Bush Points to Trade Successes as He Jumps Into the Election Race

President cites the promotion of democracy around the world as major boost to economies

WITH his reelection campaign now in full swing, President Bush responds to voters' worries about their economic future by reviewing his accomplishments abroad.

He points to his administration's promotion of democracy around the world, from Latin America to the former Soviet Union, that has helped to set the stage for political and economic reforms, create markets for American goods and services and provide more American jobs.

"The defining challenge of the '90s is to win the economic competition - to win the peace. We must be a military superpower, an economic superpower, and an export superpower," Mr. Bush told a roaring Republican crowd at his party's national convention in Houston last week.

This election-year mix of foreign and domestic policy seems to have made it easier for the president, who has been broadly accused of ignoring the nation's ailing economy in favor of his international endeavors. The post-cold-war merger of economic, political, and military issues has become a Republican campaign theme: We won the cold war, now we can devote the same energy to righting the economic wrongs at home.

White House advisers and Cabinet secretaries working hard to reelect the president carry this message. "Thanks to George Bush, we are no longer in an era of missiles, but rather of markets," boasts United States trade representative Carla Hills.

Mindful of the emergence of trade blocs in Europe and Asia and aware of the huge market potential at home, the Bush administration has done much to improve regional prospects with a deliberate policy of debt reduction, investment, and trade initiatives for Latin America.

Inter-American Development Bank president Enrique Iglesias says the worst of the Latin American debt crisis (which peaked in 1987 at $446 billion in debts) is over, thanks to international help spearheaded by the Bush admninistration.

The administration's greatest triumph may be the North American Free Trade Agreement (NAFTA), a trilateral US-Canada-Mexico accord that freely and fully engages the US with two of its most important trade partners to create the world's largest marketplace. Opposition strong

Ambassador Hills calls NAFTA "our fastest-growing export opportunity." She faces tough opposition from congressional trade watchers who say NAFTA presents the fastest way to lose American jobs and compromise the environment.

House majority leader Richard Gephardt (D) of Missouri says Bush's trade policy does nothing to protect US workers from large-scale layoffs and displacements that are bound to occur as NAFTA prompts US firms to move their operations to Mexico, where wages are low, business and labor regulations are few, and ecological damage from industrial production is largely ignored.

"In today's economy, exports are the single greatest job creation engine," says US Treasury Secretary Nicholas Brady. Indeed, exports grew at a healthy clip during the recession, and accounted for roughly half of the marginal growth in the nation's gross domestic product last year.

But the current weakness in overseas economies has slowed this engine of economic recovery. US exports of goods and services fell during the second quarter of 1992, the first decline since the first quarter of 1991. The US trade deficit is widening. Britain, Canada, Germany, and Japan - all in economic downturn - account for roughly half of the US export market.

The US Export-Import Bank says only 10 percent of US production is sent abroad, compared to Germany's 30 percent and that of the majority of other OECD countries, which export more than 20 percent of their respective gross domestic products (GDPs).

John Macomber, chairman of the Export-Import Bank (Exim), says the bank educates small and medium-sized American firms about opportunities in developing markets. Small businesses account for two-thirds of new job growth in the country, Mr. Macomber says. Bush criticized

But if Bush's priority is expanding existing opportunities and scouting out emerging markets for US producers, he draws criticism from those who question whether US trade policy is managed in Washington or by far away and difficult trading partners.

Asia is a case in point. As the former top US envoy to China, the president has been an unwavering advocate of "active engagement" with the communist giant - that is, continuing trade and commercial ties with a potentially huge manufacturing center and consumer market.

Bush has lobbied hard on Capitol Hill to win favor for his policy of extending most-favored-nation status [the lowest possible tariffs on exports to the US] to China, warning that "if we present China's leaders with an ultimatum on MFN, the result will be weakened ties to the West and further repression."

MFN's detractors focus on China's human rights abuses, its unfair trade practices (China has growing surplus with the US), the government's use of prison and child labor to produce goods exported to the US, and Beijing's unabashed weapons exports to unstable nations.

Cutting off MFN "would severly handicap US business in China, penalizing workers and eliminating jobs in this country ... and strengthen [China's] opposition to democracy and economic reform," the president warns.

Bush made a high-profile visit to Tokyo earlier this year - a trip he took to underscore his support for US farmers and manufacturers shut out of Japan. But despite Japanese Prime Minister Kiichi Miyazawa's pledge to redress his country's growing trade imbalance with the US, Japan's trade surplus has grown. In July it climbed by 27 percent to almost $4 billion.

An economic slowdown in Japan has constrained its ability to import, and Mr. Miyazawa's more recent promise to stimulate consumer and business demand with government spending is expected to fall short of its intended goal.

Bush's trade critics fault him for lost opportunities in the former Soviet empire.

There, Americans have been far outpaced by their European competitors, who enjoy historical and cultural familiarity with the newly open region, and whose governments have paved the way with quickly-signed treaties and a long line of credit.