On April 10, 1973, the US Administration presented a bill with the ambitious title of "Trade Reform Act". It has the purpose of equipping the executive with instruments and powers to develop US foreign trade according to its own ideas.

We apply a modified 'gravity model' incorporating measures of factor endowments to analyze Japanese and U.S. bilateral trade flows and direct foreign investment positions with a sample of around 100 countries for the period 1985-1990. Country features that our analysis takes into account are...