Haven't heard from John Engler in a while.

Here's a piece he's written regarding Free Trade, the trade deficit and the demand for energy.

His basic thesis is that the trade deficit has largely been a result of our increase of demand for energy which has driven up energy prices and given that we import most of our energy (via oil), we have a large trade deficit.


Here are some quotes:

The arguments against FTAs carry a political punch because of their simplicity, and on the surface they appear to have some merit. During the current economic expansion, our country entered into FTAs with 10 countries. At the same time, our trade deficit grew from $424 billion in 2002 to $708 billion in 2007, a 67% increase in just five years. If the aim of FTAs is to open foreign markets for U.S. producers and encourage export growth, these trade deficits suggest a failed trade policy.


But this argument fails to distinguish between trade with our FTA partners and trade with the rest of the world. The fact is, FTAs are enabling American manufacturers to more effectively compete in markets abroad. The manufacturing trade deficit with our FTA partners has narrowed from $41 billion in 2002 to less than $27 billion in 2007, and has switched to an outright surplus of half a billion dollars through the first five months of 2008.

It is not our country's trade policies, but energy imports that are the primary cause of the rising trade deficit. Simply put, our country does not produce enough energy to meet the demands of our economy. As a result, the United States has become increasingly dependent on foreign sources of energy.

Since the first quarter of 2002, 93% of the increase in the trade deficit has been in petroleum products. At the beginning of the current economic expansion, less than one-fifth of our country's trade deficit was in petroleum products. By the first quarter of 2008, petroleum products accounted for more than half (55%) of the deficit. If you factor out petroleum, the U.S. trade deficit has narrowed by 44% since the end of 2004 as a share of GDP and now stands at its lowest level since 1999. This improvement has come from a more competitive dollar, solid economic growth abroad and better access to markets through FTAs.