A Senate subcommittee, citing "slipping" U.S. competitiveness abroad, has recommended far-reaching collaboration between government and business to promote exports and reverse trends now adversely affecting trade, the dollar and employment.
Among the steps urged by the subcommittee on international finance is the creation of trade companies, exempt from federal antitrust laws to sell U.S. products overseas. These companies would have some similiarities to the giant Japanese trading house, which are a key arm of that country's foreign economic policy.
The subcommittee also urged the government to provide new tax incentives for industrial research, "to enable U.S. producers to match European and Japanese competition in third country markets."
"It is time to move beyond the traditional adversarial government-industry relationship and examine the possible gains from cooperative research institutes, funded by business and government, with university participation," the report said. It added that industrial research is now "hampered by barriers to cooperative research imposed by the government in the name of competition."
Subcommittee chairman Adlai E. Stevenson forwarded the report on March 8 to the Committee on Banking, Housing and Urban Affairs.
The report, which was based on 11 days of testimony by experts on the U.S. economy and trade, contained several major themes that have emerged as economic and balance of trade problems persist.
One is that federal regulation, such as antitrust laws that hamper consolidation of bids by American firms seeking foreign business, adversely affect U.S. industrial efficiency.
The other is that more direct U.S. government involvement in the economy is increasingly necessary for this country to compete against other countries whose governments operate trade monopolies or subsidize industry heavily.
In a telephone interview, Stevenson said the U.S. economy is "modeled on the behavior of markets and nations in the 18th century instead of on a world dominated by cartels and oligopolies."
"We can learn from the Japanese and others," he said. "We're not suggesting we replicate 'Japan, Inc., ' but our antitrust laws haven't been adopted to the global market that exists nowadays."
The Stevenson subcommittee report contained a warning that unless the United States acts quickly to expand its exports and strenghten its industry, the demands for more protectionist policies will increase and "formidable domestic political pressure can block trade liberalization efforts."
Government steps recommended by the subcommittee include establishing a new Department of Trade; improving information on foreign technology; revising the antitrust law to "expand the scope of permissible activities by export trade associations;" expanding export financing through the Export Import Bank and Commodity Credit Crop., and providing investment tax credits on research and development.
The report also noted "the biggest incentive to exports would be to reduce the many export restrictions and disincentives." It cited "export controls, antitrust, antibribery, human rights, environmental review and other restrictions not faced by our competitors."
"Congress should resist the impulse to restrict exports to countries whose internal or external policies do not meet U.S. standards and objectives, when restrictions would prove ineffective," it concluded.
The extensive hearings before the subcommittee described a generally unimpressive American economic position in the world during the past 15 years.
Since 1974, U.S. exports have grown only 1 per cent when adjusted for inflation. Moreover, the depreciation of the dollar, which is usually assumed to help exports, has had little favorable impact on the balance of trade, the report noted. Instead, Japan and the European Common Market have become more competitive despite the rising values of their currencies.