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economic structure. T be U.S. dollar
has been eroding steadily for over a
year. By the end of 1977 it broke
through another downward barrier,
falling below 240 Japanese yen to
the dollar. Only five months before,
the dollar was worth between 265
and 270 yen.
I n Europe, the dollar during its
1977 skid dropped perilously close
to another milestone of decline: a
ratio of two German marks to the
dol!ar. At the beginnjng of this
decade the dollar was worth four
marks.
Massive Trade Deficit
Concurrcnt with the doUar slide, the
imbalance in America's foreign
trade account has reached an alarm–
ing leve!. The U.S. trade deficit–
imports of goods and services over
exports- reached a staggering $26.7
billion for 1977.
The burdensome cost of imported
fuel-$44 billion a year- accounted
for most of America's trade short–
fall. On his trip to severa! foreign
capitals in January, President Carter
was urged by the leaders of Saudi
Arabia to take urgent measures to
prop up the sagging dollar-which
was threatening the value of the $60
billion the Saudis have tied up in
U.S. reserves.
Significantly enough, Carter an–
nounced a support plan the day af–
ter his talks with King Khalid and
Crown Prince Fahd. The dollar
irn–
mediately rebounded in a technical
rally. But al! experts agree the
plan- to borrow huge amounts of
foreign currencies with which to sop
up unwanted dollars- was, at best, a
temporary measure. The only real
answer. as the Shah of Jran lectured
Mr. Carter on the same trip, is for
America to conserve energy, to buy
far less imported fue!. However, the
President's energy program remains
logjammed in Congress, its critics
claiming it does little to encourage
the further recovery of domestic fue!
sources.
Protectionism on the Rise
The imported fuel problem is criti–
ca! enough, but it is by no means
the entire story.
A sizable chunk of the U.S. trade
deficit for 1977-$8.5 billion-was
with one country: JStpan. Japan reg-
8
istered a trade surplus for 1977 of
around $17.5 bi ll ion, mean ing the
U.S. deficit
in
Japan-U.S. trade ac–
counted for nearly ha1f of the Asían
nation's surplus.
American officials warned the
Japanese after tbe inconclusive De-
UPI
cember 1977 trade negotiations that
unless they came forth with a sub–
stantial new set of proposals the ris–
ing chorus of protectionism in the
United States would become a dis–
cordant roar. And the crescendo of
protest comes not only from Amer–
ica. T he Common Market countries
are also wrestling with a huge $5
billion annual trade deficit with Ja–
pan. And in the Australasia area,
New Zealand's P rime Minister Rob–
ert Muldoon warns that if Japan
will not open its doors to more New
Zealand beef and dairy products,
his government will not continue to
issue fishing 1icenses to Japanese
ships to operate in its offshore
waters.
I n words that reveal the at times
acrid tone of the simmering inter–
national trade fight. Muldoon
warns: "Jt is time that Japan is
dragged, kicking and screaming if
necessary, into the modern inter–
national trade community."
The Protectionist Momentum
Members of the U.S. Congress are
coming under increased pressure to
do something about the loss of jobs
in industry after industry due to the
impact of lower-cost imported
goods. Administration free traders
are losing friends in Congress and
the labor movement at an alarming
rate, according to a report in the
December 19, 1977.
Business Week.
Seen instead is a renewed drive for a
whole grab bag of tariffs and import
quotas.
"Tbe uneasy mood is most appar–
ent on the Hill." reports the maga–
zine. "Congressmen. reacting to
pressures from constituencies, are
besieging the office of Robert S.
Strauss ... with telephone calls
seeking help for one industry or an–
other. And the impatience is grow–
ing."
Shoes. steel. textiles. television
sets. sugar : The Jist is long and the
pressure is intense. ' 'Even more dis–
turbing to the Admini.stration.' '
adds
Business Week.
' ' is the defec–
tion of liberal trade unions.... In
fact the last major union still s up–
porting traditional free-trade prin–
cipies is the United Auto Workers.
'Trade provides competition and
competition holds down prices,' said
the UAW's Presiden! Douglas Fra–
ser last week. 'We tried protection–
ism once before. We got Smoot–
Hawley, the Depression, Hitler. and
World War 11.·"
Worldwide Steel Slowdown
The Administration policy currently
consists of trying to stamp out one
brushfire at a time. An examp le of
this piecemeal approach is the re–
cently engineered "trigger-price"
system which bars sales of imported
steel below certain set prices based
on a formula assessing Japanese
production costs.
Washington was under intense
pressure to shore up the American
steel industry because imports had
increased by almost 50 percent since
The
PLAIN TRUTH April 1978