Treasury Secretary W. Mitchael Blumenthal yesterday said that the Carter administration will "resist" the spread of import quota restrictions to many more industries.
The United States recently concluded so-called "orderly marketing agreements" OMAs) with Japan on color TV sets and other Asian nations on shoes sharply limiting exports to this country.
In his first general press conference since becoming Secretary, Blumenthal defended the agreements on TV sets and shoes as necessary to ward off more drastic protectionist measures.
But he acknowledged that "any restriction (on imports) is a deviation from open trade principles," and added, "we would like to see the spread (of OMAs) to other industries."
Blumenthal admitted that the United States is running such a large trade deficit that "people get concerned" when they see the numbers. He estimated that the deficit for this year would be $23 to $25 billion compared with $9.2 billion last year.
That is $2 billion more than the deficit estimate Blumenthal made just last week in Japan. But he again insisted that the U.S. competitive position is strong and that, as other major economics improve, U.S. exports will increase, narrowing the deficit. The major reason for the large deficit is the mounting oil bill which is expected to hit $41 billion this year.
Blumenthal once again stressed that Japan as a major industrial power, must play a role in "sharing" the worldwide balance of payments deficits caused by high oil prices. Blumenthal broadly intimated that Japan should let the exchange rate of the yen more higher. That would tend to move the Japanese from surplus into deficit by making their exports more expensive.
He also said it is urgent for the International Monetary Fund to add to its resources through a special fund to be made up in equal parts by members of the Organization of Petroleum Exporting countries and the industrial West, and through enlarged deposits (quotas by member countries.)
The Secretary made these observations or comments on other topics:
He would prefer to see the banks' prime interest rates move down rather than up, but "would be quite satisfied to let market conditions" take care of the recent rise. This represented a softer approach to higher bank rates than that of Office of Management and Budget Director Bert Lance, who said Wednesday they were "unjustified." If the increase is not warranted, we will "quickly" find out, Blunmenthal said.
The tax reform process is moving slowly, and it will be some weeks before basis decisions are made. Blumenthal said he hoped that tax reform would include real simplification, assure that everyone pays a fair share of taxes, and said some incentives would be provided to induce new capital formation. A reduction in both personal and business taxex is one "alternative" way of accomplishing the latter, he said in response to a question.
Although both non-food and food price increases will abate in the second half of the year, the annual rate of inflation around the end of the year will be 6.5 per cent, instead of the 5 to 6 per cent range forecast earlier by the administration. That's "too high," but at least is lower than the 10 per cent annual rate for the first four months, Blumenthal said.
Administration talks with labor and management to find elements of an anti-inflation program on which there could be "joint action" won't produce concrete results until the end of the summer, or in September.
Among other treasury re-organization details, Blumenthal announced that the offices of the Treasurer of the United States and the Director of the Mint would be combined.
(In Atlanta, Charles Schultze, chairman of the Council of Economic Advisers, told the National Association of Business Economists that the economy is steadily moving toward a balanced budget in four years.)
["The chances are good that the American people can enjoy a long period of stable and sustained economic growth," United Press International quoted Schultze as saying.]