The U.S. should think twice about yet another free trade deal
The Korea agreement, seen as a model, has proven to be the opposite of what was promised
If the impact of a two-year-old free trade agreement between the U.S. and Korea has any significance, the U.S. should think again before launching an even more ambitious Trans-Pacific Partnership involving 11 other countries. Alarming new analysis has thus far received scant media coverage.
International trade agreements are complex and a challenge to comprehend. To better understand the Trans-Pacific Partnership, or TPP, it is helpful to examine the pact that served as its template – the Korea Free Trade Agreement.
On March 13, it became necessary to separate fact from fiction when the Office of the United States Trade Representative issued a press release that used data omissions and distortions about the performance of the Korea agreement to obscure actual outcomes.
The USTR asserted, “in the two years that this landmark agreement has been in effect … exports of U.S. manufactured goods to Korea have increased” and “U.S. exports of a wide range of agricultural products have seen significant gains.”
However, according to statistics from the U.S. International Trade Commission, the U.S. has actually lost an average of more than $150 million each month in manufactured exports to Korea, and average monthly exports of all U.S. agricultural products to Korea have fallen 41 percent in comparison to the year before the deal – a decline of $125 million per month.
Back in 2011, the Obama administration told a skeptical Congress that the Korea agreement would increase U.S. goods exports by $10 billion to $11 billion and support 70,000 American jobs from increased exports alone.
However, since then, U.S. domestic exports to Korea decreased by $3.1 billion, a decline of 7.5 percent. On the other hand, imports from Korea grew $5.6 billion, a 9.8 percent increase.
Overall, the U.S. trade deficit with Korea has increased $8.7 billion, or 59.6 percent, costing nearly 60,000 U.S. jobs. Most of the nearly 60,000 jobs lost were in manufacturing.
Despite these alarming results, the USTR maintains the proposed Trans-Pacific Partnership will increase trade and investment by lowering tariffs and other trade barriers among participating countries.
However, the U.S. will be vulnerable to companies relocating abroad on the basis of where their legal and financial position is most advantageous. In addition, all Americans are threatened by the TPP requirement that the U.S. roll back environmental and labor standards to an era before the Clean Air and Clean Water Acts.
By making false claims about the Korea agreement’s performance, the USTR distorts the record and misleads decision-makers at a critical time.
The sales pitch is simply not supported by the evidence. The official U.S. government trade data documenting a decline in U.S. exports, a ballooning trade deficit and related U.S. job loss undermines the administration’s counterfactual propaganda.
John Friede is director of Worldview, a Peterborough-based nonprofit that produces educational projects to promote local self-reliance.