Roots of the trade crisis - includes related articles on strong & effective trade legislation

AFL-CIO American Federationist, The, April 18, 1987

TRADE BY COUNTRY

AND SECTOR

The United States is running its biggest merchandise and manufacturing trade deficits with Japan. Imports from that country alone account for about $59 billion of the 1986 trade deficit of $170 billion. Japanese goods imported by the United States--almost all of them manufactured goods--increased by more than two-and-one-half times from 1980 to 1986 when measured in U.S. dollars.

But the United States is running large trade deficits with several other countries. In fact, more than 70 percent of the trade deficit is accounted for by imbalances with just five countries--Japan, $59 billion; Canada, $23 billion; Germany, $16 billion; Taiwan, $16 billion; and South Korea, $7 billion.

Unlike the United States, most other countries have taken strong action to aid their domestic industries through import restrictions, export promotion, and a variety of "industrial policies."

Some countries apply trade barriers, such as import charges and quantitative restrictions, on goods from the United States and elsewhere. Some subsidize their exports and "dump" their products here and elsewhere to capture markets. And a number of countries ignore patents and copyrights designed to protect imported goods from unfair imitation.

Japan employs a number of trade practices to discourage imports and spur exports. That nation imposes tariffs and other import charges on agricultural products, wood and paper products, cigarettes, and aluminum. For wood and paper products alone, the United States could increase exports to Japan by more than $500 million if Japan's tariffs were reduced to U.S. levels.

Japan also imposes non-tariff barriers such as discriminatory standards and elaborate testing, labeling, and certification of imported goods. These practices affect imports of telecommunications equipment, pharmaceuticals, medical equipment, and autos, to name a few. For example, each automobile imported into Japan must be individually inspected in contrast to the U.S. practice of examining a few sample cars. Last year, Japan exported more than 2.3 million cars to the United States. Meanwhile, only about 2,500 U.S. autos made it into Japan.

Other barriers include patent and trademark registration delays in Japan that deter U.S. firms from introducing their products into that country for fear of imitation. Until recently, the containers that U.S. shippers commonly use were banned from Japanese freeways, forcing the packing, unpacking, and repacking of many U.S. imports. And Japan ardently protects its agricultural industry, virtually forbidding rice imports, for example, even though Japanese rice costs around six times more than high quality California rice.

Nations of the European Economic Community (EEC) also run substantial trade surpluses with the United States and follow practices that encourage exports and limit imports for a wide range of products from different countries.

France uses massive export subsidies. In many cases, the subsidies are granted when countries place large orders for French goods, thus encouraging the sale of French goods abroad and hampering U.S. exporters that compete with France in those countries. In Germany, the Deutsches Bundespost agency responsible for the purchase of about 80 percent of that country's telecommunications equipment discriminates against non-German companies through testing and certification practices and requirements that manufacturers maintain facilities in Germany. And the European Community as a whole severely restricts agricultural imports from the U.S. and elsewhere.