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Trade: `Perhaps We Should Just Shut Up For A While'


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TRADE: `PERHAPS WE SHOULD JUST SHUT UP FOR A WHILE'

Nothing annoys U.S. Trade Representative Mickey Kantor so much as the suggestion that there might be some ideology behind Clinton Administration trade policy. "Managed trade, free trade, protectionism--we reject these labels," he huffs.

No wonder that those groping to describe the message behind the Administration's trade policy use the word "confused." To hear some tell it, the Administration is engaged in a trade war--with itself. Free traders, such as Treasury Secretary Lloyd M. Bentsen and National Economic Council Chief Robert E. Rubin, are supposedly locked in combat with such aggressive trade hawks as Kantor and Laura D'Andrea Tyson, head of the Council of Economic Advisers. And the fate of the global trading system seems to hang in the balance.

`ALL BOMBAST.' The fact is, they all are managed traders to some degree, and they all believe that an activist government should nurture industry at home and push for open markets abroad. No one counts himself or herself a free-trade purist. Indeed, in his days as Senate Finance Committee chairman, Bentsen joined with Representative Richard A. Gephardt (D-Mo.) in an effort to identify and punish what they saw as unfair Japanese trade practices.

The trouble isn't with the Clintonites' philosophy, it's with their follow-through. Concedes one senior Administration official: "You can't have a policy that's all bombast." But the political fusillade continues. On Apr. 30, Kantor leveled a broadside against Tokyo, threatening retaliation unless Japan opens its construction and architectural markets and buys U.S. supercomputers. And on May 5, he fired on the European Community, blasting subsidies for the Airbus manufacturing consortium. Says a U.S. trade hand: "Maybe we should just shut up for a while."

Instead of making noise, the Clintonites should decide what trade they really want to manage. That requires an inventory of America's most critical industries and promising export markets. Until now, though, the Administration has just followed through on old negotiations or applied grease to such squeaky wheels as the auto industry.

This approach generates cynicism among small and midsize companies, which see trade help going only to the big guys. "The last lobbyist in Mickey Kantor's office seems to be making the policy," says John Endean of the American Business Conference.

WRONG TURN. The President has also gotten off track with his obsession with the yen. A strong yen may or may not shrink the $50 billion trade deficit with Japan. But if that country's economy doesn't bounce back soon, the U.S. trade deficit will likely grow even bigger in 1993--increasing pressure for U.S. retaliation.

The imbalance is not the disease, it's a symptom. Almost 40% of the trade deficit could be wiped out if Japanese-owned manufacturers in the U.S. would buy American parts. And Clinton could achieve that with the North American Free Trade Agreement, which would require companies doing business here to buy two-thirds of their parts in North America.

Trade Ambassador Kantor, the former Los Angeles attorney, is doing what lawyers do: keeping trade partners off balance. That's fine as far as it goes. But it's time to ease up on the rhetoric and get on with the business of building new trade relationships for the America of the 21st century. Douglas Harbrecht Harbrecht writes on trade policy for BUSINESS WEEK.


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