US toughens trading posture on imports
In word and deed, United States Trade Representative William Brock is signaling that a second Reagan administration will take a tougher stance on trade issues.
The stonger position comes as the US racks up a record trade deficit, which is expected to top $130 billion this year, but which Mr. Brock says will begin declining over the next several years.
A firmer hand with trading partners may be one way to cope with the rising pressures for protectionism that Brock expects.
''You will see very significant protectionist pressures in 1985, 1986 and 1987'' from US industries losing sales to foreign countries, Brock said at a breakfast Wednesday with reporters.
Brock's tough talk regarding trading partners came on two successive days this week. In a speech Tuesday, he told the Washington International Trade Association that the US ''will be a good deal less patient'' and a ''good deal more aggressive'' in reacting to unfair trading practices by other nations.
And at his breakfast meeting, Brock said recent action against Common Market exports of steel tube and pipe ''shows what happens when you don't play ball (with the US). I think it strengthens our hands'' for future negotiations.
Brock moved to help the domestic steel industry Tuesday when the US placed an embargo on imports of steel tube and pipe from the European Community through the end of the year. The action came after negotiators for the US and the Common Market were unable to agree on how to modify the terms of a 1982 European agreement to limit shipments of pipe and tube products.
The US decided to exercise its right to enforce the original agreement under which European steelmakers were to limit their shipments to 5.9 percent of the US market. Recently the Common Market nations have taken a 14 percent share of the US market.
The EEC responded to the embargo, which takes effect Nov. 29, by renouncing the 1982 accord, which the US is using as a justification for limiting the pipe exports. That leaves the way open for American steel importers to go to court to challenge the administration's authority to halt the pipe and tube imports on grounds there is no longer an agreement to enforce.
Meanwhile, senior Common Market trade officials are exected to meet in Brussels before the end of the week to discuss the situation and possible retaliation against the US. One possibility would be for the Europeans to block US exports of farm products worth the same amount as the steel the US is embargoing.
Ambassador Brock said he did not know if there would be retaliation, but he admitted that there was ''a lot of anger and anguish'' among EEC officials.
In the short term at least, the embargo means ''stormy weather, difficult times,'' between the US and a key trading partner, Brock said. He blamed at least some of the thorny trade problems between the EEC and the US on an ''increasing divergence between the economic prospects of the two partners, which deserve a lot more thought.'' Europe has been slower to recover from the recession than the US.
Meanwhile, Brock admitted that progress was ''slow'' in securing agreements to limit exports of other finished and semifinished steel products.
President Reagan Sept. 18 promised to negotiate voluntary export restraint agreements with a variety of countries to help the US steel industry. Targets for such agreements included Korea, Brazil, Japan, Canada, and the Common Market. None has yet signed.
The surging US trade deficit will decline over the next four years ''unless we make a mess of things,'' Brock said. Economists expect the dollar to weaken eventually, which would help the US trade postion. As recoveries elsewhere in the world gain strength, and the pace of US economic growth moderates, US exports should rebound as imports subside.
Brock argued that this progress in reducing the trade deficit could be advanced by chopping the federal budget deficit. ''If you could eliminate the (budget) deficit, you probably could eliminate the trade deficit in almost the same year,'' he said.
Most private economists argue that the budget deficit forces the government to borrow more heavily, pushing up interest rates that boost the dollar's value, thereby hurting US exports. President Reagan and Treasury Secretary Donald Regan disagree with this reasoning, which Brock seems to accept.
The administration will not decide until early next year whether to seek renewal of the voluntary export quotas on Japanese automobiles that are slated to expire in 1985, Brock said. He restated his position that ''it is increasingy difficult to justify these things.''