I was on the U.S. Trade Representative’s website tonight (because that’s what I do with my evenings), and was immediately struck by the above graphic. It echoes the sentence in Obama’s September 8th jobs speech about how Congress should pass the three FTAs with Korea, Panama and Colombia, and reauthorize Trade Adjustment Assistance: “Now it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama and Colombia and South Korea – while also helping the workers whose jobs have been affected by global competition.”
What’s funny about this graphic is that it implies that the three trade agreements and the Trade Adjustment Assistance program will all create U.S. jobs. There are all kinds of things wrong with this. The most obvious is that TAA is a job retraining program to help workers who have, wait for it, lost their jobs due to trade. Implicit in the existence of TAA is that trade displaces U.S. workers. It is not a job creation program; it is a program meant to soften the blow of trade agreements that result in jobs moving overseas.
And is there empirical data showing that trade agreements result in a net loss of jobs in the United States? Why yes! Over the past several years, the Economic Policy Institute has done a series of reports on just this topic, with regards to NAFTA. Now, I’ll be the first to say that different trade agreements with different countries might well have different outcomes. But the fact that the three above FTAs under consideration are all based on the NAFTA template indicate that this fact might be relevant: according to a EPI’s May 2011 report (PDF link), the net U.S. trade deficit with Mexico since the implementation of NAFTA in 1994 totals $97.2 billion, which translates into a loss of nearly 700,000 U.S. jobs, 60% of those in manufacturing.
So USTR (and Obama) are kind of in a strange alternative world if they mean to imply that the Korea, Panama and Colombia FTAs, much less the TAA program, will actually create U.S. jobs. But hey, that’s politics for you.
(Addendum: since this is a development blog and I don’t want to just talk about U.S. outcomes, I recommend reading the full EPI report linked above. The report makes it clear that NAFTA did not exactly translate into rosy outcomes for Mexican workers, either. The Dragon in the Room, about which I wrote earlier, also goes into some detail about how NAFTA was a flawed strategy for Mexico – even from a pure national economic standpoint without examining distributional, environmental or human rights factors.)