European Stars And Stripes (Newspaper) - February 8, 1987, Darmstadt, Hesse                                Despite decline of Dollar s Trade persists by Susan. Rasky new York times n Argentina thanks to the decline of the Dollar a Caterpillar tractor is now priced competitively with a Komatsu Model from Japan. But that hardly matters because Argentina is growing Loo Stowey to buy Many new tractors from America Japan or any other country. In India the decline of the Doliar Means american wheat is priced attractively. Bul India no longer needs to import the vast quantities of wheal it once did because in grows More of its own. In the United Stales the weaker Dollar is beginning to make the prices of japanese and German cars look Steep. Bull Hal is no guarantee that More americans will buy Fords Plymouth a or Chevrolet instead. Foreign cars still have a cachet of Quality in lha United Stales and if Price is the Bottom line it would be hard to boat the Hyundai built in Korea Wilh cheaper Stael and lower labor costs than any other mass produced car or the Yugo Buist in Yugoslavia and cheaper still. These examples underscore a disturbing truth lacing Washington Wall Sloet and main Street signs of improvement in Ine nation s Lales Trade figures May be decoding because More than currency adjust mints will be needed to close the record $1698 billion Gap Between what America bought hmm abroad in 1986 and what it was Able to sell there. Economic history is littered Wilh examples of countries Hal clod As if currency depreciation alone could substitute for other action to restore balance and competitiveness to their economies Paul a. Volcker the chairman of the Federal Reserve Board recently told a congressional committee. The hops or a turnaround in Trade have rested on the Nolion that As the Dollar weakens imports become More expensive so americans buy fewer of them while american goods become cheaper overseas so that exports should pick up. In both cases the object is for american companies to gain or regain business going to foreign producers and then to meet the new demand by increasing production and hiring More workers. Ail Hough Many Trade analysis believe the currency arithmetic is finally beginning to work in America s favor they argue that a Host of other a actors. Both economic and non economic Are combining to thwart the process because of a Waak world Economy even countries interested in buying from America can Alloyd to Purchase fewer goods the United slalom remains a Leader in advanced computers and let engines but in does not make certain types of consumer goods videocassette recorders Lar example Hal its Home Market or the rest of the world want of buy japanese manufacturers Are determined to hold on to shares or the lucrative american Market by keeping Price increases Small dependence on foreign Oil is growing at a Lime when the Price Al Oil is rising because . Domestic production and exploration have withered. Ii Tho Dollar alls Loo Lar it might discourage the foreign investors who finance so much of America s other Large deficit the Gap in the Federal budget and who also underwrite a sizable part of America s corporate debt. Competition is growing from such countries As Taiwan and South Korea where a costs of labor and raw materials Are lower than in the United states and where myriad barriers keep potential markets dosed to american goods. The problem is compounded you Kytt my Wewt i m of tron and Tefft i Tai i m Witk because the Dollar has declined Only slightly against i to currencies of Korea. Taiwan and Olhorn newly industrialized countries despite ils Sharp fall in relation to Tho japanese yen and the German Mark. American producers suffer from a Lack of innovation expertise and marketing skills Umpad together by Washington s Lales buzzword As a competitiveness problem. The decline of the Dollar will help bul it is by no Means a  said Steven a concur. An International economist at he manufacturers Hanover Trust co. Given the size of our Trade deficit the Best we can Hope for in 1987 is to go from worse to  the deficit arithmetic is sobering. Exports which totalled $217,3 billion in 1386, would have to increase twice As fast As imports just to keep the Trade deficit from gelling any bigger. Even if americans could Cut last year s $387.1 billion import Bil by 15 percent the deficit would still be More than $100 billion. Although preliminary Trade figures for decumber 1966 showed a narrowing of the Trade deficit As a result of a decline in imports few economists Are prepared to accept monthly statistics that have proved so unreliable in the past. Other economists Are sceptical that the Dollar has declined sufficiently against the currencies of most of America s trading partners for the effects to show up broadly in higher prices of foreign goods. According to the . Commerce department there has bean Somo movement in import prices. After substantial declines in the first Nina months of 1986, prices on goods and services from abroad Rose at an annual rate of 9.1 percent in the final Quarter of last year. That compares with much smaller Price rises for Overall goods and services and for consumer goods that s a step in the right direction but it s a Small step and it is the first reversal we be seen of a five year trend said Stephen s Roach senior economist at Morgan Stanley & co. Roach and Many other Trade analysts worry that even a More substantial Rise in import prices will not be sufficient to cure Meny americans predilection for foreign clothing consumer electronics Small appliances and automobiles. In some cases this is because foreign manufacturers have won the allegiance of Many american Consumers. In other cases it is because certain products athletic shoes and bicycles Lor example Are no longer produced in significant numbers in the United states. We gave up the consumer electronics Market first to Japan and now to Korea because we could t compete on Cost and Quality Roach said. If we were Back in these businesses it would t cure the Trade deficit but it would  other Trade watchers observe that America s $339 billion a year import habit May be the Only thing keeping a Soumen world Economy afloat. The United slates is the no. 1 Export Market or at least a dozen nations including Japan. Over the past few years. The United states has been the Only import game in town Cerier said. A Sharp drop in our consumption could be catastrophic Lor the world  David Munro director of Macro and International economics at the general motors corp. Said he was concerned thai in latin America and the Pacific rim which Are traditional markets for tha United states demand is very  burdened by Large debt repayments and subject to economic austerity programs thai the International monetary fund has imposed the nations of latin America have sharply curtailed their imports. Caterpillar for example said its sales in latin America were Down by 50 percent since the debt crisis began five years ago. Munro said he saw Mose Hope in Europe Lor America s traditional capital goods exports but Cerier said tha United states relied too much on such goods. Our product mix is  he said. Our exports am not consumer oriented As Germany s and Japan s Are Page 18 the e stars and stripes sunday february 6,19s7