Double Trouble From Asia Crisis

Imports from Asian are flooding into American ports, but those ships are going back empty. CBS News Correspondent Ray Brady reports on a policy, backed by the United States, that was intended to help Asian economies but has backfired to hurt American workers.

They are the early spearhead of Asia's financial crisis -- container ship after container ship after container ship -- all packed to the gunwales with goods from Asia, all pouring into American ports.

Cargo from Japan, from Thailand, from Malaysia, from countries trying to earn enough dollars to pay off the billions they owe to international banks, most of it to U.S. banks.

The banks are demanding repayment on loans that many now say should not have been made in the first place.

"The problem really has been hot money," says Harvard economist Jeffrey Sachs. Sachs is among those who blame the U.S. banks for causing the financial crisis now gripping Asian countries. "What really happened is that everybody became so enthusiastic about them that our banks lent them tens of billions of dollars, really not watching what they were doing, so that those countries in Asia accumulated about $175 billion in very short-term debt," Sachs says. "When our banks panicked and pulled the plug, it drove otherwise successful economies down the drain."

And parts of the US economy went with it. On West Coast docks, it does not take an economist to know what those working here have known for months: those containers are in a virtual one-way trade.
Just talk with Bob Reidelberger, who supplies containers to shippers: "When they come in right now, they are loaded with goods for the American market. When they go out, a large percentage of them are empty. Maybe as much as 60 percent empty."

And, Reidelberger says, when they do have something in them what you usually find is that we're shipping out "a lot of low-value commodities like waste paper."

That one-way trade is cutting right into the US economy: and it's cutting into John Dillon's business. He is the chief executive officer of International Paper, and he puts it simply: "Our business in Asia is off by 50 percent."

Just this month, International Paper announced a two percent reduction in its U.S. workforce. Pink slips went out at its plants in Selma, Alabama, Ticonderaga, New York, and Bastrop, Louisiana. Asian workers are making the same products they do, and selling them here at lower prices.

John Dillon is the CEO of International Paper: "Imports into the United States are up by 200, 250 percent over where they were in 1997. That is a huge increase. It means thousands of jobs lost."

What's happening at International Paper is spreading to steel and to textiles and to autos, says Harvard's Jeffrey Sachs: "What has happened is that the Asians, instead of buying our goods, are paying back debts to American banks. So they're sending money to the banks rather than sending money to American manufacturing firms that used to ship to those countries."

Clearly this trade imbalance can only end badly with a major slowdown, due to those empty containers. But can we ever fill these containers with U.S. products?

As President Clinton heads for Asia, there are two schools of thought: let the banks wait for their money so the Asians can spend here, or continue to press for repayment, following our own short-term self interests.

Sachs sees this as a "crossroads:" "What should the U.S. -- what can the U.S. -- do about Asia? The Asians need their debts rescheduled at this point. They need some time to start rebuilding the economy better. There is no simple recipe at this point."

International Paper's John Dillon needs a solution, and soon:
"Our employees are suffering. Our shareholders are suffering... The US, Europe, the developed countries cannot become a dumping ground, cannot be the solution to all of the Asian problems...We should be very firm."

It's easier said than done. Asian countries tell Bob Riedelberger they are desperate to get more containers to send even more products to these shores: "We scrounge around and get whatever we can to supply them, but we are seldom able to meet the demand."

Riedelberger says he has no doubt that if he doubled the number of containers he has over in Asia, he'd be able to fill them.

So, as long as they can get those containers, they'll be filling them up in Asia, shipping even more goods here. And, they'll do it until there is a dramatic sea change in America's policy toward Asia.

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