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Import surge puts heat on Congress. Democrats say huge increase in trade deficit shows need for legislation

A surge of imports in November will put more pressure on President Reagan to act quickly on the trade issue when Congress resumes next week. The trade gap, which reached a record $19.2 billion, perplexed the Reagan administration and reinforced Democratic congressional calls for trade legislation in 1987.

Although economists were quick to point out that the trade numbers are usually substantially revised, they were still surprised at the large jump from October's deficit of $14.7 billion, which had been revised from $12.06 billion.

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Sara Johnson, senior economist with DRI Inc., an economic forecasting service in Lexington, Mass., called the new numbers ``a shock.''

The large jump in imports apparently came as many importers tried to avoid a surcharge that went into effect Dec. 1. This fee adds $2,200 to every $1 million of imports. At the same time, Ms. Johnson said it appeared many American companies purchased foreign goods to take advantage of the faster depreciation rates under the old tax law.

Another reason for the jump resulted from speculation that many retailers expected a better Christmas and had ordered more durable goods from abroad.

In addition, automobile imports surged. For example, Japanese manufacturers' shipments were up 20 percent from October and Canadian shipments rose 14 percent. This surge was surprising because auto sales have not been that strong and inventories are relatively high.

Especially surprising was a 3.8 percent drop in exports. With a lower valued dollar, exports had been rising. ``We don't know why exports were down,'' said a spokesman for the Commerce Department, which released the numbers.

William Melton, an economist with IDS in Minneapolis, said the fall in exports is hard to explain. Mr. Melton said anecdotal evidence seems to indicate American companies are having better results exporting.

``There are a lot of leaves in the wind that seem to suggest an improvement in trade,'' he noted.

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Democrats said the bad news merely indicated the need for trade legislation. An aide to Lloyd Bentsen (D) of Texas, chairman of the Senate Finance Committee, said, ``We don't need the November numbers to know we need trade legislation.''

Sen. Robert Byrd (D) of West Virginia, the new majority leader, said the November trade news should prompt the administration to ``make a New Year's resolution to work with Congress to enact comprehensive trade and competitiveness legislation that will restore jobs and halt the erosion of our industrial basis.''

When Congress reconvenes, Senator Bentsen's aide said, trade legislation will be the top priority. The senator would like to adopt legislation to promote American exports. At the same time, the Reagan administration had indicated it will work with Congress this year to draft trade legislation.

It is expected the legislation will include some monetary relief for workers who have lost their jobs because of trade problems.

Some economists advise patience on trade. William Cline, a senior fellow with the Institute for International Economics in Washington said, ``It would be a mistake to respond with some protective screen against imports.'' He suggested the trade numbers may still be bad in the first quarter of 1987. Such a development, he added, ``will remain an extreme test of our patience.''

Mr. Cline, like many economists, hopes the lower valued dollar will stimulate exports and reduce imports. In fact, part of the reason the trade numbers look so bad is because the value of goods in foreign currencies is rising as the dollar's value falls. But the amount of goods in non-dollar terms is not rising as fast.

The trade numbers have also come at a time when the US Trade Representative has taken a number of trade actions. On Tuesday, the USTR slapped $400 million in duties on European cheese, wine, brandy, gin, and other products. This levy may be dropped, however, because negotiations with the Europeans will continue for another 30 days.

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