Trying to Right the Balance

But American sales are beset by self-inflicted wounds

It is nowhere near as politically sexy as trying to knock down inflation or prop up the dollar, but Jimmy Carter has another tough economic imperative on his hands: dealing with the trade deficit. Until the late 1960s, the U.S. routinely piled up comfortable surpluses almost without trying. Since then, rapidly rising imports of oil and manufactured goods combined with the relative slackening of the sales of American products abroad have tipped the trade balance perilously out of kilter. In the past three years, the excess of what the U.S. bought over what it sold abroad rocketed to a total of $31 billion, and this year the deficit is expected to hit a record $33 billion. So last week when the President finally announced his long-awaited new National Export Policy, he conceded that "there are no short-term, easy solutions."

The question is whether the Carter program can help much even over the long haul. It is a package of practical measures aimed at making the U.S. more competitive in world markets, and of policy directives intended to alleviate Government obstacles to trade. On the practical side, the President ordered a modest expansion of the federal machinery that helps American businessmen sell their goods abroad. For example, the Export-Import Bank, which provides low-cost loans to foreign buyers of American goods, will be given more generous financing. Also, the Small Business Administration has been authorized to advance as much as $100 million in loan guarantees to little firms that engage in exports.

On the policy , front, Carter ordered Cabinet officers and agency chiefs to pay close attention to the nation's overall trade problem in cases in which sales might be delayed or vetoed for foreign policy or environmental reasons. He directed the Department of Energy, for instance, to approve sales of conventional nuclear reactors abroad after only "abbreviated environmental reviews"; such precautions, mandatory under environmental laws, are one reason why many foreign buyers have turned to other suppliers. The President also ordered the Justice Department to draw up clear guidelines so that U.S. businessmen will know the distinction between legitimate agent fees and bribery.

These new moves may help, but, they are not likely to narrow the wide gap by very much. At first, the Administration had hoped that the cheaper dollar would lift U.S. exports, and to a very limited degree it has done so. Nonetheless, two problems continue to bedevil U.S. trade:

Ideological "Disincentives." Even as Carter was outlining his export program, he reaffirmed his commitment to his human rights crusade. Whatever its moral and political merits, the program has hurt exports. Given the generally accepted rule of thumb that every $1 billion in exports supports 30,000 to 40,000 jobs, the cost of the various official "disincentives" to trade is high. Treasury officials reckon that the U.S. loses up to $10 billion a year in sales because of various foreign policy considerations. The Jackson-Vanik amendment to the 1974 Trade Act, for example, denies the most-favored-nation status to the Soviet Union because of its reluctance to grant sufficient emigration visas to Soviet Jews. Moscow claims such restrictions have cost the U.S. $2 billion in sales. Since Carter canceled the sale of a $6.8 million Sperry Rand computer to Tass for the 1980 Olympics in order to show displeasure with the trials of Soviet dissidents last July, the Russians have been dickering with the Western Europeans for a replacement. In one typical instance involving Argentina, the State Department nearly blocked a helicopter sale to the rightist military regime on the ground that the choppers might be used to transport political prisoners.

The use of trade as a policy tool has led to sharp combat within the Administration between those who favor it (led by National Security Adviser Zbigniew Brzezinski) and those who are strongly opposed (led by Commerce Secretary Juanita Kreps). Carter seems to be leaning in some respects toward the Kreps side: he has now decreed that the U.S. should sell products to an unsavory customer if the customer could buy them somewhere else.

Multinational Disadvantage. Exports suffer because the U.S. is the world's only large multinational manufacturing nation. During the 1950s and early '60s, when American companies were awash in capital but bothered by high-priced labor, they moved factories to countries where investment was welcome and labor was cheap. Many big firms do not export finished products because they already produce them abroad. According to a confidential State Department study, U.S. multinationals in 1970 were producing $200 billion worth of goods abroad. That was nearly five times greater than total U.S. exports and, if anything, the gap has widened. The large American multinationals, such as GM, Ford, ITT, Kodak and IBM, understandably do not wish to undercut their foreign operations by increasing exports of finished products from the U.S. To a degree, multinationals benefit the U.S. because much of their profit is returned home in the form of retained earnings ($20 billion in 1977). Yet in a world that still reckons trade on a nation-to-nation basis, the great productivity of the multinationals abroad does not help the appearance of the U.S. import-export numbers.

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