ECONOMIC

arrangements which are designed to protect consumers in producing countrieswhen excessively large exports threaten to disrupt domestic marketsin producing countries.Pending Trade LegislationIn order for the United States Government to be able to make such farreachinginternational commitments on trade practices and policies., it isnecessary to obtain public backing and the appropriate legislative mandate.Two approaches were considered early last year. One approach would be firstto negotiate preliminary agreements with other countries, and then on thebasis of such agreements to seek the necessary legislation. The other approachwould be first to seek a broad enough legislative mandate to covernegotiating outcomes that could be foreseen and a procedure for congressionalparticipation where negotiating outcomes could not be foreseen, andthen to negotiate an agreement within the context of that legislative framework.The second alernative was chosen both because other governmentscould not be expected to put forward their maximum concessions if U.S.offers did not have the explicit support of the Congress, and because itwould make possible more active participation of the Congress in an areawhere congressional prerogatives have traditionally been strong.Accordingly, last April the President sent draft legislation to the Congress.After extensive hearings, the House of Representatives approved a bill thatwould provide the necessary authorities to negotiate both a comprehensivereform of the international trading system and increased access to foreignmarkets and supplies. It would also significantly improve the managementof U.S. trade policy on a day-to-day basis. In the coming months the Senateis scheduled to consider this legislation.Congressional passage of trade legislation has become more importantthan ever because of the strains that the massive increase in international oilprices is likely to place on the international trading system in the comingyear. All countries will be under pressure to reduce their imports and toexpand their exports to pay for the increased cost of oil, even though alloil-consuming countries together will not be able to improve their tradebalance by more than the oil-producing countries are prepared to increasetheir imports. Given the large increases in oil revenues and the small populationsof most oil-producing countries, only a fraction of such revenues is likelyto be spent on goods in the short run. At the same time, a number of keyproducts could be in short supply at current price relationships, and thiscould induce new international competition for such supplies. In order tonegotiate effectively with other countries on the resolution of some of theseproblems and in order to protect U.S. economic interests in the absence ofsuch agreements, a new legislative mandate is urgently needed.The draft bill before the Congress would improve the President's abilityto manage U.S. trade policies in several respects. It would give the Presidentlimited authority to impose a temporary import surcharge or other import218