Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
Topic: Trade deficit
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September 23, 2013 at 10:51 AM
The most definitive data yet are available to answer the question as to whether the Korea-U.S. Free Trade Agreement would increase American exports to South Korea. That, after all, is how the deal was sold by the Obama administration to fast-track it through Congress. And the answer, sadly, is no. Imports have risen, exports have declined and the trade deficit responsible for so many job losses keeps widening. According to Census data, the trade deficit with Seoul is nearly $16.6 billion compared with $13.1 billion in 2011.
The KORUS agreement went into force on March 15 of this year, so perhaps it’s too soon to tell. But since then, South Korean exports have surged while American exports have fallen. These managed-trade agreements always fail to live up to their promises. Last year, the United States had a $61.6 billion trade deficit with Mexico. In 1993, the Clinton administration said that NAFTA would create an additional 200,000 jobs here. But according to a 2011 report by the Economic Policy Institute, it had cost 693,000 American jobs.
This is highly relevant as the administration pushes for the Trans-Pacific Partnership, a far-reaching trade agreement with eight other nations. While there will be winners and losers domestically, it will almost certainly fail to live up to the hype and the losers will be in the majority.
September 4, 2013 at 11:33 AM
The Commerce Department reported that the trade deficit rose 13.3 percent in July. And before you yawn and flee to the sports section, it’s worth digging into this data. Officially known as the U.S. International Trade in Goods and Services report, it is invariably shortened to “the trade deficit.” We buy more from overseas than we sell. Thus, America sold $189.4 billion to the world, but we imported stuff worth $228.6 billion.
It’s hard to believe that the United States ran a trade surplus for decades. Small deficits began to show up in the 1970s as oil imports grew, inflation disrupted the economy and Japanese imports began to gain a major foothold. But the big-number trade deficits began in 1984 and have continued to grow, except during recessions.
Is this good or bad? It’s good if you believe in the world trading system created by the United States out of the ashes of World War II. The idea being that liberalized trade, with all nations lowering barriers and playing by the same rules, promoted peace. The result gave Americans a cornucopia of goods at low prices, and in many cases helped raise the standards of living in nations around the world. And American exports have grown dramatically — something especially beneficial to a state such as Washington. But as the world’s most prosperous market, we have bought more than we sold.