Reports from the Economic Front

by Martin Hart-Landsberg

The Free Trade Record

without comments

The U.S. government is hard at work negotiating the Transpacific Partnership Free Trade Agreement with eleven other governments.  It continues to defend this and other free trade agreements with claims that they generate exports and jobs for U.S. workers.

That the historical record demonstrates the falseness of such claims seems not to matter to the media or political and economic leaders.

For example, here is what the Office of the United States Trade Representative had to say upon completion of the U.S.-Korea Free Trade agreement:

The entry into force of the U.S.-Korea trade agreement on March 15, 2012 means countless new opportunities for U.S. exporters to sell more Made-in-America goods, services, and agricultural products to Korean customers – and to support more good jobs here at home.

However, the Eyes on Trade blog examined the data and found that:

Two years after the implementation of the U.S.-Korea Free Trade Agreement (FTA), government data reveal that the Obama administration’s promises that the pact would expand U.S. exports and create U.S. jobs are exactly opposite of the actual outcomes: a downfall in U.S. exports to Korea, rising imports and a surge in the U.S. trade deficit with Korea. Using the administration’s export-to-job ratio, the estimated drop in net U.S. exports to Korea in the FTA’s first two years represents the loss of more than 46,600 U.S. jobs. . . .

Contrary to the administration’s promise that the Korea FTA would mean “more exports, more jobs”:

    • U.S. goods exports to Korea have fallen below the pre-FTA average monthly level for 21 out of 22 months since the deal took effect. See graph below.
    • The United States has lost an average of $385 million each month in exports to Korea, given an 11 percent decline in the average monthly export level in comparison to the year before the deal.
    • The United States lost an estimated, cumulative $9.2 billion in exports to Korea under the FTA’s first two years, compared with the exports that would have been achieved at the pre-FTA level.

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More specifically, “U.S. average monthly exports to Korea have fallen in 11 of the 15 sectors that export the most to Korea, relative to the year before the FTA (see graph below). . . . Ironically, many sectors that the administration promised would be the biggest beneficiaries of the Korea FTA have been some of the deal’s largest losers.”

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And of course this is just the trade record.  All free trade agreements also have multiple chapters that have nothing to do with trade as commonly understood but are designed to block possible future government interventions that might limit corporate profit-making opportunities.  See here and here for examples from the U.S.-Korea Free Trade Agreement.

Since agreements like the Transpacific Partnership Free Trade Agreement are first and foremost about promoting corporate interests, the government’s lack of interest in highlighting the historical record should come as no surprise.

Written by marty

April 27th, 2014 at 6:53 am

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