Monday, February 10, 2014 Trade Report
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Trade statistics released Feb. 6 by the Department of Commerce show that the U.S. trade deficit saw a sharp increase in December but was down overall for 2013. Supporters of trade liberalization said the figures highlight the benefit of such policies while skeptics said they show the opposite.
December Figures. The monthly trade deficit rose 11.8% in December to $38.7 billion. Monthly exports tumbled 1.8% to $191.3 billion a month after hitting an all-time high, while imports edged up 0.3% to $230.0 billion. Compared to a year earlier, the December trade deficit was up $0.4 billion as exports climbed 1.4% and imports moved ahead 1.3%.
The monthly deficit in goods trade increased 8.5% in December to $58.8 billion. Exports of goods fell $4.3 billion to $132.8 billion while imports saw a $0.3 billion increase to $191.6 billion. The services surplus gained $0.4 billion to $20.1 billion as exports and imports saw increases of $0.8 billion and $0.3 billion, respectively.
With respect to individual trading partners, the U.S. saw smaller deficits in December with China (down 8.9% to $24.5 billion), Saudi Arabia (down 3.4% to $2.8 billion) and Korea (down 33.3% to $0.8 billion) but larger deficits with the European Union (up 11.9% to $11.3 billion), Japan (up 3.4% to $6.0 billion), Mexico (up 2.4% to $4.2 billion), Canada (up 126.7% to $3.4 billion), Venezuela (up 6.7% to $1.6 billion) and India (up 50% to $1.5 billion). Deficits with Germany ($5.9 billion) and Ireland ($1.8 billion) were unchanged. The U.S. continued to run trade surpluses with Hong Kong (up 13.8% to $3.3 billion), Australia (up 33.3% to $1.6 billion), Brazil (up 36.4% to $1.5 billion) and Singapore (unchanged at $1.2 billion).
2013 Figures. The trade deficit for all of 2013 was down 11.8% to $471.5 billion, which the DOC states is the lowest since 2009. Exports were up 2.8% to a record $2.27 trillion while imports were virtually unchanged at $2.74 trillion.
The deficit in goods trade fell $38.3 billion to $703.2 billion as exports saw a 2.1% increase to $1.59 trillion and imports slipped 0.3% to $2.29 trillion. The services surplus jumped 12% to an all-time high of $231.6 billion as exports gained 5.0% to a record $682.0 billion and imports rose 1.8% to $450.3 billion.
Trading partners with which the U.S. ran an annual trade deficit in 2013 included China (up 1.0% to a record $318.4 billion), Canada (virtually unchanged at $31.7 billion), Mexico (down 11.4% to $54.3 billion), the European Union (up 8% to $125.1 billion), Germany (up 12.6% to $67.2 billion), Japan (down 3.8% to $73.4 billion), Saudi Arabia (down 12.5% to $32.8 billion), Korea (up 24.7% to $20.7 billion) and India (up 8.7% to $20.0 billion).
Trade surpluses were registered with, among others, Belgium (up 5.0% to $12.7 billion) the Netherlands (up 27.2% to $23.4 billion), Australia (down 22.6% to $16.8 billion), Hong Kong (up 15% to $36.8 billion), Singapore (up 25.2% to $12.9 billion), and Brazil (up 43.1% to $16.6 billion).
The Export-Import Bank reports that exports of goods and services over the last 12 months were 44.0% above 2009 and grew at an annualized rate of 9.5% when compared to that year. Also during that time, major export markets (those with at least $6 billion in annual imports of U.S. goods) with the largest annualized increase in U.S. goods purchases were Panama (25.9%), Russia (20.3%), Peru (19.6%), Hong Kong (19.2%), United Arab Emirates (19.1%), Colombia (18.5%), Chile (17.1%), Ecuador (16.8%), Argentina (16.3%) and Indonesia (15.5%).
Reactions. Commerce Secretary Penny Pritzker pointed out that U.S. exports have risen nearly $700 billion since 2009, and the Ex-Im Bank noted that U.S. exports supported nearly 10 million domestic jobs in 2013. However, the U.S. Chamber of Commerce noted that export growth has consistently slowed over the past several years, from 16.6% in 2010 to 14.5% in 2011 to 4.4% in 2012 to 2.8% in 2013. National Foreign Trade Council President Bill Reinsch said that “to continue maximizing U.S. export growth, we must further expand market access through trade agreements such as the Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, Trade in Services Agreement and negotiations to eliminate tariffs on environmental goods.”
Pritzker also noted that goods exports to the 20 economies with which the U.S. has free trade agreements reached a record $732.0 billion in 2013, 46.4% of the U.S. total. On a per capita basis, the U.S. Chamber of Commerce noted, FTA partners purchase 12 times as many U.S. goods and services as non-FTA countries. The Chamber also said that the U.S. continues to run a trade surplus in manufactured goods with its FTA partners as a group.
The Alliance for American Manufacturing, however, highlighted that the U.S. trade deficit with China reached a new record for the fourth straight year and is “further proof that our economic policies – including a lack of enforcement of existing trade laws – contribute to outsourcing.” AAM called on President Obama to respond by designating China as a currency manipulator and securing an agreement on a plan to cut the trade deficit with that country by 50% over the next three years.
United Steelworkers International President Leo Gerard added that the problems associated with the U.S. trade deficit will not be solved by “calling for new trade agreements using the same old template, while ignoring currency manipulation by our trading partners, and relying on dialogue rather than action.” Instead, he called for “a real, honest public debate about our approach to trade,” which he said is in need of “a complete overhaul.”