‘Asia: One-Way Economics’

I read with great interest Robert Conot’s article “Asia: Big One-Way Economics” (Opinion, Nov. 15). The article, which deals mainly with the trade issues between the United States on the one hand and Japan and the four little dragons in Asia on the other, tends to rap on the unresponsiveness of these Asian nations to the growing U.S. trade deficits.

While ways to solve the existing trade problems are too complicated to discuss in this letter, I wish to clarify a couple of points involving the Republic of China on Taiwan which were touched upon in Conot’s article.

The U.S.-ROC trade is no one-way street. Since 1978 when the trade deficits had not yet alarmed the U.S. commercial officials, the ROC on Taiwan has on its own initiative sent “Buy American” trade missions to the United States. As of last July, the ROC has dispatched 13 such missions and bought a total of $10.5 billion worth of U.S. farm and industrial products. Among other measures taken by the ROC government are: Reducing tariff rates (over 2,000 items as of now, over 3,500 items scheduled for January, 1988); opening new markets to U.S. businesses (service industries, fast foods, and tobacco, beer and wine), and drastic appreciation of New Taiwan dollars.

Since the Plaza Accord in 1985, the New Taiwan dollar has appreciated by 36% in mid-November, 1987, ) not the 10% appreciation asserted by Conot. This appreciation happens to be the second highest one of any currency in Asia, second only to that of Japan. It is higher than that of Korean currency which has appreciated 12% and that of Singaporean currency which has appreciated 7.5% since the Plaza Accord in 1985.

The U.S. trade deficits, when tied in with the depreciation of the U.S. dollar, it seems to me, could trigger a vicious cycle of “figures games.” To elaborate, if the U.S. trade volume stays the same, and the United States has a trade deficit of $10 billion, when the U.S. dollar is depreciated by 25%, the trade deficit will naturally rise by 25% as well and go up to $12.5 billion. Then people may superficially construe that the depreciation of the greenback not only does not help alleviate but also exacerbates the U.S. trade deficit and ask for further appreciation of foreign currencies, and so on and so forth. Actually, it is but a “figures game.” It is my sincere hope that this vicious cycle of “figures games” may be brought to the attention of economists and laymen alike.

TY CHEN

Director, Information

and Communication Division

Coordination Council for North

American Affairs

Los Angeles