Exports and Free Trade Agreements contributing positively to the economy

July 15, 2008 by SwizStick  
Filed under QuickNews, Supply Chain Management

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We probably don’t do as good a job as we should when it comes to trumpeting exports and talking about international trade items, but luckily ShopFloor.org is there to pick up our slack. They have a number of recent posts about the positive effect trade is having on the overall U.S. economy.

First off is a report from The Commerce Department showing that the trade deficit declined for the second time in the past four months:

Though the first five months of this year, goods exports (mainly manufactured products) increased at an annual rate of 11.5 percent (in real, or inflation-adjusted terms), while imports are down 4.5 percent. And over the 12 months ending in May, exports outpaced imports in every major category: capital goods, consumer goods, industrial supplies, automotive products, and food, feed & beverages.

Second is their analysis (they are the official blog for the National Association of Manufacturers) showing that the U.S. actually has a total trade surplus when looking at the combined figures from their Free Trade Agreement partners.

“Through May, manufactured goods trade with our FTA partners was in surplus by nearly a half billion dollars,” said Engler. “While this is a modest surplus, it contrasts sharply with our $176 billion deficit with countries who are NOT our free trade partners.

“Moreover, this surplus reflects an improving trend in trade with FTA partner countries that has been going on for five years,” said Engler. “In 2002 the manufactured goods deficit with those countries was $41 billion (11 percent of our total manufactures deficit), but by 2007 the deficit had fallen to $27 billion (5 percent of the deficit). And now, so far in 2008, the deficit is gone. We have a surplus.

“This is going to come as a shock to many in the Congress who have been misled by isolationists telling them a ‘failed trade policy’ of bilateral trade agreements has been at the heart of our trade deficit,” Engler said. “Nothing could be further from the truth, and I call for quick approval of the agreements now pending before Congress – Colombia, Korea, and Panama – so we can get even more benefits from FTAs.

While I’m a champion of free trade agreements I’d have to say that the main reason for the recent surplus has more to do with the incredibly weak dollar making U.S. goods even more competitive and the resulting boom in exports. Still, as they pointed out, it’s worth noting that over time the total trade deficit with our FTA partners has declined as the agreements make U.S. manufactured goods more competitive and less costly for those markets, which is one of the goals, and intended results, of Free Trade Agreements.

Read both articles and check in with ShopFloor.org regularly as they often have interesting posts concerning U.S. trade with the World and vice versa.

India aggressively courting free trade agreements

U.S. Presidential Election : Free Trade at risk

Does Your Supply Chain Include Mexico?

Bi-Partisan support for the U.S. – Colombia Free Trade Agreement