Fair Trade

The trade deficit ballooned to $764 billion in 2006, a new record shortfall.

The White House shrugged its shoulders. From the W. Post:

"Trade is good for America," [White House spokesman Tony] Fratto said. "There are dislocations for people when you trade. A factory closes, those are real people. But the benefits that accrue to all Americans are clear."

But this severely unfair trade may not benefit all Americans. Also from the W. Post:

Some analysts fret that the trade deficit's continuing climb raises the possibility of a precipitous drop in the dollar. For now, China, Japan and many oil-producing countries are plowing the proceeds of their exports to the United States back into the country by buying U.S. Treasury bills, propping up the dollar and allowing the Fed to keep interest rates low.

But if these nations get spooked by the size of the trade deficit and reduce their dollar purchases, the value of the U.S. currency could plunge, forcing interest rates higher and hurting the economy.

"Instead of producing products, we're just printing money," said Peter Schiff, president of Euro Pacific Capital, a brokerage firm in Darien, Conn. "We're in serious trouble."

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David Sirota flags this Miami Herald story:

...the Bush administration has told Peru and Colombia that their free-trade agreements with the United States will need ''substantive adjustments'' to secure Congressional approval.

Deputy U.S. Trade Representative John K. Veroneau told reporters Wednesday that the concessions were needed to assuage Democratic objections over labor rights.

Of course, when the Bushies say "substantive," you can expect "cosmetic." The Herald continues:

The Bush administration rushed to clarify Veroneau's remarks with a statement through trade representative spokeswoman Gretchen Hamel, saying the adjustments could be made through "some binding instrument and it is not necessary to reopen the text of the agreement.'"

This implies a type of side agreement similar to what President Clinton negotiated with Mexico to pass the North American Free Trade Agreement through Congress in 1994.

Democrats have criticized the Mexico side agreement as too weak, and it was not clear whether the new formula would be acceptable.

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