Reagan nominee sees danger in rising trade protectionism
Chicago — As President Reagan's newly nominated US special trade representative sees it, protectionism around the globe is on the rise -- and dangerously so. Clayton K. Yeutter, president of the Chicago Mercantile Exchange for the last seven years, says there has been more ``threat and bluster'' from governments during the last few years than action on the subject.
``But that alone is cause for concern,'' Dr. Yeutter says, ``because at some point nations may go beyond rhetoric and take steps that have short-term political appeal, but that they will perhaps ultimately regret.''
Still, Yeutter believes a trade war between the United States and Japan is unlikely to develop. Such a battle would not only be ``devastating'' to the relationship of the two trading partners but could set a precedent other nations would likely follow with ``intolerable'' results.
He says a new round of multilateral trade negotiations appears likely. In several past speeches he has said that the rules of the General Agreement on Tariffs and Trade must be strengthened if it is to work, but he deferred elaboration until Senate confirmation hearings.
Dr. Yeutter, who was the deputy US special trade representative under President Gerald Ford, describes himself as ideologically committed to the concept of free trade. But he says he also recognizes the importance of fairness and of furthering US interests.
Can Congress's impatience with overseas barriers to trade -- such as the prodding Capitol Hill is now giving the White House -- ever be useful in adding negotiating leverage? Yeutter offers one word: ``Sometimes.''
Referring frequently to the need for a ``level playing field,'' Yeutter says he supported President Ford's decision in 1974 to impose quotas on imports of Canadian cattle, hogs, and pork. The measure came after Canada had first banned shipments of US beef (because levels of a chemical in the beef exceeded Canadian regulations) and later imposed a one-year quota on US beef imports.
``We took precisely the action that was called for and the ultimate result was to open markets,'' he explains. ``I wouldn't call that retaliatory action. I'd call it neutralizing unfair trade practices.''
He is very much against the grain embargo -- if the purpose is to send a message, we need to find a better messenger. A long-favored concept of Yeutter's is a North American Common Market embracing both Canada and Mexico.
Yeutter recognizes the strong dollar's overwhelming impact on the flow of trade. But trade barriers must be dealt with, he says, no matter what's happening in international finance.
``Frequently exchange rate movements are much more important in determining trade flows than are trade barriers,'' he says. ``That's why it's so important to coordinate international trade policy globally with international finance or monetary policy. It's important for trade ministers and finance ministers to talk to each other and coordinate their policies.''
American industry, Yeutter says, has been forced both by the recent recession and the strong dollar to trim expenses and tighten operations and, as a result, is generally much better managed and more competitive than five years ago.
``If and when the dollar does decline in value, we could see our exports expand in a very dramatic way, providing these companies still have an export structure in place. Some have been disbanding their international operations . . . at the very time they might become profitable again.''
Concerning the dollar's special role as a medium of exchange, Yeutter says it would help the US and ease pressure on the dollar as the basic internnational currency if the world began to lean on other currencies such as the Japanese yen, the German deutschmark.
As it stands, the dollar derives its value not only from trade but as an international currency, making it difficult for the US to protect its self-interest.
Despite pressure from France and others to go back to something approaching a fixed rate system, this does not appear likely to happen.
Part of the problem, he admits, is that corporate executives face tremendous pressure to remove ventures that may be losing money temporarily, but which could be profitable in the long run.
``The Japanese consistently say, `You Americans always think of the short run, and we're in this for the long pull.' There's a lot of truth to that statement -- particularly in international trade.''
But Yeutter insists most US companies have not been export oriented.
They consider exports a secondary market, up for consideration only when domestic demand is off and inventories are piling up.
``Then they say, `Aha, let's find somewhere around the world we can move this stuff.' ''
The need, he says, is to look on exports as a primary market and to sell ``skillfully'' in every sense of the word.
``From my own experience in traveling around the world, we simply haven't done the total marketing job nearly as well as other countries, in many cases.''
Many of those who know Dr. Yeutter well or have worked with him say his past job experience, that includes having been assistant secretary of agriculture, has prepared him well for the job ahead.
Yeutter is also known to be a hard worker who often puts in 16-to-18 hour days.
``He's exceedingly energetic,'' says University of Chicago agricultural economist D. Gale Johnson, who has worked with him.
Leo Melamed, special counsel for the Mercantile Exchange, says he thinks Yeutter has just the right degree of toughness to give the job what it needs.
``He can be flexible when the job calls for that but he's not going to be anybody's pushover -- he's a tough negotiator.''