HANSON’S LATIN AMERICAN LETTER - Washington - 5 January 1980 - Number 1816

Sep 21, 2026

Uploaded by Asher

Formal letter from Washington dated 5 January 1980, marked “Number 1816,” addressing whether continuing expansion of Mexican and Brazilian exports of manufactured goods should be permitted. It argues export decisions are driven more by short-run political pressures than by economics, citing labor, congressional, and presidential statements. It links U.S. bargaining power to market access, and summarizes OECD, GAO, and NPA findings on employment adjustment risks, tariff barriers, and projected export growth.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages5

Reading Time13 min

AccessFree to download

Wil1 continuing expansion of Mexican and Brazilian exports of manufactured goods be permitted?

Decision-making: politics vs economics

Policy implications and bargaining weapon

Summary of OECD study findings

Summary of GAO study findings

Simplistic solutions rejected; productivity insensitivity

HANSON’S LATIN AMERICAN LETTER WASHINGTON 5 January 1980 Dear Sir: Number 1816 # Wil1 continuing expansion of Mexicanand Brazilian exports of manufacturedgoods be permitted? In the past six months a number of major studies have appeared(OECD,IF ECONOMICS NPA and GAO)concerned with the growing "threat"of exports of manu-DICTATESfactured goods from the newly industrializing countries such as Mexicoand Brazii.The thrust of the studies is that if economics rather thanpolitics dictates the decision,over the long run suitable mutually- beneficial adjustments should be possible to enable the continuing expansion ofexports from such countries. Simultaneously the studies warn that over the shortrun maladjustments are likely to be such as to evoke demands for more protectionismagainst such exports. What is important is that the decision-making is more likely to be gearedDECISIONto the short-run performance and that it is more likely to be politicalMAKING WILL rather than economic in basis.That is,it is more 1ikely to be gearedBE POLITICALto the AFL-CIO insistence that just as the U.S.can no longer be theworld's policeman,just so can it no longer be the wor1d's consumer.And to the Congressional Budget Office warning of serious disruptions to the northeast and midwest.And even to President Carter's admonition that "some-times you can buy a little cheaper for a foreign product but I think it is good tobuy American whenever we can." Policy-wise this means that access to the U.S.market will increasinglyA GREATbe a bargaining weapon for the United States if used with the skill de-BARGAININGmanded by domestic politics.Given the fact that Mexico's capacity toWEAPON FORmeet its job problem and with it the social amelioration so imperativeTHE U.S.rests in large part on expansion of its industrial structure and with itcontinuing access to foreign markets,and given the fact that Brazil'scapacity to counter recurring financial emergencies rests also on ex- panding access to world markets for manufactured goods,the weakness of the U.S.energyposition and consequent deterioration may be altered by use of this bargaining weapon. Look at the studies: In June 1979 increased competition in manufactured goods from the newlyOECDindustrializing countries(Mexico,Brazil,Korea,etc.)had become suchSTUDYa cause for concern in the developing countries as to prompt the OECDto produce a detailed analysis.It found that from 1963 to 1977 thenewly industrializing countries had increased their share of OECD imports of manufactures from 2.6%in 1963 to 8.1%in 1977.The report concedes that therecould be substantial gross employment losses in some sensitive industries,concen-trated on certain regions and categories of workers from this new competition.Howeverbeneficial over the long run,the report conceded that "over the shorter run there isno guarantee that the necessary adjustments will come about smoothly -and even witha globally satisfactory adjustment process,individua1 industrial countries as wellas the newly industrializing countries are likely to get out of line creating seriousadjustment problems for individual industries,regions,within each country." The report stressed the need for the newly industrializing countries likeMexico and Brazil to progressively dismantle their tariff and quota protection and other administrative obstacles to imports."It is impossible to say",the reportwent on,"whether the current difficulties will lead to a major shift toward defensivepolicies in the developed countries followed by retrenchment in the newly industrial-izing countries." And it underlined the meaning by noting that already by 1975 exports ofmanufactured goods had reached 52%of Mexico's total exports(exclusive of the borderindustries)and 27%of Brazil's. In October 1979,the Comptroller-General of the United States(GAO),GAOconcerned with the U.S.balance of payments position,reported that de-STUDYveloping countries'manufactured goods export

FAQs

What is the central question raised in the letter?

Whether continuing expansion of Mexican and Brazilian exports of manufactured goods should be permitted.

Why does the letter claim trade decisions are mainly political?

It argues decisions are geared to short-run performance and political demands, citing AFL-CIO pressure and warnings about disruptions, rather than being determined by economics.

What studies are referenced and what do they generally show?

The letter cites OECD, GAO, and NPA analyses, describing rising shares of manufactured exports from newly industrializing countries, the risk of short-run maladjustments, and the expectation of continued export growth through the late 1970s into the 1980s.

Sep 21, 2026

Uploaded by Asher