Word: exporters
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There is little evidence that the disparity between the mark and the franc will end soon. The continuing West German economic surge, which underpins the mark's strength, goes against classic economic theory. Rapid economic growth should almost inevitably produce much higher export prices and the demand for more imports, both of which are damaging to a country's trade position. Yet Bonn has managed to keep its economy expanding with little inflation. West German Economics Minister Karl Schiller said in his annual report that the country's production grew by almost 9% in 1968 and should...
Reverse Image. One reason for Germany's trade prowess is that its export prices have remained essentially the same since 1964, while those of the U.S., Britain and Bonn's five Common Market partners have increased by an average of 7 %. If Bonn were to peg the obviously undervalued mark at a higher price, it would relieve the competitive imbalance by making German exports more expensive and imports cheaper. Schiller, who still hopes to avoid revaluation, predicts that various other measures will help pare West Germany's trade surplus to $3 billion this year. Even that...
What worries Washington is that value-added taxes are refunded on exports and imposed as special border taxes on U.S. products entering European countries. That tends to add 6% to 23% to the prices of U.S. goods above and beyond import duties. VAT is sanctioned by the 21-year-old General Agreement on Tariffs and Trade, to which the U.S. subscribes. Under GATT rules, the U.S. can neither match such export subsidies nor raise similar import barriers because it relies chiefly on other forms of taxation. Except for excise taxes on a few items-autos, alcohol and tobacco...
Although France adopted the value-added tax in 1954, the U.S. grew seriously concerned only after the entire Common Market decided to copy it. When Germany made the switch to VAT last year, one immediate effect was a 2% drop in the export price of steel, machinery and other goods. The Netherlands introduced VAT Jan. 1 with similar results. Denmark and Sweden have joined the rush; Norway, Belgium and Italy will do so next Jan. 1, and Britain is considering...
...group of top executives, argues that VAT should be considered as a partial replacement for corporate income taxes. Congress so far shows no inclination to consider such fundamental changes. In Geneva, American negotiators have been pushing for a sensible change in GATT rules to allow U.S. companies to receive export rebates based on corporate income taxes and other "direct" taxes. In his final economic message, President Johnson asked for Europe's help in revising the rules "so that they no longer give a special advantage" to Europe...