Anyone who thinks the U.S. auto industry is not dynamic hasn't been paying attention.

In the first half of this decade, we went through the wringer. In 1980, the little girl with the lemonade stand down the street made more profit than all of us -- GM, Ford, Chrysler and AMC -- together. The four of us lost four billion dollars that year.

Now, how did GM respond? We began the decade by announcing a 5- year worldwide program to redesign our vehicles and modernize our assembly plants. Since then, we have invested about $40 billion in new plants and equipment in the United States alone.

There is no industry in America more involved in computers and robotics. GM has joined with Japan's Fanuc in a joint venture to produce robots in the United States. In November, Electronic Data Systems became a part of General Motors, bringing its well-known skills in computer utilization to bear on everything from automotive design and manufacture to employee health-care programs. And, on the very frontier of high-tech production techniques, we are now involved with several companies pioneering in machine intelligence.

At the same time, we have returned to healthy profitability, without which none of the above is possible.

And anyone who says competition in the U.S. car and truck market hasn't been tough during this period hasn't tried to make a living in that market.

Frankly, the toughest competition has come from Japan. In recent years, this competition has been affected by government regulations -- the voluntary restraints suggested by the U.S. government and administered by the Japanese government on Japanese car exports to the United States. These were put in place in April 1981 with the assurance that they would probably last only a year or two and certainly not more than three. But they are still with us -- the fourth full year ends March 31.

To be clear, while GM did not ask for these regulations, we did believe the Japanese government was wise to take action that would reduce the pressure for legislated protection. We have always opposed the kind of protectionist legislation that triggered the trade wars of the 1920s, which, in turn, did so much to push the world into the depression of the 1930s. Japan's voluntary restraints helped avoid such a reaction during the recession of the early 1980s.

During the first year of these restraints, there was not much impact on the U.S. market -- the recession took care of that. But as our economy came back, the restraints began to affect the customer. Today we think these effects are less than some analysts have guessed, but we also think it is time to remove trade barriers -- not build them.

So let's drop the restraints and get on with slugging it out in the world marketplace. The discipline of worldwide competition not only can assure that customers have access to the best products at the best prices, it also speeds up the pace of technological innovation and industrial modernization, which means growth and more and better jobs.

No doubt, some people will say GM wants "free trade" for reasons that serve our own interests. Again, to be clear, we do have programs to bring in from Japan some small, very fuel-efficient, low-priced cars -- in limited numbers; if we had brought in all the cars we had in our plan for this year, they would amount to around only 4 percent of our car sales.

On the other end, the Japanese government must find the will and the way to open up its domestic market to U.S. manufacturers. There are too many examples of resistance to competition in everything from high tech to agriculture and services. With a U.S. trade deficit around $125 billion for 1984, nobody can ignore the consequences -- or the causes. We have our own responsibilities, but the people we trade with must also get smarter about theirs.

Concrete, specific actions must be taken by our trading partners, and U.S. negotiators must insist on them. A way must be found to correct the overvalued dollar, accelerate economic recovery abroad and restore the buying power of this country's best customers overseas.

Will we maintain our U.S. industrial base? We intend to do better than that. We intend to strengthen it.

Our Saturn Corporation, eventual- ly with assets of $5 billion, will build and operate -- in the United States -- its own new, highly integrated manufacturing and assembly complex. It will use new technologies in prod- uct and processing and will have separate franchises and a separate labor contract, using concepts worked out by a joint GM-UAW task force. Nothing will be more important than the continuing enlightene and cooperative spirit of the UAW and its members.

We don't need subsidies or protection. We do need the opportunity to work hard and work smart under fair rules. With that, I am confident about the future of our U.S.-based auto industry.