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International Economic Report of the President [Fact Sheet]
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7343062
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International Economic Report of the President [Fact Sheet]
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White House Press Releases (Ford Administration)
Press Releases
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1976-03-17
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1976
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Digitized from Box 23 of the White House Press Releases at the Gerald R. Ford Presidential Library
[3-17-76]
COUNCIL ON INTERNATIONAL ECONOMIC POLICY
WASHINGTON, D.C. 20500
FACT SHEET
INTERNATIONAL ECONOMIC REPORT OF THE PRESIDENT
The fourth International Economic Report of the President, together
with the Annual Report of the Council on International Economic Policy,
was signed by the President and submitted to the Congress today. The
Report describes the Administration's' international economic policies,
reviews the international economic events of 1975, and studies the major
international economic issues to which the Administration's policy
responds.
The commencement of economic recovery in 1975 from the most severe
post-war recession was the single achievement of the Administration's
economic policies, overshadowing even the major related economic issues
of high energy costs and international monetary reform. The United
States was the bellweather nation in the gradual world economic recovery
and used its leadership position to work for new trade agreements, new
food, energy and commodity relationships, and the reform of international
lending and credit institutions.
Highlights of the progress achieved by the United States in its interna-
tional economic position in 1975 are listed below.
PROGRESS IN 1975
The U.S. economic recovery began in the second quarter with
real GNP rising at a 3.3 percent rate, following a first quarter
decline at a 9.2 percent annual rate. In the third quarter
the rapidly recovering economy expanded at a 12 percent rate.
This rate slowed in the fourth quarter to 5.4 percent.
-Inflationary price increases, still high by historical standards,
moderated from the 1972-74 rates. Consumer prices in the United
States rose 9.1 percent and wholesale prices rose 9.2 percent.
Higher prices for energy and energy related materials contributed
significantly to these price rises.
The trade balance, in deficit by $2.3 billion in 1974, reversed
dramatically in 1975 to produce a record $11.1 billion surplus.
This #13.4 billion swing was the largest in our history. Ex-
ports of manufactured goods gre at a 11.7 percent annual rate.
Agricultural products continued their important contribution
to U.S. exports with total foreign sales in 1975 at a record
$22 billion level.
-2-
-During the course of the year the dollar appreciated in terms of
nearly all major foreign currencies. On a trade weighted basis,
the value of the dollar at the end of 1975 was 5 percent above the
close of 1974, and also about 5 percent above its level at the
beginning of generalized floating in March 1973.
-Responding to the economic demands and needs of the less developed
countries, the United States set forth some 40 specific initiatives
at the UN Seventh Special Session in September 1975. The IMF
partially responded later in the year through a major liberalization
of its Compensatory Finance Facility. Other U.S. proposals
remain under discussion.
The passage of the Energy Policy and Conservation Act represented
the first important step toward implementation of the comprehensive
national energy policy called for by the President in January 1975.
Internationally the Administration pursued its energy policies
in a number of forums, with particular focus on the International
Energy Agency's implementation of its International Energy Program.
It also submitted to Congress the agreement reached with all other
OECD members for a financial Support Fund designed to encourage
cooperation in energy and economic policy.
The United States negotiated a long-term grain sales agreement with
the Soviet Union in order to regularize that country's previous
unpredictable and massive interventions in the U.S. grain market.
The President met with the heads of the governments of France,
Federal Republic of Germany, Italy, Japan and the United Kingdom
at Rambouillet, France, where agreement was reached on new co-
operative efforts in the areas of world trade, monetary matters,
and raw materials, including energy.
Work toward major reforms in the international monetary system
went forward throughout the year. Early in 1976 the IMF's
Interim Committee reached agreement on amendments to the IMF
Articles of Agreement with respect to quotas, exchange rates,
and the role of gold. These negotiations produced the first
major revision of the international monetary system since the
Bretton Woods Conference.
The United States continued to provide strong leadership at the
Multilateral Trade Negotiations in Geneva, with the Discussions
gaining momentum throughout the year. The goal is to reach
by 1977 a successful conclusion to these negotiations to reduce
trade barriers and improve the world trading system.
While establishing methods to monitor the flow of foreign
investments into the United States, the U.S. policy on inter-
national investment remains fixed in the belief that a free
-3--
market system without artificial barriers or incentives leads
to the most efficient allocation of capital in the world
economy.
CHALLENGES TO PROGRESS: NEW AND OLD
1. Agriculture Trade and Food Reserves
The long-term international food policy objectives call for
freer trade, increased production of agricultural products,
and a reduction in the rate of population growth as the best
means of dealing with the world"s food problems. In response
to more immediate short-run problems, the United States has
pledged $200 million to the International Fund for Agric-
cultural Development, provided that donations by other countries
raise the total to at least $1 billion. Domestically, the
Administration is pursuing a policy of full agricultural
production.
The United States proposed to the International Wheat Council
the establishment of an international grain reserve system
consisting of 30 million tons of food grains.
2. Raw Materials Supplies
The falloff in demand for industrial raw materials in 1975
shifted world concern away from the shortages problems of 1973
and early 1974. This rapid shift in focus highlights the
cyclical nature of raw material markets and prices and the
consequent impact upon developing countries dependent upon
certain commodity exports for foreign exchange earnings.
Though the United States is a resource-rich nation and also
has established a viable materials recycling industry, it
remains dependent on imports for its supply of a number of
essential industrial commodities. This has led to an interest
in commodity agreements for both price stabilization and supply
access. Through 1975 the Administration studied commodity
agreements generally and for six selected nonfuel minerals.
It concluded that the United States' free market policy did not
preclude the maintaining of its position of willingness to
consider participation in commodity agreements on a case-by
case basis.
3. Energy Supplies
The interdependence of the world's economies is nowhere more
evident than in the supply and price of energy supplies,
particularly oil. Awareness that energy issues fully engage
the economic and political interests of both consuming and
producing nations grew throughout the year. The consuming
nations have begun the process of forging a cooperative energy
program through the International Energy Agency, while consuming
-4-
and producing nations from both the developed and developing
world have commenced a dialogue in the Conference for
International Economic Cooperation. Though international
concern is now focused on petroleum, it is obvious that the
development of alternative, non-fossil, energy resources and
technology will become increasingly important to all nations.
4. Sound Economic Growth
--Though concern continues about the problems of inflation and
unemployment, the underlying fact is that the U.S. economy
is steadily growing healthier. Domestic and international
economic policies are intended to keep the country on an up-
ward path. Another measure of the underlying strength of the
economy are the large number of potentially serious economic
problems that did not materialize in 1975: there was no finan-
cial crisis, the recession did not snowball into cumulative
depression, the price of bread and gasoline did not rise to
a dollar as direly predicted, and the economic difficulties
did not produce corrosive social unrest. The essential
Administration policies to achieve sustained economic
progress call for strengthening the private sector through
Federal budgetary restraint and the refunding of budget savings
to taxpayers by means of tax cuts. Further, it views programs
to cushion unemployment as only temporary remedies as it seeks
to restore the vitality of priate industry where five out of
six American workers are employed today in good, productive
jobs. Finally, it seeks to promote healthy economic growth
and a vigorous private economy by eliminating those government
policies and instittutions that raise prices or interfere with
competition.
These policies focus primarily on the economy of the United
States, but the Administration clearly recognized that the
country's range of economic interests do not stop at its shores.
It is providing leadership to the other major economies of the
world in their recovery from recession and in their priority
efforts to achieve sustainable, non-inflationary growth.
OTHER ISSUES
Other sections of the Report examine East-West trade, inter-
national investment patterns, labor comparisons, the multi-
national corporation, export promotion and controls, air trans-
port and ocean shipping, the impact of technology transfer,
international environmental problems, and the developments in
1975 of a Law of the Sea.