President Reagan said last night he will ask Congress for new negotiating authority, greater export financing, and higher subsidies, if necessary, to obtain a "fair shake" for American farmers and manufacturers who sell abroad.
In his State of the Union message, Reagan said the export financing provided by the federal Export-Import Bank must be strengthened, reversing his administration's opposition to greater funding for the bank during the past two years.
The president said that the United States must be "an unrelenting advocate of free trade," resisting attempts to raise barriers to the flow of goods between countries.
But at the same time he said the administration will pursue a more "aggressive" export policy to open doors now closed to American goods, ensuring that free trade works both ways.
One step would be an increase in the Ex-Im bank's authority to guarantee loans to developing countries, permitting them to purchase U.S. goods, Reagan said. And, if necessary, the administration will seek an increase in direct low-interest loans by the bank to counter credit subsidies by other nations whose exports undercut U.S. goods.
He also called for new, unspecified authority to negotiate improved trade opportunities in the export of high-technology goods and financial services to counter subsidized foreign exports that undercut American goods in world markets. He confirmed reports that he will seek a reorganization of federal trade agencies and changes in legislation that affect exporters. And he urged Congress to approve a modernization program for U.S. harbors to speed shipment of goods overseas.
While the president's remarks and a White House fact sheet issued yesterday spoke only in general terms about the new, "aggressive" export policy, high-ranking administration officials noted yesterday that the government is already on a tougher course.
The administration had announced last week that it would subsidize sales of wheat flour to Egypt to recapture what once had been a prime American market and to pressure Western Europe to drop its subsidies of farm exports.
U.S. Trade Representative William E. Brock said yesterday that this action will be repeated when necessary. "We simply decided we had to compete, and we will do it on any basis in which they members of the 10-nation European Economic Community chose to compete," Brock told a Senate Finance Committee hearing on American trade policy yesterday.
Repeating the administration's new strategy at a Capitol Hill luncheon, Agriculture Secretary John Block said "we have challenged the European Community practice which we consider to be unfair."
"This administration is going to be very aggressive," said Block, who last fall threatened to dump surplus American dairy products on the world market if Europe refused to end export subsidies. Block and Brock spoke at a luncheon given by Trade Net, an organization dedicated to increasing U.S. exports.
Egypt, the world's largest importer of wheat, will pay more than $150 million over the next 12 to 14 months for at least one million tons of American flour, which will fill about two-thirds of its needs. Previously, the Europeans had been supplying two-thirds of Egypt's wheat flour.
The Reagan administration will give American millers enough government-owned surplus wheat to bring the price down to world market levels of about $175 a ton--roughly $100 lower than the price of flour in the United States. Funds will come from money appropriated during the recent lame duck session of Congress to encourage agricultural exports.
Talks with European officials on the export subsidies dispute began in Washington this month, will continue next week in Brussels and are expected to be finished in March.
Brock said the action was meant "to make sure we have their the Europeans' attention." He emphasized, though, that it was not meant as a confrontational act or the start of a trade war, which he said "would be a disaster for all of us."
Brock indicated the United States might take similar steps with other commodities to undercut the Europeans while the talks over export subsidies continue. He refused to be specific, but nongovernment agriculture trade experts predicted either dairy or poultry sales would be next.
Finance Committee Chairman Robert Dole (R-Kan.) applauded the subsidized sale to Egypt and suggested that poultry or soy bean oil should be sold next.
I'm not suggesting we get into a trade war," he said. "But I believe it is necessary to serve notice in ways such as this. If we send the right signals, then we can have some real negotiations with the European Community."
Sen. Walter D. Huddleston (D-Ky.), ranking minority member of the Senate Agriculture Committee, agreed: "We've got to let the rest of the world know the United States will aggressively pursue world markets and will not be a patsy any more."