The Coalition for a Prosperous America (CPA) supports Trump administration efforts to improve export, import and trade deficit measures. Administration officials have reportedly discussed returning to trade performance measures that exclude “pass through” goods from the calculations, i.e. goods which enter the U.S. and merely pass through en route to a foreign country without change.
The US International Trade Commission's (ITC) database has long included both broad and narrow measurements of trade flows. The ITC's broad trade flow measure includes pass through goods. For example, if machine tools are imported from Germany and re-exported to Mexico, the broader measure produces inflated import results from Germany and inflated export results for Mexico.
The ITC's narrow trade flow measure is designed to exclude pass through goods. Government agencies have used both measures in past years. The Trump administration is reportedly considering the ITC's narrower measure for future data releases.
“CPA supports using the narrower measure as a good step towards more accurate trade performance data,” said Michael Stumo, CEO of CPA. “The ITC has used this method in statutorily required trade agreement reports to Congress, so it is not new."
“While both the broader and narrower measures convey useful information about US external trade, the narrower measure, by excluding pass through goods, provides a better guide to how trade impacts the American economy,” said Jeff Ferry, CPA Research Director. “The Commerce Department and Customs Service can and should continue to work on improving information collection at the ports of entry to increase trade flow data accuracy."
The Coalition for a Prosperous America is a nonprofit organization representing the interests of 2.7 million households through our agricultural, manufacturing and labor members.
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