The United States faces a continued loss of jobs and the further decline of heavy-manufacturing capacity as long as it remains virtually the only economic power without an agenda for industrial growth, a labor-business coalition warns in a new study.
"In the absence of effective U.S. policies, decisions of foreign governments are increasingly shaping the evolution of the U.S. economy," the Labor-Industry Coalition for International Trade (LICIT) concluded in its report, "International Trade, Industrial Policies and the Future of American Industry."
It pointed to automobiles and steel as areas where foreign governments had targeted industries to win export markets at the expense of American firms and said that the U.S. lead in the burgeoning high-technology field of computers and semiconductors is threatened by Japan's targeting practices.
The coalition of 10 unions and eight companies was formed in 1980 to study international economic issues that affect American businesses and their workers. It it headed by Howard D. Samuels, president of the AFL-CIO's Industrial Union Department, and Amory Houghton Jr., chairman of Corning Glass Works.
The cooperation of labor and management in the coalition underscores the new importance to the American economy of overseas sales, which amounted in 1980 to close to one-fourth of all manufactured goods. But in 1982, the United States ran a record trade deficit of $36.3 billion, and the deficit is expected to worsen this year.
The current study, third in a series, focuses on the increase in other governments' support of key industries that the study says has hurt American's ability to compete in world markets. At the same time, foreign products from targeted industries are flooding U.S. markets, further weakening domestic industries, the coalition said.
"In contrast to the United States, national governments abroad are increasingly unwilling to leave their industrial development to the private sector and the operation of the market," the report said. "Many foreign governments use industrial policies, including trade policies, to assist specific domestic industries to restructure their operations and improve their economic viability or to become strong international competitors and increase their world market position."
Among the nations the report zeros in on are Japan, whose government "has launched an all-out effort to overtake and surpass the United States in the vital area of semiconductors and computers" and is moving ahead on steel; European nations, which are modernizing their steel mills and bidding for sales in the field of commercial aircraft; and such newly industrialized countries as Korea and Brazil that are competing with industrialized nations in world steel markets.
"Government, business and labor in the United States can no longer maintain an indifferent attitude toward the industrial policies of other countries," LICIT maintained.
"We are in a situation now where the structure of American industry is being increasingly determined not by market forces but by the industrial policies of other governments," added Thomas A. Holmes, chairman of Ingersoll-Rand Co., a LICIT member.
To combat that "industrial trade gap," LICIT recomended a four-point program starting with more aggressive enforcement of existing trade laws and enactment of new ones aimed at other nations' "export-oriented, import-limiting industrial policies, which have the effect of depriving American producers of market share and American workers of jobs.
"The defense of U.S. commercial interests and of firms and workers in America's industries must be a priority national policy," the study concluded.
Beyond that, the LICIT report recommended the formation of an American industrial policy "to provide for more equal conditions of international competition for American-made products." These include the possible loosening of antitrust laws to allow collaborative research-and-development projects and some cooperation between domestic companies so they can compete better against foreign "monopolies or cartels."
But LICIT also suggested that the government reach over the border to enforce U.S. antitrust laws on foreign companies selling here. "Anticompetitive behavior which is not permitted for domestic firms selling in the domestic market should not be permitted for foreign firms exporting to the United States," the report said.
The report further called for special government incentives in the form of lower interest rates, guaranteed credit, tax breaks or startup grants for industries requiring rapid growth as well as special training programs for displaced workers.
"We are not endorsing a blank check for industry," the coalition stated. "To qualify for receiving special treatment--in trade policy, competition policy, R&D financing or other areas--industries and firms and workers should be required to specify how they will use their favored position to improve productivity and competitiveness."
The report also recommended that the government develop "timely and accurate information"--some of which already is collected, but in such a scattered way that it becomes hard to find and use for up-to-date economic analysis--on American industrial development and industrial policies of other nations that could impinge on U.S. industry, trade and employment.
Only after the United States has strengthened its trade laws and built up its industrial base should it move toward international agreements controling industrial policies that could affect other nations, the report argued.
"For U.S. proposals to win acceptance abroad, the United States will have to have a stronger bargaining position than it does today," the report said.