Not very good news yesterday as new trade figures were announced by the Commerce Department, showing an increase in the already-huge trade deficit, hitting an all-time high of $565 billion in manufactured goods for 2005. Very discouraging.
A few points, however. First of all, almost $200 billion of this deficit is with one country — China. We need to continue to press them to let their currency float. The imbalance of currency has as much to do with the trade deficit as anything. Also, we need more access to the China market. These two things go hand in hand. Here’s a link to our press release from yesterday, hitting most of these points.
However, more importantly, we can’t let the burgeoning trade deficit put a damper on free trade agreements (FTA’s). Truth is, trade agreements don’t cause trade deficits, they ease them. Lou Dobbs & Co. would have you believe otherwise. As we’ve said in this space many times, over 90% of our manufacturing trade deficit is with countries with which we have no trade agreements. FTA’s lower the barriers to entry of US-made goods, not the other way around. They open markets, find us new customers.
So let’s redouble efforts — where the NAM is already in the lead — to get China to let their currency float, thereby creating a more level playing field. And let’s continue to push for access to all markets around the world. But let’s not get distracted by wrong-headed and factually incorrect arguments blaming FTA’s.
We say bring ’em on.
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