US/China Trade Deficit Triggers Call For Legislation

By James A. Morrissey, Washington Correspondent

As the US trade deficit with China continued at a record-setting pace, lobbyists for textiles and other import-impacted industries renewed their call for legislation that will address the problem.

While the overall US trade deficit rose only slightly in May, the trade deficit with China in the first five months of this year reached $96 billion — up from $82 billion for the same period last year. This was an increase of 17 percent, and it could be on a pace to exceed last year’s record of $232 billion. The textile and apparel deficit in the first five months was $13 billion, an increase of 31 percent over the comparable period last year.

As the data were released, lobbyists for textiles and others in Washington called for passage of the border tax equity and the fairc currency acts, which are pending in Congress.

“With the US dollar hitting rock bottom against the Euro and other currencies, the US trade deficit should be falling much faster” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “The reason why the US trade deficit is sky high is because the US government shirks from confronting the predatory trade practices of other countries. The playing field has been tilted against US producers for too long, and the predictable disastrous result has been the loss of 3 million middle-class manufacturing jobs.”

Alan Tonelson, a research fellow at the US Business and Industrial Council, said the one-month moderation in the trade deficit demonstrates how far the United States remains from a “ sustainable balance in international trade,” adding that “the disastrous fundamentals of our trade situation have not changed.”

The VAT/Border Tax Equity Act is designed to offset a trade advantage countries with value-added taxes (VATs) have over the United States because they provide rebates of the tax to their manufacturers. The fair currency legislation would declare currency manipulation an unfair trade practice that could be addressed by US countervailing duty and other trade equity laws.