Trade pact may boost exports from Md. businesses to Japan

July 14, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

While the trade agreement hammered out last week between the United States and Japan establishes a framework for possible progress, it holds the potential of boosting Maryland exports to Japan, according to state officials and business executives.

"It's a positive step, but fairly general," said James L. Hughes, executive director of the World Trade Center Institute, a quasi-state group that assists Maryland business in international trade.

It is too early to gauge the precise impact on Maryland companies, Mr. Hughes said, but if the agreement ultimately reduces barriers to exporting to Japan, it will help state companies break into that very insular market.

The agreement, announced by President Clinton with much fanfare last week, commits the United States to trying to reduce its budget deficit by $500 billion over the next four years. In return, Japan agreed to try to cut its overall trade surplus of $130 billion by a third -- creating about a million jobs worldwide and several hundred thousand in the United States, according to the Clinton administration.

But the agreement is nebulous and a series of future trade talks -- along with the concurrence of other trading partners -- will determine whether the agreement has a lasting impact.

One difference between the new framework and past arrangements is that it does not call for restricting Japanese imports to the United States. Instead, it envisions Japan importing more by reducing its trade barriers.

This would mean Japanese imports through the port of Baltimore would be unaffected, while exports to Japan could be boosted, Mr. Hughes said.

"It should keep products going through the port."

There are two measures of the state's trade with Japan -- one is the amount of cargo moving through the port and the other is the value of exports of Maryland- produced items, regardless of what port they are shipped through.

Cargo moving through the port -- which often comes from other states -- is decidedly lopsided toward Japan.

In 1992, Japanese imports through the port -- consisting primarily of automobiles and electronics -- totaled $2.6 billion, according to the Maryland Port Administration. But exports to Japan, which included a large amount of coal from West Virginia and other states, was valued at $155.9 million.

The other measure of trade, exports by Maryland manufacturers to Japan, has grown by 136.7 percent during the last five years.

These products -- which may be carried across country for shipment out of West Coast ports -- increased from $109.3 million in 1988 to $258.7 million in 1992, according to the Massachusetts Institute for Social and Economic Research.

The agreement also calls for the long-term reduction of tariffs on steel in both countries, but only if a multilateral agreement is reached among steel producing nations.

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