CHEMICAL & ENGINEERING
NEWS
NOVEMBER
2,
1964
Relief, Concern Follow Britain's Import Curb U.S. officials see 15% surcharge on imports as mild step; nearly all U.S. chemical sales to Britain will be affected
Wide World Photos
WASHINGTON. Foreign Secretary Patrick Gordon Walker (right), in Washington last week with Secretary of State Dean
A sigh of relief could almost be heard rising from official quarters in Washington last week as Britain's new Labor government revealed its plans to bolster the United Kingdom's economy. Half expecting to hear the worst, U.S. officials were eager to applaud the relatively mild measures set up by Labor. But U.S. industry, and certainly the chemical segment, found little to cheer about. While most of the new government's internal economic moves will not be felt beyond Britain's borders, one action—the temporary 15% surcharge on all imports—will affect nations around the globe. About half of all U.S. exports to Great Britain will be subject to the 15% levy. And nearly all U.S. chemical exports to Britain will be hit by the surcharge. According to the economic statement released last week, "foodstuffs, unmanufactured tobacco, and basic raw materials" will be excluded from
Rusk, would not commit himself during a press conference on how long Britain will maintain the new 1 5 % surcharge
the surcharge. A close look at the itemized list realeased by the Labor government shows little that will hearten U.S. chemical producers. The only chemical items specifically excluded are salt, sulfur, and lime. Mineral fuels, mineral oils, and products (covering mainly unrefined petroleum products) are also excluded. Besides a host of foodstuffs, various metals and metal products round out the exceptions list. Payments Deficit. The surcharge imposed by the Labor government is aimed at a tough and persistent problem facing the United Kingdombalance of payments. This year the Labor government estimates that its balance of payments deficit will probably be more than $1.96 billion. By 1965 the deficit may well reach $2.24 billion. This, says Labor, ". . . calls for immediate but strictly temporary action, drastic at first, but less so as both the immediate measures
and the longer-term policies begin to take hold." U.S. industry exported some $1.4 billion worth of goods to the United Kingdom in 1963. Roughly half of current exports will be subjected to the 15% surcharge. Some $115 million worth of chemicals were exported from the U.S. to Britain in 1963. Figures for the first six months of 1964 indicate a record year for chemical exports to Britain. However, the surcharge is sure to act as a forceful brake. Organic chemicals and plastics account for the two largest chemical categories which the U.S. exports to Britain. In 1963, plastic exports came to about $35.5 million and exports of organic chemicals came to about $18.6 million. While U.S. chemical exports are sure to be hurt by the surcharge, British exports are getting a shot in the arm from other moves. A scheme will NOV.
2, 1 9 6 4
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be set up to repay British exporters for certain indirect taxes which enter into the cost of producing exported goods. Details will be announced before the end of the year, but the government has already said that a rebate of about 1.5% will be paid to exporters of certain types of products.
Long-Term Remedies.
While the
surcharge and rebate are short-term remedies, the government has also put into motion some machinery for the long term. A Department of Economic Affairs has been set up ". . . t o ensure that everything is done to develop those sections of the economy which are needed to expand exports, replace avoidable imports, and to strengthen our industrial base." Also, the new government has set up a Ministry of Technology ". . . to accelerate the process of modernization and innovation by stimulating a more rapid application of scientific and technological advances to British industry." However serious the action by Britain^ Labor Party, the U.S. Government is apparently more relieved than concerned over the moves. Early last week British Foreign Secretary Patrick Gordon Walker met with Secretary of State Dean Rusk, Secretary of the Treasury Douglas Dillon, and other U.S. officials in Washington. Following the talks with Secretary Dillon, Treasury issued a statement appraising the moves. While admitting that a surcharge will have an adverse effect on U.S. trade, Treasury says, ". . . there is no painless corrective, either for the United Kingdom or for the rest of the world. . . . The United States welcomes the British determination to reduce and remove these import charges at the earliest opportunity." Herein lies the key to the full effect of the move: How long will the surcharge be maintained? The new Foreign Secretary would not commit himself when asked this question last week at a Washington press conference. Labor has said, though, that the surcharge will be reduced as soon as the balance of payments situation permits and will be abolished at the earliest opportunity. Initial reaction in Europe is mixed. Britain's largest chemical firm, Imperial Chemical Industries, believes that it will gain in the short term. But the company has doubts about the long-term effect because of possible retaliatory measures. 26
C&EN
NOV. 2. 1964
House Committee Urges Wider Distribution of R&D Funds Says Government should funnel R&D money to research-poor areas The uneven geographical distribution of federal research and development funds is a serious problem and something should be done about it. This is the conclusion of a subcommittee of the House Committee on Science and Astronautics headed by Rep. Emilio Daddario (D. -Conn.). The distribution pattern that has developed in the past several decades appears to be the result of natural forces, Rep. Daddario says. However, steps should be taken to give all parts of the nation "the technological and scientific quality essential to the welfare of the people." The committee recommends a number of steps to improve the geographical distribution of federal R&D funds. However, it warns, remedies must be carefully chosen so as not to detract from or penalize institutions and areas which have built the kind of research competence that attracts federal grants and contracts. Remedies. The first step in solving the problem is to call a White House conference of government and industry representatives, the committee says. Goal of the conference would be to explore ways and means of distributing federal R&D funds on a more even geographic basis by identifying neglected technical capability in research-poor areas. The committee also believes the conference should look into broadening the subcontracting patterns of nonprofit organizations doing government research. One of the best ways to distribute the research dollar more evenly is to develop new centers of excellence, the committee says. It recommends that the Office of Science and Technology—with advice from the National Science Foundation, National Academy of Sciences, and educational and engineering societiesestablish criteria for identifying universities and other nonprofit organizations which seem to have the most immediate potential for growth into first-rate centers. Government agencies could channel research programs to these institutions where this could be done without seriously weakening the agency mission. Existing federal programs designed to expand the national base for science
and technology should be devoted where possible to building up institutions which appear on the verge of developing into centers of excellence. Such programs are the training grants and facilities program of the National Aeronautics and Space Administration, the National Science Foundation program for institutional development, and the matching facilities grants program of the National Institutes of Health. The committee wants NSF to earmark more money for its program of developing new centers of excellence. The goal should be to ensure the existence of at least one major center of excellence in each region. And the committee wants such agencies as the Defense Department and NASA to use their R&D contracts to develop new science centers as a hedge against obsolescence of facilities in research-concentrated areas. In addition, the committee recommends that the Government develop long-range programs, such as the 10year oceanography program, in major research areas. These would include environmental pollution, water resources, weather modification, water desalinization, and various social sciences. The committee believes that new programs of this type can be started without depending too much on the usual technical centers. Problems. Any program aimed at a more uniform geographic distribution of federal research funds could be dangerous because it could degrade the quality of the research desired by government agencies. As a result, the committee recommends that any immediate or short-range attempt to redistribute funds should be aimed at making more use of firstclass institutions that are not now heavily involved in federal research programs. Some people doubt that channeling federal R&D funds into research-poor areas would have lasting value. The committee agrees, but it believes that without such a center the long-range economic health of a community will suffer. The committee believes that federal aid is needed to stimulate action in research-poor areas. Without this stimulus "slow progress will be made in the development of new centers of excellence in research with the result that existing centers will tend to become larger at the expense of other regions of the country," it says.
