From: World Bank (International Bank for Reconstruction and Development), Trends in Developing Countries, August 1970. IMPORT COMPETITION AND By Eugene L. Stewart, Esq. I. IMPORT COMPETITION: INJURY AND MARKET DISRUPTION. CLUSIONS. I. IMPORT COMPETITION: INJURY AND MARKET DISRUPTION To secure an overview of the relative strengths and weaknesses of U.S. manufacturing industries in competing with their foreign counterparts, a comparison has been made of the change in the balance of trade of 633 U.S. manufacturing industries for the years 1967 and 1969. The industry classifications employed are those established in the Standard Industrial Classification at the 2, 4, and 5 digit levels of the classification. Foreign trade data of the United States as published by the U.S. Department of Commerce, Bureau of the Census, under two different classification systems were correlated under a classification concordance grouping import and export data within the product classification concepts of the Standard Industrial Classification. The concordance of classifications was based upon a correlation of import, export, and Standard Industrial Classifications published and updated by the U.S. Department of Commerce, Bureau of the Census. The compilation of the data and their presentation were accomplished by electronic data processing sponsored by the Trade Relations Council of the United States, and performed by the Tracor Computing Corporation. The basic data of the analysis have been published in two volumes entitled "Origin and Destination of Foreign Trade of U.S. Manufacturing Industries, 1967 and 1969." Several copies of these volumes have been presented to the Commission's staff. The data presented and discussed in this section of the paper are drawn from the basic data contained in the two referenced volumes. In Table I to this paper there are presented for each of 643 industries for which complete data were available data measuring the balance of Eugene L. Stewart, Esq. is a partner in the Lincoln and Stewart law firm and also the General Counsel for the Trade Relations Council of the United States, Inc. trade in the products of those industries for the years 1967 and 1969.1 These data are shown in the table under four columns, each of which is designed to provide a relative measurement of the competitive strength or weakness of U.S. manufacturing industries in foreign trade. Thus, the columns are headed: I. Industries whose trade deficit grew larger; II. Industries whose trade surplus was reduced; IV. Industries whose trade deficit was reduced. The theory of these four subdivisions is that the measurement provided by the concept expressed in the column heading will identify industries in accordance with their relative strength or weakness in competing with their foreign counterparts. Thus, industries which had already experienced a trade deficit by 1967 and which experienced an intensification or enlargement of that deficit by 1969 can reasonably be regarded as industries which are suffering a continued deterioration in their competitive position vis-à-vis total foreign trade. Because they are in a deficit position, imports are the dominant factor in the foreign trade position of these industries. The second column expresses a concept under which industries which enjoyed a trade surplus can nevertheless be seen as undergoing a weakening of their competitive strength vis-à-vis foreign competition. The fact of a trade surplus in 1967 distinguishes these industries from those which experienced a deficit, but the added fact that the magnitude of the surplus is diminishing as shown by the 1969 balance of trade position identifies this second group of industries as those becoming less competitive in foreign trade but not yet characterized by dominating import injury. In contrast to these two classifications, the concepts stated in the third and fourth columns of Table I measure industries which possess competitive strength vis-à-vis their foreign competition, and whose ability to compete is strengthening. This growing competitive strength is shown by the increase in the balance of trade surplus of industries which already enjoyed a trade surplus in 1967, or by the reduction in the size of the trade deficit in the case of industries which were in a deficit position in 1967. In the latter case (industries which enjoyed a reduction in the balance of trade deficit), it is reasonable to conclude that the persistence of a trade deficit indicates that the affected industries are suffering in some degree from import competition, but that the pressure of such import competition is lessening or being counterbalanced to a significant degree by increased exports. The data in Table I are grouped in numerical order under the 2 digit major industry descriptions of the Standard Industrial Classification. The principal emphasis was upon the presentation of data for industries measured at the 4-digit level of the Standard Industrial 1 1 Table I and subsequent tables referred to follow the text of this paper. |