U.S. STUDY SAYS TARIFFS AND QUOTAS COULD BACKFIRE The use of tariffs and quotas to reduce the flow of foreign goods into the United States will do little to cut the nation's swelling trade deficit, a government study said. In fact, the Federal Trade Commission (FTC) report said, such protectionist policies could make U.S. Products less competitive in the world marketplace by raising the cost of imported products that are re-exported in different forms. "Such policies are much more likely to hurt, rather than help, the productive capabilities of the U.S. Economy," it said. The 218-page report, written by FTC economists John Hilke and Philip Nelson, blamed the rising trade shortfall, which climbed to a record 166.3 billion dlrs last year, on shifting currency exchange rates and growing U.S consumer demand. Other factors commonly blamed for the deficit, such as foreign trade practices, deteriorating U.S. Industrial competitiveness, high labour costs and government restrictions on mergers, added little to the problem, it said. "Although each industry's competitiveness affects the level of imports and exports in that industry, in general we find that there have been no significant industry-specific changes affecting competitiveness that would explain the increase in the overall trade deficit," the study said. "To the extent any government action is needed to deal with the trade deficits, policies should focus on economy-wide phenomena such as exchange rates and relative economic growth," the FTC study said. Supporting its conclusion that broad-based economic shifts were the cause of the increase in the trade deficit, the report said it found that nearly all U.S. Industries lost some domestic market share to foreign competitors in the 1980s. It also said it found a "fairly direct relationship" between the increased trade deficit and the influence of shifting currency exchange rates, U.S. Economic growth and domestic demand for goods and services, which has outpaced foreign consumer demand. The study examined seven factors which have been commonly blamed for the trade deficit: foreign government subsidies and trade barriers to protect foreign industries, a lack of investment in U.S. Industry, declining research and development in U.S. Industry, high labour costs, union work rules, the oil prices rises of the 1970s and U.S. Antitrust regulations. In each case, the study found little or no evidence that the factor had any impact on the trade deficit.