Job-Killing Trade Deficits Soar under "Free Trade" Agreements -

While President Obama’s State of the Union reiterated the tired “free trade” = exports = jobs refrain, the newly-released government trade data for 2012 shows that job-eroding U.S. trade deficits have ballooned with “free trade” agreement (FTA) partners while declining with the rest of the world. Why? In part, because export growth has actually been slower under FTAs. Why then did Obama commit on Tuesday night to expand this deficit-boosting FTA model across both the Pacific and the Atlantic in the name of jobs?  Maybe he hasn’t seen the data.  Here it is (click here for the PDF version): 

U.S. Trade Deficits Grow More Than 440% with FTA Countries, but Decline 7% with Non-FTA Countries

The aggregate U.S. trade deficit with FTA partners is more than five times as high as before the deals went into effect, while the aggregate deficit with non-FTA countries has actually fallen slightly.¹ The key differences are soaring imports into the United States from FTA partners and lower growth in U.S. exports to those nations than to non-FTA nations. Incredibly, the U.S. Chamber of Commerce website states, “For those worried about the U.S. trade deficit, trade agreements are clearly the solution – not the problem.” Their pitch ignores the import surges contributing to growing deficits and job loss, while their export “data” is inflated, using tricks described below.

The aggregate trade deficit with FTA partners increasedby more than $144 billion (inflation-adjusted) since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries decreased by more than $55 billion since 2006 (the median entry date of existing FTAs). Two reasons: a sharp increase in imports from FTA partners – notably Mexico and Canada under the North American Free Trade Agreement (NAFTA) – and significantly lower export growth to FTA partners than to non-FTA nations over the last decade. Using the Obama administration’s net exports-to-jobs ratio, the FTA trade deficit surge implies the loss of nearly one million American jobs. (Scroll to the bottom for a chart giving the country-by-country data.)  

Trade with Canada and Mexico (our first and third largest trade partners, respectively) contributed the most to the widening FTA deficit. Under NAFTA, the U.S. deficit with Canada ballooned and the small U.S. surplus with Mexico turned into a $100 billion-plus deficit. The trend persists under new FTAs – nine months into the Korea FTA, our deficit with Korea has jumped 26 percent. Reducing the massive trade deficit requires a new trade agreement model, not more of the same.

Yesterday, 25 prominent labor unions, environmental organizations, faith groups, and other civil society organizations sent a letter to Barbara Weisel, the lead U.S. negotiator for the Trans-Pacific Partnership (TPP), a sweeping NAFTA-style deal proposed to encompass the U.S. and 10 Pacific Rim countries, outlining several demands for increased civil society stakeholder engagement at upcoming TPP rounds.

The groups made several clear-cut proposals for increased stakeholder engagement, requesting that a schedule of stakeholder events be published with advance notice, that stakeholders be granted access to the negotiations venue (unlike at the Auckland round, where civil society was shut out), and that stakeholder presentations be scheduled for a time when negotiations are not in session.

The letter also reiterated earlier demands by civil society that the secret TPP negotiating text be made public.  Below is the full text of the letter.

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Barbara Weisel
Assistant U.S. Trade Representative for Asia and the South Pacific
Office of the U.S. Trade Representative
Washington, DC

February 4, 2013

Dear Ms. Weisel:

At your most recent briefing with civil society stakeholders on January 10, 2013, you invited civil society organization stakeholders to share with you our desires with respect to stakeholder engagement during the Trans-Pacific Partnership (TPP) negotiating rounds.  We appreciate your willingness to share these requests with the Singapore lead, as well as the rest of the TPP partners who would be hosting upcoming rounds of negotiations.

As U.S. organizations with broad constituencies that will be affected by many aspects of the TPP, we have and will continue to utilize all opportunities to provide input and technical expertise to negotiators.  We believe that such civil society stakeholder engagement with negotiators is critical during the negotiating rounds.  Therefore, we believe that –at a minimum – stakeholder engagement during the TPP negotiating rounds should include the following:

• Hosts should publicize the schedule of stakeholder events and indicative timetable of working groups to enable stakeholders to plan travel with enough advance notice to find reasonably-priced airfare and accommodations.
• Timetable of which negotiating groups are meeting in which rooms should be made available to all stakeholders.
• Stakeholders should have access to venue where negotiations are taking place, including to corridors during coffee breaks.
• Lead negotiators should provide briefings for stakeholders at both the start and end of the negotiating round.  Call-in options should be made available for stakeholders unable to participate in person.
• Space and time should be provided for stakeholder presentations during a day/time when negotiations are not in session.  The rooms for the stakeholder presentations must be large enough to accommodate all relevant negotiators. Stakeholders should be provided with a minimum of 15 minutes for each presentation.
• Any tabling opportunity should also occur when negotiations are not in session and should not occur during the same time as stakeholder presentation sessions.
• Internet access should be made available for stakeholders at the venue.
• A reception for negotiators should be made open to all stakeholders to encourage informal interactions.
• Work space should be provided for NGO stakeholders that includes tables, printers, and a photocopier.
• Hosts should commit to distribute NGO stakeholder documents to delegations in a timely manner.

While we believe that facilitating stakeholder engagement in this way is critical as negotiations advance, we respectfully reiterate our earlier demands for negotiating texts to be made public. USTR has engaged in TPP negotiations for nearly three years without any public access to even the most fundamental draft agreement texts or summaries. This stands in contrast to the negotiation of the multi-country Free Trade Area of the Americas, for which a complete draft composite text was publicly released, and to negotiations related to the WTO Doha Round, for which various proposed agreement texts were also made public, as well as multiple other international negotiating fora. 

This lack of transparency has severely limited meaningful input by civil society and other stakeholders who have a direct and long-term interest in the outcome of these negotiations. Yet, under the trade advisory system, more than 600 official advisors mainly representing business interests have direct access to at least the U.S. proposals and thus, unlike the public and most of Congress, have a greater ability to directly influence the TPP’s terms.Greater transparency and inclusiveness is essential to such negotiations, particularly as the scope with respect to both the subject matter and the countries potentially involved are expanded. The enforceability and permanence of such binding rules, with later changes to an adopted pact requiring agreement by all signatory countries, necessitates maximal transparency and extreme care during the negotiation phase.

Thank you for your attention and for passing these requests and concerns to your counterparts in other TPP countries.

Signed:

American Medical Students Association
Columban Center for Advocacy and Outreach
Citizens Trade Campaign
Communication Workers of America
Doctors Without Borders – Access Campaign
Electronic Frontier Foundation
Environmental Investigation Agency
Friends of the Earth
Health GAP
Humane Society International
International Association of Machinists and Aerospace Workers
International Brotherhood of Boilermakers
International Brotherhood of Electrical Workers
International Fund for Animal Welfare
Institute for Policy Studies, Global Economy Project
Just Foreign Policy
Knowledge Ecology International
Oceana
Oxfam America
Public Citizen
Rainforest Action Network
Sierra Club
United Church of Christ, Justice and Witness Ministries
Universities Allied for Essential Medicines (UAEM)
Witness for Peace