International Trade

GAO provided a supplement to its report on the causes of the U.S. trade deficit and the extent that deficit reduction depends on the actions of other countries.

GAO sponsored a symposium of international trade specialists that reviewed the causes, outlook, and possible cures of the U.S. trade deficit. There are several explanations for the increased trade deficit, specifically: (1) foreign restrictions on U.S. imports; (2) foreign product competition with U.S. goods in third-country markets; (3) the increase in U.S. demand for imports; (4) increases in the world supply of agricultural products; (5) the increase in the value of the dollar between 1980 and 1985; and (6) the lack of U.S. competitiveness. The symposium projected that: (1) the U.S. economy would grow by 2.5 percent a year for the next 5 years, but the U.S. dollar would decline marginally and then remain unchanged against the currencies of other industrialized countries; (2) interest rates would remain at 6 to 7 percent, with some year-to-year variation; and (3) increased growth abroad, depreciation of the dollar, improved competitiveness, and trade derestriction should eventually reduce the trade deficit.