News

News

NEWS USA

A weekly service provided to the American Chambers of Commerce in Europe

June 24, 2002

ECONOMIC NEWS

U.S. TRADE DEFICIT INCREASES, REFLECTING SHARP IMPORT GROWTH

The U.S. trade deficit grew in April to a record $36 billion from $32.4 billion in March after narrowing slightly the previous month, reflecting higher imports in all sectors, especially petroleum, as economic recovery continued, the Commerce Department reported. Exports of goods and services increased about $1.7 billion from March to $80 billion in April while imports rose more than $5.0 billion from March to $116 billion in April. Comprising the overall deficit were a deficit in goods of $40 billion and a surplus in services of $4.0 billion. The U.S. goods deficit with Western Europe also rose sharply from $5.5 billion in March to $7.2 billion in April with exports falling by $1.3 billion and imports, primarily of crude oil, rising by $400 million.

U.S. CURRENT ACCOUNT DEFICIT INCREASES IN FIRST QUARTER OF 2002

The deficit in the U.S. current account, the broadest measure of U.S. economic activity with the rest of the world, increased in the first quarter of 2002 as both the trade deficit and payments to foreign investors went up, the U.S. Department of Commerce says. The department estimated the current account deficit in January-March at $112 billion, up from $95 billion in the fourth quarter of 2001. The deficit in merchandise goods trade increased to $106 billion in the first quarter from $101 billion in the fourth. Income payments to foreign owners of assets in the United States went up to $57.2 billion in the first quarter from $50 billion in the fourth. U.S. investors reduced their holdings of foreign stocks and bonds by $2 billion in the first quarter after increasing them by $26.1 billion in the fourth.

AMERICAN CHAMBER OF COMMERCE IN ROMANIA BUILDS MOMENTUM FOR ROMANIA’S NATO ACCESION

As the NATO Council is preparing to issue invitations to new members at the Prague Summit in November 2002, top American companies operating in Romania successfully completed a series of briefings in Washington, D.C. on the current business conditions that firms encounter on the ground in Romania. Board members of the American Chamber of Commerce in Romania (AmCham Romania), who include major investors such as Kraft/Philip Morris, Timken, and United Pan-European Communications UPC (an affiliate of United GlobalComm), met with senior officials from the State, Commerce and Treasury Departments, as well as the National Security Council. They also briefed Senators, Congressmen and key Congressional staffers. The delegation was led by Obie Moore, Board President of AmCham Romania and Managing Partner in Altheimer & Gray Bucharest.

PRESIDENT SIGNS EX-IM BANK REAUTHORIZATION BILL

President Bush has signed into law a bill that extends the operations of the Export-Import Bank (Ex-Im Bank) of the United States through September 2006. The reauthorization act will increase the current bank's ceiling of $75 billion on its outstanding loans, guarantees and insurance to $100 billion in the fiscal year 2006.

USTR, DOC ANNOUNCE SECOND SET OF STEEL SAFEGUARD PRODUCT EXCLUSIONS

The Department of Commerce and the Office of the U.S. Trade Representative (USTR) announced on June 17 the release of the second set of products to be excluded from the import restrictions imposed under the safeguard on steel products. The 46 products to be excluded cover a broad range of steel products, including plate, hot-rolled products, tin mill products, cold-rolled products, stainless steel bar, corrosion resistant products, hot-rolled bar, and stainless steel wire. The decision to exclude these products was based upon a full consideration of information submitted by U.S. steel consumers, U.S. steel producers and foreign steel producers. A list and a short description of the excluded products may be found on USTR's website: www.ustr.gov.

UPDATE: DIVERSITY IMMIGRANT VISA LOTTERY

The U.S. State Department announced that approximately 87,000 persons may apply for an immigrant visa under a special law that makes permanent resident visas available annually to persons from countries with low rates of immigration to the United States. The law makes 50,000 permanent resident visas available each year, but since it is likely that some of the first 50,000 persons registered “will not pursue their cases to visa issuance, registration of a larger number of applicants is intended to ensure that all available DV-2003 numbers will be used.” Registrants living legally in the United States who wish to apply for adjustment of their status must contact the Immigration and Naturalization Service for information on the requirements and procedures. Once the total 50,000 /1 visa numbers have been used, the program for fiscal year 2003 will end. Selected applicants who do not receive visas by September 30, 2003 will derive no further benefit from their DV-2003 registration. Similarly, spouses and children accompanying or following to join DV-2003 principal applicants are only entitled to derivative diversity visa status until September 30, 2003.

SENATE COMMITTEE APPROVES CURBS ON FOREIGN "TAX HAVENS"

The Senate Finance Committee has approved legislation that seeks to stop U.S. companies from switching their headquarters’ addresses to low-tax countries to avoid U.S. corporate taxes. The measure, passed June 18 by voice vote, would eliminate a provision of the tax code that permits U.S. companies to re-incorporate in foreign jurisdictions but otherwise continue operating as usual within the United States. If passed into law, the measure would classify a U.S. firm as domestic and subject to U.S. taxes if its original shareholders own 80 percent of the company after the move. The tax haven measure is part of a legislative package that also includes a provision requiring firms to provide the government with more detailed reporting on their use of tax shelters, and another provision approving new tax incentives for charitable donations.

FAA REQUIRES STRONGER COCKPIT DOORS ON FOREIGN PLANES

The U.S. Transportation Department has imposed a new security requirement on foreign airlines serving the United States. Transportation Secretary Norman Mineta announced that foreign airlines must install stronger cockpit doors on aircraft that serve the United States by April 9, 2003. In the transitional period they must install temporary locking devices on aircraft doors, the Federal Aviation Administration (FAA) said. Member countries of the International Civil Aviation Organization (ICAO) recently agreed to install doors that meet security standards similar to those adopted by the FAA by November 2003, seven months after the FAA deadline. The ICAO has no new requirements for temporary fixes for the interim period.