This Copy For

NEWS CONFERENCE

#1718

AT THE WHITE HOUSE

WITH JERRY WARREN

AT 12:02 P.M. EST

APRIL 17, 1973

TUESDAY

MR. WARREN: We have one change on the schedule today, as we had posted it. The meeting with the President of the Kiwanis International will take place tomorrow at 12:15. The rest of the schedule is as posted.

The President began his meeting with Prime Minister Andreotti at 10:32.

This evening, at 8:00, there will be a black tie dinner in honor of Prime Minister and Mrs. Andreotti and Jack D'Arcy will be talking with the photographers about the coverage of that. We have a pool. I think that has been posted by the East side on coverage tonight.

Tomorrow the President will meet with Bipartisan Leaders from the House and the Senate at 8:30 in the morning, in the Cabinet Room, to discuss the President's Message to the Congress on energy, which will be going to the Congress tomorrow at noon. We will brief here at 9:30 tomorrow. We will have Secretary Shultz and Charles DiBona, who is Special Consultant to the President, to discuss the Energy Message with you. We hope to have the Message and the fact sheet available here at 8:00 in the morning.

Following the briefing here tomorrow at 9:30, William E. Simon, Deputy Secretary of the Treasury and Chairman of the Oil Policy Committee, will hold a briefing for technical writers and others who are interested in room 450 of the Executive Office Building.

Q What is the time on that?

MR. WARREN: That is dependent on the length of the time of the briefing here.

Q I am unclear. Do you mean this will be right after the Shultz-DiBona briefing?

MR. WARREN: That is correct. After the briefing finishes here, those who are interested in the more technical aspects of the Message and the bills can attend that briefing.

Q Where should these people get clearance, Jerry?

MR. WARREN: The best way to get clearance would be through the Treasury Department and they can present us a complete list for the EOB.

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Q Will we have time to study this?

MR. WARREN: Of course you will.

Q Will there be the usual general subject briefing at 11:00?

MR. WARREN: Yes, or thereabouts.

Q Is there any special clearance, if a man has a White House pass and all of that, will he need special clearance for the second briefing?

MR. WARREN: No, we will make arrangements so that people with White House passes do not need clearances for the second briefing.

At 11:00 tomorrow, the President will have the second meeting with Prime Minister Andreotti of Italy.

I have very little I can tell you about the meeting this morning. It was still going on when I came out. There will be a more detailed report for you tomorrow, following the second meeting. So the briefing probably, John, will be delayed until after that meeting tomorrow. It will be more like 12:00.

Today, of course, I can tell you that the President wishes to and is discussing with the Prime Minister, U.S.-Italian relations within the broad framework of the NATO alliance and of our common political goals. In the talk today and the talks tomorrow and the discussions this evening at dinner, they will cover political security and economic issues involving the United States and Western Europe, as well as other international issues of mutual interest, such as East-West relations, the energy problem, the situation in the Mediterranean and in the Middle East.

And as I said, tomorrow there will be a more detailed report for you on that.

Q There won't be a communique, will there?

MR. WARREN: No, I don't expect a communique.

We have just a couple of other announcements for you.

Q When you say a more detailed report, do you mean a joint statement or communique?

MR. WARREN: No, I don't expect a communique, but I expect Ron will be able to give more information, obviously, after the two-day series of talks ends.

The President today is announcing the appointment of eight Members of the Board of Directors of the Pennsylvania Avenue Development Corporation, which was created by law last October. You have a release which spells out the individuals and the terms that they will serve. They are compensated at the rate of $138 a day when the Board is meeting.

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Also, today, the President is accepting with special regret and with deep gratitude for his contributions to the fight against drug abuse, the resignation of Paul L. Perito as Deputy Director of the Special Action Office for Drug Abuse Prevention. For the past year and prior to that Mr. Perito served as General Counsel and Assistant Director of the Special Action Office. We do not have a successor to announce today, but we hope to have one in the near future for you. Mr. Perito plans to return to private life.

Q Which office is that?

MR. WARREN: This is Dr. Jaffe's office, Ted.

Those are the announcements we have for you this morning.

Q Jerry, we might as well try the Watergate thing again. To start back at the beginning, can you tell us who John Mitchell saw here last Saturday?

MR. WARREN: No, I can't, Bob.

Q Can you tell us why you decline to tell us whom he saw?

MR. WARREN: Well, I frankly don't know whom he saw. I haven't been able to check every office in the White House, but I just don't know who he saw.

Q With all due respect to the problem of checking every office, all that needs to be done is that someone go to the Southwest Gate police and ask them who cleared Mr. Mitchell through the Southwest Gate. Could that be done?

MR. WARREN: I appreciate that, but I just don't have that for you this morning.

Q Are you saying you simply won't tell us?

MR. WARREN: I am saying I simply have no information on that this morning.

Q Jerry, we asked you Sunday, and again yesterday and again today. Can't we get something more clearcut than "I don't know."

MR. WARREN: I just don't have anything for you this morning.

Q You keep saying "this morning." What about this afternoon?

MR. WARREN: This morning or this afternoon.

Q Didn't you say yesterday he did not see the President?

MR. WARREN: That is correct, he did not see the President.

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Q Jerry, maybe you could tell us what offices you have checked?

MR. WARREN: I am sorry, I can't do that, Gene. And I just don't have anything for you on that this morning or this afternoon.

Q Is the President planning to make an announcement of some kind on the Watergate affair?

MR. WARREN: I am sure you are referring to a
Los Angeles Times story that was carried widely this morning.
I just have no comment on that story at this time.

Q You haven't answered his question.

MR. WARREN: I don't have any comment on that story at this time.

Q He didn't ask for a comment on the story, he asked if the President was going to make any comments on the Watergate affair?

MR. WARREN: I have no knowledge of any plans for the President to do that. I just have no comment on the story.

Q Jerry, is it still the White House position that no members of the staff were involved in any way in the Watergate incident?

MR. WARREN: I have nothing to add to what has been said before and I have no comment on that this morning.

Q Does what has been said before still stand?

MR. WARREN: I just have no comment this morning.

Q Has the President conducted a subsequent investigation after the John Dean investigation to determine whether any White House aides were involved in political espionage activities?

MR. WARREN: Gene, let me say this about that question and all others on this subject. I just have nothing to offer you this morning on the entire subject.

Q Will the President be having a press conference?

MR. WARREN: I know of no plans for a press conference.

Q You are hinting "this morning," "at this time," et cetera, that you might have something later, but these are very legitimate questions.

MR. WARREN: I am not questioning that, Helen. I just have nothing to provide you at this briefing.

Q Is the expectation that these questions would be raised the reason Mr. Ziegler isn't briefing today?

MR. WARREN: No, it is not the reason he is not briefing.

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Q Is he in a meeting?

MR. WARREN: Yes, he is in a meeting.

Q Concerning Watergate?

MR. WARREN: I can't give you the subject of the meeting, but he is in a meeting.

Q Who has given you your instructions not to say anything about it this morning?

MR. WARREN: Jim, I can't discuss with you who I talk to before a briefing-I think you can understand that--or who I don't talk to.

Q Can you tell us if Mr. Mitchell was here both in the morning and the afternoon on Saturday?

MR. WARREN: I can't. I believe he was here in the afternoon.

Q Can you check the time, how long he was in the White House?

MR. WARREN: Sure.

Q Is Mr. Dean still working here?

MR. WARREN: Yes, indeed.

Q I don't know if you recall, but maybe you can recall for me, did his report get to the bottom of who actually started the Watergate thing or was it simply a broad brush finding out if anyone was involved?

MR. WARREN: Helen, I must tell you I am not in a position to offer you anything on this subject at this briefing.

Q Did you say you were denying the L.A. Times story?

MR. WARREN: I am saying I have no comment on the L.A. Times story and I have no information to provide you today.

Q Do you expect a second briefing today?

MR. WARREN: No, I don't. We will post at 3:00.

Q Do you have anything to say about the bombing in Laos?

MR. WARREN: You know we expressed our concern yesterday over the violation of the Laos cease-fire and the Communist attack on the Laotian village. I have nothing to give you on the matter of Laos, beyond what was said at the Defense Department yesterday, and at CINCPAC fleet.

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Q Can I get back to the Watergate? Isn't it unusual for you to be unable to tell us whether or not previous statements of the White House which have been repeated here many times are now standing or not?

MR. WARREN: I have done nothing to tell you that they are not standing, Jim. I am just saying this morning that I have no information to give you and nothing to add to what has been said in the past.

Q Jerry, at every briefing when we ask either Ron or you about that statement of the President's of August 29th, that no White House aides presently employed at the White House were involved in the Watergate, at every one of these briefings, either you or Ron are able to say that that still stands.

Now at this briefing for the first time, you are not saying it still stands?

MR. WARREN: Wait a minute, Marty. Just so your mind is placed at rest, I am not trying to signal you with anything this morning, nor am I trying to open up any new avenues. I am telling you as frankly as I can that I have no knowledge that would allow me to take you beyond where we are on this subject.

Q You seem to be subtracting from where we are. In past briefings what you have done is reiterated the August 29th position. You are not doing that today.

MR. WARREN: I am telling you I have nothing new to offer you today.

Q What is the White House reaction to Mrs. Mitchell's comments that your statement is a lie?

MR. WARREN: I have no reaction to that.

Q None at all?

MR. WARREN: No. I said yesterday that Mr. Mitchell did not see the President and he did not. I have no reaction to that.

Q Has anyone at the White House talked either last night or today with either Mr. Mitchell or his wife?

MR. WARREN: Not to my knowledge, Marty.

Q Why didn't the President see Mitchell, aren't they old friends?

MR. WARREN: I have no idea why he didn't see him. I am telling you what I know and that is he did not see the President.

Q Did he see Haldeman?

MR. WARREN: Gentlemen, I can't give you any help on who he saw or who he didn't see. I can tell you he did not see the President.

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Q You indicated that you didn't know he was here in the morning.

MR. WARREN: That is right.

Q Is your denial that he saw the President a blanket denial for the entire day?

MR. WARREN: Yes, but so the record shows, Bob, when I was asked by you about his being here, I wasn't aware of it. I checked and I got back to you and said that, yes, he was here, but he did not see the President, and I did not know who he did see.

Q Jerry, my question about whether he saw Haldeman is based on your assertion that you had made some checking and failed to discover anything. Now, it would seem to most of us that Haldeman might be a place you would check.

MR. WARREN: Well, I can't lead you through my system of checking or non-checking. I just have nothing to give you on that.

Q Will you make a commitment to call Mr. Haldeman and ask him?

MR. WARREN: No, I won't, John. I am going to leave it where it is now.

Q As a matter of clarification, does the White House stand by the President's statement of last August 29th that no one then employed in the White House was involved in the Watergate?

MR. WARREN: Nothing that has been said --

Q Can you give me a yes or no?

MR. WARREN: Yes.

Q Jerry, on another phase of Watergate, Mr. Mitchell says that the President has decided to allow White House aides to testify; is that true?

MR. WARREN: I have nothing to add to anybody's statement on this. I have no knowledge that would allow me to help you with your story beyond where you are right now.

Q Yesterday, Jerry, you said you would not quarrel with what Mitchell said.

MR. WARREN: I am not quarreling with what he said, but I am not giving you anything from the White House. I am not offering you anything new.

Q You still would not quarrel with what Mitchell told reporters later, or not disagree?

MR. WARREN: But I took no position on it. I think I said to you that Mr. Mitchell is expressing something to reporters and I had no comment on what he said. I wasn't going to take issue one way or the other with what he said.

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Q If the White House stands by the August 29th statement, the Los Angeles story is wrong on the face of it.

MR. WARREN: Jim, I have nothing to give you on the Los Angeles Times story.

Q Will Ron be finished with his meeting this afternoon?

MR. WARREN: We are not briefing. We will post at 3:00.

Q How can we get to see Ron at a briefing?

Q Is he still Press Secretary?

Q Will the Press Secretary make himself available?

MR. WARREN: Of course, he will, but not this afternoon.

Q When?

MR. WARREN: I don't know, Marty. We will brief tomorrow.

Q Jerry, is there any comment on the reports that the President is considering or has decided to impose some form of additional controls on wages and prices?

MR. WARREN: I have seen a lot of speculation along that line, but I can tell you that no decisions have been made. The President continues to review the economy. No decisions have been made regarding further actions of any kind.

Q Are possible decisions being considered?

MR. WARREN: The President continues to review the situation, obviously. He is reviewing, and others in the Administration are reviewing the fight against inflation.

Q Who else is reviewing it?

MR. WARREN: Of course, George Shultz, the Cost of Living Council, Herb Stein.

Q To review means to take another look at. Is that what he is doing, to change his mind or is he looking at it as a sort of continuing process?

MR. WARREN: The review in this is to continue the look that we have been giving this for some years now.

Q Jerry, has the President's meeting with Secretary Shultz been fixed yet for later in the week?

MR. WARREN: There is no date yet for the meeting with Mr. Shultz.

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Q Do you have a comment on the House refusal to roll back prices to last March 16th?

MR. WARREN: The President is very pleased at the responsible action of the House in extending the Economic Stabilization Act for one year without limiting amendments.

Q Why was the meeting cancelled yesterday afternoon?

MR. WARREN: It was at the 3:00 posting.

Q The explanation?

MR. WARREN: Yes, the fact that the meeting would be rescheduled for later in the week.

Q But why was it?

MR. WARREN: Just a matter of scheduling. It is going to be rescheduled later on.

But to go on and complete the answer to Norm, as I said, the President is very pleased at the responsible action of the House of Representatives and we are hopeful that there will be a speedy conference and that a bill can be sent to the President which he can sign.

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Q Jerry, do you have any reaction to that Joint Committee decision to set up a Congressional budget something like the President has been calling for?

MR. WARREN: Simply to recall for you, which I don't need to do, the President has called for that, and we feel that that would be a very proper thing for the Congress to do.

Q How broad is the bipartisan leadership meeting tomorrow, just the top crust?

MR. WARREN: No, I think it will be beyond that, Helen. I don't have the precise list yet.

Q Is Senator Ervin going to be there?

MR. WARREN: I don't know. I will get you a list.

Q Jerry, there is a report that the President has rejected all the names submitted to him for FBI Director except one. Can you throw any light on that?

MR. WARREN: No, I really can't. I have nothing to give you on the FBI Director today.

Q When do you anticipate an announcement on the new nominee for that position?

MR. WARREN: I don't know at this point, Jim. When the decision is made, there will be an announcement.

Q Does Dr. Kissinger have any travel plans in the near future?

MR. WARREN: Not that I am aware of.

Q Jerry, as a matter of clarification to a previous question you were asked, apart from the Los Angeles Times story, about whether the White House intends to make a statement on Watergate, you said, "I have no knowledge of any plans for the President to do that." Is that correct?

MR. WARREN: That is correct.

Q You would know, wouldn't you?

MR. WARREN: Wait a minute. There was another disclaimer that you have got to remember when you isolate these various Q's and A's in these briefings. I have no knowledge that would allow me to give you any help on this story at all today. I cannot move it for you one way or the other.

Q You are not ruling out the fact that the White House might make a statement?

MR. WARREN: I am not ruling anything out or in. I am telling you I have no knowledge that could allow me to help you speculate on that.

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Q Jerry, could we get a briefing sometime with someone who does have knowledge on this?

MR. WARREN: Yes.

Q When will that be, Jerry?

MR. WARREN: I can't tell you that right now.

Q Possibly tomorrow?

MR. WARREN: I just don't have anything for you now.

Q I have a question on the economy. Is the President pretty well satisfied with the way his economic programs are working?

MR. WARREN: The President is continuing to review it. Actions have been taken, as you know, Don, and as Herb Stein has told you, and others, when further actions are deemed necessary, they will be taken, but we are operating on a principle now where we are monitoring this situation and there is no decision to do anything else now.

Q You are suggesting that there will be further action?

MR. WARREN: I am suggesting exactly what Herb Stein did. If further actions are deemed necessary, they will be taken.

Q Jerry, in view of Senator Ervin's announcement about the rules for testimony that his committee intended to follow, does this mean that the negotiations that Ron has alluded to from time to time between the White House and the Ervin Committee about how information might be provided, does this mean they have stopped, are they over or still going on?

MR. WARREN: Again, Adam, I have nothing to give you that would help you with that question at all.

Q Jerry, does the White House have any comment on the report that the Secretary of Labor packs a pistol?

MR. WARREN: No. I think he commented on that yesterday.

Q Does the White House have any position on Cabinet officers carrying guns?

MR. WARREN: I think the Secretary handled that in his comments to the press yesterday.

Q Jerry, do you have any confirmation on the published story that Brezhnev is coming here in June?

MR. WARREN: I don't have any confirmation on that, Bob, and we have nothing new to offer you on the upcoming visit.

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Q Under the guidelines announced yesterday by Senator Ervin, will White House assistants or employees be allowed to testify before his committee?

MR. WARREN: Ted, I don't have any comment on Senator Ervin's announcement yesterday.

Q I am not asking you to comment.

MR. WARREN: I don't have any predictions for you on how these procedures will be arranged. I just have nothing new to offer you on the subject this morning.

Q You are leaving it open that they will testify?

MR. WARREN: I have nothing new to offer you on the subject.

Q Jerry, the Administration often criticizes the press for the way it handles news. How would you suggest we handle this situation at the present time, where the former Attorney General has come to the White House and has not seen the President and you cannot tell us anything about it?

MR. WARREN: I think that was very succinctly put.

Q What is the answer?

MR. WARREN: The answer is that I have said that the Attorney General was at the White House; that he did not see the President, and I do not have any comment on what he said nor on who he saw.

Q Jerry, are you embarrassed that you are unable to find out who he saw?

MR. WARREN: I don't really think that is pertinent, Don.

Q I do.

Q Jerry, you said that we will have somebody brief us who will have knowledge about these events. Are you indicating that we will have some briefing on the Watergate situation?

MR. WARREN: No, I am saying to my friends in the rear, and directly behind you, that you will have other briefers as time goes on.

Q Who are knowledgeable of this event?

Q To go back to Brennan for a minute, the President said at the Washington Hilton yesterday that Secretary Brennan fought for one point of view in a Cabinet meeting and Secretary Butz fought for another point of view in a Cabinet meeting, and the President indicated in that particular instance Secretary Brennan won.

Can you tell us what Cabinet meeting that was, the date of it?

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MR. WARREN: I will get that for you. It was one of the recent ones, when a number of bills were being discussed. You remember when we briefed on the trade bill, there was a bipartisan meeting and a Cabinet meeting preceding that, where the trade bill was discussed, where the unemployment measure was discussed and where the pension measure was discussed. But I don't have the precise date.

Q The President's reference there, however, was to the minimum wage bill which Mr. Brennan had testified on --

MR. WARREN: I know that.

Q -- the previous day, so it couldn't have been that Cabinet meeting at which the decision was reached.

MR. WARREN: The Cabinet meeting wasn't the same day, Adam. That is my point. I don't have the precise date for you.

Q I am trying to find out precisely what kind of Cabinet meeting the President was talking about and most particularly, whether there was such a Cabinet meeting, Number One, and Number Two, whether or not it went into the subject of a decision that had not yet been made, because I rather have the impression that a decision had long since been made, and I am wondering how this fight could have taken place.

MR. WARREN: There are discussions in Cabinet meetings on up-coming decisions as well as decisions which have been made, and also there are discussions in the Domestic Council between the various counsellors.

Q But he referred to a Cabinet meeting.

MR. WARREN: I understand that and I will get that for you.

Q Jerry, you are quite aware of the Goldwater charge about the smell on the Watergate. Can't you see by not answering these questions, all you do is add to the smell?

MR. WARREN: Godfrey, I appreciate that, but I just have nothing to give you on the subject today.

Q Jerry, can you tell us anything about what was discussed between the President and the Secretary on their trip on the Sequoia last night?

MR. WARREN: No, I don't have a report for you, but the President and the Secretary see each other often and discuss various aspects of foreign policy.

Q Which Secretary?

MR. WARREN: The President was on the Sequoia last evening with Secretary Rogers.

Q Jerry, can you tell us the name of the POW who told President Nixon that the slogan for the POWs in the prison of war camp in Hanoi was, "Home with Honor"?

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MR. WARREN: I can't now, but I will get that for
you.

Q Do you have any information on the report that
Dr. Kissinger will be going to Paris to reopen some negotiations?

MR. WARREN: I really have nothing for you. There
is nothing set for a trip. I was asked a question earlier
about his travel. There is nothing set, as Ron has said
earlier, on Henry visiting Paris. Ron has been asked this
in the past, and there is nothing set at this time. I wouldn't
rule out the possibility of any appropriate step that Dr.
Kissinger might take in this situation.

Q Jerry, once the delegation, the group from
the People's Republic of China is here, and I am thinking
particularly of the leader of that delegation, does the
President plan to see them?

MR. WARREN: There are no plans at this time, Jim.

Q Jerry, a Pentagon official testifying on the
Hill -- I am sorry but I didn't get his name -- was questioned
by Senator Kennedy about the bombing in Laos, and about the
question of whether that constitutes peace with honor, and the
official said something to the effect that peace with honor
would be achieved when all the provisions of the cease-fire
agreement were implemented by all parties concerned.

Is that an accurate reflection of the Administration's
interpretation of peace with honor?

MR. WARREN: The President has discussed this many times.

Q He said we have peace with honor.

MR. WARREN: And Ron has also said that we are
scrupulously adhering to the agreement and we expect all
parties to adhere to the agreement.

Q Is bombing Laos or Cambodia scrupulously
adhering to the agreement?

MR. WARREN: We are adhering to the agreement.

Q Jerry, do you have anything to say on Easter
travel plans?

MR. WARREN: No, I have nothing at this point.

Incidentally, the meeting between the President and
Prime Minister Andreotti lasted for an hour and fifty minutes.

THE PRESS: Thank you, Jerry.

END

(AT 12:25 P.M. EST.)

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Department of State TELEGRAM

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UNCLASSIFIED

PAGE 02 USUN N 01391 01 OF 02 172300Z

"AS WE ARE MEETING HERE TODAY, I THINK IT IS IMPORTANT THAT WE RECOGNIZE WE ARE CONFRONTING A NEW AND MORE DANGEROUS TURN IN THE LONG AND FRUSTRATING SEARCH FOR PEACE IN THE MIDDLE EAST.

THE CYCLE OF VIOLENCE IN THIS PART OF THE WORLD IS NOT ONLY CONTINUING BUT HAS TAKEN ON NEWER AND UGLIER DIMENSIONS. TO THE SHAME OF ALL MANKIND, ACTS OF VIOLENCE AND TERROR, OFTEN STRIKING DOWN INNOCENT PEOPLE, ARE ON THE VERGE OF BECOMING A ROUTINE FOOTNOTE TO THE TRAGIC AND UNRESOLVED ARAB-ISRAELT CONFLICT.

IN FOCUSING ATTENTION ON VIOLENCE, I AM NOT ASKING THAT WE LOSE SIGHT OF THE HUMAN AND POLITICAL PROBLEMS THAT HAVE ALREADY DEFTED SOLUTION FOR A GENERATION. RATHER, I WISH TO PLACE IN PERSPECTIVE A PHENOMENON THAT IS BOTH INHERENTLY IMPORTANT AND IMPORTANT AS A BARRIER TO FURTHER EFFORTS TO BRING REAL PEACE AND SECURITY TO THE MIDDLE EAST.

IN THE PAST FEW MONTHS HUNDREDS HAVE BEEN KILLED -- INNOCENT MEN, WOMEN AND CHILDREN, DIPLOMATS, TOURISTS AND BYSTANDERS ALIKE.

IF WE ARE TO DO ANYTHING ABOUT THIS, IT IS IMPORTANT THAT WE UNDERSTAND THAT THIS NEW TURN MAY BE MORE THAN A TEMPORARY PHENOMENON IN THE HISTORY OF MANKIND. IT CAN BECOME AN ACCEPTED WAY OF LIFE.

WE ARE LIVING TODAY AT A TIME WHEN A KNOCK ON THE DOOR MAY SIGNAL THE VISIT OF AN ASSASSIN ARMED WITH A MACHINE GUN OR FIRE BOMB. IT IS INTOLERABLE THAT OUR FEARS HAVE NOW REACHED THE STAGE THAT AT A THOUSAND AIRPORTS AROUND THE WORLD INNOCENT CIVILAINS MUST SUBMIT TO COMPLEX SECURITY SEARCHES BEFORE BOARDING THEIR PLANES -- AND PRAY THAT THEIR FLIGHTS WILL BE SAFE. IT IS INTOLERABLE THAT INNOCENT CIVILIANS CANNOT ENTER THEIR AUTOMOBILES WITHOUT FEAR THAT THEY HAVE BEEN CONVERTED INTO INSTRUMENTS OF DEATH.

IT IS INTOLERABLE THAT OPENING THE MORNING MAIL MAY TRIGGER AN EXPLOSION. IT IS INTOLERABLE THAT THE INNOCENT

UNCLASSIFIED

FORM

Department of State

TELEGRAM

[Lc]

UNCLASSIFIED

PAGE 03 USUN N 01391 01 OF 02 172300Z

CANNOT REGARD EVEN THE FAMILY APARTMENT, THE SOCIAL GATHERING, THE OLYMPIC SPORTING FIELD, OR THE QUIET STREETS AS AN ABODE OF PEACE.

AND IT IS INTOLERABLE THAT DIPLOMATS MUST CONDUCT THEIR TASKS WITH CONCERN FOR WHAT MAY HAPPEN TO THEM OR THEIR FAMILIES IN THE FUTURE AND WITH GRIEF OVER WHAT HAS ALREADY TRANSPIRED.

EVERYWHERE LIFE, THE LIFE OF THE INNOCENT BYSTANDER, HAS BEEN MADE TRAGICALLY CHEAP.

ARE THESE ACTS OF TERROR AND COUNTER- TERROR TO BECOME ACCEPTED AS THE NEW RULES OF ENGAGEMENT TO A TRAGIC UNRESOLVED WAR? ARE THESE ACTS, WHICH DEMONSTRATE A GRISLY CONTEMPT FOR LIFE, TO BECOME NORMAL -- DEEDS TO BE EMULATED MORE AND MORE THROUGHOUT THE WORLD?

IS THIS THE HERITAGE, WE, THE MEMBERS OF A CIVILIZED SOCIETY WISH TO LEAVE BEHIND?

IN THE DECLARATION OF HUMAN RIGHTS, THE UNITED NATIONS AFFIRMED THE RIGHT OF EVERY HUMAN BEING TO LIFE, LIBERTY AND THE SECURITY OF PERSON. IS THIS DECLARATION NOW TO BE FORGOTTEN?

SO THAT THERE WILL BE NO MISUNDERSTANDING, LET ME MAKE IT EMPHATICALLY CLEAR THAT THE UNITED STATES OPPOSES VIOLENCE AND TERROR FROM WHATEVER SOURCE AND OF WHATEVER KIND.

WE DO NOT, AND WILL NOT, CONDONE VIOLATIONS OF THE SOVEREIGNTY OF ONE STATE BY ANOTHER STATE. NEITHER, HOWEVER, DO WE CONDONE MURDERS IN VIOLATION OF BASIC HUMAN RIGHTS BY INDIVIDUALS OR GROUPS. SUCH INDIVIDUALS AND GROUPS DEPEND ON THE SUPPORT, OR ON THE ACQUISESCENCE OF GOVERNMENTS ON WHose TERRITORY THEY EXIST AND FROM WHICH THEY PLAN AND DIRECT THEIR OPERATIONS. THAT SUPPORT AND ACQUISESCENCE IS CLEARLY CONTRARY TO THE GENERAL ASSEMBLY'S DECLARATION ON FRIENDLY RELATIONS AS WELL AS GENERAL PRINCIPLES OF INTERNATIONAL LAW.

UNCLASSIFIED

DEPARTMENT OF STATE
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WHILE WE ARE AWARE OF THE POLITICAL REALITIES WHICH ARE USUALLY CITED TO EXCUSE THE ACTION OR INACTION OF CERTAIN GOVERNMENTS, IT IS THE DUTY OF EACH STATE NOT TO CONDONE OR ABET OR CLOSE ITS EYES TO THESE ACTS OF TERRORISM. INDEED, IT IS THE DUTY OF EVERY STATE ACTIVELY TO PREVENT THE ORGANIZATION OR INSTIGATION OF SUCH ACTS ON ITS TERRITORY, WHETHER THEY ARE DIRECTED AGAINST ITS OWN CITIZENS OR AGAINST THE CITIZENS OF OTHER COUNTRIES.

THE QUESTION NOW IN THE MIDDLE EAST IS NOT WHO STARTED WHAT, BUT HOW THIS VICIOUS CYCLE IS TO BE BROKEN. THIS IS OUR REAL PROBLEM. STATES MUST NOT EXPORT VIOLENCE. PRIVATE GROUPS MUST NOT EXPORT VIOLENCE. AT THIS MOMENT, ASSESSING BLAME IS ECONDARY TO THE PURPOSE OF ENDING THE MISERY AND SUFFERING ON BOTH SIDES. THE OVERRIDING TASK OF THIS COUNCIL IS TO SEIZE THE PRESENT OPPORTUNITY AND MOVE TO PUT AN END TO VIOLENCE SO THAT THE POLITICAL PROCESSES WILL HAVE A CHANCE TO OPERATE.

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REFERRED TO IN THE PRESENT PARAGRAPH INVOLVE THE THREAT OR USE OF FORCE."

THE CYCLE OF VIOLENCE WILL NOT BE BROKEN BY DRAWING DISTINCTIONS BETWEEN VIOLENCE BY CONVENTIONAL FORCES AND VIOLENCE BY INDIVIDUALS AND GROUPS. VIOLENCE BY CONVENTIONAL FORCES AND VIOLENCE BY TERRORISTS ARE TO BE CONDEMNED EQUALLY. ONE IS AS UGLY AS THE OTHER. THE TIME AS COME TO RECOGNIZE THAT WE MUST BE EQUALLY STERN IN DEALING WITH ALL FORMS OF INTERNATIONAL VIOLENCE.

THE UNITED NATIONS MUST LEAVE NO DOUBT AS TO THE DISAPPROVAL OF THE INTERNATIONAL COMMUNITY OF UNWARRANTED AND UNNECESSARY LOSS OF INNOCENT LIVES FROM ACTS OF INTERNATIONAL TERRORISM AND MILITARY RESPONSES TO IT. ACTION AND COOPERATION BY ALL STATES IS REQUIRED. NO MEMBER STATE SHOULD ATTACK ANOTHER. ANY SUCH ACTION ONLY BREEDS FURTHER VIOLENCE. NEITHER SHOULD ANY STATE ALLOW ITS TERRITORY TO BE USED FOR THE LAUNCHING OF TERRORIST ATTACKS OUTSIDE ITS TERRITORY. NO STATE SHOULD HARBOR ELEMENTS WHICH ATTACK OTHER STATES OR NATIONALS OF THAT STATE, WHEREVER THEY MAY BE.

WE HAVE HEARD MANY SPEECHES HERE CONDEMNING ONE SIDE OR THE OTHER, TRYING TO ASSESS BLAME. WE BELIEVE THIS IS AN ESSENTIALLY STERILE APPROACH TO THE PROBLEM. THESE ARGUMENTS WILL NOT LEAD TO AN END TO THE PRESENT AGONY, FOR IT IS IN THE NATURE OF A VICIOUS CIRCLE THAT CAUSE AND EFFECT BECOME IMPOSSIBLE TO DISTINGUISH.

THE TIME HAS COME, INDEED IT IS ALREADY OVERDUE, WHEN THERE MUST BE A HALT TO ALL ACTS OF TERROR BY ALL SIDES. EVEN AS THERE IS A TRUCE ON THE GROUND WHICH HAS STOPPED THE MAJOR HOSTILITIES FOR 32 MONTHS, SO TOO, MUST THERE BE AN END TO THIS GRISLY EXCHANGE OF VIOLENCE AND COUNTER-VIOLENCE WHICH EXTENDS THE BATTLEFIELD TO AREAS WHERE INNOCENT PEOPLE INEVIITABLY BECOME ITS VICTIMS. ALL OF US, REGARDLESS OF OUR SYMPATHIES, HAVE A DUTY TO ACT NOW -- AND NOT BY ONE-SIDED CONDEMNATIONS, OR BY DEMANDS FOR UNEQUAL PUNISHMENT WHICH IGNORES THE REAL WORLD.

INSTEAD, LET US MOVE CAREFULLY, AVOIDING THE TEMPTATION

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FOR THE SHORT-TERM PROPAGANDA ADVANTAGE WHICH INFLAMES RATHER THAN HEALS. LET US NOT VIE WITH ONE ANOTHER IN CATALOGING OUR GRIEVANCES AND SUFFERINGS. IT IS NOT ENOUGH TO LOOK BACKWARD. IT IS TIME TO LOOK FORWARD. MY GOVERNMENT IS PREPARED TO DO SO, AS WE CONTINUE OUR SEARCH FOR BETTER UNDERSTANDING AMONG THESE TEMPORARY FOES -- WHICH ONE DAY MUST BE FRIENDS.

LET US FACILITATE THE TURN FROM VIOLENCE TO PEACE. AN INSTRUMENT FOR THIS LIES AT HAND. LET US USE IT; LET US USE THE FRAMEWORK FOR AN OVERALL SETTLEMENT THAT ALREADY EXISTS. I REFER TO RESOLUTION 242 WHICH POINTS THE WAY TO THE GOAL OF A LASTING PEACE THROUGH WHICH ALL THE PROPLES OF THE MIDDLE EAST CAN ACHIEVE SECURITY AND JUSTICE. RESOLUTION 242 CALLS FOR A JUST SETTLEMENT OF THE REFUGEE PROBLEM. THE UNITED STATES RECOGNIZES THAT PEACE IN THE MIDDLE EAST CAN ONLY BE ACHIEVED BY TAKING INTO FULL ACCOUNT THE LEGITIMATE ASPIRATIONS OF THE PALESTINIANS.

UNLESS THE COUNCIL CAN MOVE FROM RECRIMINATION TO EVEN-HANDED CONDEMNATION OF ALL FORMS OF VIOLENCE, THERE WILL BE NO PROGRESS TOWARD PEACE. THEREFORE, WE ASK FOR AN END TO BOTH CROSS-BORDER ATTACKS AND INDIVIDUAL ACTS OF VIOLENCE. IF THE COUNCIL WILL CALL FOR THIS, IT WILL CREATE AN ATMOSPHERE IN WHICH WE CAN MOVE FROM THE ASSESSMENT OF BLAME TO THE MAKING OF PEACE. LET US MOVE AHEAD URGENTLY TO ENCOURAGE NEGOTIATIONS FOR A PEACEFUL SETTLEMENT. I APPEAL TO THE MEMBERS OF THIS COUNCIL TO ACT IN SUCH A WAY THAT THIS MEETING CAN CONTRIBUTE TO THE GOAL OF A LASTING PEACE IN THE MIDDLE EAST."
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NEWS CONFERENCE

AT THE WHITE HOUSE

WITH RON ZIEGLER

AT 12:42 P.M. EST

APRIL 18, 1973

WEDNESDAY

MR. ZIEGLER: The President's schedule for today has been posted. I think you are aware of the Leadership Meeting on the Energy Message. Also, the President met this morning with Congressional Leaders to discuss his request for most favored nation legislation for the Soviet Union, as mentioned in the recent Trade Message which the President sent to the Hill.

In the meeting this morning with the Congressional Leaders, the President indicated that we have had constructive communications with leaders of the Soviet Union on the issue of emigration of Soviet Jews, especially with respect to the law that was passed in August.

The President informed the Congressional Leaders in the meeting this morning of the communications and strongly urged them to pass the most favored nation legislation as an essential in our whole policy of relaxation of tensions.

I think you are all familiar with the outline of the position which the President holds on the most favored nation matter. It was contained in some detail in the recent message that the President sent to the Congress on trade.

We also have a few announcements to make to you this morning.

The President is announcing his reappointment of Kevin Roche to another four year term as a Member of the Commission of Fine Arts. Mr. Roche is an architect in Hamden, Connecticut.

The President is also today accepting with deep regret the resignation of Whitney North Seymour, Jr., as U.S. Attorney for the Southern District of New York. Mr. Seymour has held this position since January of 1970. To succeed Mr. Seymour, as U.S. Attorney for the Southern District of New York, the President has nominated Paul J. Curran of Scarsdale, New York. Mr. Curran is a New York lawyer and he will be nominated for a four year term.

Q: Is he any relation to Joe Curran?

MR. ZIEGLER: I don't know his family background. I am sorry. I don't know the answer to that question, Clark.

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Q Ron, as a result of this meeting, and as a result of these constructive communications, is the White House now more optimistic about the prospects that the Jackson Amendment can be removed or ameliorated as a barrier to the Trade Bill or MFN?

MR. ZIEGLER: I don't want to predict or characterize a Congressional action. I will simply tell you that in the course of the meeting this morning, when the President informed the Congressional Leaders of the communications, he strongly urged them to pass the most favored nation legislation as an essential in our whole policy of relaxation of tension. He urged them to proceed as outlined in the trade legislation, but I am not prepared to comment on that further.

Q Did anything relevant emerge during the talks between Prime Minister Andreotti and President Nixon on the Middle East, sir?

MR. ZIEGLER: I should have mentioned that the two leaders did discuss the situation in the Mediterranean and the Middle East against the background of Italy's special position in that part of the world and their role in NATO and the southern flank of NATO in relation to the Mediterranean.

In relation to the Middle East, both governments recognize the desirability of the earliest possible progress toward settlement of the Middle East crisis, and the President, I am sure, took special note of the contribution which Italy can make towards such an end.

Q Did they go into energy aspects of the Middle Eastern situation? I think energy was mentioned yesterday as one of the topics, Ron.

MR. ZIEGLER: I did not participate in the meeting, so I cannot answer your question.

Q Can we go back to MFN? You said, if I have you correctly, "The issue of emigration of Jews, especially the law passed in August..." What was that law?

MR. ZIEGLER: The law passed in August is the law which placed an education fee on emigrants.

Q Can we infer they are going to relieve or wipe out this law, somehow withdraw it?

MR. ZIEGLER: Bob, I recognize the necessity of your question, but as I said earlier, I am only prepared to make the comments on this matter which I have made.

Q Ron, did the "constructive communications" extend after Secretary Shultz' visit to Moscow?

MR. ZIEGLER: I don't want to put a specific time on it.

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EMBARGOED FOR RELEASE UNTIL 12:00 NOON, EST

April 18, 1973

Office of the White House Press Secretary

THE WHITE HOUSE

TO THE CONGRESS OF THE UNITED STATES:

At home and abroad, America is in a time of transition. Old problems are yielding to new initiatives, but in their place new problems are arising which once again challenge our ingenuity and require vigorous action. Nowhere is this more clearly true than in the field of energy.

As America has become more prosperous and more heavily industrialized, our demands for energy have soared. Today, with 6 percent of the world's population, we consume almost a third of all the energy used in the world. Our energy demands have grown so rapidly that they now outstrip our available supplies, and at our present rate of growth, our energy needs a dozen years from now will be nearly double what they were in 1970.

In the years immediately ahead, we must face up to the possibility of occasional energy shortages and some increase in energy prices.

Clearly, we are facing a vitally important energy challenge. If present trends continue unchecked, we could face a genuine energy crisis. But that crisis can and should be averted, for we have the capacity and the resources to meet our energy needs if only we take the proper steps -- and take them now.

More than half the world's total reserves of coal are located within the United States. This resource alone would be enough to provide for our energy needs for well over a century. We have potential resources of billions of barrels of recoverable oil, similar quantities of shale oil and more than 2,000 trillion cubic feet of natural gas. Properly managed, and with more attention on the part of consumers to the conservation of energy, these supplies can last for as long as our economy depends on conventional fuels.

In addition to natural fuels, we can draw upon hydroelectric plants and increasing numbers of nuclear powered facilities. Moreover, long before our present energy sources are exhausted, America's vast capabilities in research and development can provide us with new, clean and virtually unlimited sources of power.

Thus we should not be misled into pessimistic predictions of an energy disaster. But neither should we be lulled into a false sense of security. We must examine our circumstances realistically, carefully weigh the alternatives -- and then move forward decisively.

WEIGHING THE ALTERNATIVES

Over 90 percent of the energy we consume today in the United States comes from three sources: natural gas, coal and petroleum. Each source presents us with a different set of problems.

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Natural gas is our cleanest fuel and is most preferred in order to protect our environment, but ill-considered regulations of natural gas prices by the Federal Government have produced a serious and increasing scarcity of this fuel.

We have vast quantities of coal, but the extraction and use of coal have presented such persistent environmental problems that, today, less than 20 percent of our energy needs are met by coal and the health of the entire coal industry is seriously threatened.

Our third conventional resource is oil, but domestic production of available oil is no longer able to keep pace with demands.

In determining how we should expand and develop these resources, along with others such as nuclear power, we must take into account not only our economic goals, but also our environmental goals and our national security goals. Each of these areas is profoundly affected by our decisions concerning energy.

If we are to maintain the vigor of our economy, the health of our environment, and the security of our energy resources, it is essential that we strike the right balance among these priorities.

The choices are difficult, but we cannot refuse to act because of this. We cannot stand still simply because it is difficult to go forward. That is the one choice Americans must never make.

The energy challenge is one of the great opportunities of our time. We have already begun to meet that challenge, and realize its opportunities.

## NATIONAL ENERGY POLICY

In 1971, I sent to the Congress the first message on energy policies ever submitted by an American President. In that message I proposed a number of specific steps to meet our projected needs by increasing our supply of clean energy in America.

Those steps included expanded research and development to obtain more clean energy, increased availability of energy resources located on Federal lands, increased efforts in the development of nuclear power, and a new Federal organization to plan and manage our energy programs.

In the twenty-two months since I submitted that message, America's energy research and development efforts have been expanded by 50 percent.

In order to increase domestic production of conventional fuels, sales of oil and gas leases on the Outer Continental Shelf have been increased. Federal and State standards to protect the marine environment in which these leases are located are being tightened. We have developed a more rigorous surveillance capability and an improved ability to prevent and clean up oil spills.

We are planning to proceed with the development of oil shale and geothermal energy sources on Federal lands, so long as an evaluation now underway shows that our environment can be adequately protected.

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We have also taken new steps to expand our uranium
enrichment capacity for the production of fuels for nuclear
power plants, to standardize nuclear power plant designs,
and to ensure the continuation of an already enviable safety
record.

We have issued new standards and guidelines, and have
taken other actions to increase and encourage better
conservation of energy.

In short, we have made a strong beginning in our effort
to ensure that America will always have the power needed to
fuel its prosperity. But what we have accomplished is only
a beginning.

Now we must build on our increased knowledge, and on
the accomplishments of the past twenty-two months, to develop
a more comprehensive, integrated national energy policy. To
carry out this policy we must:

-- increase domestic production of all forms of energy;

-- act to conserve energy more effectively;

-- strive to meet our energy needs at the lowest cost
consistent with the protection of both our national
security and our natural environment;

-- reduce excessive regulatory and administrative
impediments which have delayed or prevented
construction of energy-producing facilities;

-- act in concert with other nations to conduct research
in the energy field and to find ways to prevent
serious shortages; and

-- apply our vast scientific and technological
capacities -- both public and private -- so
we can utilize our current energy resources
more wisely and develop new sources and new
forms of energy.

The actions I am announcing today and the proposals I
am submitting to the Congress are designed to achieve these
objectives. They reflect the fact that we are in a period
of transition, in which we must work to avoid or at least
minimize short-term supply shortages, while we act to
expand and develop our domestic supplies in order to meet
long-term energy needs.

We should not suppose this transition period will be
easy. The task ahead will require the concerted and
cooperative efforts of consumers, industry, and government.

DEVELOPING OUR DOMESTIC ENERGY RESOURCES

The effort to increase domestic energy production in
a manner consistent with our economic, environmental and
security interests should focus on the following areas:

Natural Gas

Natural gas is America's premium fuel. It is clean-
burning and thus has the least detrimental effect on our
environment.

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Since 1966, our consumption of natural gas has increased by over one-third, so that today natural gas comprises 32 percent of the total energy we consume from all sources. During this same period, our proven and available reserves of natural gas have decreased by a fifth. Unless we act responsibly, we will soon encounter increasing shortages of this vital fuel.

Yet the problem of shortages results less from inadequate resources than from ill-conceived regulation. Natural gas is the fuel most heavily regulated by the Federal Government -- through the Federal Power Commission. Not only are the operations of interstate natural gas pipelines regulated, as was originally and properly intended by the Congress, but the price of the natural gas supplied to these pipelines by thousands of independent producers has also been regulated.

For more than a decade the prices of natural gas supplied to pipelines under this extended regulation have been kept artificially low. As a result, demand has been artificially stimulated, but the exploration and development required to provide new supplies to satisfy this increasing demand have been allowed to wither. This form of government regulation has contributed heavily to the shortages we have experienced, and to the greater scarcity we now anticipate.

As a result of its low regulated price, more than 50 percent of our natural gas is consumed by industrial users and utilities, many of which might otherwise be using coal or oil. While homeowners are being forced to turn away from natural gas and toward more expensive fuels, unnecessarily large quantities of natural gas are being used by industry.

Furthermore, because prices within producing States are often higher than the interstate prices established by the Federal Power Commission, most newly discovered and newly produced natural gas does not enter interstate pipelines. Potential consumers in non-producing States thus suffer the worst shortages. While the Federal Power Commission has tried to alleviate these problems, the regulatory framework and attendant judicial constraints inhibit the ability of the Commission to respond adequately.

It is clear that the price paid to producers for natural gas in interstate trade must increase if there is to be the needed incentive for increasing supply and reducing inefficient usage. Some have suggested additional regulation to provide new incentives, but we have already seen the pitfalls in this approach. We must regulate less, not more. At the same time, we cannot remove all natural gas regulations without greatly inflating the price of gas currently in production and generating windfall profits.

To resolve this issue, I am proposing that gas from new wells, gas newly-dedicated to interstate markets, and the continuing production of natural gas from expired contracts should no longer be subject to price regulation at the wellhead. Enactment of this legislation should stimulate new exploration and development. At the same time, because increased prices on new unregulated gas would be averaged in with the prices for gas that is still regulated, the consumer should be protected against precipitous cost increases.

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To add further consumer protection against unjustified price increases, I propose that the Secretary of the Interior be given authority to impose a ceiling on the price of new natural gas when circumstances warrant. Before exercising this power, the Secretary would consider the cost of alternative domestic fuels, taking into account the superiority of natural gas from an environmental standpoint. He would also consider the importance of encouraging production and more efficient use of natural gas.

## Outer Continental Shelf

Approximately half of the oil and gas resources in this country are located on public lands, primarily on the Outer Continental Shelf (OCS). The speed at which we can increase our domestic energy production will depend in large measure on how rapidly these resources can be developed.

Since 1954, the Department of the Interior has leased to private developers almost 8 million acres on the Outer Continental Shelf. But this is only a small percentage of these potentially productive areas. At a time when we are being forced to obtain almost 30 percent of our oil from foreign sources, this level of development is not adequate.

I am therefore directing the Secretary of the Interior to take steps which would triple the annual acreage leased on the Outer Continental Shelf by 1979, beginning with expanded sales in 1974 in the Gulf of Mexico and including areas beyond 200 meters in depth under conditions consistent with my oceans policy statement of May, 1970. By 1985, this accelerated leasing rate could increase annual energy production by an estimated 1.5 billion barrels of oil (approximately 16 percent of our projected oil requirements in that year), and 5 trillion cubic feet of natural gas (approximately 20 percent of expected demand for natural gas that year).

In the past, a central concern in bringing these particular resources into production has been the threat of environmental damage. Today, new techniques, new regulations and standards, and new surveillance capabilities enable us to reduce and control environmental dangers substantially. We should now take advantage of this progress. The resources under the Shelf, and on all our public lands, belong to all Americans, and the critical needs of all Americans for new energy supplies require that we develop them.

If at any time it is determined that exploration and development of a specific shelf area can only proceed with inadequate protection of the environment, we will not commence or continue operations. This policy was reflected in the suspension of 35 leases in the Santa Barbara Channel in 1971. We are continuing the Santa Barbara suspensions, and I again request that the Congress pass legislation that would provide for appropriate settlement for those who are forced to relinquish their leases in the area.

At the same time, I am directing the Secretary of the Interior to proceed with leasing the Outer Continental Shelf beyond the Channel Islands of California if the reviews now underway show that the environmental risks are acceptable.

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I am also asking the Chairman of the Council on Environ-
mental Quality to work with the Environmental Protection
Agency, in consultation with the National Academy of Sciences
and appropriate Federal agencies, to study the environmental
impact of oil and gas production on the Atlantic Outer
Continental Shelf and in the Gulf of Alaska. No drilling
will be undertaken in these areas until its environmental
impact is determined. Governors, legislators and citizens
of these areas will be consulted in this process.

Finally, I am asking the Secretary of the Interior to
develop a long-term leasing program for all energy resources
on public lands, based on a thorough analysis of the Nation's
energy, environmental, and economic objectives.

Alaskan Pipeline

Another important source of domestic oil exists on the
North Slope of Alaska. Although private industry stands
ready to develop these reserves and the Federal Government
has spent large sums on environmental analyses, this
project is still being delayed. This delay is not related
to any adverse judicial findings concerning environmental
impact, but rather to an outmoded legal restriction
regarding the width of the right of way for the proposed
pipeline.

At a time when we are importing growing quantities of
oil at great detriment to our balance of payments, and at
a time when we are also experiencing significant oil short-
ages, we clearly need the two million barrels a day which
the North Slope could provide -- a supply equal to fully
one-third of our present import levels.

In recent weeks I have proposed legislation to the
Congress which would remove the present restriction on the
pipeline. I appeal to the Congress to act swiftly on this
matter so that we can begin construction of the pipeline
with all possible speed.

I oppose any further delay in order to restudy the
advisability of building the pipeline through Canada. Our
interest in rapidly increasing our supply of oil is best
served by an Alaskan pipeline. It could be completed much
more quickly than a Canadian pipeline; its entire capacity
would be used to carry domestically owned oil to American
markets where it is needed; and construction of an Alaskan
pipeline would create a significant number of American jobs
both in Alaska and in the maritime industry.

Shale Oil

Recoverable deposits of shale oil in the continental
United States are estimated at some 600 billion barrels,
80 billion of which are considered easily accessible.

At the time of my Energy Message of 1971, I requested
the Secretary of the Interior to develop an oil shale leasing
program on a pilot basis and to provide me with a thorough
evaluation of the environmental impact of such a program.
The Secretary has prepared this pilot project and expects
to have a final environmental impact statement soon. If
the environmental risks are acceptable, we will proceed
with the program.

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To date there has been no commercial production of
shale oil in the United States. Our pilot program will
provide us with valuable experience in using various
operational techniques and acting under various environ-
mental conditions. Under the proposed program, the costs
both of development and environmental protection would be
borne by the private lessee.

Geothermal Leases

At the time of my earlier Energy Message, I also directed
the Department of the Interior to prepare a leasing program
for the development of geothermal energy on Federal lands.
The regulations and final environmental analysis for such
a program should be completed by late spring of this year.

If the analysis indicates that we can proceed in an
environmentally acceptable manner, I expect leasing of
geothermal fields on Federal lands to begin soon thereafter.

The use of geothermal energy could be of significant
importance to many of our western areas, and by supplying
a part of the western energy demand, could release other
energy resources that would otherwise have to be used.
Today, for instance, power from the Geysers geothermal
field in California furnishes about one-third of the
electric power of the city of San Francisco.

New technologies in locating and producing geothermal
energy are now under development. During the coming fiscal
year, the National Science Foundation and the Geological
Survey will intensify their research and development efforts
in this field.

Coal

Coal is our most abundant and least costly domestic
source of energy. Nevertheless, at a time when energy
shortages loom on the horizon, coal provides less than
20 percent of our energy demands, and there is serious
danger that its use will be reduced even further. If
this reduction occurs, we would have to increase our oil
imports rapidly, with all the trade and security problems
this would entail.

Production of coal has been limited not only by
competition from natural gas -- a competition which has
been artificially induced by Federal price regulation --
but also by emerging environmental concerns and mine
health and safety requirements. In order to meet environ-
mental standards, utilities have shifted to natural gas and
imported low-sulphur fuel oil. The problem is compounded
by the fact that some low-sulphur coal resources are not
being developed because of uncertainty about Federal and
State mining regulations.

I urge that highest national priority be given to
expanded development and utilization of our coal resources.
Present and potential users who are able to choose among
energy sources should consider the national interest as
they make their choice. Each decision against coal in-
creases petroleum or gas consumption, compromising our
national self-sufficiency and raising the cost of meeting
our energy needs.

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In my State of the Union Message on Natural Resources and the Environment earlier this year, I called for strong legislation to protect the environment from abuse caused by mining. I now repeat that call. Until the coal industry knows the mining rules under which it will have to operate, our vast reserves of low-sulphur coal will not be developed as rapidly as they should be and the under-utilization of such coal will persist.

The Clean Air Act of 1970, as amended, requires that primary air quality standards -- those related to health -- must be met by 1975, while more stringent secondary standards -- those related to the "general welfare" -- must be met within a reasonable period. The States are moving very effectively to meet primary standards established by the Clean Air Act, and I am encouraged by their efforts.

At the same time, our concern for the "general welfare" or national interest should take into account considerations of national security and economic prosperity, as well as our environment.

If we insisted upon meeting both primary and secondary clean air standards by 1975, we could prevent the use of up to 155 million tons of coal per year. This would force an increase in demand for oil of 1.6 million barrels per day. This oil would have to be imported, with an adverse effect on our balance of payments of some $1.5 billion or more a year. Such a development would also threaten the loss of an estimated 26,000 coal mining jobs.

If, on the other hand, we carry out the provisions of the Clean Air Act in a judicious manner, carefully meeting the primary, health-related standards, but not moving in a precipitous way toward meeting the secondary standards, then we should be able to use virtually all of that coal which would otherwise go unused.

The Environmental Protection Agency has indicated that the reasonable time allowed by the Clean Air Act for meeting secondary standards could extend beyond 1975. Last year, the Administrator of the Environmental Protection Agency sent to all State governors a letter explaining that during the current period of shortages in low-sulphur fuel, the States should not require the burning of such fuels except where necessary to meet the primary standards for the protection of health. This action by the States should permit the desirable substitution of coal for low-sulphur fuel in many instances. I strongly support this policy.

Many State regulatory commissions permit their State utilities to pass on increased fuel costs to the consumer in the form of higher rates, but there are sometimes lags in allowing the costs of environmental control equipment to be passed on in a similar way. Such lags discourage the use of environmental control technology and encourage the use of low-sulphur fuels, most of which are imported.

To increase the incentive for using new environmental technology, I urge all State utility commissions to ensure that utilities receive a rapid and fair return on pollution control equipment, including stack gas cleaning devices and coal gasification processes.

As an additional measure to increase the production and use of coal, I am directing that a new reporting system on national coal production be instituted within the Department of the Interior, and I am asking the Federal Power Commission for regular reports on the use of coal by utilities.

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I am also stepping up our spending for research and development in coal, with special emphasis on technology for sulphur removal and the development of low-cost, clean-burning forms of coal.

## Nuclear Energy

Although our greatest dependence for energy until now has been on fossil fuels such as coal and oil, we must not and we need not continue this heavy reliance in the future. The major alternative to fossil fuel energy for the remainder of this century is nuclear energy.

Our well-established nuclear technology already represents an indispensable source of energy for meeting present needs. At present there are 30 nuclear power plants in operation in the United States; of the new electrical generator capacity contracted for during 1972, 70 percent will be nuclear powered. By 1980, the amount of electricity generated by nuclear reactors will be equivalent to 1.25 billion barrels of oil, or 8 trillion cubic feet of gas. It is estimated that nuclear power will provide more than one-quarter of this country's electrical production by 1985, and over half by the year 2000.

Most nuclear power plants now in operation utilize light water reactors. In the near future, some will use high temperature gas-cooled reactors. These techniques will be supplemented during the next decade by the fast breeder reactor, which will bring about a 30-fold increase in the efficiency with which we utilize our domestic uranium resources. At present, development of the liquid metal fast breeder reactor is our highest priority target for nuclear research and development.

Nuclear power generation has an extraordinary safety record. There has never been a nuclear-related fatality in our civilian atomic energy program. We intend to maintain that record by increasing research and development in reactor safety.

The process of determining the safety and environmental acceptability of nuclear power plants is more vigorous and more open to public participation than for any comparable industrial enterprise. Every effort must be made by the Government and industry to protect public health and safety and to provide satisfactory answers to those with honest concerns about this source of power.

At the same time, we must seek to avoid unreasonable delays in developing nuclear power. They serve only to impose unnecessary costs and aggravate our energy shortages. It is discouraging to know that nuclear facilities capable of generating 27,000 megawatts of electric power which were expected to be operational by 1972 were not completed. To replace that generating capacity we would have to use the equivalent of one-third of the natural gas the country used for generating electricity in 1972. This situation must not continue.

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In my first Energy Special Message in 1971, I proposed that utilities prepare and publish long-range plans for the siting of nuclear power plants and transmission lines. This legislation would provide a Federal-State framework for licensing individual plants on the basis of a full and balanced consideration of both environmental and energy needs. The Congress has not acted on that proposal. I am resubmitting that legislation this year with a number of new provisions to simplify licensing, including one to require that the Government act on all completed license applications within 18 months after they are received.

I would also emphasize that the private sector's role in future nuclear development must continue to grow. The Atomic Energy Commission is presently taking steps to provide greater amounts of enriched uranium fuel for the Nation's nuclear power plants. However, this expansion will not fully meet our needs in the 1980's; the Government now looks to private industry to provide the additional capacity that will be required.

Our nuclear technology is a national asset of inestimable value. It is essential that we press forward with its development.

The increasing occurrence of unnecessary delays in the development of energy facilities must be ended if we are to meet our energy needs. To be sure, reasonable safeguards must be vigorously maintained for protection of the public and of our environment. Full public participation and questioning must also be allowed as we decide where new energy facilities are to be built. We need to streamline our governmental procedures for licensing and inspections, reduce overlapping jurisdictions and eliminate confusion generated by the government.

To achieve these ends I am taking several steps. During the coming year we will examine various possibilities to assure that all public and private interests are impartially and expeditiously weighed in all government proceedings for permits, licensing and inspections.

I am again proposing siting legislation to the Congress for electric facilities and for the first time, for deepwater ports. All of my new siting legislation includes provision for simplified licensing at both Federal and State levels. It is vital that the Congress take prompt and favorable action on these proposals.

## Encouraging Domestic Exploration

Our tax system now provides needed incentives for mineral exploration in the form of percentage depletion allowances and deductions for certain drilling expenses. These provisions do not, however, distinguish between exploration for new reserves and development of existing reserves.

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In order to encourage increased exploration, I ask the Congress to extend the investment credit provisions of our present tax law so that a credit will be provided for all exploratory drilling for new oil and gas fields. Under this proposal, a somewhat higher credit would apply for successful exploratory wells than for unsuccessful ones, in order to put an additional premium on results.

The investment credit has proven itself a powerful stimulus to industrial activity. I expect it to be equally effective in the search for new reserves.

## IMPORTING TO MEET OUR ENERGY NEEDS

### Oil Imports

In order to avert a short-term fuel shortage and to keep fuel costs as low as possible, it will be necessary for us to increase fuel imports. At the same time, in order to reduce our long-term reliance on imports, we must encourage the exploration and development of our domestic oil and the construction of refineries to process it.

The present quota system for oil imports -- the Mandatory Oil Import Program -- was established at a time when we could produce more oil at home than we were using. By imposing quantitative restrictions on imports, the quota system restricted imports of foreign oil. It also encouraged the development of our domestic petroleum industry in the interest of national security.

Today, however, we are not producing as much oil as we are using, and we must import ever larger amounts to meet our needs.

As a result, the current Mandatory Oil Import Program is of virtually no benefit any longer. Instead, it has the very real potential of aggravating our supply problems, and it denies us the flexibility we need to deal quickly and and efficiently with our import requirements. General dissatisfaction with the program and the apparent need for change has led to uncertainty. Under these conditions, there can be little long-range investment planning for new drilling and refinery construction.

Effective today, I am removing by proclamation all existing tariffs on imported crude oil and products. Holders of import licenses will be able to import petroleum duty free. This action will help hold down the cost of energy to the American consumer.

Effective today, I am also suspending direct control over the quantity of crude oil and refined products which can be imported. In place of these controls, I am substituting a license-fee quota system.

Under the new system, present holders of import licenses may import petroleum exempt from fees up to the level of their 1973 quota allocations. For imports in excess of the 1973 level, a fee must be paid by the importer.

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This system should achieve several objectives.

First, it should help to meet our immediate energy needs by encouraging importation of foreign oil at the lowest cost to consumers, while also providing incentives for exploration and development of our domestic resources to meet our long-term needs. There will be little paid in fees this year, although all exemptions from fees will be phased out over several years. By gradually increasing fees over the next two and one-half years to a maximum level of one-half cent per gallon for crude oil and one and one-half cents per gallon for all refined products, we should continue to meet our energy needs while encouraging industry to increase its domestic production.

Second, this system should encourage refinery construction in the United States, because the fees are higher for refined products than for crude oil. As an added incentive, crude oil in amounts up to three-fourths of new refining capacity may be imported without being subject to any fees. This special allowance will be available to an oil company during the first five years after it builds or expands its refining capacity.

Third, this system should provide the flexibility we must have to meet short and long-term needs efficiently. We will review the fee level periodically to ensure that we are imposing the lowest fees consistent with our intention to increase domestic production while keeping costs to the consumer at the lowest possible level. We will also make full use of the Oil Import Appeals Board to ensure that the needs of all elements of the petroleum industry are met, particularly those of independent operators who help to maintain market competition.

Fourth, the new system should contribute to our national security. Increased domestic production will leave us less dependent on foreign supplies. At the same time, we will adjust the fees in a manner designed to encourage, to the extent possible, the security of our foreign supplies. Finally, I am directing the Oil Policy Committee to examine incentives aimed at increasing our domestic storage capacity or shut-in production. In this way we will provide buffer stocks to insulate ourselves against a temporary loss of foreign supplies.

## Deepwater Ports

It is clear that in the foreseeable future, we will have to import oil in large quantities. We should do this as cheaply as we can with minimal damage to the environment. Unfortunately, our present capabilities are inadequate for these purposes.

The answer to this problem lies in deepwater ports which can accommodate those larger ships, providing important economic advantages while reducing the risks of collision and grounding. Recent studies by the Council on Environmental Quality demonstrate that we can expect considerably less pollution if we use fewer but larger tankers and deepwater facilities, as opposed to the many small tankers and conventional facilities which we would otherwise need.

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If we do not enlarge our deepwater port capacity, it is clear that both American and foreign companies will expand oil transshipment terminals in the Bahamas and the Canadian Maritime Provinces. From these terminals, oil will be brought to our conventional ports by growing numbers of small and medium size transshipment vessels, thereby increasing the risks of pollution from shipping operations and accidents. At the same time, the United States will lose the jobs and capital that those foreign facilities provide.

Given these considerations, I believe we must move forward with an ambitious program to create new deepwater ports for receiving petroleum imports.

The development of ports has usually been a responsibility of State and local governments and the private sector. However, States cannot issue licenses beyond the three-mile limit. I am therefore proposing legislation to permit the Department of the Interior to issue such licenses. Licensing would be contingent upon full and proper evaluation of environmental impact, and would provide for strict navigation and safety, as well as proper land use requirements. The proposed legislation specifically provides for Federal cooperation with State and local authorities.

## CONSERVING ENERGY

The abundance of America's natural resources has been one of our greatest advantages in the past. But if this abundance encourages us to take our resources for granted, then it may well be a detriment to our future.

Common sense clearly dictates that as we expand the types and sources of energy available to us for the future, we must direct equal attention to conserving the energy available to us today, and we must explore means to limit future growth in energy demand.

We as a nation must develop a national energy conservation ethic. Industry can help by designing products which conserve energy and by using energy more efficiently. All workers and consumers can help by continually saving energy in their day-to-day activities: by turning out lights, tuning up automobiles, reducing the use of air conditioning and heating, and purchasing products which use energy efficiently.

Government at all levels also has an important role to play, both by conserving energy directly, and by providing leadership in energy conservation efforts.

I am directing today that an Office of Energy Conservation be established in the Department of the Interior to coordinate the energy conservation programs which are presently scattered throughout the Federal establishment. This office will conduct research and work with consumer and environmental groups in their efforts to educate consumers on ways to get the greatest return on their energy dollar.

To provide consumers with further information, I am directing the Department of Commerce, working with the Council on Environmental Quality and the Environmental Protection Agency, to develop a voluntary system of energy efficiency labels for major home appliances. These labels should provide data on energy use as well as a rating com-

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paring the product's efficiency to other similar products. In addition, the Environmental Protection Agency will soon release the results of its tests of fuel efficiency in automobiles.

There are other ways, too, in which government can exercise leadership in this field. I urge again, for example, that we allow local officials to use money from Highway Trust Fund for mass transit purposes. Greater reliance on mass transit can do a great deal to help us conserve gasoline.

The Federal Government can also lead by example. The General Services Administration, for instance, is constructing a new Federal office building using advanced energy conservation techniques, with a goal of reducing energy use by 20 percent over typical buildings of the same size. At the same time, the National Bureau of Standards is evaluating energy use in a full-size house within its laboratories. When this evaluation is complete, analytical techniques will be available to help predict energy use for new dwellings. This information, together with the experience gained in the construction and operation of the demonstration Federal building, will assist architects and contractors to design and construct energy-efficient buildings.

Significant steps to upgrade insulation standards on single and multi-family dwellings were taken at my direction in 1971 and 1972, helping to reduce heat loss and otherwise conserve energy in the residential sector. As soon as the results of these important demonstration projects are available, I will direct the Federal Housing Administration to update its insulation standards in light of what we have learned and to consider their possible extension to mobile homes.

Finally, we should recognize that the single most effective means of encouraging energy conservation is to ensure that energy prices reflect their true costs. By eliminating regulations such as the current ceiling on natural gas prices and by ensuring that the costs of adequate environmental controls are equitably allocated, we can move toward more efficient distribution of our resources.

Energy conservation is a national necessity, but I believe that it can be undertaken most effectively on a voluntary basis. If the challenge is ignored, the result will be a danger of increased shortages, increased prices, damage to the environment and the increased possibility that conservation will have to be undertaken by compulsory means in the future. There should be no need for a nation which has always been rich in energy to have to turn to energy rationing. This is a part of the energy challenge which every American can help to meet, and I call upon every American to do his or her part.

## RESEARCH AND DEVELOPMENT

If we are to be certain that the forward thrust of our economy will not be hampered by insufficient energy supplies or by energy supplies that are prohibitively expensive, then we must not continue to be dependent on conventional forms of energy. We must instead make every useful effort through research and development to provide both alternative sources of energy and new technologies for producing and utilizing this energy.

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For the short-term future, our research and development strategy will provide technologies to extract and utilize our existing fossil fuels in a manner most compatible with a healthy environment.

In the longer run, from 1985 to the beginning of the next century, we will have more sophisticated development of our fossil fuel resources and on the full development of the Liquid Metal Fast Breeder Reactor. Our efforts for the distant future center on the development of technologies -- such as nuclear fusion and solar power -- that can provide us with a virtually limitless supply of clean energy.

In my 1971 Energy Special Message to the Congress I outlined a broadly based research and development program. I proposed the expansion of cooperative Government-industry efforts to develop the Liquid Metal Fast Breeder Reactor, coal gasification, and stack gas cleaning systems at the demonstration level. These programs are all progressing well.

My budget for fiscal year 1974 provides for an increase in energy research and development funding of 20 percent over the level of 1973.

My 1974 budget provides for creation of a new central energy fund in the Interior Department to provide additional money for non-nuclear research and development, with the greatest part designated for coal research. This central fund is designed to give us the flexibility we need for rapid exploitation of new, especially promising energy technologies with near-term payoffs.

One of the most promising programs that will be receiving increased funding in fiscal year 1974 is the solvent refined coal process which will produce low-ash, low-sulphur fuels from coal. Altogether, coal research and development and proposed funding is increased by 27 percent.

In addition to increased funding for the Liquid Metal Fast Breeder Reactor, I am asking for greater research and development on reactor safety and radioactive waste disposal, and the production of nuclear fuel.

The waters of the world contain potential fuel -- in the form of a special isotope of hydrogen -- sufficient to power fusion reactors for thousands of years. Scientists at the Atomic Energy Commission now predict with increasing confidence that we can demonstrate laboratory feasibility of controlled thermonuclear fusion by magnetic confinement in the near future. We have also advanced to the point where some scientists believe the feasibility of laser fusion could be demonstrated within the next several years. I have proposed in my 1974 budget a 35 percent increase in funding for our total fusion research and development effort to accelerate experimental programs and to initiate preliminary reactor design studies.

While we look to breeder reactors to meet our mid-term energy needs, today's commercial power reactors will continue to provide most of our nuclear generating capacity for the balance of this century. Although nuclear reactors have had a remarkable safety record, my 1974 budget provides additional funds to assure that our rapidly growing reliance on nuclear power will not compromise public health and safety. This

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includes work on systems for safe storage of the radioactive waste which nuclear reactors produce. The Atomic Energy Commission is working on additional improvements in surface storage and will continue to explore the possibility of underground burial for long-term containment of these wastes.

Solar energy holds great promise as a potentially limitless source of clean energy. My new budget triples our solar energy research and development effort to a level of $12 million. A major portion of these funds would be devoted to accelerating the development of commercial systems for heating and cooling buildings.

Research and development funds relating to environmental control technologies would be increased 24 percent in my 1974 budget. This research includes a variety of projects related to stack gas cleaning and includes the construction of a demonstration sulphur dioxide removal plant. In addition, the Atomic Energy Commission and the Environmental Protection Agency will continue to conduct research on the thermal effects of power plants.

While the Federal Government is significantly increasing its commitment to energy research and development, a large share of such research is and should be conducted by the private sector.

I am especially pleased that the electric utilities have recognized the importance of research in meeting the rapidly escalating demand for electrical energy. The recent establishment of the Electric Power Research Institute, which will have a budget in 1974 in excess of $100 million, can help develop technology to meet both load demands and environmental regulations currently challenging the industry.

Historically the electric power industry has allocated a smaller portion of its revenues to research than have most other technology-dependent industries. This pattern has been partly attributable to the reluctance of some State utility commissions to include increased research and development expenditures in utility rate bases. Recently the Federal Power Commission instituted a national rule to allow the recovery of research and development expenditures in rates. State regulatory agencies have followed the FPC's lead and are liberalizing their treatment of research and development expenditures consistent with our changing national energy demands.

I am hopeful that this trend will continue and I urge all State utility commissions to review their regulations regarding research and development expenditures to ensure that the electric utility industry can fully cooperate in a national energy research and development effort.

It is foolish and self-defeating to allocate funds more rapidly than they can be effectively spent. At the same time, we must carefully monitor our progress and our needs to ensure that our funding is adequate. When additional funds are found to be essential, I shall do everything I can to see that they are provided.

## INTERNATIONAL COOPERATION

The energy challenge confronts every nation. Where there is such a community of interest, there is both a cause and a basis for cooperative action.

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Today, the United States is involved in a number of cooperative, international efforts. We have joined with the other 22 member-nations of the Organization for Economic Cooperation and Development to produce a comprehensive report on long-term problems and to develop an agreement for sharing oil in times of acute shortages. The European Economic Community has already discussed the need for cooperative efforts and is preparing recommendations for a Community energy policy. We have expressed a desire to work together with them in this effort.

We have also agreed with the Soviet Union to pursue joint research in magnetohydrodynamics (MHD), a highly efficient process for generating electricity, and to exchange information on fusion, fission, the generation of electricity, transmission and pollution control technology. These efforts should be a model for joint research efforts with other countries. Additionally, American companies are looking into the possibility of joint projects with the Soviet Union to develop natural resources for the benefit of both nations.

I have also instructed the Department of State, in coordination with the Atomic Energy Commission, other appropriate Government agencies, and the Congress to move rapidly in developing a program of international cooperation in research and development on new forms of energy and in developing international mechanisms for dealing with energy questions in times of critical shortages.

I believe the energy challenge provides an important opportunity for nations to pursue vital objectives through peaceful cooperation. No chance should be lost to strengthen the structure of peace we are seeking to build in the world, and few issues provide us with as good an opportunity to demonstrate that there is more to be gained in pursuing our national interests through mutual cooperation than through destructive competition or dangerous confrontation.

## Federal Energy Organization

If we are to meet the energy challenge, the current fragmented organization of energy-related activities in the executive branch of the Government must be overhauled.

In 1971, I proposed legislation to consolidate Federal energy-related activities within a new Department of Natural Resources. The 92nd Congress did not act on this proposal. In the interim I have created a new post of Counsellor to the President on Natural Resources to assist in the policy coordination in the natural resources field.

Today I am taking executive action specifically to improve the Federal organization of energy activities.

I have directed the Secretary of the Interior to strengthen his Department's organization of energy activities in several ways.

— The responsibilities of the new Assistant Secretary for Energy and Minerals will be expanded to incorporate all departmental energy activities;

— The Department is to develop a capacity for gathering and analysis of energy data;

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-- An Office of Energy Conservation is being created to seek means for reducing demands for energy;

-- The Department of the Interior has also strengthened its capabilities for overseeing and coordinating a broader range of energy research and development.

By Executive order, I have placed authority in the Department of the Treasury for directing the Oil Policy Committee. That Committee coordinates the oil import program and makes recommendations to me for changes in that program. The Deputy Secretary of the Treasury has been designated Chairman of that Committee.

Through a second Executive order, effective today, I am strengthening the capabilities of the Executive Office of the President to deal with top level energy policy matters by establishing a special energy committee composed of three of my principal advisors. The order also reaffirms the appointment of a Special Consultant, who heads an energy staff in the Office of the President.

Additionally, a new division of Energy and Science is being established within the Office of Management and Budget.

While these executive actions will help, more fundamental reorganization is needed. To meet this need, I shall propose legislation to establish a Department of Energy and Natural Resources (DENR) building on the legislation I submitted in 1971, with heightened emphasis on energy programs.

This new Department would provide leadership across the entire range of national energy. It would, in short, be responsible for administering the national energy policy detailed in this message.

## CONCLUSION

Nations succeed only as they are able to respond to challenge, and to change when circumstances and opportunities require change.

When the first settlers came to America, they found a land of untold natural wealth, and this became the cornerstone of the most prosperous nation in the world. As we have grown in population, in prosperity, in industrial capacity, in all those indices that reflect the constant upward thrust in the American standard of living, the demands on our natural resources have also grown.

Today, the energy resources which have fueled so much of our national growth are not sufficiently developed to meet the constantly increasing demands which have been placed upon them. The time has come to change the way we meet these demands. The challenge facing us represents one of the great opportunities of our time -- an opportunity to create an even stronger domestic economy, a cleaner environment, and a better life for all our people.

The proposals I am submitting and the actions I will take can give us the tools to do this important job.

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April 18, 1973

THE WHITE HOUSE

EXECUTIVE ORDER

SPECIAL COMMITTEE ON ENERGY AND NATIONAL ENERGY OFFICE

This Administration is determined to continue to develop a more comprehensive, integrated national energy policy to meet the emerging energy challenge. Many steps have been taken toward that end, including measures to increase domestic production of all forms of energy without violating our natural environment, to conserve the energy we produce, to better utilize our current resources, and to use our vast scientific and technological capacities to develop new sources and new forms of energy. I have now determined that in order to protect and promote the interests of the people of the United States as energy users, and to coordinate the policies of the executive branch in this area, it is necessary to establish a Special Committee on Energy and a National Energy Office.

NOW, THEREFORE, by virtue of the authority vested in me as President of the United States by the Constitution and statutes of the United States, it is hereby ordered as follows:

Special Committee on Energy

Section 1. Three Assistants to the President, John D. Ehrlichman, Henry A. Kissinger, and George P. Shultz, shall constitute a Special Committee on Energy. The Director of the National Energy Office shall perform his functions under this order in accordance with policies and guidance provided him by the Special Committee.

Establishment of the Office

Sec. 2. There is hereby established in the Executive Office of the President a National Energy Office. The Office shall be under the immediate supervision and direction of a Director who shall be designated by the President. The Director shall report to the President through the Special Committee on Energy.

Functions of the Director

Sec. 3. (a). The Director shall advise the President, through the Special Committee on Energy, with respect to all Federal energy programs, activities, and related matters.

(b) The Director shall recommend policies and guidelines pertaining to energy matters for all energy related programs within the Executive Branch. To the maximum extent permitted by law, Federal officers and Federal departments and agencies shall cooperate with the Director in carrying out his functions under this Order.

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(OVER)

April 18, 1973

THE WHITE HOUSE

EXECUTIVE ORDER

Special Committee on Energy

Establishment of the Office

Functions of the Director

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April 10, 1973

THE WHITE HOUSE

The Trade Reform Act of 1973, which I am today proposing to the Congress, calls for the most important changes in more than a decade in America's approach to world trade.

This legislation can mean more and better jobs for American workers.

It can help American consumers get more for their money.

It can mean expanding trade and expanding prosperity, for the United States and for our trading partners alike.

Most importantly, these proposals can help us reduce international tensions and strengthen the structure of peace.

The need for trade reform is urgent. The task of trade reform requires an effective, working partnership between the executive and legislative branches. The legislation I submit today has been developed in close consultation with the Congress and it envisions continuing cooperation after it is enacted. I urge the Congress to examine these proposals in a spirit of constructive partnership and to give them prompt and favorable consideration.

This legislation would help us to:

- Negotiate for a more open and equitable world trading system;

- Deal effectively with rapid increases in imports that disrupt domestic markets and displace American workers;

- Strengthen our ability to meet unfair competitive practices;

- Manage our trade policy more efficiently and use it more effectively to deal with special needs such as our balance of payments and inflation problems; and

- Take advantage of new trade opportunities while enhancing the contribution trade can make to the development of poorer countries.

## Strengthening the Structure of Peace

The world is embarked today on a profound and historic movement away from confrontation and toward negotiation in resolving international differences. Increasingly in recent years, countries have come to see that the best way of advancing their own interests is by expanding peaceful contacts with other peoples. We have thus begun to erect a durable structure of peace in the world from which all nations can benefit and in which all nations have a stake.

This structure of peace cannot be strong, however, unless it encompasses international economic affairs. Our progress toward world peace and stability can be significantly undermined by economic conflicts which breed

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political tensions and weaken security ties. It is imperative,
therefore, that we promptly turn our negotiating efforts to
the task of resolving problems in the economic arena.

My trade reform proposals would equip us to meet this
challenge. They would help us in creating a new economic
order which both reflects and reinforces the progress we
have made in political affairs. As I said to the Governors
of the International Monetary Fund last September, our
common goal should be to "set in place an economic structure
that will help and not hinder the world's historic movement
toward peace."

Toward a New International Economic Order

The principal institutions which now govern the world
economy date from the close of World War II. At that time,
the United States enjoyed a dominant position. Our
industrial and agricultural systems had emerged from the
war virtually intact. Our substantial reserves enabled
us to finance a major share of international reconstruction.
We gave generously of our resources and our leadership in
helping the world economy get back on track.

The result has been a quarter century of remarkable
economic achievement -- and profound economic change. In
place of a splintered and shattered Europe stands a new
and vibrant European Community. In place of a prostrate
Japan stands one of the free world's strongest economies.
In all parts of the world new economic patterns have developed
and new economic energies have been released.

These successes have now brought the world into a very
different period. America is no longer the sole, dominating
economic power. The new era is one of growing economic
interdependence, shared economic leadership, and dramatic
economic change.

These sweeping transformations, however, have not been
matched by sufficient change in our trading and monetary
systems. The approaches which served us so well in the
years following World War II have now become outmoded;
they are simply no longer equal to the challenges of our
time.

The result has been a growing sense of strain and stress
in the international economy and even a resurgence of
economic isolationism as some have sought to insulate them-
selves from change. If we are to make our new economic
era a time of progress and prosperity for all the world's
peoples, we must resist the impulse to turn inward and
instead do all we can to see that our international
economic arrangements are substantially improved.

Momentum for Change

The United States has already taken a number of actions
to help build a new international economic order and to
advance our interests within it.

-- Our New Economic Policy, announced on August 15, 1971,
has helped to improve the performance of our domestic
economy, reducing unemployment and inflation and thereby
enhancing our competitive position.

-- The realignment of currencies achieved under the
Smithsonian Agreement of December 18, 1971, and by the
adjustments of recent weeks have also made American goods
more competitive with foreign products in markets at home
and abroad.

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-- Building on the Smithsonian Agreement we have advanced far-reaching proposals for lasting reform in the world's monetary system.

-- We have concluded a trade agreement with the Soviet Union that promises to strengthen the fabric of prosperity and peace.

-- Opportunities for mutually beneficial trade are developing with the People's Republic of China.

-- We have opened negotiations with the enlarged European Community and several of the countries with which it has concluded special trading agreements concerning compensation due us as a result of their new arrangements.

But despite all these efforts, underlying problems remain. We need basic trade reform, and we need it now. Our efforts to improve the world's monetary system, for example, will never meet with lasting success unless basic improvements are also achieved in the field of international trade.

## Building a Fair and Open Trading World

A wide variety of barriers to trade still distort the world's economic relations, harming our own interests and those of other countries.

-- Quantitative barriers hamper trade in many commodities, including some of our potentially most profitable exports.

-- Agricultural barriers limit and distort trade in farm products, with special damage to the American economy because of our comparative advantage in the agricultural field.

-- Preferential trading arrangements have spread to include most of Western Europe, Africa and other countries bordering on the Mediterranean Sea.

-- Non-tariff barriers have greatly proliferated as tariffs have declined.

These barriers to trade, in other countries and in ours, presently cost the United States several billion dollars a year in the form of higher consumer prices and the inefficient use of our resources. Even an economy as strong as ours can ill afford such losses.

Fortunately, our major trading partners have joined us in a commitment to broad, multilateral trade negotiations beginning this fall. These negotiations will provide a unique opportunity for reducing trading barriers and expanding world trade.

It is in the best interest of every nation to sell to others the goods it produces more efficiently and to purchase the goods which other nations produce more efficiently. If we can operate on this basis, then both the earnings of our workers and the buying power of our dollars can be significantly increased.

But while trade should be more open, it should also be more fair. This means, first, that the rules and practices of trade should be fair to all nations. Secondly, it means that the benefits of trade should be fairly distributed among American workers, farmers, businessmen and consumers alike and that trade should create no undue burdens for any of these groups.

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I am confident that our free and vigorous American
economy can more than hold its own in open world competition.
But we must always insist that such competition take place
under equitable rules.

The Urgent Need for Action

The key to success in our coming trade negotiations
will be the negotiating authority the United States brings
to the bargaining table. Unless our negotiators can
speak for this country with sufficient authority, other
nations will undoubtedly be cautious and non-committal --
and the opportunity for change will be lost.

We must move promptly to provide our negotiators with
the authority their task requires. Delay can only aggravate
the strains we have already experienced. Disruptions in
world financial markets, deficits in our trading balance,
inflation in the international marketplace, and tensions
in the diplomatic arena all argue for prompt and decisive
action. So does the plight of those American workers and
businesses who are damaged by rapidly rising imports or
whose products face barriers in foreign markets.

For all of these reasons, I urge the Congress to act on
my recommendations as expeditiously as possible. We face
pressing problems here and now. We cannot wait until
tomorrow to solve them.

Providing New Negotiating Authorities

Negotiators from other countries will bring to the
coming round of trade discussions broad authority to alter
their barriers to trade. Such authority makes them more
effective bargainers; without such authority the hands of
any negotiator would be severely tied.

Unfortunately, the President of the United States and
those who negotiate at his direction do not now possess
authorities comparable to those which other countries will
bring to these bargaining sessions. Unless these authorities
are provided, we will be badly hampered in our efforts to
advance American interests and improve our trading system.

My proposed legislation therefore calls upon the
Congress to delegate significant new negotiating authorities
to the executive branch. For several decades now, both the
Congress and the President have recognized that trade policy
is one field in which such delegations are indispensable.
This concept is clearly established; the questions which
remain concern the degree of delegation which is appropriate
and the conditions under which it should be carried out.

The legislation I submit today spells out only that
degree of delegation which I believe is necessary and proper
to advance the national interest. And just as we have consulted
closely with the Congress in shaping this legislation, so the
executive branch will consult closely with the Congress in
exercising any negotiating authorities it receives. I invite
the Congress to set up whatever mechanism it deems best
for closer consultation and cooperation to ensure that its
views are properly represented as trade negotiations go
forward.

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It is important that America speak authoritatively and with a single voice at the international bargaining table. But it is also important that many voices contribute as the American position is being shaped.

The proposed Trade Reform Act of 1973 would provide for the following new authorities:

First, I request authority to eliminate, reduce, or increase customs duties in the context of negotiated agreements. Although this authority is requested for a period of five years, it is my intention and my expectation that agreements can be concluded in a much shorter time. Last October, the member governments of the European Community expressed their hope that the coming round of trade negotiations will be concluded by 1975. I endorse this timetable and our negotiators will cooperate fully in striving to meet it.

Secondly, I request a Congressional declaration favoring negotiations and agreements on non-tariff barriers. I am also asking that a new, optional procedure be created for obtaining the approval of the Congress for such agreements when that is appropriate. Currently both Houses of the Congress must take positive action before any such agreement requiring changes in domestic law becomes effective -- a process which makes it difficult to achieve agreements since our trading partners know it is subject to much uncertainty and delay. Under the new arrangement, the President would give notice to the Congress of his intention to use the procedure at least 90 days in advance of concluding an agreement in order to provide time for appropriate House and Senate Committees to consider the issues involved and to make their views known. After an agreement was negotiated, the President would submit that agreement and proposed implementing orders to the Congress. If neither House rejected them by a majority vote of all members within a period of 90 days, the agreement and implementing orders would then enter into effect.

Thirdly, I request advance authority to carry out mutually beneficial agreements concerning specific customs matters primarily involving valuation and the marking of goods by country of origin.

The authorities I outline in my proposed legislation would give our negotiators the leverage and the flexibility they need to reduce or eliminate foreign barriers to American products. These proposals would significantly strengthen America's bargaining position in the coming trade negotiations.

## Objectives in Agricultural Trade

I am not requesting specific negotiating authority relating to agricultural trade. Barriers to such trade are either tariff or non-tariff in nature and can be dealt with under the general authorities I am requesting.

One of our major objectives in the coming negotiations is to provide for expansion in agricultural trade. The strength of American agriculture depends on the continued expansion of our world markets -- especially for the major bulk commodities our farmers produce so efficiently. Even as we have been moving toward a great reliance on free

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market forces here at home under the Agricultural Act of 1970, so we seek to broaden the role of market forces on the international level by reducing and removing barriers to trade in farm products.

I am convinced that the concerns which all nations have for their farmers and consumers can be met most effectively if the market plays a far greater role in determining patterns of agricultural production and consumption. Movement in this direction can do much to help ensure adequate supplies of food and relieve pressure on consumer prices.

## Providing for Import Relief

As other countries agree to reduce their trading barriers, we expect to reduce ours. The result will be expanding trade, creating more and better jobs for the American people and providing them with greater access to a wider variety of products from other countries.

It is true, of course, that reducing import barriers has on some occasions led to sudden surges in imports which have had disruptive effects on the domestic economy. It is important to note, however, that most severe problems caused by surging imports have not been related to the reduction of import barriers. Steps toward a more open trading order generally have a favorable rather than an unfavorable impact on domestic jobs.

Nevertheless, damaging import surges, whatever their cause, should be a matter of great concern to our people and our Government. I believe we should have effective instruments readily available to help avoid serious injury from imports and give American industries and workers time to adjust to increased imports in an orderly way. My proposed legislation outlines new measures for achieving these goals.

To begin with, I recommend a less restrictive test for invoking import restraints. Today, restraints are authorized only when the Tariff Commission finds that imports are the "major cause" of serious injury or threat thereof to a domestic industry, meaning that their impact must be larger than that of all other causes combined. Under my proposal, restraints would be authorized when import competition was the "primary cause" of such injury, meaning that it must only be the largest single cause. In addition, the present requirement that injury must result from a previous tariff concession would be dropped.

I also recommend a new method for determining whether imports actually are the primary cause of serious injury to domestic producers. Under my proposal, a finding of "market disruption" would constitute prima facie evidence of that fact. Market disruption would be defined as occurring when imports are substantial, are rising rapidly both absolutely and as a percentage of total domestic consumption, and are offered at prices substantially below those of competing domestic products.

My proposed legislation would give the President greater flexibility in providing appropriate relief from import problems -- including orderly marketing agreements or higher tariffs or quotas. Restraints could be imposed for an initial period of five years and, at the discretion of the President, could be extended for an additional period of two years. In

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exceptional cases, restrictions could be extended even further
after a two-year period and following a new investigation by
the Tariff Commission.

Improving Adjustment Assistance

Our responsibilities for easing the problems of displaced
workers are not limited to those whose unemployment can be
traced to imports. All displaced workers are entitled to
adequate assistance while they seek new employment. Only if
all workers believe they are getting a fair break can our
economy adjust effectively to change.

I will therefore propose in a separate message to the
Congress new legislation to improve our systems of unemploy-
ment insurance and compensation. My proposals would set
minimum Federal standards for benefit levels in State programs,
ensuring that all workers covered by such programs are treated
equitably, whatever the cause of their involuntary unemployment.
In the meantime, until these standards become effective, I
am recommending as a part of my trade reform proposals that
we immediately establish benefit levels which meet these
proposed general standards for workers displaced because of
imports.

I further propose that until the new standards for
unemployment insurance are in place, we make assistance for
workers more readily available by dropping the present
requirement that their unemployment must have been caused
by prior tariff concessions and that imports must have been
the "major cause" of injury. Instead, such assistance would
be authorized if the Secretary of Labor determined that
unemployment was substantially due to import-related causes.
Workers unemployed because of imports would also have job
training, job search allowances, employment services and
relocation assistance available to them as permanent features
of trade adjustment assistance.

In addition, I will submit to the Congress comprehensive
pension reform legislation which would help protect workers
who lose their jobs against loss of pension benefits. This
legislation will contain a mandatory vesting requirement which
has been developed with older workers particularly in mind.

The proposed Trade Reform Act of 1973 would terminate the
present program of adjustment assistance to individual firms.
I recommend this action because I believe this program has been
largely ineffective, discriminates among firms within a given
industry and has needlessly subsidized some firms at the
taxpayer's expense. Changing competitive conditions, after all,
typically act not upon particular firms but upon an industry
as a whole and I have provided for entire industries under my
import relief proposals.

Dealing with Unfair Trade Practices

The President of the United States possesses a variety
of authorities to deal with unfair trade practices. Many of
these authorities must now be modernized if we are to respond
effectively and even-handedly to unfair import competition at
home and to practices which unfairly prejudice our export
opportunities abroad.

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To cope with unfair competitive practices in our own markets, my proposed legislation would amend our antidumping and countervailing duty laws to provide for more expeditious investigations and decisions. It would make a number of procedural and other changes in these laws to guarantee their effective operation. The bill would also amend the current statute concerning patent infringement by subjecting cases involving imports to judicial proceedings similar to those which involve domestic infringement, and by providing for fair processes and effective action in the event of court delays. I also propose that the Federal Trade Commission Act be amended to strengthen our ability to deal with foreign producers whose cartel or monopoly practices raise prices in our market or otherwise harm our interest by restraining trade.

In addition, I ask for a revision and extension of my authority to raise barriers against countries which unreasonably or unjustifiably restrict our exports. Existing law provides such authority only under a complex array of conditions which vary according to the practices or exports involved. My proposed bill would simplify the authority and its use. I would prefer, of course, that other countries agree to remove such restrictions on their own, so that we should not have to use this authority. But I will consider using it whenever it becomes clear that our trading partners are unwilling to remove unreasonable or unjustifiable restrictions against our exports.

## Other Major Provisions

**Most-Favored-Nation Authority.** My proposed legislation would grant the President authority to extend most-favored-nation treatment to any country when he deemed it in the national interest to do so. Under my proposal, however, any such extension to countries not now receiving most-favored-nation treatment could be vetoed by a majority vote of either the House or the Senate within a three-month period.

This new authority would enable us to carry out the trade agreement we have negotiated with the Soviet Union and thereby ensure that country's repayment of its lend-lease debt. It would also enable us to fulfill our commitment to Romania and to take advantage of opportunities to conclude beneficial agreements with other countries which do not now receive most-favored-nation treatment.

In the case of the Soviet Union, I recognize the deep concern which many in the Congress have expressed over the tax levied on Soviet citizens wishing to emigrate to new countries. However, I do not believe that a policy of denying most-favored-nation treatment to Soviet exports is a proper or even an effective way of dealing with this problem.

One of the most important elements of our trade agreement with the Soviet Union is the clause which calls upon each party to reduce exports of products which cause market disruptions in the other country. While I have no reason to doubt that the Soviet Union will meet its obligations under this clause if the need arises, we should still have authority to take unilateral action to prevent disruption if such action is warranted.

Because of the special way in which state-trading countries market their products abroad, I would recommend two modifications in the way we take such action. First, the Tariff Commission should only have to find "material injury" rather than "serious injury" from imports in order to impose appropriate restraints.

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Secondly, such restraints should apply only to exports from the offending country. These recommendations can simplify our laws relating to dumping actions by state-trading countries, eliminating the difficult and time-consuming problems associated with trying to reach a constructed value for their exports.

**Balance of Payments Authority.** Though it should only be used in exceptional circumstances, trade policy can sometimes be an effective supplementary tool for dealing with our international payments imbalances. I therefore request more flexible authority to raise or lower import restrictions on a temporary basis to help correct deficits or surpluses in our payments position. Such restraints could be applied to imports from all countries across the board or only to those countries which fail to correct a persistent and excessive surplus in their global payments position.

**Anti-Inflation Authority.** My trade recommendations also include a proposal I made on March 30th as a part of this Administration's effort to curb the rising cost of living. I asked the Congress at that time to give the President new, permanent authority to reduce certain import barriers temporarily and to a limited extent when he determined that such action was necessary to relieve inflationary pressures within the United States. I again urge prompt approval for this important weapon in our war against inflation.

**Generalized Tariff Preferences.** Another significant provision of my proposed bill would permit the United States to join with other developed countries, including Japan and the members of the European Community, in helping to improve the access of poorer nations to the markets of developed countries. Under this arrangement, certain products of developing nations would benefit from preferential treatment for a ten-year period, creating new export opportunities for such countries, raising their foreign exchange earnings, and permitting them to finance those higher levels of imports that are essential for more rapid economic growth.

This legislation would allow duty-free treatment for a broad range of manufactured and semi-manufactured products and for a selected list of agricultural and primary products which are now regulated only by tariffs. It is our intention to exclude certain import-sensitive products such as textile products, footwear, watches and certain steel products from such preferential treatment, along with products which are now subject to outstanding orders restricting imports. As is the case for the multilateral negotiations authority, public hearing procedures would be held before such preferences were granted and preferential imports would be subject to the import relief provisions which I have recommended above. Once a particular product from a given country became fully competitive, however, it would no longer qualify for special treatment.

The United States would grant such tariff preferences on the basis of international fair play. We would take into account the actions of other preference-granting countries and we would not grant preferences to countries which discriminate against our products in favor of goods from other industrialized nations unless those countries agreed to end such discrimination.

**Permanent Management Authorities.** To permit more efficient and more flexible management of American trade policy, I request permanent authority to make limited reductions in our tariffs as a form of compensation to other countries. Such compensation could be necessary in cases where we have raised certain barriers under the new import restraints discussed above and would provide an alternative in such cases to increased barriers against our exports.

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I also request permanent authority to offer reductions in particular United States barriers as a means of obtaining significant advantages for American exports. These reductions would be strictly limited; they would involve tariff cuts of no more than 20 percent covering no more than two percent of total United States imports in any one year.

## Reforming International Trading Rules

The coming multilateral trade negotiations will give us an excellent opportunity to reform and update the rules of international trade. There are several areas where we will seek such changes.

One important need concerns the use of trade policy in promoting equilibrium in the international payments system. We will seek rule changes to permit nations, in those exceptional cases where such measures are necessary, to increase or decrease trade barriers across the board as one means of helping to correct their payments imbalances. We will also seek a new rule allowing nations to impose import restrictions against individual countries which fail to take effective action to correct an excessive surplus in their balance of payments. This rule would parallel the authority I have requested to use American import restrictions to meet our own balance of payments problem.

A second area of concern is the need for a multilateral system for limiting imports to protect against disruptions caused by rapidly changing patterns of international trade. As I emphasized earlier, we need a more effective domestic procedure to meet such problems. But it is also important that new arrangements be developed at the international level to cope with disruptions caused by the accelerating pace of change in world trade.

We will therefore seek new international rules which would allow countries to gain time for adjustment by imposing import restrictions, without having to compensate their trading partners by simultaneously reducing barriers to other products. At the same time, the interests of exporting countries should be protected by providing that such safeguards will be phased out over a reasonable period of time.

## Promoting Export Expansion

As trade barriers are reduced around the world, American exports will increase substantially, enhancing the health of our entire economy.

Already our efforts to expand American exports have moved forward on many fronts. We have made our exports more competitive by realigning exchange rates. Since 1971, our new law permitting the establishment of Domestic International Sales Corporations has been helping American companies organize their export activities more effectively. The lending, guaranty and insurance authorities of the Export-Import Bank have been increased and operations have been extended to include a short-term discount loan facility. The Department of Commerce has reorganized its facilities for promoting exports and has expanded its services for exporters. The Department of State, in cooperation with the Department of Commerce, is giving increased emphasis to commercial service programs in our missions abroad.

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In addition, I am today submitting separate legislation which would amend the Export Trade Act in order to clarify the legal framework in which associations of exporters can function. One amendment would make it clear that the act applies not only to the export of goods but also to certain kinds of services -- architecture, construction, engineering, training and management consulting, for example. Another amendment would clarify the exemption of export associations from our domestic antitrust laws, while setting up clear information, disclosure and regulatory requirements to ensure that the public interest is fully protected.

In an era when more countries are seeking foreign contracts for entire industrial projects -- including steps ranging from engineering studies through the supply of equipment and the construction of plants -- it is essential that our laws concerning joint export activities allow us to meet our foreign competition on a fair and equal basis.

## The Growth of International Investment

The rapid growth of international investment in recent years has raised new questions and new challenges for businesses and governments. In our own country, for example, some people have feared that American investment abroad will result in a loss of American jobs. Our studies show, however, that such investment on balance has meant more and better jobs for American workers, has improved our balance of trade and our overall balance of payments, and has generally strengthened our economy. Moreover, I strongly believe that an open system for international investment, one which eliminates artificial incentives or impediments here and abroad, offers great promise for improved prosperity throughout the world.

It may well be that new rules and new mechanisms will be needed for international investment activities. It will take time, however, to develop them. And it is important that they be developed as much as possible on an international scale. If we restrict the ability of American firms to take advantage of investment opportunities abroad, we can only expect that foreign firms will seize these opportunities and prosper at our expense.

I therefore urge the Congress to refrain from enacting broad new changes in our laws governing direct foreign investment until we see what possibilities for multilateral agreements emerge.

It is in this context that we must also shape our system for taxing the foreign profits of American business. Our existing system permits American-controlled businesses in foreign countries to operate under the same tax burdens which apply to its foreign competitors in that country. I believe that system is fundamentally sound. We should not penalize American business by placing it at a disadvantage with respect to its foreign competitors.

American enterprises abroad now pay substantial foreign income taxes. In most cases, in fact, Americans do not invest abroad because of an attractive tax situation but because of attractive business opportunities. Our income taxes are not the cause of our trade problems and tax changes will not solve them.

The Congress exhaustively reviewed this entire matter in 1962 and the conclusion it reached then is still fundamentally sound: there is no reason that our tax credit and deferral provisions relating to overseas investment should be subjected to drastic surgery.

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On the other hand, ten years of experience have demonstrated that in certain specialized cases American investment abroad can be subject to abuse. Some artificial incentives for such investment still exist, distorting the flow of capital and producing unnecessary hardship. In those cases where unusual tax advantages are offered to induce investment that might not otherwise occur, we should move to eliminate that inducement.

A number of foreign countries presently grant major tax inducements such as extended "holidays" from local taxes in order to attract investment from outside their borders. To curb such practices, I will ask the Congress to amend our tax laws so that earnings from new American investments which take advantage of such incentives will be taxed by the United States at the time they are earned -- even though the earnings are not returned to this country. The only exception to this provision would come in cases where a bilateral tax treaty provided for such an exception under mutually advantageous conditions.

American companies sometimes make foreign investments specifically for the purpose of re-exporting products to the United States. This is the classic "runaway plant" situation. In cases where foreign subsidiaries of American companies have receipts from exports to the United States which exceed 25 percent of the subsidiaries' total receipts, I recommend that the earnings of those subsidiaries also be taxed at current American rates. This new rule would only apply, however, to new investments and to situations where lower taxes in the foreign country are a factor in the decision to invest. The rule would also provide for exceptions in those unusual cases where our national interest required a different result.

There are other situations in which American companies so design their foreign operations that the United States treasury bears the burden when they lose money and deduct it from their taxes. Yet when that same company makes money, a foreign treasury receives the benefit of taxes on its profits. I will ask the Congress to make appropriate changes in the rules which now allow this inequity to occur.

We have also found that taxing of mineral imports by United States companies from their foreign affiliates is subject to lengthy delays. I am therefore instructing the Department of the Treasury, in consultation with the Department of Justice and the companies concerned, to institute a procedure for determining inter-company prices and tax payments in advance. If a compliance program cannot be developed voluntarily, I shall ask for legislative authority to create one.

## The Challenge of Change

Over the past year, this Administration has repeatedly emphasized the importance of bringing about a more equitable and open world trading system. We have encouraged other nations to join in negotiations to achieve this goal. The declaration of European leaders at their summit meeting last October demonstrates their dedication to the success of this effort. Japan, Canada and other nations share this dedication.

The momentum is there. Now we -- in this country -- must seize the moment if that momentum is to be sustained.

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