The case of the Oshkosh Truck Corp. and the Libyan tanks is a parable of our times: a dramatic illustration of the inability of the United States to come to grips with its reduced economic and political power in the world.
By themselves, the facts of the case are intriguing. Oshkosh Truck agreed to sell Libya's military government 400 heavy duty trucks for $60 million. The Commerce Departm ent, which controls most exports, assured Oshkosh that the trucks could be exported as long as they did not contain specified military design features, such as bulletproof glass.
Ordinarily, that would have ended the story. But the Libyans almost certainly intend to use most of Oshkosh's trucks to haul tanks across the desert. As soon as the State Department learned this, it objected, citing Libya's hostility to American allies - Egypt, Tunisia - and its encouragement of terrorism. State convinced Commerce to reverse its decision. Oshkosh appealed to the Wisconsin congressional delegation, who appealed to Secretary of State Cyrus R. Vance to reverse State's position. Their argument: if Oshkosh doesn't sell the trucks, somebody else will.
Vance has now affirmed his earlier decision, and the Commerce Department is certain to go along with State.
Although the details of this episode are fascinating, the story raises a more important issue. How much can the United States limit its export sales to serve its short-term political or moral goals?
For the Oshkosh case is not isolated. The State Department is currently delaying the Boeing Co. from selling two 727s to Libya for an estimated $26 million. The Westinghouse Corp. and the General Electric Co., the two major U.S. nuclear reactor exporters, blame the government's increasingly stringent review of export sales for loss of business; before 1972, U.S. firms accounted for about 85 percent of foreign reactor orders, but only 40 percent since then.
And a multitude of future conflicts loom. Last year, Congress imposed a mild requirement on the Export-Import Bank of the United States - that it consider "human rights" as a factor before approving credits to countries that want U.S. goods; some Members of Congress now want the requirement toughened. As U.S.-Soviet relations have deteriorated, suggestions that the United States trim its grain shipments - now running at a $1 billion to $2 billion annual rate - have increased.
Americans naturally gravitate toward such restrictions. They believe that the United States should not confer the benefits of its trade upon countries that act against U.S. interests or reject U.S. values. Likewise, they believe that the United States can reward or punish countries by withholding trade, foreign aid or investment.
As comforting as these notions are, the evidence mounts daily events. Increasingly, America cannot influence other nations - except in a negative sense - by economic retaliation. And, increasingly, that the United States regards as the "benefits" of its trade are exports urgently needed to sustain U.S. employment and pay for oil imports.
Americans, like the British before them, avoid thinking the unpleasant thought that their preeminent position in the world economy has seriously eroded. But there can be little doubt that it has.
The once substantial U.S. lead in technology has slipped significantly. It many areas of medium and high technology - machine tools, power competitor from Europe, Japan and even some developing countries export goods that approach or surpass the best American designs. The same is true of sophisticated management services, such as the planning and engineering of major construction projects - manufacturing plants, ports or new residential cities - abroad.
In this changed climate, subordinating exports to political goals is a strategy that can boomerang. In many cases, countries denied U.S. goods can easily find them elsewhere. Moreover, if the United States acquires a reputation as an unreliable exporter, other countries will take steps in their own self-interest to assure their future supplies. In 1973, for example, the United States suspended soybean exports to Japan; subsequently, Japan invested heavily in soybean production in Brazil, which has emerged as a U.S. competitor. Recent American hesitation in fulfilling a uranium contract to other suppliers.
The result is to weaken further America's overseas economic and political power. In the short run, the U.S. trade balance - $31 billion in deficit last year - suffers, and the dollar may drop; this undermines confidence abroad in America's economic vitality. In the long run, the U.S. competitive position permanently deteriorates from a willful sacrifice of markets. Paradoxically, the more the United States seeks to use the levels of trade to achieve political results, the more it may weaken its economic and political power.
And yet, the temptation will be difficult to avoid. In the early postwar years, America's economic and political goals conveniently harmonized. The overriding U.S. political objective was to strengthen its allies against communism. Trade with Europe - and with developing countries receiving U.S. foreign aid - admirably served that goal. Our biggest trading partners shared our broad cultural, political and economic biases.
Increasingly, that's no longer true. Nearly 40 percent of U.S. exports now go to oil producers, other developing countries and Communist nations. Most of these countries don't share our values; many actively oppose our policies.
The frustration that American officials and politicans feel in dealing with these nations is one of the permanent hallmarks of the past 10 years. Despite our reduced power, we are tempted to react to irritations with whatever weapon is closest at hand, and in many cases, we cannot resist the attempt to impose our moral and political values on someone else.
Symbolically at least, short-term political gains may result from economic retaliation. But in the long run, the gains are far less certain. Playing politics with trade is a risky game, even if Americans don't realize it.