U.S. STUDY SAYS TARIFFS AND QUOTAS COULD BACKFIRE
  The use of tariffs and quotas to
  reduce the flow of foreign goods into the United States will do
  little to cut the nation's swelling trade deficit, a government
  study said.
      In fact, the Federal Trade Commission (FTC) report said,
  such protectionist policies could make U.S. Products less
  competitive in the world marketplace by raising the cost of
  imported products that are re-exported in different forms.
      "Such policies are much more likely to hurt, rather than
  help, the productive capabilities of the U.S. Economy," it said.
      The 218-page report, written by FTC economists John Hilke
  and Philip Nelson, blamed the rising trade shortfall, which
  climbed to a record 166.3 billion dlrs last year, on shifting
  currency exchange rates and growing U.S consumer demand.
      Other factors commonly blamed for the deficit, such as
  foreign trade practices, deteriorating U.S. Industrial
  competitiveness, high labour costs and government restrictions
  on mergers, added little to the problem, it said.
      "Although each industry's competitiveness affects the level
  of imports and exports in that industry, in general we find
  that there have been no significant industry-specific changes
  affecting competitiveness that would explain the increase in
  the overall trade deficit," the study said.
      "To the extent any government action is needed to deal with
  the trade deficits, policies should focus on economy-wide
  phenomena such as exchange rates and relative economic growth,"
  the FTC study said.
      Supporting its conclusion that broad-based economic shifts
  were the cause of the increase in the trade deficit, the report
  said it found that nearly all U.S. Industries lost some
  domestic market share to foreign competitors in the 1980s.
      It also said it found a "fairly direct relationship" between
  the increased trade deficit and the influence of shifting
  currency exchange rates, U.S. Economic growth and domestic
  demand for goods and services, which has outpaced foreign
  consumer demand.
      The study examined seven factors which have been commonly
  blamed for the trade deficit: foreign government subsidies and
  trade barriers to protect foreign industries, a lack of
  investment in U.S. Industry, declining research and development
  in U.S. Industry, high labour costs, union work rules, the oil
  prices rises of the 1970s and U.S. Antitrust regulations.
      In each case, the study found little or no evidence that
  the factor had any impact on the trade deficit.
  

