U.S. Record Deficit Reflects Failed Policies, Critics Say

U.S. Record Deficit Reflects Failed Policies, Critics Say

Does George know, or is he still using outdated stats?
Will the bubble ever burst?

WASHINGTON - The U.S. trade deficit with the world has reached an all-time high, setting new record levels with China, Japan, Europe and oil-exporting nations, the U.S. the Commerce Department's said Friday, even as some U.S. senators slammed China as the biggest contributor to the deficit.

Such a huge trade gap undercuts domestic manufacturing and destroys good U.S. jobs. America's gargantuan trade deficit is a weight around American workers' necks that is pulling them into a cycle of debt, bankruptcy and low-wage service jobs.

Richard Trumka, AFL-CIO's secretary-treasurer"These trade deficits show that our trade policy is an unbelievable failure that is selling out American jobs and weakening our country," said U.S. Senator Byron Dorgan, a Democrat from North Dakota, in a statement after the release of the figures. "If these new trade deficit numbers don't finally wake up the president and Congress, nothing will." Bubble land must burst.

The Commerce Department reported that the annual U.S. trade deficit for 2005 swelled 17.5 percent above the 2004 deficit of 617.6 billion dollars, to a whopping 725.8 billion dollars, the highest on record.
U.S. imports climbed nearly twice as much as exports, and the country set new deficit records with China, Japan, Europe, Canada, Mexico and the Organisation of Petroleum Exporting Countries (OPEC).

The deficit with China alone hit 201.6 billion dollars last year -- a quarter of the total.
"I think we've reached a tipping point. Despite all the assurances that our trade policies are working, this is pretty damning evidence that they are not," Dorgan said.

Particularly disturbing to many U.S. lawmakers is the fact that the trade gap with China is now two and a half times bigger than it was when Washington signed a trade agreement with the Asian nation in 2000.
On Thursday, Dorgan and Sen. Lindsey Graham, a South Carolina Republican, introduced legislation that would repeal the Permanent Normal Trade Relations (PNTR) status with China and subject the U.S. relationship with that country to an annual review by Congress.

When it was passed in 2000, PNTR paved the way for normal trade relations between U.S companies and China and helped Beijing join the World Trade Organisation.

Citing chronic "cheating" by China that has allegedly led to a huge and record-breaking U.S. trade deficit, the two senators, known here for their nationalistic tendencies, claimed that China was flooding the U.S. with its products. They charged that China keeps artificial barriers in place and uses a variety of unfair trade practices to keep U.S. products out of China.

The senators say that those practices include piracy, currency manipulation and violation of China's own labour laws.

The senators hope that by conducting an annual analysis of China's trade policies to review its trade status, they will provide incentives for China to curb its trade surplus with the United States.

Prior to gaining PNTR status in October 2000, China was subject to provisions of the so-called "Jackson-Vanik amendment", which meant that the country was given normal trade relations on an annual basis, with renewal subject to Congressional approval.

Since that time, the U.S. trade deficit with China has ballooned from 83 billion dollars in 2001 to more than 200 billion dollars in 2005.

"The American marketplace is the biggest and best marketplace in the world. Controlling access to that market is the best way to exert some leverage to get China to begin to practice fair trade," Dorgan said.
Another U.S. lawmaker, Sen. Olympia J. Snowe, said Friday that she sent a letter to Treasury Secretary John Snow to demand the George W. Bush administration take a stand against China by officially labeling the country a "currency manipulator" in its semi-annual report on International Economic and Exchange Rate Policy due to Congress in April.

Pres. Bush is hosting his Chinese counterpart, Hu Jintao, in Washington the same month.
"It is time for the administration to take a stand against China's unfair currency practices," Snowe said in her letter. He just gone done kissing up to them

The recent backlash against Beijing comes amid a rising chorus of demands to penalize China, a growing economic superpower, that has included U.S. lawmakers as well as industry and labor groups.

In January, the American Manufacturing Trade Action Coalition demanded that Congress pass legislation that would place large tariffs on Chinese imports if Beijing refused to float its currency. Sen. Charles Schumer, a leading critic of the Chinese currency policy, introduced the "China Free Trade Act" last year, a bill that would impose 27.5 percent tariffs on Chinese imports.

Labor unions also complain that the White House has done nothing to stem the migration of industry to cheaper markets overseas, leading to some three million manufacturing job losses in the United States over the last five years, in turn worsening the deficit.

"Such a huge trade gap undercuts domestic manufacturing and destroys good U.S. jobs," said Richard Trumka, secretary-treasurer of the powerful American Federation of Labour-Council of Industrial Organisations. "America's gargantuan trade deficit is a weight around American workers' necks that is pulling them into a cycle of debt, bankruptcy and low-wage service jobs."

Chinese officials have countered that any rise in the price of Chinese exports could hurt millions of people at home who depend on the country's exports boom.