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March 18, 2011

Debunked FTA Export Claims Continue to Pop Up

In his announcement of the hearing on the Colombia FTA that occurred yesterday, Rep. Kevin Brady alleged that "Since 2000, U.S. exports to the 13 countries with which the United States has implemented trade agreements have grown almost twice as fast as our worldwide exports," but a fair accounting of the export record does not support this claim.

In our September report about the dismal record of U.S. exports to our FTA partners, Lies, Damn Lies, and Export Statistics, we debunked similar claims floated by the Chamber of Commerce and the U.S. Trade Representative. Apparently fair trade opponents think this claim is just too good to let facts get in the way, because it has surfaced again in Rep. Brady's statement.

It seems Rep. Brady is engaging in the same apples-to-oranges comparison trick that we highlighted in our September report (see page 18). If you take the unweighted average growth of exports to FTA partners and compare it to the weighted average growth of exports to the world over 2000-2010, you'll get an FTA growth rate almost twice as high as the growth rate of exports to the world.* Comparing weighted and unweighted averages makes FTAs seem great for U.S. exports, but it's a false comparison.

In fact, an apples-to-apples comparison of exports to FTA partners and non-FTA partners since 2000 shows just the opposite of Rep. Brady's claims: exports to FTA partners have grown at half the pace of exports to non-FTA partners. In inflation-adjusted and trade weighted terms, exports to FTA partners grew at an average annual rate of only 1.5 percent over 2000-2010 while exports to non-FTA partners grew at an average annual rate of 3.8 percent over the same period. The best way to compare the FTA and non-FTA export rates is to use a weighted measure since it weights exports by their value - and thus their importance to U.S. workers who produce the exported goods. However, as we demonstrated in our September report, it is also the case that if you slice it the other way - comparing the unweighted FTA rate against the unweighted non-FTA rate - exports to FTA partners still have grown at half the pace of exports to non-FTA partners. Thus, any way you slice it, exports to FTA partners have lagged behind exports to countries with which we do not have FTAs.

*Since Rep. Brady says "worldwide" exports, here exports to FTA partners are not subtracted out from exports to the world to get the non-FTA export growth rate. Also, Rep. Brady speaks of 13 U.S. FTA partners, but there are 17 FTA partners and all 17 were included in the calculations here. Finally, these numbers are not adjusted for inflation because the unweighted FTA export growth rate would actually be more than twice the weighted worldwide export growth rate if the data was adjusted for inflation, which would be inconsistent with Brady's claims.

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