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

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

Newly industrialized countries also have adopted trade practices favoring their own businesses. Brazil, for example, uses an extensive system of import controls. Total imports of Brazil in 1985 amounted to less than 6 percent of that country's gross domestic product--or 3 percent if oil imports are excluded. In contrast, U.S. imports amounted to 31 percent of this country's gross domestic product.

Brazilian law restricts the importation of goods that can be made in Brazil, and the country's licensing requirements and quantitative restrictions effectively exclude imports of U.S.-made goods. Without these restrictions, U.S. exports of textile and apparel to Brazil would average about $100 million a year, according to a report from the U.S. Trade Representative. With them, such exports amounted to less than $12 million in 1985.

Korea, which exports clothing, telecommunications and audio equipment, footwear, electrical equipment, and automobiles to the United States, imposes quotas on many U.S. agricultural and food products as well as a range of manufactured goods.

Imports have hurt a whole range of U.S. manufacturing industries. Auto imports are expected to total 4.7 million units in 1986, or 40 percent of the U.S. market. Steel imports have climbed 35 percent in volume from 1980 to 20.9 billion tons in 1986.

Imports of clothing and textiles rose more than 250 percent in dollar terms from 1980 to 1986. Shoe imports, too, have skyrocketed during that period. And the U.S. trade balance for telephone and telegraph equipment fell from a $136 million surplus in 1980 to a $1.3 billion deficit last year.

In 1980, the value of manufactured imports equaled 23 percent of the value of all such goods made in the USA. By 1985 their value was almost one-third that of U.S. manufactured goods. Meanwhile, the share of U.S. manufactured goods exported fell from 25 percent in 1980 to 18 percent in 1985. Given last year's trade deficit, 1986 levels undoubtedly will be worse.

Agriculture and High-Tech

For a time, some economists and policymakers counted on U.S. exports of agricultural products, high technology and business services to keep the trade flows in balance. They were wrong.

The United States, long considered the bread basket of the world, exported one-third fewer agricultural products last year than it did in 1980. The U.S. agricultural trade surplus has plummeted from about $23 billion to about $3 billion over that period. Many factors were involved, including the overvalued dollar, better agricultural yields abroad, and aggressive export policies of other countries selling to nations which previously bought from the United States.

A similar shift has occurred in U.S. trade of high-tech goods. The 1985 U.S. trade surplus of $3.6 billion for these goods is expected to became a deficit of $3.6 billion for 1986, a startling switch from a U.S. high-tech surplus of $26.7 billion in 1980. The United States is in the red to the tune of $18 billion for high-tech trade in communications equipment and electronic components, $2.8 billion for professional and scientific instruments and more than $800 million for engines, turbines and parts.