Foreign Trade: An Urge for the Yankee Label

U.S. businessmen don't care much for inflation at home, but they have some reason to cheer when they see it in the other fellow's yard. The reason: it is good for U.S. exports. Right now Europe is plagued by inflation; Robert Marjolin, the Common Market's vice president, last week warned the six member nations that "severe measures" will have to be taken to halt it. Caught in a wage-price spiral that this year alone has boosted wages 19% in The Netherlands, European manufacturers are no longer able to cover increasing expenses out of their earnings, instead are raising prices. One result is that imports from the U.S., even after markups of as much as 40% to cover transportation costs and duty, are becoming increasingly competitive in Europe.

For the first quarter of 1964, U.S. exports to Britain and the Common Market rose 25% to $1.5 billion, and for all of 1964 they are expected to reach a record $8.5 billion — an increase important both to the vitality of the U.S. economy and to the U.S. balance of payments (whose deficit, the Government reported last week, was reduced to $800 million in 1964's first half, compared with twice that amount in previous years). The vigor of this trade is fed, of course, by the virtues of improved U.S. technology, a wealth of new products, and a harder sell by U.S. businessmen—plus the fact that prosperous countries tend to increase their imports. But to a larger degree, U.S. products are also benefiting from Europe's rising prices.

Status Appeal. Prices are not the only attraction, since few U.S. goods yet compete directly in price in Europe. But as the gap narrows, the selling points of U.S. products become more attractive: better quality, smarter design, less need of servicing, speedier deliveries than can be made by many European competitors, who are already working at full capacity. In many cases, American manufacturers offer goods that Europeans only recently realized they wanted. Barbecue grills and gadgets are selling fast among Frenchmen, who have lately discovered le week-end opportunities for le camping, le barbecue, and le pique-nique. And just as affluent Americans buy Pucci blouses or Rolls-Royces, Europeans have taken to choosing imports for the status appeal of a "Made in U.S.A." label. Says French Planner Pierre Massé: "We are running after the U.S., of course."

European prosperity has produced a strong demand for U.S. capital goods. Westinghouse International, which once considered Latin America its best market, has shifted sights to Europe and now does one-third of its business there in everything from tiny electronic parts to steel mill machinery and atomic power plants. After only four years of concentrated marketing in Europe by bilingual salesmen, Milwaukee's Koehring Co. now has sales of $6,000,000 annually in machines that do anything from die casting to ditchdigging.