Tariff, trade, and jobs issues wait for Reagan in the Oval Office
One of the major "hot potatoes" President-elect Reagan will inherit from his predecessor is the "automobile problem," and he will be obliged to deal with it at the very outset of his administration.
It poses tough questions in both foreign and domestic policy -- namely, should imports of automobiles from Japan be restricted and should the decision to restrict or not to restrict be the sum and substance of his concern with the crisis of the domestic automobile industry? There is enough in this single issue to curtail severely the "honeymoon" period of his presidency and enough to set a standard for the kind of leadership the country can expect from the new regime.
The International Trade Commission (ITC) recently found that imports of automobiles were less important than other factors as a cause or threat of serious injury to the US automobile industry. It found that the industry was suffering mainly from the depressed state of the economy and from its own delay in mass producing the small fuel-efficient cars which consumers almost overnight decided they preferred over the "gas-guzzlers" to which they had long been accustomed. The commission therefore decided (by a vote of 3 to 2) that, under current statutory standards, restriction of auto imports was not justified.
However, there was strong support in the outgoing Congress, and there will be strong support in the incoming Congress, for some form of automobile import control, preferably through negotiation of a so-called "orderly marketing agreement."
The "lame duck" Congress came close to passing a resolution authorizing the president to negotiate such an agreement that would require Japan to reduce substantially its shipments of cars to the US for several years without the pact running afoul of US anti-trust laws. Such a resolution over-whelmingly cleared both the House of Representatives and (with an amendment) also the Senate Finance Committee.
Only the preadjournment logjam in the Senate prevented further action. Smooth sailing for such a measure early in the new Congress appears quite likely. If it passes, the new President would not technically be compelled to seek such a pact, but his ability to resist the pressure from Congress and the automobile industry (management and labor) would test his skills as a national leader, particularly if he himself is opposed to curtailing the imports.
It may be noted that if the Congress confers upon the president authority to negotiate "an orderly marketing agreement with Japan," it really is instructing him to "twist Japan's arm" hard and long enough so that it would curtail automobile exports to whatever level the President insists. A question might be raised about the propriety of such conduct on the part of the US in dealing with its second largest trading partner -- and one that contributes substantially to our country's profitable outlet for large quantities of wheat, cotton, soybeans, tobacco, and a host of other products that provide gainful and much needed employment for large numbers of residents of this country.
The automobile-imports issue will also provide an immediate test of the President's concern with inflation (import controls would be highly inflationary), with unemployment (import controls would do little for the vast numbers of unemployed in the automobile industry), and with the real problems of this major industry (problems which import controls of whatever variety would not address).
To lay the foundation for a coherent national policy on this critical issue, President Reagan should immediately:
* Ask the ITC and appropriate executive agencies to produce within 30 days an up-to-date assessment of the domestic market for automobiles and the position of the domestic auto industry in that market.
* Make clear his determination to address the plight of the domestic industry within the framework of a compehensive strategy to develop an efficient national transportation system immune to damage from the loss of foreign oil. He should assess the defense implications of the auto industry's malaise, and how best to protect any defense stake in the industry's viability -- a subject not even addressed in the ITC's investigation.
Rapid development of a rational, efficient, fuel-conserving transportation system -- including high-speed electric trains as the main links between cities less than, say, 500 miles apart -- would lessen the use of automobiles and airplanes for such trips, thus saving oil-based energy.
Development of a rational transportation system would also generate new job opportunities for automobile workers whom declining auto production and rising automation have cast adrift.
The plight of those workers merits the earnest attention of government and, if necessary, remedial action at public expense. The trade adjustment assistance program does not adequately meet the needs of these displaced persons. For example, it does not ensure their reemployment in jobs equally remunerative.
The most technologically advanced trains in the world -- which were supposed to be operating between London and Glasgow by now, but have been rescheduled to begin in May, 1981 -- will ordinarily travel at 125 miles per hour though capable of going 160 mph. The fastest trains between Washington and New York City travel at 60 mph. When on schedule, they make the 225-mile run in 3 hours and 45 minutes. At 125 mph, a train would make the same trip in 1 hour and 48 minutes, from midcity to midcity.
Quick and convincing action by the Reagan administration to deal responsibly with the auto crisis along lines that advance the total national interest would counter, perhaps defuse, pressures for simplistic, counterproductive measures like trade restrictions. It would invite congressional and public attention to needed rebuilding, perhaps redesigning, of the auto industry and remodeling of the overall transportation system. To restrict auto imports, or not restrict them, is not the whole question. It is not clear, however, that the country, and more particularly the government itself, has as yet grasped this reality.