WASHINGTON — President Reagan, declaring he "will not stand by and watch" as American businesses and workers are crushed by imports, called today for creation of a $300-million government fund to promote U.S. exports.
Reagan detailed his repackaged trade strategy in a speech at the White House that came one day after the Administration joined with the four other leading Western industrial nations to lower the value of the dollar, blamed for pricing U.S. goods out of the market.
Reaction was immediate. The dollar plunged 5% in Europe and New York today in what one London dealer called "a headlong rush to sell dollars."
The most spectacular drop was against the Japanese yen--to 226.80 yen from 238.95. Dealers said the yen soared when French Finance Minister Pierre Beregovoy said "the yen should lead the parade" against the dollar.
Pound Up 7 Cents
In London, the pound jumped to $1.4255 from Friday's $1.3745.
On European markets, stocks of multinational companies that do business in the United States plunged because of fears that their dollar earnings will be valued substantially less.
Treasury Secretary James A. Baker III said the effects of the five-nation agreement may not translate into a lower U.S. trade deficit for another 10 to 18 months.
But Reagan said he was confident that action would "provide better markets for U.S. products and improve the competitive position of our industry, agriculture and labor."
In his speech to the Export Council, an industry group, Reagan--facing a congressional stampede toward protectionism to save American jobs--vowed aggressive efforts to see that other nations "abide by the rules" laid down by the principle of "free and fair trade." He renewed his threat to veto protectionist legislation.
Unfair Trade Targeted
Reagan asked Congress for expanded authority to negotiate lower trade barriers abroad and announced creation of a government strike force to ferret out and "promptly counter and eliminate" cases of unfair trade practices.
Congressional leaders applauded the tone of the speech, but emphasized that Reagan will be judged not by what he says but by whether his proposals succeed.
"I'm glad we got his attention," Senate Democratic leader Robert C. Byrd of West Virginia said. "He felt that something had to be done because they saw this train coming down the track in the Congress."
Leaders of both parties agreed the speech would do little to prevent passage of a textile import quotas bill opposed by Reagan, which looms as the first major test in his trade policy showdown with Congress.
Loans to Aid Purchases
Asked if the promise of action was sufficient to lessen chances of a damaging veto override--a serious concern to the White House--Sen. John C. Danforth (R-Mo.) replied, "It is not, in and of itself."
A centerpiece of Reagan's "trade policy action plan" announced today is the proposed creation of a $300-million fund for loans to help foreign buyers purchase U.S. goods.
Some members of Congress were skeptical about the size of the fund, compared to a trade deficit estimated at about $150 billion this year, and its purpose. The fund must be approved by Congress.
In offering to work with Congress on trade matters, Reagan drew the line at protectionism.
Warning that such action would only boost prices to consumers, invite retaliation, strain international relations and rekindle inflation, he declared, "I will strongly oppose and veto measures that will harm economic growth, cause loss of jobs and diminish international trade."