	economic spotlight u s deficit with nics the u s  deficit with taiwan and korea is expected to widen this year despite some economic and currency adjustments by the two newly industrialized countries economists said the surpluses that taiwan and korea ran with the u s in will get bigger this time next year the u s will be screaming at those countries about their exports said steve cerier of manufacturers hanover trust co taiwan is currently the third biggest exporter to the u s after japan and canada while korea is the seventh largest faced with heightened protectionist sentiment in congress the reagan administration has been stepping up the rhetoric against taiwan and korea urging those countries to allow their currencies to appreciate and lift impediments to free  the thrust has shifted to those newly industrialized countries nics amid signs the dollar s steep drop against the currencies of japan and most ec nations previously the main focus of the u s drive to cut its  gap is beginning to close the competiveness gap for american goods u s treasury secretary james baker said recently that he expects a reduction in japan s  surplus this year but u s manufacturers still are losing markets on their own doorstep to taiwan and korea whose currencies have not risen as much as the yen and the mark as major beneficiaries of soft oil prices and with low labor costs taiwanese and korean exporters are well placed to take up the slack in the fashionable comment in washington was japan bashing now it s nic bashing said robert chandross of lloyds bank plc asia s four main nics hong kong south korea singapore and taiwan accounted for almost one fifth of the overall billion dlr u s merchandise  deficit for the u s  gap with taiwan rose to billion dlrs in from billion in while the bilateral  deficit with south korea grew to billion from billion and preliminary u s data show that the growth trend is continuing the u s  shortfall with taiwan was billion dlrs in january up pct from a year earlier the gap with korea was mln dlrs up pct from a year ago lately both nations have said they will take steps to defuse incipient  tensions korea said it is choosing many of the items on which the u s wants it to cut import tariffs in order to deflect pressure for currency revaluation still south korean  minister rha woong bae said last week that korea would maintain a  surplus for three to five years as a way to cut its billion dlr foreign debt for its part taiwan said in january that it will cut tariffs on goods sometime in the second half of and try to diversify exports but vice economic minister wang chien shien said last month that he still does not expect taiwan s  surplus with the u s will fall in the nics have made deep inroads into markets for textiles and electronic goods but korea is raising its profile in the area of big ticket manufactured goods notably cars korea expects its auto exports mostly for north america to balloon to units in from zero in the nics exports are almost all manufactured goods when their exports rise it hits the heart of the u s manufacturing base it cuts directly to us and to our customers said bob wendt manager for economic studies at bethlehem steel corp the u s takes pct of korea s computer products exports pct of its electrical appliances and pct of its telecommunications equipment a recent study by morgan guaranty trust co says taiwan and south korea are the most pressing  issue for the u s while hong kong and singapore run  surpluses with the u s these are offset by their deficits with other countries but taiwan and to a lesser extent south korea stand in marked contrast both of these nations have moved rapidly into large bilateral surplus with the u s and major overrall  and current account surpluses the morgan study says morgan expects taiwan s overall  surplus to grow to billion dlrs in from billion last year and korea s to increase to billion dlrs from billion concern about the nics is not confined to the u s a lot of korea and taiwan s exports to the u s have been at japan s expense said richard koss at general motors corp february s paris meeting of six major industrial powers exorted nics to lower  barriers and revalue currencies but this two pronged approach has drawn little response from the two nations so far and in any case will only work with a sizeable lag economists say the u s has not said how much it thinks the taiwan s and korea s currencies should climb the taiwan dollar which is pegged to the u s dollar has risen about pct since september while the korean won has risen about five pct but in real terms the taiwan dollar has been flat against the u s unit and the won has lost seven pct economists say we ve not seen any lessening of competition from those countries that we can attribute to currency changes said bethlehem steel s wendt and so far u s pleas for taiwan and korea to use their hefty export earnings to import more have had little effect moreover it is uncertain how far u s protectionism will get given the administration s free  stance it s hard to see that anything will be passed much before year end and then the question is will it have teeth one economist said reuter 
