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Changes in US trade policy needed to stop record foreign trade red ink

Feb '07
The U.S. government reported that the U.S. trade deficit reached an all-time high of $763.6 billion in 2006, smashing the previous record of $717 billion in 2005. With China, U.S. trade deficit jumped from $202 billion in 2005 to $232.5 billion in 2006. For manufactured goods, the U.S. trade deficit jumped to $525.8 billion, up from $504 billion in 2005.

“The 2006 record negative U.S. trade imbalance further proves that U.S. trade policy is broken. The deficit will only worsen and the offshoring of key U.S. industrial sectors will only accelerate unless Congress steps in and makes major changes,” said American Manufacturing Trade Action Coalition (AMTAC) Executive Director Auggie Tantillo.

“Our escalating U.S. trade deficits and concomitant loss of three million U.S. manufacturing jobs are a direct outgrowth of U.S. trade policy. The U.S. government's refusal to use access to the U.S. market as trade negotiating leverage gives other countries like China a green light to subsidize and protect their industries to the detriment of U.S. producers,” Tantillo continued.

In AMTAC's view, the most ubiquitous and damaging protection/subsidy are foreign value-added taxes (VAT) taxes. Currently 137 countries, including every major industrial power except the United States, rebate VAT taxes when goods are exported and levy VAT taxes on imports.

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