WASHINGTON (AP) The U.S. trade deficit declined to $35.1 billion in October, the best showing in seven months, although much of the gain was attributed to the West Coast labor dispute, which sharply trimmed the level of imports.
The Commerce Department reported yesterday that the imbalance between what America sells abroad and what it imports decreased by 5.5 percent from the September deficit of $37.1 billion.
The September deficit and an August imbalance of $38.1 billion had been the two highest monthly trade deficits on record as shippers rushed to get goods into the country ahead of the deadline for resolving the dockworkers’ labor dispute.
The brief lockout, which disrupted shipments in early October before President Bush used federal law to get dockworkers back on the job, cut into both imports and exports. However, the disruption was greater on the import side of the ledger, given the volume of shipments the United States receives at West Coast ports from China and Japan, the two countries that have the largest trade surpluses with the United States.
The October deficit was the smallest imbalance since March, when the deficit was $32.6 billion. Even with the improvement, the trade deficit for the entire year is running at an annual rate of $420 billion, an all-time record and 17 percent higher than last year’s trade deficit of $358.3 billion.
In trying to attack the deficit, the Bush administration has taken the same stance as the Clinton administration, arguing that instead of raising barriers to imports, which drive up costs to American consumers, the United States will seek to boost American exports by attacking foreign trade barriers.
Last week, the administration announced it had concluded a free trade agreement with Chile and last month officials said they had resolved almost all outstanding issues for a free-trade deal with Singapore.
The administration hopes these agreements, which must be approved by Congress, will serve as the springboard to an even bigger prize, a free-trade agreement covering 34 nations in the Western Hemisphere.
Administration critics, however, contend that despite all the negotiations, American workers face unfair competition from low-wage countries where factories are allowed to operate under lax environmental regulations.
U.S. manufacturers have also been upset about what they see as an overvalued U.S. dollar, which makes their goods more expensive in foreign markets and imports cheaper in the U.S. market.
The dollar has been falling in recent days since Treasury Secretary Paul H. O’Neill was forced to resign. Currency traders expect Mr. Bush’s new choice for the post, railroad executive John W. Snow, will heed the pleas of American manufacturers and drop the administration’s support for a strong-dollar policy.
However, presidential spokesman Ari Fleischer told reporters on Tuesday that there had been no change in the administration’s stance. A strong dollar helps to hold down U.S. inflation and makes American financial markets more attractive to foreign investors.