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December 10, 2010

U.S. Workers Don't Care if Korea Buys Tomorrow the U.S. Exports Germany Bought Today

Over at the White House blog, U.S. Trade Representative Ron Kirk continues his tendency to play loose with the facts of the U.S. International Trade Commission (USITC) study. He says:

The tariff cuts alone in the U.S. - Korea trade agreement will increase exports of American goods and services by $10 to $11 billion.  We expect this agreement to create 70,000-plus jobs for American workers in a wide range of economic sectors from autos and manufacturing to agriculture.

In reality, the USITC study that the administration has been citing predicts that U.S. exports in the sectors analyzed will increase by $4.8-5.3 billion, but imports will increase by $5.1-5.7 billion due to the Korea FTA. This leads to a net increase in the deficit of between $308 million and $416 million.  The “$10 to $11 billion” figure that Kirk is citing refers to the increase in exports to only Korea, but does not account for declines in U.S. exports to other countries that the FTA will induce. Because of the way that bilateral trade agreements affect global trade flows, about 50% of the increase in exports to Korea are merely U.S. exports to third countries shifting to Korea. In other words, 50% of the “$10 to $11 billion” does not represent new exports, only exports that have changed destination.

Put differently, U.S. workers don't care if Korea buys tomorrow the U.S-made products Germany bought today. This creates no new jobs, although it may increase carbon emissions with the longer shipping times. Couple this with the fact that the USITC shows that U.S. workers’ net exports will be lower after the deal is implemented, and U.S. workers have every reason to oppose this deal.

Furthermore, as much as Ron Kirk hopes that the agreement will create jobs in the auto sector, the government's own projections suggests that jobs will be lost in the auto sector. The study predicts that the auto deficit will increase by $531-708 million ( See our memo on the topic here). Although the USITC model does not allow the total number of jobs in the U.S. economy to change, it predicts that a substantial number of jobs in the auto sector will shift away from autos to other sectors of the economy (see Table 2.4 on page 2-15 in the USITC report). Thus, contrary to Kirk's expectations, U.S. auto workers will be losers in this Korea FTA.

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Comments

Kurt

The industrialization of the US brought to you by Both of our so called parties the dems and repubs! This has been going on for close to two generations and is nothing less than treason to the american worker! The race to the GUTTER brought to you by the Rothschilds and other goons that rule the US through the council of foreign relations. Welcome to serfdom!!!

Kurt

That was ment to say deindustrialization, spell check got me!

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