The China Post yesterday reported that Taiwan and Singapore will begin formal negotiations on a free trade agreement (FTA) to eliminate obstacles to trade between the two economies. This marks just the latest announcement of new negotiations. The European Union, for example, is negotiating with Argentina, Brazil, CAFTA, India, Saudi Arabia, Vietnam, and the United Arab Emirates, among others. Japan, China, Colombia, and others are busily cutting trade deals with each other.
All in all, as of today, the World Trade Organization (WTO) reports that there are 290 FTAs in force around the world. The United States is a party to just 17 FTAs, and is being increasingly isolated as one of the few countries whose manufacturers, farmers, and service providers will face trade barriers around the world – a prescription for export loss and job losses.
All this is because of the mistaken view of the AFL-CIO, observers like Lou Dobbs, and the Global Trade Watch who refuse to let the facts get in their way. They keep saying, “Since NAFTA we have lost five million jobs,” putting the job loss blame on growing manufactured goods deficits “caused by U.S. trade agreements.”
What’s wrong with this picture is that our manufactured goods deficit with our FTA partners hasn’t grown. It is smaller today than in 2000, which is when our job loss started. There was no growing deficit. It shrunk. This is the case whether one looks at the Commerce Department’s correctly calculated figures or the trade opponent’s bloated deficit figures. Either way, the facts show our manufactured goods deficit with our FTA partners is smaller today than when the job loss started. They just don’t get it: The increase in the deficit has been with countries that have NOT entered into FTA agreements with us. That’s where the problem is.
How sad that mythology is allowed to prevail over factual analysis –- and is leading to policies that are killing U.S. jobs rather than supporting them.
Frank Vargo is vice president, international economic affairs, for the National Association of Manufacturers.
[Editor's note: “Due to an editor’s error, an important ‘not’ was omitted. The corrected sentence is: ‘They just don’t get it: The increase in the deficit has been with countries that have NOT entered into FTA agreements with us.”]