Trade Deficits. For many years the United States has imported a higher dollar value of
goods than it has exported. The difference is referred to as a trade deficit (the area in Figure
9-1 between the exports and imports tines). The trade deficit is made up-by the-transfer of
American dollars, government bonds, corporate securities, and so on, to foreign firms. U.S. banks as well as the U.S. Treasury actually benefit from the deficit because it means that foreigners are accepting U.S. paper-currency, bonds, and securities-in exchange for their
products. This makes it easier for the U.S. government to fund its own huge debt-selling
bonds to foreign investors. U.S. interest payments on this part of the national debt flow out
o[the country.
Retreat from Free Trade? The Obama Administration voices its general support for free
trade and open markets. Yet its support for trade agreements appears-to be contingent upon
the inclusion of worker protections and environmental safeguards in future trade agreements
with foreign countries. Obama advisors recommend a "major review of trade policies" to
ensure that trade agreements'include enforceable labor and environmental standards ... and
a new focus on ensuring that trade rules help combat climate change and do not impede the
essential global energy transformation."2 They also warn against unfair trade.practices and
currency manipulation, especially with regard to China. These concerns promise to complicate
future trade negotiations with other countries'