"International Trade: The Burning Issues - Perspectives from Today and
Tomorrow," Dr. Eilif Trondsen, SRI Consulting, September 10, 1996

Dr. Trondsen discussed the rapid growth of exports in Asia that has risen
sharply between 1989 and 1995. Asia now accounts for 18.9% of world exports
up from 12.8% in 1989. Asia's export engine is accelerating in the past
several years. In 1995, Asian exports rose by 25% compared to industrial
nations that grew by 10%.

He noted that North America has realized persistent trade deficits in spite
of gain in competitiveness ratings. There are major imbalances with both
Japan and China. The U.S. current account balance is likely to be in
deficit through the year 2001 in terms of absolute terms and as a
percentage of GDP.

Moreover, Trondsen showed that U.S. trade deficits with Japan are
persistent and growing. U.S. exports to Japan reached $584 billion while
imports from Japan totaled $907 billion in 1995.

Turning to Latin America, he stated that economic integration is starting
to take hold, especially in South America. Brazil is finally moving in the
right direction. However, imports exceed exports for three key nations in
1995: Mexico, Brazil and Argentina.

Looking to the future,  Trondsen said that Japan's regional role in Asia is
growing, especially concerning China. Asian nations are increasing their
reliance on electronics. They also are attempting to differentiate
themselves on the basis of value-added products. Reversing the trend of the
last few years, he sees Japan's export growth outpacing imports from 1997
to 2000.

Gearing up for the future, several Asian nations are increasing their
growth in research and development. Taiwan and South Korea have already
experienced double digit growth in real R&D between 1989 and 1993. Japan
continues to lead the pack in R&D spending with almost 3% of GDP.

Europe sees a new role in pushing trade liberalization measures to boost
growth. It is also seeking a larger role in Asia. Projectionist measures
abound, key sectors such as agriculture still collect huge subsidies.

There is growing "investment-based trade" in which more trade is conducted
within key markets. Local presence is likely to be the norm in the future
as governments and customers demand it. Customers are encouraging local
operations and companies are seeking to avoid trade conflicts. In addition,
trading inside key markets tends to minimize currency risks.