for worldwide trade liberalization indicates that a majority of the U.S. executives polled believe that the Kennedy round will have a favorable impact on the country's trade and economy, and at least a moderately favorable effect on the balance of payments. Chemicals and textiles will be hardest hit. Another problem confronting the
new administration is the declining share of world trade accounted for by less developed countries. Three fourths of the business leaders representing the less developed countries say that the Kennedy round negotiations provide few advantages for the trade and economic development of their countries. One executive charges that "the underdeveloped nations were left out in the cold." Reasons cited were that raw materials and tropical products already enjoy low tariffs while semiprocessed and manufactured goods such as textiles, processed food products, lumber and wood products, and semiprocessed raw materials received inadequate tariff cuts. A solution of the problem of how best to help the less developed nation is elusive, the survey finds. In the opinion of many of the 109 business leaders responding to the NICB survey the answer lies beyond the narrow scope of tariff agreements. Finally, many executives say that all future efforts to reduce tariff barriers, to provide trade assistance to less developed countries, and to form more liberal trading groups will not bring about free and equitable world trade so long as disguised tariff barriers remain. JAN. 13, 1969 C&EN
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