A Jobs-Seeking US Tries To Ease Trade Sanctions
Calculations on lost business cause a rethink of policies
WHEN Brazil's trade negotiator Paulo-Tarso Flecha de Lima arranged to buy a supercomputer from Cray Research Inc. in 1988, it was the culmination of a two-year campaign to loosen United States export controls on this high-technology product.
But a year later, Latin America's largest nation purchased its second multimillion-dollar supercomputer from Japan, and reportedly infuriated the US ambassador to Brazil. ``We were fed up and exhausted with those negotiations with the Americans,'' recalls Mr. de Lima, now his country's ambassador to Washington.
Echoing comments from other international procurers, de Lima laments that while American goods are generally much preferred over other foreign sources, the laborious and time-consuming efforts to break through various blocks on US exports ``weakens the [bilateral] link and the reliability of US supplies.''
Documenting the slip in US market share when the US imposes export controls and the loss of potential sales when the US imposes sanctions, the US Council on Competitiveness recently examined eight cases. It estimated that their combined cost exceeds $6 billion and 120,000 jobs.
Clinton administration officials say they are acutely aware of how such limits undermine the nation's economic recovery, since exports are the single largest contributor to US growth. ``We no longer have the luxury of saying, for example, `Well, India is a pariah because of its nuclear program' and then watch the French, the British, and the Japanese move into the market,'' asserts Jeffrey Garten, undersecretary of commerce for international trade.
Mr. Garten says that when he recently traveled through Asia on a tour to promote US products, he met outrage from US business leaders at the local American chambers of commerce. Despite the administration's removal of many restrictions on sales of telecommunications technologies and computers abroad, he says, the American executives were ``screaming about export controls.''
The curbs are strictest against Iran and other countries Washington suspects of terrorism. In the case of Iran, ``we're at loggerheads with our trade partners,'' says Syracuse University Prof. J. David Richardson, author of ``Sizing Up US Export Disincentives.'' Germany, ``which views Iran as a country to be watched but not to be isolated, sends $5 billion worth of products a year while the US exports roughly $1 billion a year,'' says Mr. Richardson, who calculated a $1.8 billion loss in total US export opportunities from 1979 to 1989.
For nations trying to obtain nuclear weapons, Washington must devise a policy that will both deter them and maximize US commercial benefits, says Alan Tonelson, research director for the Economic Strategy Institute. Instead of cutting off American military sales to states determined to develop their military nuclear capability, such as Pakistan, US policymakers should put more emphasis on selling conventional weapons to enhance their sense of security, Mr. Tonelson says.
``That way, the US locks into a market, avoids sanctions, beats the competition, and stabilizes a potentially explosive nuclear situation,'' he says. Besides, ``if we don't sell Pakistan F-16 fighter jets, they'll just get [jets] from somewhere else.''
The competition is fierce. With the cold war over, [Russian-made] MiG 29s - comparable to F-16s but a lot less costly - are going many places they have never gone before. ``And with the Russians it's cash and carry,'' quips a lobbyist for US defense contractors. ``You can get a whole squadron of planes within a year, while you only start to get planes from US suppliers after they've been on order for a year.''
American firms lost market share when the US imposed sanctions against South Africa to protest apartheid, says Stephen Lewis, president of Carleton College in Northfield, Minn. Dr. Lewis, author of ``The Economics of Apartheid,'' says it is ironic that wholesale divestment by US investors provided South African state and private concerns ``more ownership of low-cost assets because they snapped up offerings at fire-sale prices.'' Lewis says anti-apartheid sanctions were notoriously porous.
Last week US Commerce Secretary Ron Brown began an initiative to recapture American market share. He named a minister counsellor to South Africa to develop US commercial activities in southern Africa - what Garten calls an ``emerging area of trade and investment opportunity.''