U.S. trade deficit falls

Press, 20 February 1989, Page 13

U.S. trade deficit falls

NZPA-Reuter Washington Fresh figures show the 1988 U.S. trade deficit fell by 19 per cent, but a fall-off In exports near the year’s end suggests it may be tough to continue the favourable trend. Annual figures released on Friday (early Saturday N.Z. time) by the Commerce Department showed the trade deficit last year was 1U5137.34 billion, down from a record $U5170.32 billion in 1987. The December figure, also announced on Friday, reported the monthly shortfall at 3U511.89 billion, down from November’s deficit of 3U512.22 billion. The White House hailed the figures, with spokesman Marlin Fitzwater saying “It’s good news. It does show steady improvement, a trend of improvement” But others were not so optimistic, pointing out that while the

shortfall shrank significantly in the first months of last year, the surge in exports tapered off as the year ended.

Economist Lawrence Chimerine, chairman of the forecasters’ W.E.F.A. Group, said “I think a reasonable conclusion would be that the progress we had earlier has stopped.”

He said the fall in the dollar in early 1988 made exports cheap and spurred overseas sales, reflecting in the improvement in trade with Western Europe, where the shortfall was almost cut in half.

Other economists noted, however, that while trade improved with free market Europe, there was far less improvement in trade with Japan and other Asian nations.

The shortfall with Europe fell to 3U517.04 billion, from $U530.22 billion in 1987 while the shortfall

with Japan, which accounts for about one-third of the U.S. deficit, fell only marginally, to $U555.44 billion from 5U559.83 billion.

Analysts said the dollar had done its job to make U.S. exports cheap and the closed markets of Asia, including Japan, would now have to be opened if the Bush Administration was to make further headway in cutting the trade deficit

They said the Trade Act passed last year would give the administration the tools needed and new U.S. Trade Representative, Carla Hills, has pledged to use a “crowbar” if necessary to open the markets.

The Commerce Department figures showed that, after Japan, the biggest U.S. trade deficit was with Taiwain, SUSI4.I billion; West Germany, SUSI3.I billion; Canada, SUSIO.6 billion and South korea, SUS 9.9 billion.