U.S. Trade Deficit Hits Lowest Level in 2 Years
The U.S. trade deficit declined in November for the fifth consecutive month and reached its lowest point in nearly two years, as exports of aircraft and computer parts jumped sharply, the government said Wednesday. The picture with Japan and China, two longtime trade nemeses, was particularly encouraging.
Overall, the Commerce Department report gave the Clinton administration much to brag about, at a time when international trade is getting more attention from candidates for the Republican presidential nomination.
“The trend continues,” said U.S. Trade Representative Mickey Kantor, pointing to increasing exports, tapering imports and a 27.5% drop in the trade deficit from November 1994 to November 1995.
The deficit with Japan, while $55.8 billion during the first 11 months of 1995, was $4.1 billion during November, down from $4.8 billion in October, and off sharply from the $6.2-billion deficit in November 1994. It was narrower than at any point since May 1993.
“Our exports to Japan are increasing at a rate four times our imports,” Kantor said. In the diplomatically and politically sensitive arena covering auto trade, Kantor said that exports of U.S. autos and auto parts to Japan had climbed 36% during the first 11 months of the year, while Japanese auto exports to the United States had slipped by 5.2%.
The U.S. report coincided with Japan’s annual report of its trade balance, which showed a sort of mirror image: a dramatic drop of 14.5% in its global trade surplus, spurred by increased imports, currency fluctuations and increased production overseas.
With China, the deficit was $2.8 billion--$31.8 billion during the first 11 months of the year. In October 1995 it was $3.6 billion, and in November 1994 it was $2.9 billion.
“For the time being, at least . . . we’re heading in the right direction,” said economist Charles McMillion of MBG Information Services, a private consulting firm in Washington. But, he added: “It’s too early to tell if we’ve turned the corner, because economic growth of our major trading partners has slowed dramatically, particularly in Europe.”
The overall deficit, covering merchandise and services, including banking, investment, insurance and travel, was $7.06 billion--down from $8.2 billion the month before and lower than at any point since March 1994, when it dropped to $6.53 billion. Still, during the first 11 months of the year, the deficit climbed to $105.2 billion, nearly $7 billion greater than during the same period in 1994.
The increase in exports was fueled by sales of aircraft and computer parts and by sales of military goods, among them Patriot missiles to Saudi Arabia and helicopters to Greece.
But the government figures showed that the nation continued to import more manufactured goods than it exported. The gap was 18% wider in the first 11 months of 1995 than in the same period the year before.
U.S. trade problems with Mexico grew worse in November, with imports from Mexico outweighing U.S. exports there by $1.7 billion, $300 million more than in October and roughly $1.3 billion greater than the modest deficit in trade a year earlier.
Four years ago when he ran for office, Clinton turned the campaign spotlight on the role of international trade in solving the nation’s economic problems. He aggressively sought approval--against the wishes of many Democrats--of the North American Free Trade Agreement, which lowered barriers to commerce with Mexico, and a massive revision of the regulations governing world trade.
Thus, indications that the nation’s trade gap is closing--imports are growing, but at a slower rate than in the past, and job-producing exports are climbing at a snappier pace than they had earlier--can only help Clinton fend off critics’ attacks that lowered tariffs and more open borders are costing Americans jobs.
While the report suggested an easing of trade tensions with China, other factors--from nuclear proliferation issues to human rights--are clouding the picture. Administration officials are in the midst of negotiations to bring greater Chinese adherence with a year-old agreement intended to curtail piracy of compact discs, videos and computer software.
On Wednesday, two Democrats--House Minority Leader Richard A. Gephardt of Missouri and Sen. Barbara Boxer of California--urged the president to keep up the pressure on China, with Boxer urging him to impose sanctions if China fails to reduce unauthorized copying of such intellectual property, a course that Kantor has already said is under consideration.
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U.S. Trade
Overall deficit, in billions of dollars:
Nov. 1995: -$7.06
Source: Commerce Department
