From the Economic Policy Institute an easy to understand analysis of the Fast Track Trans-Pacific Partnership trade agreement and what it could do to American workers and businesses. Good article with many clickable links to provide more information to topics raised.
Fast Track to Lost Jobs and Lower Wages
This week, Senator Hatch will reportedly introduce “fast track” (trade promotion authority) legislation in the Senate, to help President Obama complete the proposed Trans-Pacific Partnership (TPP), a trade and investment deal with eleven other countries in Asia and the Americas. “Fast Track” authority would allow the President to submit trade agreements to Congress without giving members of Congress the opportunity to amend the deal. Experience has shown that these trade and investment deals typically result in job losses and downward pressure on the wages of most American workers. The last thing America needs is renewal of fast track and more trade and investment deals rushed through Congress.
The administration has claimed that the TPP will create jobs, but it will not. There are other policies that have attracted bipartisan support, including ending currency manipulation and rebuilding infrastructure that could each create millions of U.S. jobs. President Obama has limited political capital to expend with the Republican-controlled Congress and he must choose his policies wisely.
Trade and Jobs?
For more than twenty years, both Democratic and Republican administrations have claimed that free trade agreements like the U.S. – Korea Free Trade Agreement (KORUS) and the North American Free Trade Agreement (NAFTA) would lead to growing U.S. exports and stimulate creation of goods jobs in the United States. Bill Clinton claimed that NAFTA would create 200,000 jobs in its first two years and a million jobs in five years. President Obama claimed that KORUS would “support 70,000 American jobs” because the agreement would “increase exports of American goods by $10 billion to $11 billion.”
Claims that trade and investment deals would support domestic job creation have proven to be empty promises. Expanding exports alone is not enough to ensure that trade adds jobs to the economy. Increases in U.S. exports tend to create jobs in the United States, but increases in imports lead to job loss—by destroying existing jobs and preventing new job creation—as imports displace goods that otherwise would have been made in the United States by American workers. Thus, it is changes in trade balances—the net of exports and imports—that determine the number of jobs created or displaced by trade and investment deals like NAFTA and KORUS.
More than 5 million U.S. manufacturing jobs were lost between 1997 and 2014, and most of those job losses were due to growing trade deficits with countries that have negotiated trade and investment deals with the United States.
Between 1993 (before NAFTA took effect) and 2013, the U.S. trade deficit with Mexico and Canada increased from $17.0 billion to $177.2 billion, displacing more than 850,000 U.S. jobs. Growing trade deficits and job displacement, especially between the United States and Mexico, were the result of a surge in outsourcing of production by U.S. and other foreign investors. The rise in outsourcing was fueled, in turn, by a surge in foreign direct investment (FDI) into Mexico, which increased by more than 150 percent in the post-NAFTA period.
KORUS took effect in March 2012. Between 2011 and 2014, U.S. exports to Korea increased by about $1 billion, but imports have increased by $13 billion, so the trade deficit has increased by nearly $12 billion. This growing trade deficit with Korea has cost more than 75,000 U.S. jobs.
Continue reading: Fast Track to Lost Jobs and Lower Wages