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WHERE THE CANDIDATES STAND ON FOREIGN TRADE. America's stubborn trade gap undercuts US economic security. Can trade in today's world economy be both free and fair? Seventh in a series on the candidates and the issues. DUKAKIS

By Ron SchererStaff writer of The Christian Science Monitor / October 25, 1988



AS Michael Dukakis has found out, selling United States goods abroad is no tea party. It took three years before the Massachusetts Office of International Trade and Investment, established by Governor Dukakis, could take credit for some overseas sales. Today, after spending nearly $2 million of Bay State funds, the agency takes responsibility for a total of $35 million in contracts for the export of Massachusetts products.

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It will take lots more sales to make a dent in the US's $140 billion trade deficit. ``It's a task,'' agrees Andrew Bagley, director of the agency.

But Mr. Dukakis vows he will eliminate the trade gap in four years, using a combination of fiscal measures - that is, reducing the budget deficit - ``restoring competitive exchange rates,'' and prying open foreign markets.

Dukakis has received advice from Rep. Richard Gephardt (D) of Missouri, the sponsor of a tough trade bill that called for retaliatory actions against countries blocking American imports. But the governor concedes that eliminating trade barriers will not alone close the US trade gap.

``If every barrier to US goods abroad disappeared tomorrow, we would still have a trade deficit of $125 billion,'' Dukakis says.

To further bridge the trade gulf, according to Rob Shapiro, an issues adviser to Dukakis, the governor is counting on a $6 billion-a-year increase in productivity, and another $30 billion to $40 billion from higher exports to Japan and West Germany, which would be encouraged to become more growth-oriented.

Dukakis further envisions lopping another $15 billion to $20 billion a year off the trade deficit by ``jump starting'' stalled Latin American economies.

There are still many issues that Dukakis has yet to take a position on. These include where he stands on ``voluntary restraint agreements'' on steel, sugar quotas, and proposed legislation to reduce textile imports. Mr. Shapiro says, however, that Dukakis would not support a grain embargo.

In recent days, Dukakis has become more critical of the surge in foreign investment in the US. He had an embarrassing moment recently when he raised questions about the spate of foreign takeovers of US companies; unknowingly, he was speaking at a factory owned by an Italian corporation. But Shapiro insists that under a Dukakis administration, ``there would be no restrictions on foreign investment.''

Some business groups in Massachusetts say Dukakis has made it more difficult for them to operate. Chris Anderson, general counsel of the Massachusetts High Tech Council, says the governor tried to enact a unitary tax - that is, a tax on the total operations of a company, not just its business within Massachusetts. ``This is a tax on export-oriented businesses,'' Mr. Anderson maintains.

Anderson is also critical of a Dukakis proposal to make all corporate state tax returns available to the public. ``The line at the secretary of state's office would be full of foreign nationals and the raiders of the world,'' he asserts.

Dukakis gets higher marks from Joe Motor, vice-president for international sales at Baird Corporation, a maker of analytical instruments in Bedford, Mass. Mr. Motor recently returned from a trip to India organized by Mr. Bagley's trade office. Even though it is too soon to see if the trip resulted in any sales, he says, ``We met some influential people in Delhi. I think it's a good idea.''