- The Washington Times - Thursday, August 10, 2006

ASSOCIATED PRESS

The U.S. trade deficit showed a slight improvement as strong global growth pushed exports to a record level. That helped offset a surge in Chinese imports and record crude oil prices.

The deficit declined 0.3 percent in June, compared with May, dropping to $64.8 billion, still the fifth largest imbalance on record, the Commerce Department reported yesterday.

The deficit is running at an annual rate of $768 billion through the first six months of this year, putting the country on track to see a fifth straight record imbalance. Last year’s deficit was $716.7 billion.

Democrats have attacked the soaring trade deficits as evidence that the Bush administration’s trade policy has been a failure that has exposed U.S. workers to unfair competition from countries such as China and contributed to the loss of nearly 3 million manufacturing jobs since 2001.

“After years of record-setting deficits, it is painfully clear that America needs a new direction in trade policy,” said Rep. Benjamin L. Cardin of Maryland, the top Democrat on the Ways and Means trade subcommittee. “Every day the administration waits to enforce the rules of trade and level the playing field for our workers is a day lost to our competitors.”

Big factors in the deterioration in the trade deficit this year are soaring global oil prices, reflecting increased tensions in the Middle East, and higher demand from developing countries such as China. The latest bad news emerged this week with the shutdown of an Alaska oil pipeline because of corrosion.

For June, the average price for a barrel of imported crude oil hit an all-time high of $62.04, pushing total crude oil imports to a record high of $20.5 billion.

All petroleum imports, reflecting crude and refined products, totaled $27.3 billion, the second-highest level on record, but down from the record of $28.3 billion set in May. Analysts are predicting further increases in oil imports, reflecting the rise in global prices since June to more than $70 per barrel.

The smaller June deficit reflected a healthy 2 percent increase in U.S. exports to a record $120.7 billion, with shipments of farm goods, capital goods and industrial supplies all setting records.

U.S. shipments to the 25-nation European Union and countries in Central and South America reached all-time highs, reflecting improved economic growth in those regions. Exports to Japan, which also is enjoying an economic rebound, rose to the highest level since March 2001.

Imports also rose to a record in June of $185.5 billion, an increase of 1.2 percent, as imports of consumer goods set a record, led by big gains in shipments of clothing, televisions and furniture. Imports of foreign cars climbed to the second-highest level on record.

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