Free trade pacts have been good for U.S.

I was disappointed to read Global Trade Watch Director Lori Wallach’s recent op-ed in The Hill (“Obama’s trade policy opportunity,” March 17, 2010). In the piece, Wallach alleged that NAFTA and similar “failed” agreements caused an $800 billion trade deficit, destroyed 5 million manufacturing jobs, lowered U.S. living standards and benefited a few at the expense of many.

Wallach’s opinion is exactly contrary to what the facts show.

ADVERTISEMENT
The fact is that U.S. free trade agreements (FTAs) have never been a significant factor in the U.S. trade deficit, and over the past two years FTAs have resulted in a U.S. manufactured goods surplus of nearly $50 billion. That’s right — according to the Census Bureau data for manufactured goods exports in 2008-’09, we sold our trade agreement partners nearly $50 billion more manufactured goods than we bought from them. 

There is no question the United States has a trade problem, but it is not caused by FTAs. Our challenge is with oil imports and with countries where we do not have trade agreements. While racking up a $50 billion manufactured goods surplus with our FTA partners over the past two years, we suffered an $820 billion manufactured goods deficit with the rest of the world. 

Consider NAFTA and the assertion that it cost millions of manufacturing jobs. In reality, Labor Department data show that for almost a decade after NAFTA, the United States gained nearly a half-million manufacturing jobs. The big manufacturing employment loss didn’t begin until 2001. What Wallach failed to mention in her opinion was that the manufactured goods deficit with NAFTA barely budged after 2001 while nearly doubling with the rest of the world. Jobs displaced by imports from NAFTA were offset by the jobs gained from exports.

True, the overall deficit with NAFTA has soared since 2001 — again, the result of oil imports, not manufactured goods. Growing oil imports do not cost manufacturing jobs, and aside from energy imports, the deficit is virtually unchanged. The deficit — and the trade problem — is with countries where we do not have FTAs, such as China, which accounts for three-quarters of our manufactured goods deficit.

FTAs are also tarred by alleging large agribusinesses and “job offshoring multinationals” are “the few beneficiaries” of those agreements — implying that trade agreements don’t work for most of America. Again, the facts tell a different story.  Census Bureau data show 95 percent of U.S. exporters to NAFTA are small and medium-sized firms. NAFTA is by far the largest export market for America’s smaller companies; their exports to NAFTA grew 50 percent faster than large companies in the past five years, and NAFTA is the largest export market for 41 states.

What about CAFTA, which opponents assured Congress would result in huge U.S. job losses? U.S. manufactured goods went from consistent deficits before CAFTA to a surplus that has totaled over $12 billion since the agreement. What about Peru? Peru is another example of the misinformation spread by Wallach and others. The U.S. has moved into a surplus with Peru.

The fact is that President Barack Obama said he wants to double exports in the U.S. in the next five years and create at least 2 million new jobs. He will not achieve this goal with the policies in the “TRADE” Act Wallach supports, which would wipe out existing FTA surpluses, give away America’s environmental technologies and the jobs associated with them, and cost countless billions in lost exports as its onerous provisions prevent other countries from negotiating with us. And, he will not achieve it by continuing to sit on the sidelines while the Europeans and others actively negotiate deals with Brazil, Canada, India, Vietnam and others.

To achieve his goal, the president must call for immediate passage of the three pending FTAs and open more foreign markets through rapid negotiation of additional fair and reciprocal trade agreements. Coupled with export promotion, a fairly valued currency and competitiveness-enhancing policies like a strengthened and permanent R&D credit and lower corporate taxes, we can double our exports and create millions of jobs.

Vargo is vice president for international economic affairs at the National Association of Manufacturers.