Iowa Public Television

 

Trade Deficit Widens

posted on February 16, 2007


Hello, I'm Mark Pearson. Much of the less than upbeat economic news this week seems to reflect what's happening in the auto industry.

While Retail Sales posted a slight gain last month, sagging auto sales are hampering further economic growth. *ndustrial output also declined and analysts attribute the decline to a drop in auto sales.

Those numbers, in turn, pushed unemployment sharply higher. The number of newly laid off workers filing for unemployment benefits jumped last week by the largest amount in 17 months. This of course, does not include the most recent announcement by Daimler-Chrysler, that the automotive giant will eliminate 13-thousand jobs due to low sales.

Motorists also are "downsizing" -- to smaller, more fuel efficient vehicles – many of which are imports. And as the "Big-Three" automakers struggle, popularity of foreign cars is grim reminder of the forces at play in a global economy.

But policymakers are concerned about America's growing trade deficit, which amounted to a record $763 billion dollars in 2006.

 

Trade Deficit Widens

The new trade report showed the deficit with China shot up nearly 16 percent – or $232 billion dollars last year – the largest imbalance ever recorded with any country. The U.S. also set a record trade gap of $88 billion dollars with Japan ... and $64 billion with Mexico.

The day after the new trade deficit figures were released the House Ways and Means Committee brought President Bush's U.S. Trade Representative before the committee to discuss the direction and content of U.S. trade policy.

Susan Schwab, U.S. Trade Representative: "These agreements by almost any measure are of dramatic net benefit to the United States Economy."

The Bush Administration wants Congress to extend the authority needed to strike new free trade agreements with individual countries and pursue a global trade pact. Until July 1, the president's trade deals -- under a so-called fast track trade promotion authority -- cannot be changed, or modified, by Congress. They can be just approved or rejected.

Trade Representative Susan Schwab told the committee such authority in negotiations is vital to the success of the Doha round of world trade talks.

Susan Schwab, U.S. Trade Representative: "If we do not have trade promotion authority, whether it is for the DOHA round or regional agreements or bilateral agreements or plural-lateral agreements, that is the equivelant of walking off the field. And if you're not moving forward in this business, you're probably moving backwards."

Many Democrats feel their views on trade have been ignored by the Bush administration. Now that they control Congress, some want Schwab to make changes that would include an enforceable commitment by certain countries to abide by international labor standards and stronger environmental protections.

Rep. Ron Kind (D) Wisconsin: "The real question is, its what's in the mind of our constituents back home is are we going to work hard to harmonize upwards or are we going to encourage a race to the bottom where we have no worker rights, no labor enforcment standards, no environmental protections, no level playing field for our constituents in which to compete, too. And that's really the great challenge we're trying to get at."

Schwab told committee members she believes the Bush Administration can address the Democrat's concerns without formally renegotiating any trade pacts.

 


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