Emerging market downturn to have rising impact in U.S.<\/p>\n
WASHINGTON (Bloomberg): The financial downturn that has spread
\nfrom Asia through Russia and into Latin America will have a
\nrising impact on U.S. economic growth as exports slow and
\nconfidence sags, U.S. Trade Rep. Charlene Barshefsky said
\nWednesday.<\/p>\n
The widening recession in emerging market nations constitutes
\n\"the most dangerous financial crisis the world has faced in 50
\nyears,\" Barshefsky told the annual meeting of the National Assoc.
\nof Business Economists (NABE), echoing a message U.S. President
\nBill Clinton has delivered in recent weeks.<\/p>\n
While the flight of investment capital from Asia and other
\nemerging markets is \"obviously devastating for the countries
\ndirectly affected ... we will see here an exacerbation of the
\ncurrent trend\" of slowing exports and faltering confidence in
\nfinancial markets and the business environment, Barshefsky said.<\/p>\n
\"Two out of five cargo containers leaving the Port of Los
\nAngeles leave empty,\" highlighting sagging demand for U.S.
\nmanufactured exports, Barshefsky said. Overall U.S. exports fell
\nUS$14 billion in the first 8 months of this year, from the same
\nperiod last year. Exports to Japan are down 12 percent and
\nexports to Indonesia have fallen 70 percent, she noted.<\/p>\n
A casualty is \"rapidly declining\" farm incomes in the U.S.,
\nwhere farmers count on international markets for 25 cents of
\nevery dollar of income. U.S. farm exports to Asia in the year
\nended Sept. 30 fell 17 percent to $19.6 billion from $23.8
\nbillion in the year ended Sept. 30, 1997.<\/p>\n
In this context, the administration's top priority must be to
\npersuade Congress to approve the $17.9 billion requested by the
\nClinton administration to fund the International Monetary Fund,
\nthe lender of last resort to economies in crisis, Barshefsky
\nsaid. \"It is critical that Congress approves the president's full
\nrequest to re-fund the IMF.\"<\/p>\n
Heat on Japan<\/p>\n
While the U.S. has an urgent role to play, Japan, the world's
\nsecond largest economy, has an \"equally important\" task in
\nboosting the world economy, she said. That refrain has resounded
\nin conference rooms and corridors of power here this week amid
\nthe annual meetings of the IMF and World Bank.<\/p>\n
\"Japan must apply sustained and substantial fiscal stimulus
\nfor domestic demand, it must clean up its banking system ... and
\nderegulate and open its markets,\" so it can play a vital role as
\nthe economic engine that pulls Asia from recession, Barshefsky
\nsaid. \"If Japan does not recover, Asia does not recover.\"<\/p>\n
As the U.S. trade deficit mounts -- and it's on track to hit a
\nrecord $158.6 billion this year -- \"we must refuse to panic, we
\nmust refuse to cut ourselves off\" from the global system of free
\ntrade, she said. To throw up protectionist barriers at this
\nstage, Barshefsky said, would be to invite \"global depression.\"<\/p>\n
Rather, she said, the U.S. must continue to lead in forging
\nnew market-opening agreements with its trading partners,
\nincluding a proposed Free Trade in the Americas Agreement that
\nwould extend the North American Free Trade Agreement (Nafta) to
\nLatin America.<\/p>\n
The U.S. also hopes to forge new agreements to open markets
\nfor energy, telecommunications and medical equipment, among other
\ngoods, within the Asia-Pacific Economic Cooperation forum,
\nBarshefsky said. APEC trade ministers meet next month in Kuala
\nLumpur, Malaysia.<\/p>\n
Fast Track<\/p>\n
To complete any new trade accords, President Bill Clinton will
\nneed special \"fast track\" trade negotiating authority that
\nCongress has twice refused to give him. Fast track, rejected last
\nmonth in the House, gives the president the power to negotiate
\ntrade accords that can be rejected, but not amended, by Congress.<\/p>\n
Fast track opponents, including big labor groups and many
\nenvironmental organizations, want any such legislation to mandate
\nthat U.S. trading partners adhere to high labor and environmental
\nstandards. Without those protections, U.S. businesses operate at
\na competitive disadvantage, they argue.<\/p>\n
The Clinton administration chose not to lobby for fast track
\nthis fall because it saw the push for passage as a political show
\ndesigned to divide and embarrass Democrats before November
\nelections. Democrats count labor and environmental groups as
\nmajor allies.<\/p>\n
The administration has vowed to push for passage early next
\nyear, and Barshefsky said she hopes the debate can resume in
\nJanuary.<\/p>\n
Other challenges facing the U.S. include extending
\nintellectual property protections to new technology, insuring
\nthat Internet commerce remains \"duty-free and fighting off
\nattempts to block free trade in bio-engineered products, she
\nsaid. That effort means ensuring that \"sound science is always
\nthe test, not political expedience.\"<\/p>",
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