Third world a potent force in US export trade

This week, President Carter announced a comprehensive new economic package to help the beleaguered US steel industry. Earlier this year he announced an aid program for the troubled US auto industry.

But to many people concerned about the nation's trade with the rest of the world, US officials should also be announcing programs to avoid losing the nation's vital manufacturing trade with third-world nations.

The US trade deficit this year could well equal the $25 billion recorded in 1979. Yet, a significant element of overall US trade involves exports to LDCs -- the less developed countries. During 1978 alone, the last year for which complete trade figures are available, 38 percent of overall US exports were sent to developing nations.

A report released here Sept. 30 by the Center for Strategic and International Studies (a highly respected research group dealing in international issues) suggests US policymakers take a hard look at protecting this third-world trade.

The CSIS, which is affiliated with Georgetown University, has taken a hard look at overall US trade performance with LDCs during the 1970s.

During that period the US saw a sharp reduction in its manufacturing export trade with the third world. In fact, had the US "maintained the same share of the LDC export market that it had in 1962," US exports to that market in 1978 (the last year for which complete trade figures are available), "would have been

The result, argues the CSIS, is that "this would have reduced the US overall trade deficit in 1978 by over 41 percent."

Outside trade analysts here agree that US trade performance with the third world must be given serious attention.

On Sept. 9, the Carter administration released a study indicating an overall decline in trade in US manufactured products, including to the third world.

Harald B. Malmgren, a Washington trade analyst points out that the "new growth markets in the 1980s" will in great part be centered in Asia and the LDCs.

"If the US is to have high export performance," he argues, it must carefully protect its access to this market.

Currently, argues Dr. Malmgren, "the capacity of the US to perform in the third world is threatened by many traditional ways of doing trade," including, he notes, more government cooperation in that part of the world by European trading nations, as well as development of joint government-industry financing packages, that enable the LDCs to buy manufactured goods.

Among major points noted by the CSIS study:

* Although the US posted lost market shares in every LDC region of the world between 1970 and 1978, the largest losses were recorded in South America and the petroleum exporting countries, followed by Asia.

* During that same period -- 1970 to 1978 -- the falloff was particularly sharp for a number of key US products.

The US export share declined by more than 30 percent for pharmaceuticals, iron and steel products, trucks, buses, motor vehicle parts, heating and cooling equipment, and pumps.

* Significantly, during the period of US decline in manufacturing exports, Japan's exports to LDCs increased. Yet, the study concludes, "the gains in Japanese export performance cannot be explained by a significant improvement in overall measures of that country's price and cost competitiveness." In other words, the cost of goods was not the deciding factor in explaining Japan's gains vis-a-vis the US, suggesting much deeper weaknesses in the US trade posture.

One factor that must be given careful attention by policymakers, the CSIS suggests, is "US government taxation, export credits, and other policies and programs relating to exports are less favorable than those found in competing countries."