Here and elsewhere in the blogosphere (here and here, for example), NAM VP Frank Vargo’s post on CAFTA elicited some comment. Included was the expected deflection, “Well, yeah, yeah, but what about NAFTA? Deficits with Mexico and Canada are up!”
Why is that? Read the news release from David Huether, chief economist with the National Association of Manufacturers:
“The spike in the cost of oil accounted for 80 percent of the November rise in imports,” Huether said. “Our country’s increasing dependence on overseas energy supplies is made clear by the fact that nearly half of the November trade deficit was in petroleum products. It’s time for Congress to address this problem is by expanding access to domestic energy resources, a critical oversight in last year’s energy legislation.”
And from BusinessWeek:
The surge in oil prices continues to reverberate through key U.S. economic reports. Case in point: The U.S. trade deficit in November surged to the highest level in 14 months, reflecting record imports of foreign oil. The deficit with China declined slightly, while the weak dollar boosted exports to another record high….[snip]
The increase was driven by a 16.3% surge in America’s foreign oil bill, which climbed to an all-time high of $34.4 billion as the per barrel price of imported crude reached new records. With prices last week touching $100 per barrel, analysts are forecasting higher oil bills in future months.
“The trade data are slightly negative for fourth-quarter real [adjusted for inflation] GDP growth (oil prices don’t affect the real data), but perhaps more negative for the dollar,” wrote S&P Economics in a Jan. 11 note.
The big surge in oil pushed total imports of goods and services up by 3% to a record $205.4 billion.
The growing U.S. economy’s demand for energy means we would still would have needed the increasingly expensive oil (and natural gas) from Canada and Mexico — our first and third largest sources of foreign oil, respectively — whether NAFTA had been approved or not. Attributing bilateral trade deficits to NAFTA is a clever polemical touch, but it hardly proves that the trade agreements with Canada or Mexico destroy jobs.
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