Why do America's trade deficits keep ballooning?

Though the Bush administration would prefer you did not know, a key reason is that U.S. trade policy is pathetically weak.

The U.S. government is supposed to make sure that American exporters get a fair shake in foreign markets. In reality the odds in many key foreign markets are outrageously stacked against American exporters.

Few can testify to this point more convincingly than the Harley-Davidson motorcycle company. As reported by Manufacturing & Technology News, a Washington-based newsletter, Harley-Davidson is badly wrong-footed by tariff and non-tariff barriers in many parts of the world.

In no market is the problem greater than in China, which just happens to be the nation with which the United States runs the largest trade deficits.

Harley-Davidson has been told that it cannot sell its iconic bikes in China unless it manufactures them there. To add insult to injury, the Beijing government permits local Chinese manufacturers to make knock-offs of Harley's bikes which are sold in China's black markets.

It is not as if all this comes as much of a surprise. Harley's problems in China are just one example of a pattern of foreign protectionism that for at least forty years now has been progressively weakening America's manufacturing base.

The problem has been particularly acute in East Asia, where first Japan and then several other nations discovered that no matter how outrageously the flout the provisions of trade agreements, they can hope to get away with it.

Again Harley's experiences are highly relevant. In the Japanese market, a key barrier for many years was a special riding exam. This was compulsory for anyone wanting to own a 400cc or larger bike -- in other words a Harley.

According to Harley chief executive Jeffery Bleustein, one of the tests was to ride a motorcycle across a balance beam. "You see the difficulty a gymnast has in doing that," says Bleustein. "Imagine trying to ride a large bike across a balance beam. It was not quite as far off the gournd but if yo fell off it was a special experience. Obviously the test was couched as a safey requirement but its real purpose was to keep Harley-Davidson motorcycles out of the market."

It succeeded brilliantly: with a pass rate of about 2 percent, Harley hogs were as rare on Japanese roads as, say, Buddhist monks are in Vatican City.

After decades of complaining by Harley, Japan abolished this test some years ago -- but only after its own motorbike manufacturers had caught up with and indeed in many cases surpassed Harley-Davidson in key technologies.

Even so, to this day Harley's access to the Japanese market continues to be hampered by other barriers.

Why do foreign nations, even ostensible allies such as Japan, give American exporters such a hard time? The answer in large measure is because they can get away with it. Even if Americans fondly imagine their nation wields unparalleled power in world affairs, the governments of America's trading partners know that where trade is concerned the Bush administration is a bunch of cream puffs.

Manufacturing & Technology News is one of the best sources of information on what is really happening to the American economy. An annual subscription costs $495. See www.manufacturingnews.com.