The shrinking world and economic choices
Washington — To maintain its place in the overall world economy, the US must realize "it is no longer feasible to make domestic economic policy decisions without regard to international consequences."
Fiscal and monetary policies, anti-inflation decisions, and farm policies can no longer be made primarily on the basis of domestic needs and political issues. These and other questions should be addressed with an eye to the role the US plays in international economics.
At the same time, "the key to an open and expanding trading system . . . is a US economy with reasonable price stability and full employment."
These are some of the conclusions of new trade policy report issued here March 4 by the Economic Policy Council of the United Nations Association of the USA. Called "Trade Policy Issues: Global Structural Changes and the US Economy, " the study represents the consensus of a broad range of top US policymakers including officials from business, labor, and the academic communities.
As such, it is being seen here as an important analysis of what are the likely key trade issues facing the US in the 1980s.
The report comes against what its authors regard as a troubling international backdrop of rising protectionism, stagnant growth in the major industrial nations, rampant worldwide inflation, staggering debt burdens for many less-developed countries (LDCs), and the swelling economic and political muscle of the Organization of Petroleum Exporting Countries.
Arguing that the US is "at a point of decision as it enters the 1980s," the report maintains there is an urgent need for "fiscal, monetary and regulatory policies that will induce industry to generate a higher level of domestic investment. . . ."
"What's especially interesting," notes Harald B. Malmgren, a Washington trade analyst who is a member of the Economic Policy Council and was the principal research specialist for the study, is that the report "represents the thinking of top US labor leaders."
Union officials include Sol C. Chaikin, of the International Ladies' Garment Workers' Union, I. W. Abel of the United Steelworkers union, Douglas A. Fraser of the United Automobile Workers Union, and J. C. Turner, general president of the International Union of Operating Engineers.
The report is expected to be used extensively in helping to prepare a broad consensus on trade policy within the US during the next year or so.
Some Commerce and State Department officials, for their part, are already known to be highly concerned about the dangers of developing trade wars with European allies and Japan.
One reason for this concern is that the total volume of world trade is expected to grow at a slower pace in the 1980s than was the case in the 1960s and 1970s. This is expected to lead to fiercer competition to divide up the "trading pie."
Among conclusions in the report:
* There will likely be a reduced worldwide emphasis on multinational corporations as a problem during the 1980s, while attention will shift to a need for greater capital spending and improvement of productivity in the US.
* The older mainline trade institutions, including the General Agreement on Tariffs and Trade, the Organization for Economic Cooperation and Development, and the UN Conference on Trade and Development, must "revew themselves and learn to cooperate more fully." New "coordinative mechanisms" should be created as necessary.
* The US government "urgently needs better ways to co-ordinate its foreign economic policies and to reconcile them with its domestic policies." Currently, US trade policy is fragmented among a number of different agencies, including the Treasury and State Departments, and the Office of the Special Trade Representative.
* Despite the new multinational trade negotiations last year (the Geneva Accords), there is a rising mood of protectionism in most industrial nations. For that reason, argues the report, "the possibility of developing international rules limiting . . . restrictive actions" should be explored.
* US policymakers are going to have to develop new "policy concepts" regarding the issues of concentration and competition given "the intensification of international competition" and the active role of national governments in world trade.
Traditional US views of what is sound antitrust and antimerger policy are becoming outmoded, the report says.
* There is an urgent need for greater international coordination in world agricultural trade policies.