The final U.S. export and import figures for 2006 are now in, and make it easier than ever to debunk the claims made on behalf of current U.S. trade policies in Mike Verespej's Jan. 29 news article ``Free trade agenda could face battle,'' Page 14.
For example, Commerce Secretary Carlos Gutierrez may be impressed that export growth finally outpaced import growth in 2006. But even a .220 hitter goes four-for-four occasionally. More important, the explosion in U.S. imports has so utterly dwarfed export growth for so long, and the trade deficit has grown so large, that the gap actually rose in 2006 - to a record $764 billion - despite the bounce in U.S. overseas sales.
The same trends are visible in manufacturing. Even though export growth exceeded import growth by 47 percent last year, American industry is already so deep in the hole that the manufacturing deficit increased 4.66 percent in 2006, to more than $630 billion.
>From a macroeconomic perspective, these unprecedented deficits keep burdening current and future generations with debt, and threaten the world economy with a dollar collapse and a deep, protracted downturn. From a microeconomic perspective, they are loudly signaling that America's manufacturing industries - the productivity and technology leaders of the entire economy - are losing global competitiveness. After all, the idea of comparative advantage that underlies international trade holds that the countries that trade various products most successfully will be the countries that eventually make them most successfully.
Similarly misleading are Gutierrez's comments about renewing presidential Trade Promotion Authority (the so-called ``fast track'' legislation that Congress will vote on this year). As his administration colleague, the Deputy U.S. Trade Representative, recently admitted, U.S. deficits have mounted with each new trade deal signed by Washington.
The kindest interpretation is that U.S. negotiators simply don't know how to open markets as well as their foreign counterparts. At least equally likely is that these NAFTA-style trade agreements have fueled the deficits by encouraging the offshoring of U.S. production mainly to serve the existing American market. In other words, the U.S. exports generated by these agreements tend to create even greater U.S. imports.
The U.S. exports to China so hyped by Gutierrez are an excellent example. Many are simply parts and components of products assembled in China and sent right back to American consumers. Many are pieces of capital equipment that further build up the Chinese export base.
As for the Central and South American markets that so excite Gutierrez, even the most cursory inspection reveals their marginal nature. The Central American Free Trade Agreement may have reduced trade barriers to U.S. exports of plastics products and related equipment, but in 2005 (the last year for which detailed U.S. output figures are available) the six countries combined purchased considerably less than 1 percent of the products shipped by U.S. producers of plastics materials and resins; unreinforced, nonpackaging plate and sheet; plastics and rubber industry machinery, and industrial molds.
Gutierrez is right about one thing: It's the U.S. market that is the world's strongest, and that ``you can't call yourself a global company if you don't have a strong business in the United States.'' That's exactly why imports must not be ignored, and the numbers spotlight a major U.S. trade policy failure.
As made clear by the U.S. Business and Industry Council's recent research, largely due to officially encouraged offshoring and to Washington's failure to combat our predatory foreign economic practices, most U.S.-based capital-intensive, high-tech manufacturing industries have lost big, rapidly growing shares of this critical home market for nearly 10 years.
Plastics producers have been no exception. Flooded by imports, the machinery and equipment makers actually have seen U.S. output fall since 1997. But the importance of holding and expanding U.S. market share is apparent even for the better-performing resin and plastics products makers.
Gutierrez may have been appointed by President Bush, but he's being paid by the American public - including domestic manufacturers. He owes them accurate information, not cynical spin.
Tonelson is a research fellow at the U.S. Business and Industry Council Educational Foundation and the author of The Race to the Bottom (Westview Press). Petrucci is president of BA Die Mold of Aurora, Ill.