Business

Trade deficit soars to record

WASHINGTON — The Bush administration insists that its efforts to tear down barriers to sales of American products overseas is the right trade policy.

But the latest news on another record trade deficit is giving critics ammunition to contend that a change in approach is needed.

The Commerce Department reported Friday that the deficit for 2005 jumped to an all-time high of $725.8 billion, up 17.5 percent from 2004 and the fourth consecutive record deficit.

Reaction was swift from Democrats who long have criticized Bush’s drive to strike free trade agreements with countries around the world.

“These trade deficits show that our trade policy is an unbelievable failure that is selling out American jobs and weakening our economy,” said Sen. Byron Dorgan, D-N.D. “If these new trade deficit numbers don’t finally wake up the president and Congress, nothing will.”

Dorgan is pushing legislation that would require Congress to vote every year on whether to renew China’s normal tariff rates with the United States, with the vote resting on China’s willingness to follow global trade rules.

Sen. Charles Schumer, D-N.Y., said the new deficit figures were evidence of a “slow bleeding at the wrists economically for the United States.”

Schumer has won widespread support for legislation that would impose penalty tariffs of 27.5 percent on all Chinese imports unless China stops what critics consider blatant currency manipulation to gain trade advantages.

The new report showed America’s trade deficit with China soared to $201.6 billion last year, the biggest imbalance ever recorded with a single country.

Even some members of Bush’s own party were critical.

Sen. Olympia Snowe, R-Maine, called on the administration to take a tougher approach with China on the currency issue by branding China a currency manipulator in a report the Treasury Department must submit to Congress in April.

That designation would trigger consulations and could ultimately lead to U.S. sanctions against China if America won a case before the World Trade Organization.

The chief culprit in pushing the deficit up last year was record global oil prices and increased U.S. demand because of a loss of Gulf Coast production following Hurricane Katrina. The U.S. foreign oil bill soared to a record $251.6 billion, up 39.4 percent from 2004.



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