Global changes bode well for importers, exporters.

But liberalization has down side -- more competition

This year augurs well for many Los Angeles importers and exporters because key trends and the post-Cold War policies of many governments signal trade liberalization.

Trade through the L.A. Customs District was growing at a 9 percent annual clip in 1992, far better than L.A.'s economy or the nation's.

But competitive threats to certain traders could offset any positive effects they might reap in trade with Mexico, for instance, which is dismantling many import barriers, or with Asia, with its mounting consumer buying power.

Much cotton, for example, has long been exported from L.A. ports. But textile mills in Japan, Taiwan and Indonesia are hiking purchases from cheaper producers in Pakistan, China and Australia, noted Jeffrey Coppersmith, vice president of L.E. Coppersmith Inc., a Mid-Wilshire customs brokerage that handles big cotton accounts. His export clients are pushing their trade groups to court foreign mills more aggressively than ever to defend market share.

"Outside pressure is making U.S. companies work harder" for foreign market share in 1993, said Coppersmith, when asked to name the No. 1 trade concern of his clients.

One big-picture issue, however, binds all traders -- President-elect Bill Clinton's intentions. Presidents can influence trade policy by intertwining it with foreign policy.

Clinton has variously spoken out against nations that keep selling more to America than they buy from us, such as Japan, L.A.'s largest trading partner, or China, L.A.'s fastest-growing partner. Clinton could propose hiking tariffs on imports from such partners, to "level the playing field," as congressional protectionists call it.

"It all hinges on how hard he hits our large trading partners that have big surpluses with us," said Al Fierstine, director of marketing for the Port of Los Angeles. "If he goes in with a gloved hand or an iron fist is the concern."

Japan exported $12 billion of goods to the L.A. Customs District vs. imports of just $5.2 billion during the first half of 1992, the latest period for which figures are available. China sent L.A. $3.5 billion and bought only $756 million in the same period, according to U.S. Census figures compiled by TradeWatch.

Rich Japan may not increase its buying from L.A. in 1993 because of its own problems. The world's second-largest economy reportedly is expecting corporate profits to decline by 20 percent; its money supply is shrinking for the first time since the 1960s; and a historic real-estate/banking restructuring is under way to address plunging land values.

"In Japan there is fear that the economy has really run aground, a kind of mania (among) Japanese consumers," said Norman Futami, an Asia-Pacific transactional lawyer with Paul, Hastings, Janofsky & Walker in L.A. who returned from his most recent visit to Japan in December.

Yet consumer pressure is unlikely to spur liberalizing of Japan's import rules to the benefit of America and others, Futami predicted.

"Domestic Japanese business has to improve before Japanese consumers get any relief," he predicted. "In the short term, it will be harder to export from L.A." to Japan.

As for China, all eyes are resting on Arkansas' ex-governor. In Los Angeles, before the World Affairs Council in August, Clinton said: "We will link China's trading privileges to its human rights record and its conduct on trade and weapons sales."

But at press time, the president-elect had taken no radical departure from President Bush's foreign trade policies in words or in his choices for cabinet appointments. Some trade experts expect few changes.

"None of my clients are concerned about Clinton. No worries," said Jacques Naffaa, first vice president and manager of international development in L.A. for Capital Bank of California.

His bank finances imports of textiles for L.A.'s garment industry, many of them from China. Naffaa predicted the Clinton administration won't restrict China trade, and "guesstimated" local importers would buy about 20 percent more Chinese textiles in 1993.

China is of paramount importance to L.A. Two-way trade grew by nearly $2.5 billion in 1992, more than with any other nation, according to the L.A.-based Trade-Watch database.

Positive signs for American traders began to appear last year: In December, China announced plans to legalize imports of cigarettes, and to reduce import tariffs on 3,371 items.

The moves, reportedly covering 54 percent of imports, appeared aimed at meeting efforts to join the General Agreement on Tariffs and Trade, and gaining the benefits accruing to GATT members. Among the items are crude oil, airplanes and computer software -- the output of key L.A. industries.

Aircraft and spacecraft are the No. 2 export category from the L.A. Customs District. They accounted for $4.2 billion in the first half, or 17 percent of the total exports.

Psychologically, L.A. traders might continue to be drawn toward China in 1993, thanks to other developments. Pressured by the U.S. and other Western nations, China agreed early last year to stronger enforcement of patent and copyright law, a possible catalyst for computer-related exports.

And in October, China agreed to phase out many licensing requirements and other import barriers between 1993 and 1998. It also agreed to end its protectionist ban on purchases by Chinese companies of imports that can be bought from local, Chinese producers. China also agreed to make public certain formerly unpublished trade laws, and it ousted several older, hard-line leaders from the Politburo.

"The (new) younger leadership is less dogmatic and more pragmatic, and that will translate into a lot more purchases of U.S. products," predicted Robert Krieger, customer broker with L.A.-based Norman Krieger Inc.

Still, warn some traders, Clinton could be swayed by continued allegations that some Chinese exports are manufactured by slaves, and that others are shipped through secondary ports and re-labeled with a different country of origin, to evade U.S. import quotas.

Meanwhile, the impending North American trade pact, more than any other development in 1993, could spell opportunities and threats for L.A. traders.

On Dec. 1 Clinton reportedly informed Latin American leaders, by phone, that he supported the Bush-negotiated North American Free Trade Agreement and building similar agreements with other Latin American nations, such as Chile.

The pact's foes, especially environmentalists and labor unions, are expected to reach a crescendo in their criticism when the accord approaches congressional hearings next year.

Los Angeles businesses could be affected in unforeseen ways. NAFTA will supercede many existing U.S. laws, as did its model, the 1989 U.S.-Canada free trade agreement.

Mexican truck drivers, for instance, are already allowed to make deliveries across the border. But they would come in greater numbers under NAFTA, predicted Art Takei, a Mid-Wilshire-based administrator for the AFL-CIO's Food and Drug Council. And Takei said NAFTA would end the drivers' current requirement to earn a California drivers' license and be insured by an American insurance company.

"What's going to happen to the safety of our highways when all these truck drivers come in with all their produce and products?" Takei asked. Also, with Mexican driver wages averaging one-third of U.S. rates, "It will undercut the standards over here," he said.

Whether or not the accord is enacted this year, many importers and exporters on both sides of the border know the Mexican government's ongoing economic liberalization already has moved mountains.

"NAFTA puts a real nice sheen on it," said L.A.-based attorney Michael Owen, in charge of the Latin American practice of Paul, Hastings. But already Owen's clients "are looking for opportunities down there to either market their products or to open up channels" using joint ventures or a wholly owned companies to manufacture certain products there principally for the Mexican market.

One client, a Richmond, Calif.-based marketer of waste disposal equipment called Synthetica Technologies Inc., will likely get a deal in 1993, he predicted. Waste management, oil drilling and financial outfits are especially well-suited, he said.

The big European story of last year was the slight unraveling of the EC. In June, Danish voters rejected the Maastricht treaty, the EC's ambitious blueprint for greater monetary and political union.

Last fall, Britain dropped out of the European exchange-rate system, ending support for the pound at EC-determined trading values.

In December, Swiss citizens voted down membership in the European Economic Area, a secondary free-trade zone to the Common Market. "No" voters were said to fear job losses.

Despite the EC's troubles, some firms' have solid contracts for 1993.

Pasadena-based Jacobs Engineering Group Inc. is engineering and managing the construction of a $200 million computer-chip fabrication plant in Ireland for Intel Corp. The work is being done out of its Dublin subsidiary, Jacobs International, which has seen its work force grow from 130 to 400 since 1989, mirroring Ireland's growing attractiveness as a low-wage EC outpost.

Jacobs' only foreign subsidiary "is in a better position to pick up on, and execute, European projects" in the Common Market than its Pasadena headquarters, said Jacobs Senior Vice President Arlan Emmert.

Emmert, who was CEO of the 18-year-old Irish operation until March 1992, said the EC union indirectly benefitted Jacobs, because his potential clients rushed to build in Europe before their products would face EC unified tariff laws. "We found companies like (California-based) Intel moving to Europe, and petrochemical, pharmaceutical and others were headed in that direction," he said.

Kicking up more 1993 opportunities for L.A.'s high-tech exporters, the Eastern Europe's Coordinating Committee for Multilateral Export Controls could accept a U.S. proposal to eliminate export licensing for a host of products currently controlled by that group, which has long policed exports to East Bloc countries on behalf of NATO nations.

Up to 3,000 licenses a year would no longer be required by American exporters of some $3 billion of goods, said Michael Hoffman, director of the western region of the U.S. Bureau of Export Administration. Hoffman said the action could come as early as February.

As for Russia, some 24,000 state enterprises have been sold, and there is much price freedom. But corruption and lasting state monopolies reportedly still bedevil investors.

Still, the vast potential market of the former Soviet Union, eyed by many Armenian Angelenos and other L.A. business people with cultural contacts there, intrigued many dealmakers.

The solution, said attorney L.A.-based Fulbright & Jaworski attorney Tim Bruinsma, is to barter or denominate sales in hard currencies. Bruinsma, said the 250-room hotel his clients are developing in the C.I.S.' Far East will bill its mostly Western clients in dollars or other hard currencies.

"And most of the Russian help would be paid in rubles, with a hard-currency kicker," such as a 20 percent bonus, he said.

The hotel is planned in the city of Khabarovsk, just north of Manchuria. A "leading" hotel management company has signed on and one of the largest American tour companies is a co-investor, he said.

But the deal isn't sure until a loan from the U.S. Export-Import bank is secured, said Bruinsma, who previously set up a distribution network in the Ukraine for a Pacific Palisades firm.