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Imports trouble the waters between US and its friends

By Harry B. EllisStaff correspondent of The Christian Science Monitor / March 18, 1980



Washington

(Item)m American auto firms want US government help to fend off growing competition from gas-stingy Japanese imports. (Item)m European fibermakers cry foul against their American competitors, on grounds that controlled petroleum prices in the United States favor American synthetic fiber companies.

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(Item)m Major US steel firms are poised to bring antidumping suits against European steelmakers, if Washington does not limit steel imports.

(Item)m Nations of the European Community are considering an internal tax on vegetable fats and oils. The tax would have the effect of reducing demand in Europe for American soybean exports, now worth billions of dollars.

Such foreign trade issues are in lively debate between US government and business leaders on the one hand, and between government on the other.

The stakes are huge. This year the US will pay $80 billion or more for foreign oil and, says Brookings Institution economist Barry P. Bosworth, "there is no way we can earn the foreign exchange to pay for it."

So in 1980 the US, as in past years, will rack up a hefty trade deficit, and it needs every possible export dollar to keep the red ink down.

Reubin Askew, top White House trade official, and his aides cock sympathetic ears to the pleas of American firms for import protection. But they stress the need to prevent a trade war that would choke off American exports to the other lands.

The crux of the problem, White House trade envoy Robert D. Hormats says, is to "mesh domestic concerns" with the principles of free trade to which the US is pledged.

All this comes after Congress overwhelmingly ratified US participation in a new worldwide agreement to liberalize trade, called the Multilateral Trade Negotiations (MTN). The aim of this agreement was to outlaw the "beggar thy neighbor" approach of the 1930s, which led the US and other powers to erect high tariff walls against foreign goods -- a major cause of the great depression.

Under MTN, major industrial powers, plus some third-world nations, have set up codes of conduct designed to give a fair shake to everyone in the worldwide scramble for markets.

Already, however, enforcement of the codes runs up strong protectionist pressures in the US, Europe, and Japan, as troubled domestic industries cry for relief.

In the case of Japanese cars, US government officials and the automotive big three -- General Motors, Ford, and Chrysler -- are on the same side, asking major Japanese carmakers to begin producing cars in the United States.

Honda plans to make some vehicles here, but the Japanese big two -- Toyota and Nissan (Datsun) -- are holding back, reluctant to invest billions of dollars in US facilities.

Meanwhile, Japanese models now comprise 75 percent of all imported cars and the total moves up as Americans in droves turn to more efficient cars.

Congress is threatening to take matters into its own hands and legislate limits on the numbers of cars Japan can send to the U.S

The steel issue is more complex, with US government officials and leaders of the industry somewhat at odds.

The White House relies on a so-called trigger price mechanism to prevent dumping of foreign steel in the US below cost.

Major American steel firms, beset by plant closings and worker layoffs, contend that the price mechanism is not working and that some Japanese and European steel is coming in below cost. If the American firms could show material injury and were backed up by US courts, the government would be forced to raise tariffs on foreign steel. This, the Europeans warn, could trigger a trade war.

Disputes of this kind send tremors through the trading world. American soybean exports to Europe, for example, have nothing directly to do with steel.

The nine nations of the Common Markets, burdened by huge dairy product surpluses, are considering an internal tax on certain kinds of cattle feed, to reduce the size of their herds.

One product affected would be American soy oil. Under earlier international trade agreements, the Europeans cannot tax soybeans themselves, which enjoy what is called a "zero tariff binding."

But a tax on the oil derivative would diminish European demand for the soybeans. European officials friendly to the US, says one American source, hint that they might be unable to head off a tax on oils, if European steel exports to the US were curtailed.