Public Citizen Analysis: 2021 Trade Deficit Likely To Be Largest in U.S. History Amid Shortage of COVID-19 Vaccines and Dragging Economic Growth in Other Countries
Tomorrow’s U.S. Census Bureau January-September 2021 Trade Data Will Show U.S. Exports Lagging As COVID Extends Economic Woes in Much of World While U.S. Economic Recovery Increases Imports
FOR IMMEDIATE RELEASE: Nov. 3, 2021
CONTACT: Matt Groch mgroch@citizen.org (202) 454-5111
REPORTERS’ MEMO
WASHINGTON, D.C. – On Thursday, the U.S. Census Bureau will release new trade data that will likely show how the Biden administration’s failure to implement a global plan to end the pandemic is widening the U.S. trade deficit and weighing on economic growth, according to an analysis by Public Citizen.
The analysis conducted by Global Trade Watch research director Daniel Rangel shows that based on the eight-month data and the advance trade-in-goods September data, the overall U.S. trade deficit with the rest of the world is likely to surpass $650 billion in the first three-quarters of 2021. This would be 28% higher than the first nine months of 2020 and up by 35% compared to the same period in 2019, in inflation-adjusted terms. With this trajectory, the goods trade deficit is poised to surpass the $1 trillion mark for the first time in U.S. history.
The relatively high U.S. COVID-19 vaccination rate has allowed U.S. businesses to reopen and, along with expansionary fiscal and monetary policies, has promoted increased consumption that fuels import growth. However, U.S. exports have lagged as most of the world is still struggling with mass COVID-19 outbreaks and existing or new restrictions on commercial activity and other demand-squelching COVID-fallout as the global supply of vaccines falling far short of need.
“This trade data gives President Biden another powerful reason to deliver the waiver of WTO intellectual property monopolies now limiting COVID vaccine production given the large travel and hospitality sectors related to foreign tourism and international student enrollment and other U.S. service sector exports are crushed until the world is vaccinated and the pandemic ends,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The protection of one industry’s monopoly control over vaccines that were developed using taxpayer funds is slamming all the rest of the country’s businesses and workers as it also results in millions of needless deaths worldwide.”
“A drag in U.S. economic growth is the aggregate effect of decimated U.S. service exports due to domestic pandemic-related restrictions on foreign travel and tourism and sluggish U.S. goods exports growth caused by lack of demand in the many parts of the world where a lack of vaccination means ongoing outbreaks and economic havoc,” Rangel said.
The ballooning deficit reflects a drop in service exports, which traditionally offset part of the large U.S. trade-in-goods deficit. Pandemic-related restrictions on travel and indoor activities are crushing demand in the service sectors such as education and tourism. In the first eight months of 2021, U.S. services exports were valued in $507 billion, up by just 0.6% from 2020’s record low levels and 19% lower compared to 2019. Meanwhile, goods imports jumped 17% in the first nine months of the year compared to the same period in 2020 and are already 4% higher compared to 2019 levels. Conversely, U.S. goods exports have experienced a more sluggish recovery and are still 2% down compared to the nine-month 2019 value.
The new trade data will underscore how it is in the U.S. economic interest to increase production and equitable distribution of vaccines, therapeutics and diagnostics around the world. An International Chamber of Commerce-commissioned January 2021 study, made clear that the failure to thoroughly vaccinate people in middle- and low-income countries undermines global economic recovery and, paradoxically, wealthy countries have the most to gain economically from ramping up immunization efforts worldwide. Yet to date, the Biden administration has not delivered on any of the three necessary steps to increase vaccine coverage to end the pandemic: the temporary World Trade Organization (WTO) TRIPS waiver to eliminate intellectual property barriers stymieing COVID-19 health technologies manufacturing, compelling pharmaceutical firms to transfer technology to facilitate the speediest scale-up of production and securing the funding to boost manufacturing globally.
A recent analysis by the United Nations Development Program, World Health Organization and University of Oxford showed that every additional million people vaccinated would add $7.93 billion to the global economy with high-income countries gaining most. Rich nations would benefit from 71% of the projected gains with expanded vaccination, much of which would come in the form of demand for their exports. To that extent, a truly global vaccination campaign besides delivering the evident outcome of taming the virus, would generate economic gains for everyone.
“The best trade policy that the Biden administration could undertake, and particularly with the WTO Ministerial Conference just a few weeks away, is making a whole-of-government effort to put shots in arms throughout the world through a strategy that removes intellectual property barriers on widespread production of COVID-19 related technologies, compels Big Pharma to share vaccine-making know-how and secures the necessary funding to generate new manufacturing capacity. It is not only the moral thing to do, but it would also greatly benefit the U.S. economy,” said Rangel.
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