Business: Trying to Right the Balance

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Ideological "Disincentives." Even as Carter was outlining his export program, he reaffirmed his commitment to his human rights crusade. Whatever its moral and political merits, the program has hurt exports. Given the generally accepted rule of thumb that every $1 billion in exports supports 30,000 to 40,000 jobs, the cost of the various official "disincentives" to trade is high. Treasury officials reckon that the U.S. loses up to $10 billion a year in sales because of various foreign policy considerations. The Jackson-Vanik amendment to the 1974 Trade Act, for example, denies the most-favored-nation status to the Soviet Union because of its reluctance to grant sufficient emigration visas to Soviet Jews. Moscow claims such restrictions have cost the U.S. $2 billion in sales. Since Carter canceled the sale of a $6.8 million Sperry Rand computer to Tass for the 1980 Olympics in order to show displeasure with the trials of Soviet dissidents last July, the Russians have been dickering with the Western Europeans for a replacement. In one typical instance involving Argentina, the State Department nearly blocked a helicopter sale to the rightist military regime on the ground that the choppers might be used to transport political prisoners.

The use of trade as a policy tool has led to sharp combat within the Administration between those who favor it (led by National Security Adviser Zbigniew Brzezinski) and those who are strongly opposed (led by Commerce Secretary Juanita Kreps). Carter seems to be leaning in some respects toward the Kreps side: he has now decreed that the U.S. should sell products to an unsavory customer if the customer could buy them somewhere else.

Multinational Disadvantage. Exports suffer because the U.S. is the world's only large multinational manufacturing nation. During the 1950s and early '60s, when American companies were awash in capital but bothered by high-priced labor, they moved factories to countries where investment was welcome and labor was cheap. Many big firms do not export finished products because they already produce them abroad. According to a confidential State Department study, U.S. multinationals in 1970 were producing $200 billion worth of goods abroad. That was nearly five times greater than total U.S. exports and, if anything, the gap has widened. The large American multinationals, such as GM, Ford, ITT, Kodak and IBM, understandably do not wish to undercut their foreign operations by increasing exports of finished products from the U.S. To a degree, multinationals benefit the U.S. because much of their profit is returned home in the form of retained earnings ($20 billion in 1977). Yet in a world that still reckons trade on a nation-to-nation basis, the great productivity of the multinationals abroad does not help the appearance of the U.S. import-export numbers.