U.S. and Hong Kong (1998)

18 June 1998

COMMERCE SECRETARY DALEY ON U.S. TRADE DEFICIT

Following is the text of Daley's remarks:

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A STATEMENT BY COMMERCE SECRETARY WILLIAM M. DALEY ON THE U.S. INTERNATIONAL TRADE FIGURES FOR APRIL

Washington -- The trade data released today for the month of April show more evidence of the weakness of many economies in Asia. Our economy continues to be the strongest in the world, but the problems in Asia are affecting our exports and driving up the trade imbalance. It is time for Congress to step forward and allow the President to help resolve these problems by approving his package for the International Monetary Fund.

The April trade deficit increased from $13.2 billion in March to $14.5 billion. This is the second consecutive record month for the U.S. trade deficit. As a share of our economy, however, the trade deficit was substantially higher in the 1980s than today. Moreover, our trade balance with our NAFTA partners and with the rest of Latin America continued to improve. There is an important lesson here. In early 1995, President Clinton took decisive action, with the support of Congress, to stabilize a financial crisis in Mexico. Since then, the Mexican economy has recovered; and from 1996 on, our exports to Mexico have been growing by more than 20 percent a year, and our trade balance with that country has improved dramatically.

Almost all of the deterioration in U.S. exports of goods this year occurred in Asian markets. Thus far this year, U.S. exports to Korea are off 45 percent; our exports to Hong Kong and Singapore are down 11 percent; to Thailand, down 26 percent; and to Indonesia, down 43 percent. Exports to Malaysia and Taiwan, however, are continuing to rise.

We are all watching the events in Asia and have been disappointed by the continuing downturn in a number of countries. In fact, most of our trade deficit can be accounted for by Japan and China. The recession in Japan, combined with her continuing trade barriers, is clearly affecting our trade picture. So far this year, our exports to Japan have fallen 10 percent, and our imports from Japan are up less than 1 percent. The fact is, until her economy recovers, Japan is unlikely to buy more exports from the United States. Two days ago, President Clinton spoke to Prime Minister Hashimoto. He stressed the important role in restoring economic stability to Asia that Japan can play with new policies to stimulate growth, strengthen her financial markets, deregulate her industries, and open her markets.

Next week, I am accompanying the President to China, where we will discuss the deteriorating trade imbalance with that country. Our exports to China are rising by 12 percent thus far this year, but our imports from China continue to increase at a faster rate. Our imports from China are nearly five times as great as our exports to China. It is time for China to press forward much more aggressively with reforms that will open more of her markets to American goods and services.

Today, the best insurance we can have for American exports and jobs is to support the recovery of the Asian economies. By approving the President's proposal for the IMF, we can encourage and promote the reforms that these struggling economies need to restore their stability and revive their growth.

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