Better Accounting Shaves $10 Billion Off Trade Deficit

The nation’s merchandise trade deficit last year was actually $10.2 billion less than the previously announced $166.3 billion, the Commerce Department said Tuesday as it unveiled a more accurate method of measuring trade figures.

Accounting for the difference, Commerce Undersecretary Robert Ortner said, is the fact that the department has begun counting a large amount of previously undocumented exports to Canada, the United States’ largest trading partner.

Ortner and Charles A. Waite, an associate director of the Census Bureau, which helps collect such government statistics, said U.S. exports to Canada have been understated routinely. They reasons, they said, are inadequate record-keeping along the world’s longest undefended land border and the exponential growth in U.S.-Canada trade.

“Say I’m driving a truck full of vegetable products in Upstate New York and cross the border near Buffalo,” Waite said. “I cross the border without filing the necessary export documents in the box the Customs Service provides at the crossing point. The goods never get reported as exports.”

Last year, Ortner said, officials concluded that U.S. exports to Canada were underreported by about 22%. “When it gets that large, something has to be done,” he said.

Canadian exports to the United States were under-reported by only about 4%, apparently because Canadian customs officers patrol their border more carefully.

The reduction of the trade gap to $156.1 billion still left 1986 as a record deficit year for merchandise. However, the adjustment could help the Administration in its efforts to soften support for protectionist legislation in Congress that would combat the deficit with sanctions against nations that run large trade surpluses with the United States.

The $10.2-billion increase in reported exports to Canada dropped the bilateral U.S. trade deficit with that nation to $13.3 billion. That revision is unusually large, Ortner said, and Census Bureau sources said the adjustment for this year could be as much as $6 billion.

The new formula will be reflected in revised trade deficit estimates for the first half of 1987 that are to be published Friday.

Through May, the monthly trade deficit in agricultural products, manufactured goods and commodities has averaged $13.7 billion--on track for a deficit of $164.4 billion for the whole year if the trade improvement expected in late 1987 does not occur.

With additional Canadian trade factored in, the level for the year would be about $158.4 billion, close to 1986’s newly revised figure. A similar revision for 1985 reduced that year’s merchandise deficit to $133.6 billion from $139.7 billion.

The Commerce Department and Canada’s Ministry of Supply and Services in recent years have jointly published annual trade “reconciliations,” in which the discrepancies between reported imports and exports have been rectified.

But until this week the corrected statistics have never found their way into the monthly merchandise trade reports. To further improve the statistics, Waite said, officials will press a campaign to persuade truckers to be more careful about reporting transborder shipments to Canada.

With the Canadian revisions, the merchandise trade deficit for 1984 was lowered to $122.4 billion from $127.6 billion, and for 1983, to $64.2 billion from $69.3 billion. The new revisions have been extended all the way back to 1970, but before 1983 the nation’s merchandise trade deficits were small enough not to be a major political issue.