EXPORT FIRMS TOUTED AS CURE FOR TRADE BLUES

EXPORT FIRMS TOUTED AS CURE FOR TRADE BLUES

Wayne P. Cooper struggled for years to sell his company's grain silos to the Chinese. But in spite of thousands of dollars spent and numerous trips to China, Mr. Cooper could get no closer to a contract than a letter of intent.

So the president of Charlotte-based Arcon International Inc. turned to a trading company to represent Arcon in China. Only then, through the trading company's familiarity with the market and with the Chinese officials who oversee it, was the deal closed.Yes, Mr. Cooper said this week at the opening session of the 12th annual conference of the North Carolina World Trade Association, trading companies do add another level of cost onto a company's product. But he argued the percentage of cost is relatively small and certainly worth the price.

If you try to deal with these countries without an agent, it's a mistake, asserted Mr. Cooper, who also is the world trade association's president.

Working with trading companies may not be necessary in all circumstances, he continued, noting that as honorary consul for Mexico in North Carolina he is comfortable in most of his Mexican dealings.

However, even in Mexico, Mr. Cooper said he turns to trading companies when the contract involves countertrade or other types of barter arrangements.

It is not necessary or advisable to sign an exclusive contract with one trading company, he said. For instance, Arcon employs four trading companies to market its silos in China with very little overlap of effort.

Mr. Cooper said manufacturers should be leery of trading companies demanding exclusive rights to represent them because those that make such demands probably operate out of their bedrooms with just a phone and a telex.

William Walker, an attorney with the firm of Mudge Rose Guthrie Alexander & Ferdon of New York, suggested this is the time for U.S. manufacturers to get involved with trading companies.

The much-ballyhooed Export Trading Company Act never really got off the ground, primarily because of poor timing, Mr. Walker said.

That legislation permits, among other things, bank involvement in export trading companies and antitrust exemptions. The act took effect earlier this decade, when the U.S. dollar was still strengthening and the debt problems of the developing countries were mounting, he said.

But Mr. Walker said that while banks were permitted to participate in the trading companies, various technical limitations placed on their involvement lessened the attraction.

Despite those difficulties, companies should pursue overseas markets, in part because conditions have never been better for U.S. exporters to succeed, Mr. Walker said. He said the U.S. companies that survived the recession of the early 1980s are more efficient and competitive than they were earlier this decade, and the drop in the value of the dollar against other currencies makes goods priced in dollars especially attractive.

Trade works both ways, of course, and Mr. Cooper noted that trading companies can assist U.S. manufacturers by obtaining low-cost imported components that can reduce a product's overall cost, thereby making it more competitive in both domestic and world markets.

Obtaining such benefits through imports may prove more difficult if Congress overrides President Reagan's expected veto of the omnibus trade bill, Mr. Walker cautioned.

So far, he said, deliberations on the massive trade bill have been a combination of high drama and low farce, resulting in legislation that won't do much to assist U.S. exporters but will hinder importers.

The real drama will come if, as he expects, the House overrides a presidential veto while the Senate sustains it, Mr. Walker said.

In any event, the trade bill points out Congress' desire to cater to special interest groups rather than truly address what should be done, the attorney said.

Does anyone really believe the trade deficit is caused by foreign

barriers? he asked.

If Congress were truly serious about U.S. competitiveness it could have done something with the tax codes to encourage investment and savings, he said. Mr. Walker also suggested the government could try to reduce the budget deficit or to cut the current account deficit - the deficit on trade in services and investment as well as in goods - that could reach $1 trillion by the 1990s.