U.S. STUDY SAYS TARIFFS AND QUOTAS COULD BACKFIRE
The use of tariffs and quotas to
reduce the flow of foreign goods into the United States will do
little to cut the nation's swelling trade deficit, a government
study said.
    In fact, the Federal Trade Commission (FTC) report said,
such protectionist policies could make U.S. Products less
competitive in the world marketplace by raising the cost of
imported products that are re-exported in different forms.
    "Such policies are much more likely to hurt, rather than
help, the productive capabilities of the U.S. Economy," it said.
    The 218-page report, written by FTC economists John Hilke
and Philip Nelson, blamed the rising trade shortfall, which
climbed to a record 166.3 billion dlrs last year, on shifting
currency exchange rates and growing U.S consumer demand.
    Other factors commonly blamed for the deficit, such as
foreign trade practices, deteriorating U.S. Industrial
competitiveness, high labour costs and government restrictions
on mergers, added little to the problem, it said.
    "Although each industry's competitiveness affects the level
of imports and exports in that industry, in general we find
that there have been no significant industry-specific changes
affecting competitiveness that would explain the increase in
the overall trade deficit," the study said.
    "To the extent any government action is needed to deal with
the trade deficits, policies should focus on economy-wide
phenomena such as exchange rates and relative economic growth,"
the FTC study said.
    Supporting its conclusion that broad-based economic shifts
were the cause of the increase in the trade deficit, the report
said it found that nearly all U.S. Industries lost some
domestic market share to foreign competitors in the 1980s.
    It also said it found a "fairly direct relationship" between
the increased trade deficit and the influence of shifting
currency exchange rates, U.S. Economic growth and domestic
demand for goods and services, which has outpaced foreign
consumer demand.
    The study examined seven factors which have been commonly
blamed for the trade deficit: foreign government subsidies and
trade barriers to protect foreign industries, a lack of
investment in U.S. Industry, declining research and development
in U.S. Industry, high labour costs, union work rules, the oil
prices rises of the 1970s and U.S. Antitrust regulations.
    In each case, the study found little or no evidence that
the factor had any impact on the trade deficit.
 REUTER
