TRADE: DANGEROUS DRIFT FOR THE U.S.

TURNING away from the fitful franc for a moment, the International Monetary Fund last week reported some sanguine statistics about world trade. For the first time, nations are selling goods and services to each other at a rate of more than $200 billion a year. The flow reached $209 billion in this year's third quarter, an increase of 8% in the past twelve months. Altogether, the industrial nations increased their exports by 116% in the past decade.

Still, not all did well. Britain's exports rose only 45% during the same period. And while the U.S. remained the world's biggest salesman, its growth of 91% in total trade over ten years rates only two cheers. In fact, the U.S. is on the verge of a crisis in exports.

Deficit Expected. The U.S. needs an exceptionally high and rising rate of exports in order to balance its generous outflow of capital for imports, foreign aid, military aid, tourism and the like. Unless the nation achieves faster ex port growth/ it will not be able to bring its balance of payments into line, and the value of the dollar may be threatened. Though the U.S. payments ran slightly in surplus during the July-through-September quarter, much of this was due to such temporary factors as the turbulence in Czechoslovakia and France, which caused considerable European capital to flee into U.S. stocks, bonds and banks.

The Commerce Department reported that in October the nation's balance of trade stumbled into a $63 million deficit. Exports fell 20% from the September level. For all of 1968, the Commerce Department expects a trade surplus of scarcely $1 billion, in sharp contrast to last year's $4.1 billion and the fat $7 billion as recently as 1964.

The real picture is even bleaker than the figures suggest. About $3 billion or $4 billion of the nation's exports come from Government-financed sales of foreign-aid supplies and military goods. Not counting all that, the U.S. "commercial" trade will be in the red this year for the first time ever. Expected deficit: $2 billion to $3 billion.

It can be argued that exports, which rose from $22 billion in 1963 to $33.5 billion this year, have accounted for a remarkably steady 4% or so of the nation's gross national product. But just keeping lip with the G.N.P. is not getting ahead in the world. Since 1960, the U.S. share of world exports—one of the best measures of the nation's global economic power—has shrunk from more than 25% to around 23%.

Buy, Lease, Steal. Why? One reason is that inflation tends to suck in im ports and to price U.S. products out of foreign markets. At the same time, fewer orders are coming from countries that suffer from economic contraction, notably Britain and France. Other trends that operate against the U.S.:

∙TECHNOLOGY. U.S. technological superiority means less than before. Lawrence Fox, a high official of the Commerce Department, observes that "foreigners today can either buy, lease or steal American research advances." Li censing of foreign manufacturers is rising. Last week, for example, B.F. Goodrich licensed Tokyo's Mitsubishi to use a vinyl-chloride chemical process, for which the Japanese firm will build a whole new plant.