Trade Deficit

[MDOLAN <mdolan@citizen.org>]

  .c The Associated Press
  
        By MARTIN CRUTSINGER
        WASHINGTON (AP) - The U.S. trade deficit narrowed sharply to
  $8.2 billion in June as American exports climbed to an all-time
  high and imports shrank for the first time in eight months. The
  politically sensitive deficits with China and Japan both widened, however.
        The Commerce Department said that the overall deficit shrank by
  14.5 percent to $8.16 billion. It was the smallest imbalance since March 
  and compared to a May trade gap of $9.54 billion.
        Even with the better-than-expected showing in June, the trade
  deficit for the first half of this year is running at an annual
  rate of $111.1 billion, putting the country on track for its worst trade 
  performance since 1988.
        While in terms of low unemployment and low inflation, the
  economy is turning in a stellar showing this year, trade has
  remained the one glaring exception to all the good news.
        Despite the fact that President Clinton has sought to make trade
  a key component of American foreign policy, critics point to the rising 
  deficits and argue that the administration's policies have been a failure 
  resulting in a flood of imports from low-wage
  countries.
        The administration, however, points to the low U.S. unemployment
  rate and record exports to argue that the strategy of opening new markets 
  is working.
        Clinton has said he will ask Congress next for the
  ``fast-track'' authority he needs to expand the North American Free Trade 
  Agreement to other countries in Latin America. That likely will launch a 
  bitter battle pitting Clinton against labor and
  environmental constituencies in his own party.
        For June, the deficit with Mexico, which had climbed to record
  levels, narrowed 29 percent to $1.2 billion as American exports hit an 
  all-time high. The administration has blamed the widening trade gap with 
  Mexico on that country's severe currency crisis in late 1994 and argued, 
  without NAFTA, the situation would have been even worse.
        The deficit with China was up 14.5 percent to $4.3 billion,
  reflecting big increases in imports of Chinese clothing, shoes and toys. 
  For only the fourth time in history, the deficit with China surpassed the 
  trade gap with Japan, which was also up.
        In June, the trade gap with Japan rose by 11.6 percent to $4.1
  billion as imports of Japanese office machines and cars rose
  sharply.
        Overall, U.S. exports of goods and services edged up 0.9 percent
  to a record high of $78.4 billion. Imports, which had set seven
  straight monthly records, dipped a slight 0.7 percent to $86.6
  billion. It was the first decline since last October.
        Sales of American cars and parts, consumer goods and industrial
  supplies were all at record levels. But imports of American capital goods 
  and high-technology products were also at all-time highs.
        America's foreign oil bill declined by 4.5 percent in June to
  $5.8 billion. The volume of oil imports was down slightly while the average 
  price per barrel of crude oil was up slightly to $17.07
  compared with $17 in May.
        AP-NY-08-20-97 0840EDT
  ***** NOTES from MDOLAN (MDOLAN @ CITIZEN) at 8/21/97 8:48 AM