Share this story
Close X
Switch to Desktop Site

Is the US serious about trade?

It is vital that the United States develop a comprehensive national policy promoting foreign trade. If it does not do so - if it continues to let European and Asian industrial competitors win larger and larger shares of the world market - it will experience even more of the unfortunate trade deficits that have now become so commonplace. The latest trade figures, released this week, show a US merchandise trade deficit for July of $6.36 billion, compared to $4.96 billion in June. For the first seven months of 1983 the deficit hit $33.6 billion, up from $19.03 billion for the same period of 1982.

''But wait a minute,'' you may be thinking. ''Are not the vigor of the recovery, and the strength of the dollar in relation to other currencies, instrumental in boosting the trade deficit?'' The answer, of course, is yes. The strength of the dollar has made American goods more expensive in world markets - thus giving an advantage to lower-cost products from other nations. And assuming that the dollar continues to remain strong, US goods will remain at a commercial disadvantage. Indeed, Commerce Secretary Malcolm Baldrige estimates that the US trade deficit this year will total between $65 billion and $70 billion, compared to last year's record deficit of $43 billion.

About these ads

What must be understood, however, is that until 1970 the US almost invariably exported more goods than it bought.

Since then, because of a combination of factors - including the aggressiveness of industrial nations in developing international trade policies, high US labor costs, sloppy production standards, and US tax policies that encourage consumption rather than savings - the United States has lost more and more market opportunities to overseas nations and firms. That loss of market shares in manufacturing and other product-oriented trade even occurred in the late 1970s, when the dollar was not overvalued relative to other currencies. Business Week recently went so far as to suggest that the ''powerful economic recovery and the flood of foreign money into the US are masking a trade problem that could turn out to be the economic disaster of the decade.''

Ensuring that the US remains strong in foreign trade is more than just a matter of national pride. It means protecting jobs - and creating new ones. It also means maintaining a strong industrial base for purposes of national security.

Steps needed to boost US trade are varied. They include holding wage and benefit increases to no more than real gains in productivity; better cooperation between management and labor; encouraging savings; avoiding legislation, such as domestic-content bills now before Congress, that could spark protectionism abroad.

Another important step would be to establish a new cabinet-level department of trade, an idea supported by Mr. Baldrige and many trade specialists. Almost all industrial nations have such a department. By coordinating and focusing its promotion efforts in a single foreign trade office, the US stands a better chance of eliminating those growing trade deficits.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.