Trade Generating Two-Thirds of U.S. Economic Growth
by John Murphy
Trade was cast in the role of villain by some candidates in this year’s presidential primaries. This is nothing new: "We rail at trade," wrote Ralph Waldo Emerson more than a century ago, "but the historian of the world will see that it was the principle of liberty; that it settled America, and destroyed feudalism, and made peace and keeps peace."
But it is bizarre to "rail at trade" just when it’s coming to the rescue of a struggling U.S. economy. Exports generated an impressive two-thirds of U.S. economic growth over the past year (67% in Q3 2007 – Q2 2008), according to data released by the U.S. Department of Commerce on July 31.
As we reported earlier, an export boom has helped the United States shift to a trade surplus in manufactured goods with its 14 free trade agreement (FTA) partners. If it weren’t for the fact that the United States today imports two-thirds of its petroleum, the overall trade deficit would look quite different: Since 2002, rising imports of petroleum products have accounted for 93% of the increase in the U.S. trade deficit.
For 2008, the United States is on track to retain its title as the world’s largest exporter, with exports of goods and services approaching $2 trillion:
- Exports of manufactured goods and other merchandise are expected to reach $1.4 trillion in 2008, an increase of 18% over the previous year.
- Services exports for 2008 are on track to surpass $550 billion, with the U.S. trade surplus in services reaching $125 billion.
- Agricultural exports are projected by the U.S. Department of Agriculture to break records and pass the $100 billion mark for the first time in 2008.
Exporters shouldn’t have to apologize for being the strongest contributors to the American economy today. Rather than railing at trade, our political leaders should focus on removing the barriers to trade that put American jobs at risk.
The perfect place to start? Congress should approve the pending trade agreements with Colombia, Panama, and South Korea to create a level playing field for American workers, farmers, and businesses.
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