ITALY FEELS QUALITY PRODUCTS COULD HELP CLOSE TRADE GAP

ITALY FEELS QUALITY PRODUCTS COULD HELP CLOSE TRADE GAP

Italians are worried.

They're buying far more overseas than they are selling.The figures speak very clearly, said Renato Ruggiero, foreign trade minister. In 1987 we exported a lot, but we also imported too much.

The 1987 increase in imports is linked to a sharply rising domestic demand for consumer goods, up 4.5 percent from 1986. Italy's domestic demand is the highest among European industrialized countries, topping even West Germany's 2.5 percent increase.

Italy's trade deficit in 1987 was 11.1 trillion lire (US$9 billion), up

from 1986's deficit of 3.7 trillion lire, but only half the 22 trillion lire deficit of 1985. It was in the areas of energy, food and agriculture, and chemicals that the deficit was the highest, Mr. Ruggiero said recently in an address before the Mediocredito Centrale Banke in Rome.

Some solutions to Italy's trade deficits were voiced when the figures came out.

We have the choice of either limiting imports or increasing exports, said Paolo Ferrucci of the Foreign Trade Agency. But no one is thinking of trade restrictions or protectionism. We must instead improve the quality of our exports.

Some industry spokesmen have proposed reducing those employee benefits that raise the cost of labor, Mr. Ferrucci said. The state would then pay the benefits by taxing certain goods.

But a more widely accepted approach to the deficit problem is to increase competitiveness based on non-price factors. Export services, for example, could be improved, Mr. Ferrucci said.

About 100,000 companies in Italy export their products, but most are not properly organized for such activities, he said. Representatives abroad could be better coordinated; deliveries more timely; and greater post-sales assistance available, he said.

Another solution is to turn a primary sector into a strategic one, said Gerardo Pelosi, Foreign Trade Ministry spokesman.

The food and agriculture deficit, for example, could be cut by linking farms with industry and distribution, thus allowing goods to move faster from the Italian farmer to the foreign consumer, he said.

Italy's trade with OPEC nations fell during the first 11 months of 1987, with a 20 percent decrease in exports (and a 9 percent drop in imports.) Contributing to this was a decline in demand and a depreciation of the U.S.

dollar, Mr. Pelosi said.

In 1987, US$1 was worth 1,300 lire; in 1986 the same dollar was worth 1,500 lire.

Italy's exports to the United States fell from 15.60 million lire in 1986 to 14.46 million lire. Its trade surplus with the United States dropped from 7.13 million lire in 1986 to 5.84 million last year. The drop was due to a lower lire-dollar exchange rate, said Mr. Ruggiero.

But trade with the European Community rose in 1987, with Italian exports up 7 percent and imports up 9.3 percent.