TAIWAN ASSURES US TRADE DEFICIT WILL BE TRIMMED

TAIWAN ASSURES US TRADE DEFICIT WILL BE TRIMMED

Taiwanese officials spend much of their time these days trying to convince U.S. representatives of the sincerity of their efforts to address the whopping trade deficit the United States has with Taiwan.

In addition to predicting a decline in that trade deficit this year, they clearly seek to separate themselves from their Asian neighbors in the eyes of U.S. policymakers and not to be lumped in with Hong Kong, Singapore and South Korea.Taiwanese officials seem intent on minimizing political damage to their relations with the United States and trying to prevent the U.S. government

from taking more radical countermeasures against their nation's exports.

They point to the 41 percent rise in the value of their currency vis-a-vis the U.S. dollar since the Plaza Accord of September 1985 as proof of Taiwan's commitment to help boost U.S. exports. Much of that increase has come in the past year, however, as the United States stepped up pressure on Taiwan to revalue.

A depreciating U.S. dollar, coupled with the Taiwanese government's encouragement of Taiwanese to buy U.S. products, has led to a significant

shift in Taiwan, Taiwanese officials say.

Taiwan's exports to the United States last year were a record $23.6 billion, according to Taiwanese data that do not include shipping and insurance costs. The U.S. Commerce Department valued those imports, including the costs of insurance and freight, at $26.4 billion.

But Taiwanese officials also point to a major increase in U.S. sales on their island in 1987, especially toward the end of the year, as the currency shifts took hold.

Taiwan reports that its imports from the United States increased 40.8 percent throughout 1987, compared with 1986, to $7.6 billion. And, Taiwanese officials say, Taiwan's imports from the United States in November and

December rose by 75 percent or more from their levels of the year before.

For 1988, Taiwan is predicting that the trade imbalance will be reduced

from $16 billion to between $10 billion and $13.5 billion. U.S. government data indicate an imbalance of somewhat larger than $16 billion in 1987.

In fact, Taiwanese officials say, if the trends of the last quarter of 1987 continue, It is possible that figures for one given month (this year) will reflect a U.S. surplus in trade.

The smallest deficit in any month of 1987, they say, was December's $970 million. The Commerce Department, again figuring insurance and freight in imports from Taiwan, said the December deficit was $1.1 billion.

Under its current five-year plan, Taiwan projects that its imports from the United States will increase 30 percent a year on average, while its exports to the United States will decline by an average 7 percent a year, thereby cutting the U.S. trade deficit in half by 1992, according to a government summary.

Albert Ching-Hsiu Lin, deputy information director of the Taiwanese government's equivalent of an embassy here, said, We are very proud to say we are one of the most cooperative countries in regard to U.S. trade goals.

He said Taiwan would continue to respond to U.S. concerns and that his nation agrees with the Reagan administration that the emphasis (on fixing the trade imbalance) should be on how to increase (U.S.) exports, not to restrict imports.

He said that while his country is unhappy about losing duty-free access in the United States for its products under the so-called Generalized System of Preferences, I think we have to live with that decision.

(South Korea, Hong Kong and Singapore, all nations with large trade surpluses with the United States, also will lose their GSP privileges.)

Taiwanese officials say $3.7 billion of their trade with the United States in 1987 was covered by GSP tariff waivers.

Mr. Lin, however, says Taiwan is more concerned about pending U.S. trade legislation that singles us out . . . in substance if not in name.

Mr. Lin notes an irony in Taiwan's trade liberalization moves.

It is the United States that pushes us to reduce our tariffs, but it is others who benefit from the new lower tariffs, he says.

As an example, he cites U.S. pressure to cut duties on imported chocolate. When the tariffs fell, he says, it was Japanese - not U.S. - manufacturers that rushed into Taiwan, even though most Taiwanese believe U.S. chocolate products are superior.

The Yuan, Taiwan's legislature, has passed several rounds of tariff reductions since 1986, reducing the average tariff some 50 percent, to 12.5 percent, Taiwanese officials stress.

They say Taiwan reduced duties on 239 of 270 tariff items that the United States expressed specific concern over in the latest round of talks.

The Yuan also liberalized foreign exchange controls, and Taiwan now permits citizens to invest up to $5 million a year abroad without requiring government approval.

Mr. Lin contends that a major difference between Taiwan and the other major U.S. trading partners in Asia is that most Taiwanese products imported into the United States are either components that are placed into other products or are finished products manufactured for U.S. companies.

Very few Taiwanese products, he notes, are imported into the United States by Taiwanese firms.

Taiwan, Mr. Lin says, will continue to encourage its businesses to buy American.

He also reports that U.S. companies would be encouraged to upgrade their service operations in Asia by basing skilled technicians in Taiwan. He says companies often decide to buy competing products not because the machinery is inferior but because U.S. companies generally take longer to provide service.