Record Imports Fuel Trade Gap : Economy: Exports hit a new high in September but couldn’t overcome an imbalance with Japan that made up 53% of the deficit.
The U.S. trade deficit remained at stubbornly high levels in September as trade with Japan continued to register a severe imbalance, accounting for more than half the total gap, according to Commerce Department figures released Wednesday.
Both imports and exports set records, but imports were valued at $8.31 billion higher than exports, only a slight improvement over August’s deficit of $8.95 billion. The two months’ performance was the worst in nearly two years.
If current trends persist, the nation’s merchandise trade deficit for the year will exceed $80 billion, a substantial deterioration from 1991’s figure of $65.4 billion.
The Bush Administration found reason to cheer the figures, even if few others did.
The export figures in particular “are good news for America and the American economy, and mark a broad improvement in our trade performance,” Secretary of Commerce Barbara Hackman Franklin said. “President Bush’s efforts to open markets and promote U.S. exports are paying off.”
The September report showed that exports rose to $38.24 billion, an increase of 6.8% over August. The leading export items included computer equipment, aircraft engines, farm products and industrial machinery.
But imports also rose to record levels, reaching $46.55 billion, including large increases in deliveries of passenger cars, oil and general consumer goods.
Economist Robert Blecker of the liberal Economic Policy Institute in Washington said the rise in imports was a mixed blessing.
“It means we’re recovering from recession--but more consumer dollars are going to foreign products, not creating jobs at home,” Blecker said.
House Majority Leader Richard A. Gephardt, in an interview, said the September figures marked “a very disturbing continuation of a 10- to 12-year trend. Not only are we not making progress, we’re moving in the wrong direction.”
Gephardt said the surge in imports from Japan was especially troubling and dramatized the need for tougher trade policies directed at Tokyo. He noted that the U.S. deficit with Japan accounted for 53% of the total U.S. global imbalance in September.
He said that he would urge the incoming Clinton Administration to demand voluntary restraints on Japanese exports to the United States or to erect barriers to Japanese products entering this country.
“We’re not dealing with reality,” the Missouri Democrat said. “We will continue to have this problem unless we address it with better fiscal policy and a better trade policy.”
The Lexington, Mass., economic forecasting firm DRI/McGraw-Hill projected that the 1992 U.S. trade deficit would be $86 billion, rising to more than $100 billion in the years 1993 through 1995.
The trade figures were announced as senior American and European trade officials began two days of meetings in Washington to try to resolve a bitter impasse over oil-seed subsidies that threatens to derail a six-year series of trade reform talks known as the Uruguay Round of the General Agreement on Tariffs and Trade. The talks adjourned Wednesday without announcement of progress.
U.S. Trade Representative Carla Anderson Hills and Agriculture Secretary Edward R. Madigan met with top officials of the European Community to seek a compromise over the issue of European subsidies for growers of oil seeds--such as soybeans, rapeseed and sunflowers--used in cooking oils and animal feeds.
If no agreement is reached before Dec. 5, the United States plans to impose stiff tariff penalties on $300 million worth of European imports. The levies are aimed chiefly at French white wines--which will triple in price here--because the French have been the most vocal in insisting that their subsidies are legal, even though two GATT panels have ruled against them.
Although both sides expressed optimism going into this week’s talks, it appears unlikely that either the United States or the European Community is prepared to make the concessions necessary to achieve a breakthrough.
Many fear that if the oil-seed dispute is not resolved quickly, the GATT talks will fall apart and the world will plunge into a costly and chaotic trade war.
Earlier in the day, several hundred French farmers demonstrated near the U.S. Embassy in Paris to protest the American position in the trade dispute.
A Record Surge for Imports
The U.S. trade deficit remained stuck near a two-year high in September as imports surged to a record level, offsetting a sharp rise in exports, which also hit an all-time high, the government said Wednesday.
The numbers: The Commerce Department said the deficit--the amount of imports that exceeds exports--was $8.31 billion in September. The trade deficit through the first nine months was running at an annual rate of $80.2 billion, a sharp deterioration from a 1991 deficit of $65.4 billion.
The trend: Analysts believe that the trend will continue. They are forecasting the trade deficit will climb above $100 billion next year.
The response: It is a key economic problem for President-elect Bill Clinton. President Bush has insisted that aggressive efforts to lower trade barriers are the best policy. Negotiators were to meet in an effort to avert a full-scale trade war between the United States and its biggest trading partner, the 12-nation European Community, over subsidies that the United States claims are robbing American farmers of $1 billion in sales annually.
Exports: U.S. exports did climb to a record in September of $38.24 billion, an increase of 6.8% over August. The gain was widespread, with sales of computer equipment, aircraft, farm products and industrial machinery all posting sizable increases.
Imports: Imports were up as well in September, rising 4% to $46.55 billion. Cars climbed 3.4% to $7.82 billion; oil was up 4.1%. The trade deficit with Japan shot up 19% in September to $4.44 billion, the biggest imbalance with that country since last December, representing about 53% of America’s total imbalance with the world. The second-largest deficit was with China, an imbalance of $2.28 billion in September. While the United States is on the brink of a trade war with Europe, that area of the world is one of the few where America enjoys a trade surplus. The surplus actually grew in September to $558 million, up from $73 million in August.
Source: Times wire reports
