New threats to trade

The Reagan administration needs to take firm steps to ensure that there is a steady and growing world trade during the decade of the 1980s. Although total international trade during 1979 reached a whopping $1.6 trillion -- up some 6 percent in total volume over the preceding year -- clear evidence is emerging that trading patterns in the early years of the '80s may be somewhat arrested because of the impact of worldwide recession, continuing inflation, new protectionist threats, massive debt burdens by trird-world nations, and a possible cutback in economic assistance from the West, Particularly the United States.

Some trade experts believe that final 1980 trade figures will show only a modest increase in dollar terms. Moreover, the general consensus among economists is that the total volume of trade is expected to show a sluggish growth of only about 3 percent for 1980, and less than 3 percent for 1981. That compares to annual growth rates of between 7 and 9 percent in the early 1970s.

While the US by itself has been turning in a solid trading record of late -- with its overall current account balance in equilibrium during 1980 -- there must be no compromise with the importance of a healthy international trading market. Growing commerce between nations is the lubricant of rising living standards for all peoples as well as that larger bond of mutuality helping to cement socities together in a common good.

The Reagan economic team ought to look at the expansion of world trade in both immediate and long-term perspectives:

For the short term, the administration needs to reject congressional efforts to restrict Japanese auto imports. Such a measure would merely add impetus to similar restrictions being considered in Europe and lead to the danger to trade confrontations between and among the US, Japan, and the European Community. At the same time, the administration should be wary about sharp budget cuts that would hamper America's ability to sell its products abroad. Funds to expand trade, after all, are "investment" dollars in the truest sense of the term. Yet the administration is believed to be leaning toward substantial cuts in two trade-related areas:

* The administration is reportedly considering curbing the lending authority of the US Export-import Bank. Exim helps finance the sale of US goods abroad.

* Proposed cuts are expected for the US foreign aid budget, as well as cuts in US contributions to international lending agencies. such as the International Monetary Fund.

Top trade experts such as respected Washington analyst Harald Malmgren note that, of the total volume of US exports, a little over one-third goes to less developed nations. Over one half of that amount, moreover, goes to non-OPEC nations. Many of these latter nations, already deep in debt because of the need for imported oil, are unable to negotiate new private bank financing for their imports. without foreign aid assistance, or favorable terms provided by trade facilities like Exim, they will be forced to curtail imports.

For the long haul, the administration is correct in seeking to undertake those budgetary and tax reforms necessary to make US industry more productive and hence more competitive in world markets. The administration needs to be particularly supportive of new growth industries that offer services not provided by firms in other nations. It should not be surprising that historically successful US industries (such as autos) are now being duplicated abroad. That after all, is the usual pattern in trade, as established technology "trickles down" from nation to nation. The task for the US will be to stay at the cutting edge of new technology -- providing goods and services not yet offered to the world as a whole. If the US does so, its overseas trade will expand.

The Carter administration was intrumental in helping to enact a new worldwide trading agreement. But that administration was never really able to bring a sense of order to the many (often competing) federal agencies dealing with trading matters in the US government itself.

Should the US have an overall cabinet level trade office that would absorb functions now handled by the office of the special trade representative, the Commerce Department the Pentagon, Exim, Agriculture, and a diversity of other agencies? Perhaps the first step would be a presidential commission devoted solely to examining how to make the US more administratively efficient, as well as competitive, in trade matters.

The 1970s were a time of greatly expanding trade. There need be no reason why -- with forethought and a dedication to opening all possible avenues of expanding commerce -- the 1980s will not show similar gains. And expanding trade is good for indiv idual economies as well as their citizens' pocketbooks.

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