New Report Projects Shrinking Market For U.S. Imports
Implications “Enormous” for G-8 Talks, WTO, Developing Countries
For Immediate Release: July 11, 2006
Contact: Mark Weisbrot, 202-746-7264
Washington, DC: A new report released today by the Center for Economic and Policy Research (CEPR) finds that U.S. imports, measured in non-dollar currencies, are projected to decline over the next decade. "A Shrinking Market: Projections for U.S. Imports " makes projections for the U.S. import market as the U.S. trade and current account deficits inevitably adjust.
"This has enormous implications for developing countries and their policy decisions," said economist Mark Weisbrot, Co-Director of CEPR and a co-author of the report. "With regard to the various bilateral trade agreements now under negotiation, and even the WTO - these projections indicate that many developing countries may be making a lot of costly concessions in exchange for access to a major market that may not be there for them."
Since 1994 the United States has provided a large and growing market for the exports of a number of developing countries. But it is widely recognized by economists that the U.S. trade and current account deficits are not sustainable, and that an adjustment will have to take place. This adjustment will dramatically reduce the growth of U.S. imports.
In fact, the projections in this paper show the annual value of U.S. imports can actually be expected to contract over the next decade, when measured in non-dollar currencies.
The projections examine three different scenarios for the future of the U.S. import market. In the most optimistic scenario, the U.S. market for foreign goods and services will shrink by $208 billion, or 9.5 percent over the next decade. In the middle and low import scenarios, the value of imports is projected to shrink much more over the next decade. In the middle-import scenario it shrinks by $312 billion or 14.3 percent; in the low import scenario it shrinks by $443 billion or 20.3 percent.
The G-8 (and G-7 previously) has long been concerned with global economic imbalances, and the U.S. trade and current account deficit has been a major focus of discussion at recent summits. However, the impact of the inevitable adjustment on the ability of developing countries to export to the United States has received little attention.
The G-8, which meets this weekend, is also concerned with re-starting the stalled negotiations for the Doha round of the WTO. The projected shrinking of the U.S. import market is very relevant to these talks as well, since increased access to the U.S. market, which many assume will continue to grow, is an important part of what these and also bilateral commercial agreements with the United States have to offer developing countries.
To read the report, click here.
The Center for Economic and Policy Research is an independent, nonpartisan think tank that promotes democratic debate on the most important economic and social issues affecting people's lives. CEPR's Advisory Board of Economists includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Richard Freeman, Professor of Economics at Harvard University; and Eileen Appelbaum, Professor and Director of the Center for Women and Work at Rutgers University.