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Less Appetite For Foreign Goods

The U.S. trade deficit showed a dramatic improvement in February, shrinking to the lowest point since December 1999, as imports of foreign goods from petroleum to shoes dropped by the largest amount on record.

The Commerce Department said Wednesday that the trade gap for February narrowed by 18.8 percent from a January imbalance of $33.3 billion to $27 billion, a far bigger improvement than economists had been expecting.

The narrowing deficit reflected a 4.4 percent decline in imports, the largest one-month decrease since the government started tracking monthly trade flows in goods and services in 1992.

The politically sensitive deficit with China narrowed sharply in February but the imbalance with Japan widened.

Economists have been forecasting that the trade deficit could improve this year as the slowing U.S. economy cuts into what has been a seemingly insatiable demand by American consumers for foreign products.

Still, analysts cautioned against reading too much into a one-month change in America's trade performance. The January deficit of $33.3 billion was the second-highest imbalance on record and for years America's trade deficit exploded as the fast-growing U.S. economy sucked in imports from around the world.

The deficit for all of 2000 climbed to a record $368.9 billion, 39 percent higher than the previous high of $265 billion set in 1999.

Critics of U.S. trade policy contend that the Clinton administration's insistence on pursuing big free-trade agreements to open up foreign markets to U.S. goods has been a failure.

But President Bush signaled in a speech Wednesday that his administration will be even more free-trade oriented. He will travel to Canada Friday for two days of meetings with 33 leaders of the Western Hemisphere as they try to re-energize an effort to create the world's largest free-trade area, stretching from the Canadian Arctic to the tip of Argentina.

Mr. Bush said his administration will actively seek authority from Congress to negotiate the Free Trade Agreement of the Americas as well as other trade liberalization pacts. Former President Clinton was unable for seven years to win such negotiating authority from Congress.

The deficit with China dropped by 30 percent to $5.1 billion in February, the lowest level in nearly two years. Some in Congress have called for the United States to revoke China's normal trade status with the United States in retaliation for China's behavior in the recent standoff over the U.S. spy plane.

America's deficit with Japan increased by 4.4 percent to $6.1 billion, bucking the overall trend of a shrinking deficit with much of the world in February.

The $27 billion overall deficit in February was the smallest monthly imbalance since a $25.7 billion deficit in December 1999.

Overall, U.S. exports of goods and services rose by 1 percent in February to $90.5 billion as American sales of consumer goods hit a record high.

The 4.4 percent drop in imports pused them down to $117.4 billion and reflected big declines across a number of categories. Imports of consumer goods fell by $1.9 billion in February, led by a $422 million decrease in shipments of artwork. Government analysts said this category had been inflated in January by large shipments of paintings from Europe.

But virtually all categories of consumer goods were down, from toys and games to clothing and household appliances.

America's foreign oil bill fell by 8.5 percent to $8.8 billion in February. The number of barrels of imported crude oil dropped to the lowest level since December 1999 while the price per barrel edged up slightly to $23.76, compared to $23.13 in January.

Imports of autos and auto parts fell by $131 million in February.

By Martin Crutsinger
©MMI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed

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