The announcement today that the U.S. trade deficit hit an all-time record of $435 billion in 2002 is a national catastrophe for working Americans who are losing their jobs, health care and stable communities due to our nation’s failed economic policies. 

The Commerce Department reports that the U.S. trade deficit in goods and services is almost 16 percent more than the previous high of $376 billion in 2000.  And in manufactured goods, the U.S. ran an annual deficit of $369 billion, more than one billion dollars a day. 

A trade deficit of this magnitude stems from national economic policies that have utterly failed in almost every dimension: U.S. trade and tax policies encourage and reward companies that move jobs overseas, the overvalued dollar puts domestic producers at an impossible disadvantage and unfair trade practices by other countries keep our goods out of overseas markets.  

The resulting trade deficit represents a drag of 4.2 percent on U.S. economic growth, slowing any possibility of strong economic recovery and undermining future job growth.  

These figures are very real to working Americans who are losing family-supporting jobs and benefits as manufacturing and even service jobs are lost overseas.  In fact, more than 200,000 steelworker retirees alone have lost health care due to bankruptcies and liquidations in that industry.   

U.S. goods exports actually fell in 2001 and in 2002, exposing the falsehood in the Administration’s cheerleading that current U.S. trade policies are enhancing our competitiveness in overseas markets.  In 2002, total U.S. goods exports were only $694 billion, down almost $90 billion from the 2000 level.

This year’s trade figures also reveal other startling weaknesses in the U.S. economy, even in those areas which have traditionally been considered U.S. strongholds, like services and advanced technology products.  The trade surplus in services plunged by almost $20 billion in 2002, from $68 billion to $49 billion.  In advanced technology products, similarly, the U.S. surplus of $4.5 billion in 2001 turned into a whopping deficit of $17.5 billion last year.  

Our nation’s deeply flawed free trade agreements fuel this ballooning trade deficit.  The combined U.S. trade deficit with Canada and Mexico soared from $9 billion in 1993, prior to NAFTA, to $87 billion in 2002, almost a tenfold increase.  Since granting China Permanent Normal Trade Relations in 2000, which we were told would help us sell American goods in China, the U.S. trade deficit with China increased by almost 25 percent, hitting a staggering $103 billion last year – our single largest bilateral deficit.  

With a record like this, the last thing we need the Bush Administration to do is to negotiate new trade agreements modeled on the old, flawed ones.  These policies have failed to deliver on their promises, and it is time to change course before we do irreparable harm to our economy and to America’s working families. 

Contact: Lane Windham (202) 637-5018