NAM Insists On Fair Trade Due To Huge Trade Deficit With China

Feb. 14, 2007
Of manufacturing portion of trade deficit, 80% was with China.

Of the total U.S. trade deficit -- $764 billion-- for all goods and services $526 was from manufacturing. Of this number 80% was with trade from China.

That high percentage caused John Engler, president of the National Association of Manufacturers (NAM) to insist on fair trade. "This highlights the importance of assuring that trade with China is fair," Engler said. "The recent WTO case the U.S. has brought against China for its export subsidies is very important and needs to be concluded quickly."

Engler went on to discuss free trade agreements (FTA's.) "While FTA's are widely believed to be the cause of the trade deficit, the data show the opposite is true. NAFTA and the other countries with which the U.S. has free trade agreements accounted for nearly half of U.S. exports of manufactured goods last year, but only $30 billion, or 6%, of the manufacturing deficit."

The $30 billion deficit with U.S. free trade partners last year was the same in 2006 as in 2000 explains Engler. "This portion of the trade deficit hasn't grown in six years.Yet our deficit with the rest of the world grew more than $200 billion in that time period. Free trade agreements level the playing field by eliminating foreign barriers on our exports."

While the overall deficit with NAFTA has grown substantially, that has been due to rising energy imports, which now account for 70% of our deficit with NAFTA explains Engler.

Enlger points out that the $25 billion increase in the manufactured goods deficit was the smallest increase in five years. "While the trade tide continues to rise, it is doing so at a slower rate," Engler said. "More needs to be done, though, to level the playing field and ensure market-driven currency rates."

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