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NEWS OF THE WEEK
FOREIGN TRADE
March 4, 2002
Volume 80, Number 9
CENEAR 80 9 p. 11
ISSN 0009-2347
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U.S. Chemical Surplus Dropped Sharply In 2001

WILLIAM STORCK

The U.S. chemical industry, already suffering from depressed demand in 2001, got no help from foreign trade last year. Exports rose minimally, and that growth was vastly outpaced by the rise in imports from foreign producers, sending the chemical trade balance to its lowest level in decades.

According to data from the Commerce Department, in 2001 the value of exports of chemicals and allied products rose just 0.6% to $80.2 billion. Meanwhile, imports rose 7.1% to $78.9 billion. The result was a 78.7%, or $4.70 billion, slide in the chemical trade surplus, to $1.29 billion.

Two factors contributed to the decline: the strength of the dollar against foreign currencies, which shows no sign of abating, making U.S. products more expensive overseas and overseas products cheaper and more competitive in the U.S.; and slowing overseas economies, which cut demand for U.S. exports.

A third factor also affected two chemical sectors: inorganic chemicals, which includes intermediates, and medicinals and pharmaceuticals. The shift to overseas production in intermediates and pharmaceuticals has caused a surge in imports into the U.S. While pharmaceutical exports rose a healthy 17.5% last year to $15.1 billion, imports jumped 28.8% to $18.6 billion, causing a $3.48 billion, deficit.

Organic chemical exports contracted 8.1% to $16.5 billion, whereas imports rose 3.7% to $29.6 million, producing a whopping $13.1 billion deficit in this sector.

With seemingly little hope of the dollar value abating and with continuing slow economic growth, the stage is set, some economists say, for an actual trade deficit for 2002--the first since the 1920s.

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