Report Blames U.S. for Own Trade Ills
A new California study warns that the United States is standing still against ferocious economic competition from Asia and proposes incentives to increase the national savings rate, encourage long-term investment and assist critical industries through a new technology corporation.
The California-Pacific Year 2000 Task Force report, unveiled Monday by Rep. Mel Levine (D-Los Angeles) and Lt. Gov. Leo T. McCarthy, resists blaming Japan and other foreign countries for all of the nation’s competitive woes. Instead it notes that eliminating all foreign trade barriers would reduce the federal trade deficit by only 10%, and it urges Americans to tackle their own general shortcomings of short-term thinking and lack of foreign-language literacy.
“In the end, we must acknowledge that many of the roots of our trade difficulties lie within the U.S. and that we are partially at fault for being too sure of ourselves and too resistant to the changes we need to make to remain competitive,” the report said. “Bashing our competitors for their success will not produce any positive end.”
The task force, made up of 34 leaders in California government, business and academia, held four public hearings and conducted hundreds of interviews in compiling the report. Its tough tone is necessary to jolt Americans into action and refocus attention from Eastern Europe to the Pacific Rim, McCarthy and Levine said.
U.S. trade with the Asia Pacific region will be twice that of Europe by 1995 and is the fastest-growing sector of the California economy, the report said.
“For the first time since Henry Ford . . . Americans are in danger of not being the leader in industrial innovation,” said Levine.
The report urges several moves:
* Establish a Technology Corp. of America to promote and fund private ventures in strategic industries or those deemed essential for the nation’s future, such as computers or biotechnology. The corporation would be federally chartered but privately run, a deliberate departure from Japan’s famous Ministry of International Trade and Industry. Start-up funds would be $50 million in government grants to match industry funding.
* Revise federal antitrust laws to allow more joint research consortia.
* Increase long-term investment through a permanent research and development tax credit and a sliding-scale capital gains tax. The report suggests lower tax rates on capital gains for investments held longer than, say, five years.
* Restore parity in federal research and development spending between the military and civilian sectors. During the 1980s, military R&D; spending grew to twice the level of the civilian sector; restoring an equal ratio would free up $20 billion for civilian research efforts.
* Increase the national savings rate through a more attractive savings bond or enhanced individual retirement account programs. The U.S. personal savings rate, although increasing, was just 4.4% in 1988, compared to 15.2% in Japan.
* Expand financing for U.S. exporters and streamline the export licensing process, which takes up to 2 1/2 years in the United States, compared to four days in Japan.
* Expand trade promotion efforts, including two new state trade offices in Asia. California now has offices in Tokyo and Hong Kong.
* Establish a $10-million scholarship fund for the study of Asian-Pacific languages, cultures, history and geography. Increase the school year from 180 days to 220 days. Increase foreign-language requirements in high school and college.
