The Commerce Department announced Friday the U.S. trade deficit narrowed to $26 billion in May. That's down nearly 10 percent from April and the lowest level since November of 1999.
Exports of goods and services rose to $123 billion in May, reflecting increased sales of soybeans, corn and other farm products, along with higher exports of industrial machinery, generators and computers.
U.S. Imports fell, marking their 10th consecutive monthly decline. Pressured by a weak domestic economy, May imports were 35 percent below their all-time high set last July.
Much of the decline was attributed to a 3 percent drop in petroleum imports due, in part, to higher prices. The average price of an imported barrel of crude oil rose nearly $5 from April.
Oil prices, of course, have moved sharply higher since May, and while crude trended lower this week, there is considerable uncertainty in rural America over higher input costs. Of more immediate concern for farmers, however, are implications of climate change legislation being crafted in Washington.
Members of the Senate Finance Committee wrangled over climate change legislation this week on Capitol Hill. Focusing on implications of the House-passed cap-and-trade measure, lawmakers questioned panelists on the future trade role of India and China.
Sen. Charles Grassley, R – Iowa: "If we do something that is inconsistent with the rules of WTO we could open ourselves up to trade sanctions worse than we've seen and then we would have hurt our manufacturers twice."
Gary Horlick, International Trade Lawyer: "You could easily imagine India saying we're going to require permits for all U.S. exports until your per capita emissions are the same as ours. But that's not going to happen for a long time. The best way to avoid this is an international agreement. We react negatively when other countries do it to us. I've spent too much of the last ten years fighting border measures against U.S. livestock exports."
Senator Jim Bunning, a Kentucky Republican, expressed strong concern that China may gain a global economic foothold as a result of cap-and-trade legislation.
Sen. Jim Bunning, R-Kentucky: "We have some industries in Kentucky that are being injured seriously by not having the enforcement in China."
Sen. John Kerry: "I couldn't agree with you more. We are all concerned. If you have a global agreement with 160 nations and China or India were to sit out then we would have a global renegade. At that point we can set up a mechanism in the WTO to enforce that, right?"
Gary Horlick, International Trade Lawyer: "I think in practical terms you're going to need a China and an India. And they are going to do it for their own motives. And I'm not an expert in this but I believe they run out of water before we do…that's a crude way of putting it."
While many Senators and panelists in Washington agreed that a successful global agreement would hinge on India and China, the G8 summit in Rome was a setback for the Obama Administration.
The G8 nations released a group statement saying the world's major economies would reduce 80 percent of heat-trapping carbon emissions by 2050. But the release made no firm targets and was blasted by the U.N. Secretary-General as "not sufficient enough."
Back in Washington, Senate Democratic leaders pledged to push back climate change proceedings until early September.