Trade: how it plays on the hustings
Washington — International trade has become a highly charged domestic political issue. All across the country, Democrats are waving the flag and calling for a little two-fisted economic -behavior.
* Presidential contender Walter F. Mondale, speaking before an audience of electrical workers, said earlier this month that the United States should get ''really tough'' with countries that sell goods here but are reluctant to buy our products. ''What do we want our kids to do?'' he asked. ''Sweep up around Japanese computers?''
* Michigan's Sen. Donald Riegle, in the Democratic response to President Reagan's Oct. 13 economic speech, said ''there's an international trade war going on, and we're losing it.''
* Democratic candidates all across the country are echoing the Mondale and Riegle theme, says the campaign manager for a Democratic senatorial candidate. ''I think it's a trend,'' he says.
Many Republicans respond that such talk is dangerous, protectionist rhetoric.
''Yes, I'm afraid that trade will become a more politicized issue,'' says Commerce Secretary Malcolm Baldrige. Democrats are ''using [trade] emotionally, '' says Mr. Baldrige, ''taking a cheap, political'' approach to the subject.
The US economy once roared along in relative isolation from the rest of the world. But in recent years, international trade has played a more important role in powering US economic growth. In 1970, exports and imports combined accounted for only 8.6 percent of the American gross national product; today, trade's share of US GNP has jumped to 18 percent.
The US imports more durable goods - autos, steel, etc. - than it exports. Through September, this merchandise trade deficit was $29.7 billion. But when services such as banking and insurance are taken into account, US trade figures are often written in black ink. Through the first six months of the year, total trade showed a $3.2 billion surplus.
Now the world economy is mired in recession. In many nations, smokestack industries such as steel and autos are struggling to stay competitive in the global marketplace. As a result, pressures for economic protection have been increasing across the world.
Though the Reagan administration insists it stands for free trade, the US has built its share of trade barriers. And the hammering is growing louder. Last week, Special Trade Representative William Brock said he favors a third year of quotas on Japanese autos. President Reagan announced a plan to boost farm exports with US government subsidies to foreign buyers. And the administration, under pressure from domestic steelmakers, finally nailed down an agreement limiting the amount of steel Europe can ship to this country.
Against this background, Democrats - eager to present an alternative to Reaganomics - have begun clamoring for the US to get even tougher with foreign trade competitors. Presidential contender Mondale, long known as a remarkably mild politician, has given a series of overtly martial, armor-rattling speeches to union groups.
''His basic message is twofold,'' says James Johnson, a key aide to Mondale, ''One, we need to take steps to be dramatically more competitive as a nation, and two, we need to make more equitable and fair international trade rules. Until (other countries) halt unfair subsidies, we will fight them dollar for dollar.''
Sen. Edward M. Kennedy, also preening for a presidential bid, has delivered unions roughly the same message. The AFL-CIO will endorse a presidential candidate before the national conventions, a fact that helps explain Kennedy and Mondale's strident trade rhetoric, say analysts.
''It's an attempt to reestablish the traditional Democratic coalition, the ties to mainstream labor that were broken in the 1980 election,'' says Jeffrey J. Schott, a senior trade analyst at the Carnegie Endowment for International Peace.
Critics say the Democrats are armchair soldiers, calling ''to war!'' while ignoring how destructive that war would be. The US exports more than it imports, and is thus vulnerable to angry retaliation, they say, while stomping on foreign goods won't solve the deep-seated problems of many domestic industries.
''The US has benefited more from a free trading system than any country in the world,'' says Commerce Secretary Baldrige.
The coming congressional election may result in increased pressure on the administration to move against balky trading partners. If the Democrats make strong gains in depressed industrial areas, the ''administration will get a little scared on this issue,'' says a trade expert who asked not to be named. ''They will be amenable to some semi-protectionist actions, such as temporary excess tariffs on autos or other high-tech goods.''
Congress might also act on the ''domestic content'' bill, legislation which would require foreign auto manufacturers with high US sales to produce many of their parts here. The bill, backed by Mondale and other Democrats, is vehemently opposed by Republicans and business groups - such as the computer industry - that fear foreign retaliation.
Tomorrow: Why it's so hard to "buy American."