POLICY: Crisis in Money and Trade

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As seen from Europe and Japan, U.S. international economic policy is a mess. The Nixon Administration appears confused and confusing, showing open disregard for its trading partners, taking actions that run counter to its announced determination to correct the steadily shrinking value of the dollar overseas, the massive U.S. balance of payments deficit and the continuing American trade gap. Last week foreigners were shocked by a new and ominous U.S. policy: the imposition of controls on exports of farm commodities and steel scrap, a move the Administration insists is necessary to build up domestic supplies and hold down raging U.S. prices.

The controls will create shortages and aggravate inflation overseas. Under a new licensing system, U.S. exporters can now ship no more than 50% of the soybean orders that they had on hand as of June 13, and 40% of the orders for soybean meal. No orders after that will be filled until October at the earliest. To head off a rush by foreigners to buy substitute feed supplements, the Administration slammed a total embargo on 41 other commodities, retroactive to June 13; they include edible oils, animal fats and such livestock feeds as linseed-oil cake and peanut meal. The restraints could cost the U.S. about $500 million in lost exports of soybeans alone.

In addition, the White House clamped an almost total embargo on exports of iron and steel scrap. Steelmakers contend that surging foreign demand has lifted the cost of some scrap to $55 a ton, the highest since 1956. Scrapmen vigorously deny that there is a shortage, which was the main reason for the embargo. They attribute the ban entirely to protectionist pressures from American steel manufacturers, who are worried about competition from Japan, which buys two-thirds of all U.S. scrap exports.

Angry Customers. In defense of their controls on farm exports, Administration officials argue that the zooming price of food has made a shambles of their anti-inflation crusade and must be brought down at all costs. Says John Dunlop, chief of the Cost of Living Council: "Until October, we really don't have any other measure to deal with food prices except export controls."

The possibility of livestock-feed shortages was, in fact, apparent as early as last fall, before bad weather destroyed some soybean crops. The Administration nonetheless made a much publicized deal to sell to the Russians and Chinese about 54 million bushels of soybeans. The Europeans and Japanese are regular customers, and the fact that the U.S. did not show much interest in providing for their needs rankles. Speaking of the new export controls, one American agriculture attaché in Europe complains, "As diplomats, we're being forced to defend something that may be indefensible."