In Search of Balanced Export Plan
The strong showing of American industrial exports in March affirms the nation’s new competitiveness in world markets and serves as a useful reminder of the importance of moving ahead with the new General Agreement on Tariffs and Trade (GATT) to make world commerce even freer.
President Bush’s Economic Policy Council has, at the same time, made a positive contribution to trade negotiations with its proposals for dealing with allegedly unfair practices on the part of America’s trading partners. That report proposes strict limitations on retaliation in handling complaints under the omnibus trade legislation adopted last year, avoiding provocative responses that could touch off a trade war just when there is the promise of substantial progress in the GATT talks.
The record exports of March helped reduce, but not eliminate, the trade deficit, continuing for the second year a trend of significant improvement. If this trend continues, the year will end with a deficit of $110 billion compared with $120 billion last year and $152 billion in 1987.
There are two evident problems that need attention: oil and the value of the dollar. Increased oil imports at a time of rising petroleum prices were a major factor in offsetting some of the positive impact of the exports. The nation’s oil conservation efforts are weakening. And the rise of the dollar to the highest level in more than a year could brake the export surge, making American goods costlier on foreign markets while making foreign goods cheaper on the U.S. market.
It remains to be seen whether central bank interventions will succeed in stabilizing the dollar and returning it to a more competitive lower level.
Robert Mosbacher, the secretary of commerce, tempered his enthusiasm about the March trade figures with some common sense. “These numbers support our contention that a favorable movement in exports and imports is under way,” he said. “Nonetheless, monthly trade figures are too volatile, and it would be unwise to put too much weight on any one or two months’ data.”
That volatility may account for the hesitancy of export industries to demonstrate confidence in the export trend by enlarging their plants. Many of them are operating close to plant capacity, which could translate into stagnant exports.
