President Carter's top trade negotiator Robert S. Strauss today told a gathering of world industrial leaders here that what is needed to improve the international economic outlook is "an expansion of markets, not trade wars or protective tariffs or quotas . . ."

In a strongly worded warning obviously aimed at domestic industries such as steel, electronics and chemicals, Strauss said such protectionist devices ". . . invite retaliation or shortsighted short-term solutions of saving jobs at home by keeping out products from abroad."

Strauss said he and President Carter "do not expect to ignore our own national economic problems, anymore than he would ask others to do." He added, "We must each develop jobs by opening markets - not closing them."

In a search prepared for delivery to the International Industrial Conference, Strauss reported generally on gains being made at international trade talks in Geneva. He also reported making gains in bilateral talks with such countries as Japan and Canada. The conference is a quadrennial meeting of 600 business leaders from 73 counties.

Strauss stressed that the United States will have to be open to free trade to achieve administration goals.

It is this nation's intention," Strauss said, "to negotiate firmly but widely, to seek free trade so long as it is fair, just and equitable and works both ways, to assure ourselves that the markets of the world are as open to our products and produce as ours are to theirs, and in turn, to see that we always go fully half way to meet our trading partners."

Strauss said there can be greater commerce among friendlier nations "if we will but set aside inordinate national demands."

Criticizing "the chronic inability and unwillingness of business leaders such as yourselves and political leaders in the United States and around the world to address and deal with the problems in a multilateral context rather than through narrow nationalist solutions," Strauss called on the business leaders to help set up a more progressive trading system.

He said that in the Tokyo round of trade talks, the U.S. is "determined that we shall move forward aggressively, yet sensibly, to achieve not only meaningful tariff cuts but also a substantial elimination of montariff barriers, up-to-date safeguards, improved customs procedures, and a full and understandable set of codes."

The speech is considered a strong redefinition of administration policies by international trade experts, who pointed out that Strauss earlier this year invoked Article 19 of the General Agreement on Tariff and Trade (GATT) to impose short-term quotas on imported color TVs.

Although the skilled political negotiator has been credited with achieving surprising results in the previously staid international trade talks, he has been under increasing pressure from several domestic industries and labor groups - most recently the chemical industry - to impose more import quotas in efforts to save jobs domestically.

But Strauss used a surprising quote from a speech originally prepared for delivery by Presidnet John F. Kennedy during his ill-fated trip to Dallas in 1963 to illustrate that the present domestic squabbling was "petty" when compared to ultimate international goals.

In that speech, which Kennedy did not live to give, he was to say, "Our duty is not nearly the preservation of political power but the preservation of peace and freedom. So let us not be petty when our cause is so great. Let us not quarrel amongst ourselves when our nation's future is at stake."