AMERICANS have always prided themselves on their global trading acumen - from the days of the Yankee clipper sailing ships down to the jet aircraft and computer export sales of recent years.Skip to next paragraph
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But now is not the time for basking in the glow of past commercial success. Rather, export markets should be protected and new ones built.
The current US merchandise trade deficit - $12.2 billion alone during April, up 18 percent over the prior month - represents a long-range challenge to America's world commercial preeminence during the remainder of this century. Just ask any trader: Export markets once lost are not easily regained. Moreover, the trade imbalance represents an equally serious challenge to the overall US economy in terms of lost jobs and declining industries. Rising demands for import protection, which work against global trade, could crimp the world recovery.
Many economists now expect this year's trade deficit to be in the range of $ 100 billion or more, compared with a record trade gap (imports over exports) of
Yet, given some strong action at home, such gloomy results need not occur:
* Washington must reduce the massive federal budget deficits, which help keep interest rates high. High interest rates put upward pressure on the dollar, which in turn works against US export sales abroad. An overstrong dollar makes US goods more expensive vis-a-vis overseas goods, thus promoting imports.
Domestic interest rates are already hitting levels that many economists had not expected until later this year or next year. The higher rates stem from a combination of belt-tightening by the Federal Reserve Board plus competition for credit between the federal government seeking to finance deficits and commercial firms seeking to expand sales or upgrade facilities.
In that regard, the budget deficit packages now winding their way through Congress - while important symbolically - will not be enough to reduce the federal deficits to acceptable levels. The first order of priority for the new White House and Congress next year must be a no-nonsense deficit-reduction agreement.
* Federal trade-related agencies must step up efforts to hold existing US export markets, while seeking new markets. Smaller and medium-sized firms must be helped to become more export-oriented.
* Congress should consider legislation that would consolidate into one agency all trade departments and offices that are scattered throughout the government.
What's happening out in the trading world, it should be underscored, is a month-by-month increase in the US merchandise trade deficit (in other words, products) that is overpowering a continued trade surplus in services and farm products, although the farm surplus itself is now gradually shrinking.
In manufactured goods, the United States has swung from a surplus in the years 1979 to 1981 to deficits starting in 1982 and continuing to the present. Over this latest three-year period, according to Data Resources Inc., imports of manufactured goods soared 60 percent. Exports fell 10 percent.
Another way to look at this important shift - from a surplus in exports of manufactured goods to a deficit - is in terms of jobs. According to DRI, the decrease in real net exports from the summer of 1980 to the beginning of 1984 has meant a loss to the American work force of - here's the rub - almost 3 million jobs.
It's time to start saving jobs. That means safeguarding - and expanding - US and global trade.