Feb. 13, 2007
Staggering Trade Deficit Reinforces Failure of Status-Quo Trade Policy
Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch Division
The alarming $763.6 billion 2006 trade deficit reinforces the message the voters sent in the midterm election: Don’t stay the course on our failed trade policy. To get good trade agreements, Congress must retire the Fast Track process that enabled damaging pacts like the North American Trade Agreement (NAFTA), the Central America Free Trade Agreement (CAFTA) and the World Trade Organization (WTO) and replace it with a new mechanism for trade negotiations that puts the American people and Congress back in the driver’s seat and allows us to set a new course toward a trade policy that benefits the majority.
Before the Nixon administration hatched Fast Track as a way to grab Congress’ exclusive constitutional power to set trade policy, the United States had balanced trade and even trade surpluses every year – with 1971 and 1972 as the only recent exceptions. Since Congress passed Fast Track in 1974, we have had only one year – 1975 – of trade surpluses.
Fast Track-enabled agreements like NAFTA and the agreement that created the WTO have only made things worse. Before these pacts were signed, the United States ran a $100 billion trade deficit in today’s dollars. Following implementation of NAFTA, U.S. bilateral deficits with Mexico and Canada skyrocketed, while our nation’s overall trade deficit has grown nearly 800 percent and now accounts for a record high of nearly six percent of our national income.
In addition to posing a danger to U.S. and global economic stability, these macroeconomic trends have a disastrous human impact. The average worker’s hourly wage has risen only a nickel since 1973 – the year before Congress finally conceded to Nixon’s Fast Track power grab. Meanwhile, income inequality is at levels not seen since the Robber Baron era, with the richest 10 percent of U.S. citizens taking nearly half the economic pie. And as the trade deficit has skyrocketed, one in six U.S. manufacturing workers have been displaced, representing a devastating loss of good jobs.
The 2006 midterm elections showed that members of Congress bear the political liability for this failed trade policy. The only question that remains is whether they will reclaim their constitutional authority over trade policy by permanently burying Fast Track and replacing it with a new model that guarantees they can shape globalization to benefit all Americans.