Limiting trade is poor response to imports challenge
This is going to be the economic equivalent of a Dutch-uncle talk on international trade and foreign competition. My conversations with many business executives remind me of the gripes of students who cut class, do not do the homework, and then complain when you give them a low grade. Unfortunately, the parallel is clear. Just look at the data on absenteeism for one US industry, autombiles, hard hit by imports. As a recently published study shows, its absenteeism is four times that of Japan. Its labor turnover rate is seven times higher.Skip to next paragraph
Subscribe Today to the Monitor
In another major manufacturing industry, one large US company (Caterpillar Tractor) that is losing its share of world markets has to pay a bonus each time a worker puts in a full week. That is like my giving an apple to each student who shows up to class on time. The sad truth is that industry after industry in the United States has been matching falling productivity with rising labor costs. We cannot blame that on foreigners.
The answer is not to erect additional trade barriers, such as the higher tariffs and import quotas the President imposed on stainless-steel imports last week. We may have convenient memories. But foreign business executives cite chapter and verse on US trade restrictions. ''Buy American'' practices by federal, state, and local governments discriminate against foreign domestic producers. We prohibit foreign ships from engaging in commerce between American ports. We limit imports of agricultural products, such as sugar, beef, dairy produce, and mandarin oranges. We also have encouraged foreign exporters of beef to restrain their sales voluntarily to avoid the imposition of formal quotas.
Although our average tariff rates are low (about as low as Japan's), high tariffs are levied on some items. Tariffs on textiles average 20 percent. Duties on fruit juices are over 27 percent, and the rate on ceramic products is over 14 percent. In addition, numerous nontariff barriers, often of a regulatory nature, are imposed by federal, state, county, and municipal governments.
Despite this nation's overall free-trade posture, ''protection'' against imports into the US now covers such basic industries as automobiles, steel, and textiles. Pleas for further trade restrictions extend to such esoteric sectors as mushrooms, mechanics' shop towels, and manhole covers. Protection is popular because it benefits a specific sector of the economy at the expense of the broad mass of the public. The higher prices that result are in effect a hidden tax on the consumer.
It would also help if our government would reduce its obstacles to our own exports. These are self-inflicted wounds. In many ways - and often without considering the effects - we prevent US exports or make it more difficult for American companies to compete in foreign markets. These export barriers range from a prohibition on the export of oil from North Slope fields to a ban on timber exports from federal lands west of the 100th meridian. When they get that specific, you can detect the smell of special interest pressures.