Pressures are building in Congress and among business groups for
the Bush administration to impose on its trading partners
quantitative targets for American exports.
Those pressures are stemming from discouragement over the
persistence of the United States trade deficit. After declining to
$126.5 billion in 1988 from $160.3 billion the previous year, the
merchandise trade deficit appears to be growing again.
So the demand is for a ``results oriented'' policy, known as
managed trade, rather than free trade. Numerical targets would be
set, sector by sector, for the volume of American goods that foreign
nations would be expected to buy.
If they failed to reach that volume, the United States would
retaliate, or threaten to retaliate, against them. The 1988 trade
act gives the president the power to do so.
The president's special trade representative, Carla A. Hills, is
the point woman in the administration's drive to negotiate away
obstacles to American goods. If import targets were accepted as
policy, it would be her job to recommend retaliatory actions by the
president when she found discrimination against American goods.
What does she think of a ``results oriented, managed trade''
policy? In an interview, Hills made clear her opposition to the
approach. Like many American economists, she regards it as a danger
to an open trading system. Asked whether she approves of specific
import targets to be reached by individual countries in a specified
period, she said firmly, ``No, I do not.''
Many people, she said, feel ``frustrated with the stubbornness''
of the trade deficit. ``Irritation is growing, especially toward
Japan,'' she added.
To a degree, she appears to share that frustration. She noted
that former Secretary of State Henry A. Kissinger had come out for
managed trade, together with business leaders like James D.
Robinson, chairman of American Express, and James R. Houghton,
chairman of Corning Glass.
Robinson and Houghton are co-chairmen of the Advisory Committee
for Trade Policy and Negotiation, which has issued a report
supporting import targets.
While rejecting quantitative targets, Hills said she found
``much good'' in the report. She welcomed its emphasis on the
importance of macroeconomic policy, and particularly of reducing the
budget deficit, if the United States is to get rid of its trade
deficit. ``Macroeconomic policy,'' she said, ``drives the trade
In a nutshell, given the low rate of national saving, the budget
deficit raises American interest rates, necessitates heavy borrowing
from abroad, and exacerbates the trade deficit. …