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To: allen v.w. who wrote (7691)	1/6/1999 1:06:00 AM
From: allen v.w.	Read Replies (1) \| Respond to of 40688

SORT OF OFFSUBJECT: Weighing the 'Burden' of Buying Cheap Exports By Paul Blustein Washington Post Staff Writer Wednesday, December 16, 1998; Page C18 Here's a development that doesn't bode well for the recovery of countries in Asia, Eastern Europe and Latin America stricken by the global financial crisis: The United States and the European Union are feuding over which of them ought to bear the greatest "burden" of buying cheap products from these nations. The Clinton administration cites data of the sort shown in the chart at right to back claims that the EU is absorbing a far smaller amount of imports than the United States from nations whose currencies have suffered devastating declines in recent months. In meetings with their European counterparts, administration officials are complaining particularly vociferously about the steel sector, where the United States imports roughly twice as much as Europe does. The White House is under fierce pressure from U.S. steel manufacturers and their workers, who are reeling from low-priced competition from nations such as South Korea and Russia, and who have demanded that the administration curtail cheap steel imports. The topic is sure to feature prominently in the semiannual summit between Washington and Brussels on Friday. "We're in a situation where private forecasts put our trade deficit in goods this year at about $235 billion," said Charlene Barshefsky, the U.S. trade representative. "Continental Europe, meanwhile, will run a surplus -- it will decline, but it is still a surplus. In steel, the Europeans' import penetration is about 11 percent; ours is over 30 percent. We take twice as much Russian steel as they do, and 10 times as much Japanese steel." Accordingly, Barshefsky is pressing the EU to relax an arrangement it negotiated with Russia some time ago to restrict the amount of Russian steel entering European markets. She also wants the Europeans to ease longstanding "voluntary" restraints on the sale of Japanese autos. "We can't be the market of only resort," she said, reiterating Washington's mantra on the issue. "The politics aren't there." The Europeans retort that their American critics aren't being fair -- for as the chart also shows, EU purchases of foreign steel have risen faster in the first eight months of this year than U.S. imports have, by 53 percent to 24 percent. U.S. officials scoff at that argument, noting that the big percentage rise in EU imports is the result of a much lower base. But Hugo Paemen, the EU's ambassador to Washington, contended in a recent letter to the State Department that this criticism, too, is unfair. "The fact is that the net shift in the EU's steel trade balance (cumulative effect of the surge in imports and sharp fall in exports) has been enormous," Paemen wrote, "i.e. in the region of -5.1 million metric tonnes in the first half of 1998, compared with around a -2.2 million metric tonnes deterioration in the U.S. steel trade balance in the same period." For the whole year, Paemen wrote, "the price that the Community will pay for 1998 will be, all in all, about 13 million tonnes of additional imports and lost exports. That is around twice the loss of trade that the U.S. can expect in 1998." Whichever side is right, it seems clear that neither is likely to back down. And this buck-passing exercise between the world's two biggest markets is hardly encouraging for countries hoping to claw their way out of recession by selling more of their goods overseas. So far, the exports of nations such as Thailand and South Korea have been crippled by a number of practical factors, including their inability to obtain trade financing and difficulties in securing containers to ship goods abroad. Once they overcome those obstacles, however, they face the prospect of higher trade barriers -- such as dumping duties of the sort sought by U.S. and European steelmakers against foreign steel -- fueled by indignation over allegedly unfair burden-sharing. "Ask each of these [Asian] governments why it thinks next year will show growth and they have one answer: We will begin to export a lot more as our trade credit lines get reestablished and production kicks in again," Medley Global Advisors told its clients earlier this month. But, "to where are they going to export? To each other? Not likely. To the U.S. and Europe? Think again. . . . Exports are sailing into the winds of protectionism." ALLEN: