Shrinking Surplus

People buy foreign goods for many reasons: novelty, fashion, durability, economy, snob appeal. Whatever the reasons, U.S. imports traditionally run at about 3% of the gross national product. That total tends to rise sharply, however, in times of prosperity --and this year it has spurted faster than at any time in a decade. The surge may satisfy the fanciers, and the sellers, of Dutch beer, Swiss watches or Italian fashions, but it bothers the U.S. Government. The nation's trade surplus --the excess of exports over imports--is rapidly shrinking, thus reducing the base that the U.S. has used to support its foreign and military aid in the face of its chronic balance of payments deficit.

Last week the Commerce Department reported that imports soared 12% in this year's first nine months, to an annual rate of $20.4 billion. At the same time, exports rose only 3%, to a rate of $25.7 billion. This unfavorable turn has cut the U.S. trade surplus from last year's $6.8 billion to $5.3 billion and frustrated attempts to achieve a surplus in the overall balance of payments. The Commerce Department, which last week estimated that U.S. payments ran a deficit of $200 million to $400 million during the third quarter, expects the nation to dip into the red by some $1.5 billion for the full year.

Shoes & Scotch. What foreign goods do Americans hanker for? U.S. companies, of course, have their own special needs; the fastest-rising major import so far this year is steel, which has risen 68% to $864 million. But consumer goods account for a full 40% of imports, include some of the sharpest gainers. The U.S. demand for Italian shoes, Pucci pants and British woolens has lifted imports of clothes and tex tiles this year by 18%, to $853 million. Purchases of leisure goods--German toys, Japanese baseball gloves, French musical instruments and the like--have risen 20%, to $187 million. Electrical apparatus, notably Japanese transistor radios and TV sets, are up 39%, to $429 million. Among other gainers: Danish cheese, Swedish cars, Brazilian galoshes, Scotch whisky.

The import spurt would be easier to tolerate if exports were keeping pace. Export growth has been stunted by several factors: dock strikes in the U.S., the slowing of business expansion in Europe and Japan, Britain's 10% sur charge on imports, and the worldwide plunge in commodities prices, which the underdeveloped nations depend on to earn foreign exchange. And, despite denials from U.S. officials, many businessmen suspect that the "voluntary" cutback of U.S. loans abroad has also hurt the nation's exports by drying up dollars in Europe.

Helped by Diplomats. Even so, many U.S. products continue to hurdle these obstacles. Exports of office machines have risen 6%; power-generating equipment is up 18%, military aircraft sales up 38%, and civilian aircraft--especially small executive planes--up 65%. To stimulate sales, the Hartford Chamber of Commerce loaded a DC7B with local merchandise, wrote $1,000,000 worth of orders on a swing through Europe, plans another trip next spring. The Grace Line last week organized a ship-borne industrial exhibit to sell to Latin America; similar floating fairs are being put together by the Farrell Lines for Africa and the American Export Isbrandtsen Lines for the Mediterranean and Middle East. While the Commerce Department is promoting "America Week" displays of U.S. merchandise in department stores throughout Europe, U.S. embassies in Manila, Beirut and Lagos will soon show products from some 500 American companies, recruit foreign salesmen to push them.

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