BY CHRONICLE STAFF
Thanks to declined imports from Latin America, overall U.S. trade with the region is slowing down, according to data for the first half of the year. The U.S. trade deficit with Latin America is also declining.
U.S. trade with Latin America reached $266.5 billion in the first six months of 2007, an increase of 2.7 percent compared with the same period last year. While U.S. exports grew by 4.6 percent to $110.2 billion, imports from Latin America fell by 0.5 percent to $156.3 billion, according to the U.S. Census Bureau. The U.S. trade deficit with Latin America fell by 15.6 percent to $46.1 billion.
U.S. trade with Mexico (the top U.S. trading partner in Latin America) grew by 2.0 percent, or $3.3 billion, to $167.9 billion. Trade with Brazil (the second-largest U.S. trading partner in the region) expanded by 12.3 percent, or $2.6 billion, to $23.4 billion. Trade with Venezuela (the third-largest U.S. trade partner in Latin America) fell by 3.2 percent, or $736.7 million, to $22.0 billion, according to a Latin Business Chronicle analysis of U.S. Census Bureau data.
U.S. Commerce Secretary Carlos Gutierrez says U.S. exports will get a boost if the U.S. Congress approves pending free trade agreements with Latin American and Asian countries. "President Bush is committed to helping Americans benefit from the world economy," he said in a statement last week. "The best thing Congress can do this year to help attain that goal is to pass the pending Free Trade Agreements with Peru, Colombia, Panama, and Korea. The overwhelming majority of these countries' exports already enter the United States duty free while U.S. exports to these countries face significant tariffs. These four FTAs will level the playing field and open new export opportunities for American businesses, workers, farmers and ranchers."
The trade figures mark a strong slowdown compared with the first half of 2006, when U.S. trade with Latin America grew by 14.1 percent thanks to export growth of 16.1 percent and import growth of 12.7 percent.
The slowdown is due to two key factors - reduced economic growth in the United States and Mexico. The U.S. economy expanded by a mere 0.6 percent in the first quarter before recovering in the second quarter with 3.4 percent growth. By comparison, GDP in the first and second quarters last year grew by 4.8 percent and 2.4 percent, respectively. However, it was in the second quarter that the imports slowed down and actually fell. Total U.S. imports of goods and services declined by 2.6 percent in the latest quarter, according to the U.S. Commerce Department.
Meanwhile, Mexico's economy only expanded by 2.6 percent in the first quarter and 2.8 percent in the second quarter. By comparison, Mexico's GDP grew 4.8 percent during all of 2006. The slowdown affects overall trade with Latin America since Mexico accounts for 60.8 percent of U.S. exports to the region and 64.6 percent of its imports of U.S. goods.
Mexican exports to the United States have also been negatively affected by growing competition from China. Credit Suisse estimates Mexico lost a total of $15.7 billion in foregone exports to the United States between 2002 and 2006 (See Mexico: Export Competition Costs $15 Billion).
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