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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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February 21, 2013

The 12 Questions about the TPP that President Obama and Prime Minister Abe Do Not Want to Hear this Week

Today Japanese Prime Minister Shinzo Abe arrives in Washington for a Friday meeting with President Obama. A hot item on the agenda is the possibility of Japan joining the Trans-Pacific Partnership (TPP), a U.S. NAFTA-style “free trade” agreement currently under negotiation between 11 Pacific Rim nations. Japan is not now involved in TPP negotiations and Prime Minister Abe’s party, the Liberal Democratic Party (LDP), explicitly campaigned against joining the TPP in the December elections that restored Abe and his party to power.

Recent indications that Abe may contradict those campaign pledges have ignited a torrent of criticism within Japan and prompted the Japanese press to flood the Abe administration with tough questions regarding his TPP intentions. Meanwhile, key Obama constituencies, such as the auto industry and unions, have vocally opposed Japan’s inclusion, while U.S. congressional leaders from both parties have expressed opposition to the entire deal alongside consumer, labor, environmental, public health, Internet freedom and other public interest groups.

Here are 12 questions on the TPP that President Obama and Prime Minister Abe do not want to hear during Abe’s visit this week:

For both Prime Minister Abe and President Obama:

  • The TPP replicates provisions from prior NAFTA-style agreements that empower foreign investors to skirt domestic laws and courts and privately enforce the terms of a public treaty by directly challenging governments’ public interest policies before foreign tribunals to demand unlimited sums of taxpayer compensation. The premise for including such extreme extra-judicial enforcement procedures in past agreements has been that the domestic legal systems of developing country trade partners have not been sufficiently trustworthy. President Obama, do you see Japan’s domestic legal system as not sufficiently trustworthy, or do you plan to exempt U.S. firms operating in Japan from these investor privileges? Prime Minister Abe, I would ask the same question with regard to the U.S. domestic legal system and Japanese firms operating in the United States.
  • The TPP would bar both of your governments from favoring domestic companies with fiscal stimulus, or from requiring that taxpayer dollars be directed toward domestic firms in government procurement. China, meanwhile, remains free to pursue such pro-growth, domestically-focused strategies. If both Japan and the United States intend to compete with China, why would either country benefit from such limiting provisions in the TPP?

For President Obama:

  • In your recent State of the Union, you stated a priority of “making America a magnet for new jobs and manufacturing.” Given that wages in Vietnam are approximately one-third of those in China, how do you see the TPP – a NAFTA-style deal with Vietnam – contributing to your manufacturing growth goals for America?
  • Japan’s powerful rice lobby has successfully pushed Prime Minister Abe’s party to conditionally reject the TPP unless Japan is granted an exemption from tariff cuts on sensitive products like rice. Vietnam, as one of the world’s largest rice exporters and a TPP negotiating party, is unlikely to accept such an exemption unless the United States grants Vietnam greater access to its own sensitive economic sectors, such as the manufacturing sector that you pledged to expand in your State of the Union speech. How do you expect to simultaneously satisfy Japan and Vietnam and grow American manufacturing?  
  • The U.S. auto industry and unions, key supporters of your administration, have rejected Japan’s inclusion in the TPP, citing Japan’s resistance to lowering import barriers on U.S. autos. Have you been able to extract from Japan a commitment to lower these barriers as a precondition to joining the TPP?

For Prime Minister Abe:

  • Your party has stated that it is not interested in joining the TPP unless you are guaranteed that there is no precondition that tariffs must be cut on all products without exception. Given that no such assurance has been given, what do you have to discuss with President Obama regarding the TPP?
  • Given the LDP campaign pledge to protect the national healthcare system, have you been able to extract from the United States a commitment to exempt Japan from the provisions in the proposed TPP text that would extend medicine patents and challenge national drug formularies?
  • Japan’s legal associations have opposed the TPP’s proposed inclusion of investment provisions that would allow foreign corporations to skirt Japan’s laws and courts and directly challenge Japanese domestic policies in foreign tribunals, demanding taxpayer compensation for public interest laws that they claim to be violations of TPP-granted investor privileges. Have you been able to extract a commitment from the United States to exempt Japan from these provisions?
  • Japanese consumer safety groups have opposed proposed TPP rules that would require Japan to accept meat, poultry and other food from the United States and other TPP countries that are deemed to have roughly “equivalent” food inspection systems, even if Japan’s specific food safety requirements were not met. Have you been able to extract a commitment from the United States to exempt Japan from these rules?
  • Japan’s economy relies heavily on the use of existing technologies to spur innovation and growth. Given that the TPP’s proposed text would significantly expand intellectual property protections so as to inhibit open-source usage of existing technologies, have you been able to extract from the United States a commitment to exempt Japan from these rules?
  • Japan’s farm ministry calculates that the TPP would cause a ¥7.9 trillion downfall in Japan’s gross domestic product and the loss of 3.4 million jobs. How do you see the TPP fitting into the economic growth goal that is one of the three pillars of your reform platform? 
  • Have you been able to extract from the United States commitments to exclude rice, beef, pork, dairy, sugar or other sensitive agricultural sectors from the TPP’s tariff-cutting requirement, given the intense anti-TPP pressure exerted by the farmers in these sectors who helped return the LDP to power in December?  Have you been able to extract such a commitment for construction, postal services, insurance or other sensitive service sectors that have also opposed the TPP? 

February 14, 2013

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 increased by 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 ratiothe 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.

U.S. Export Growth Falters under FTAs

Growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the last decade.2 Between 2002 and 2012, U.S. goods exports to FTA partner countries grew by an annual average rate of only 4.8 percent. Goods exports to non-FTA partner countries, by contrast, grew by 6.6 percent per year on average. Since 2006, when the number of FTA partner countries nearly doubled with the implementation of the Central America Free Trade Agreement (CAFTA), the FTA export growth “penalty” has only increased. Since then, average U.S. export growth to non-FTA partner countries has topped average export growth to FTA partners by 46 percent.

Corporate FTA Boosters Use Errant Methods to Claim Higher Exports under FTAs

Members of Congress will invariably be shown data by defenders of our status quo trade policy that appears to indicate that FTAs have generated an export boom. Indeed, to promote congressional support for new NAFTA-style FTAs, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) have funded an entire body of research designed to create the appearance that the existing pacts have both boosted exports and reversed trade deficits with FTA partner countries. This work relies on several methodological tricks that fail basic standards of accuracy:

  • Ignoring imports: U.S. Chamber of Commerce studies regularly omit mention of soaring imports under FTAs, instead focusing only on exports. But any study claiming to evaluate the net impact of trade deals must deal with both sides of the trade equation. In the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically seen under FTAs.
  • Counting “re-exports:” NAM has misleadingly claimed that the United States has a manufacturing surplus with FTA nations by counting as U.S. exports goods that actually are made overseas – not by U.S. workers. NAM’s data includes “re-exports” – goods made elsewhere that are shipped through the United States en route to a final destination. Determining FTAs’ impact on U.S. jobs requires counting only U.S.-made exports.
  • Omitting major FTAs: The U.S. Chamber of Commerce has repeatedly claimed that U.S. export growth is higher to FTA nations that to non-FTA nations by simply omitting FTAs that do not support their claim. One U.S. Chamber of Commerce study omitted all FTAs implemented before 2003 to estimate export growth. This excluded major FTAs like NAFTA that comprised more than 83 percent of all U.S. FTA exports. Given NAFTA’s leading role in the 441 percent aggregate FTA deficit surge, its omission vastly skews the findings.
  • Failing to correct for inflation: U.S. Chamber of Commerce studies that have claimed high FTA export growth have not adjusted the data for inflation. This artificially magnifies claimed FTA export gains.
  • Comparing apples and oranges: The U.S. Chamber of Commerce has claimed higher U.S. exports under FTAs by using two completely different methods to calculate the growth of U.S. exports to FTA partners (an unweighted average) versus non-FTA partners (a weighted average). This inconsistency creates the false impression of higher export growth to FTA partners by giving equal weight to FTA countries that are vastly different in importance to U.S. exports (e.g. Canada, where U.S. exports exceed $244 billion, and Bahrain, where they do not reach $2 billion), despite accounting for such critical differences for non-FTA countries.

Chart: U.S. Trade Deficit Rises by $144 Billion with FTA Partners, Falls by $55 Billion with Rest of the World

FTA Partner

Entry Date

Pre-FTA Trade Balance

2012 Balance

Change in Balance Since FTA

Israel*

1985

($1.0)

($12.4)

($11.4)

Canada

1989

($23.3)

($79.7)

($56.5)

Mexico

1994

$2.5

($101.2)

($103.7)

Jordan

2001

$0.3

$0.5

$0.2

Chile

2004

($1.9)

$7.9

$9.8

Singapore

2004

$0.7

$6.9

$6.2

Australia

2005

$7.2

$19.3

$12.1

Bahrain

2006

($0.1)

$0.4

$0.6

El Salvador

2006

($0.2)

$0.2

$0.4

Guatemala

2006

($0.5)

$1.0

$1.5

Honduras

2006

($0.7)

$0.9

$1.6

Morocco

2006

$0.1

$1.3

$1.2

Nicaragua

2006

($0.7)

($1.7)

($1.0)

Dominican Republic

2007

$0.6

$2.4

$1.8

Costa Rica

2009

$1.2

($5.4)

($6.6)

Oman

2009

$0.5

$0.3

($0.2)

Peru

2009

($0.2)

$1.6

$1.8

Korea

2012

($15.0)

($17.9)

($2.9)

Colombia

2012

($9.8)

($10.3)

($0.5)

Panama

2012

$7.6

$8.7

$1.1

         

FTA TOTAL:

 

($32.7)

($177.2)

($144.4)

Non-FTA TOTAL:

[2006]

($776.1)

($720.7)

$55.4

FTA Deficit INCREASE:  441%             Non-FTA Deficit DECREASE:  7%

Source: U.S. International Trade Commission. Units: billions of 2012 dollars. (*Measured since 1989 due to data availability.)



1The change in the aggregate U.S. trade deficit with FTA partners is found by comparing 1) the combined inflation-adjusted U.S. trade balance in goods for all current FTA partners in the year before the FTA entered into force, and 2) the combined U.S. trade balance with those same countries in 2012. The change in the aggregate trade deficit with non-FTA countries is found by comparing 1) the combined inflation-adjusted U.S. trade balance in goods in 2005 (the year before the median entry date of existing FTAs) for all countries that are not current FTA partners, and 2) the combined U.S. trade balance with those same countries in 2012. All data comes from U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed February 11, 2013. Available at: http://dataweb.usitc.gov/.

2All figures in this section use an inflation-adjusted weighted average to find average annual growth rates of domestic exports for both FTA partner countries and non-FTA partner countries. All data comes from U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed February 11, 2013. Available at: http://dataweb.usitc.gov/.

February 13, 2013

SOTU, TPP, TAFTA -- WTF?

Op-ed by Global Trade Watch Director Lori Wallach, published in The Huffington Post:

Did you notice the two rabid skunks President Obama unleashed at the State of the Union picnic?

Creating American jobs! Rebuilding American manufacturing! Boosting American exports! Promoting innovation! Ensuring strong health and environmental protections! Completing an 11-nation NAFTA-style "free trade" agreement (FTA) called the Trans-Pacific Partnership (TPP) - aka NAFTA with Vietnam? Launch of "free trade" negotiations with Europe long-demanded by multinational corporations to eliminate vital consumer protections - the Trans-Atlantic Free Trade Agreement (TAFTA)?

Two of these things are not like the others. Indeed, TPP and TAFTA would gut many of the most worthy goals included in Obama's SOTU address if the American public and Congress let them come to fruition.

Says who? Well, the official U.S. government trade and employment data, to start with. Since the implementation of our existing FTAs, more than 60,000 U.S. manufacturing facilities have been shuttered and we have lost five million manufacturing jobs - fully one quarter of America's manufacturing jobs prior to the agreements' implementation. Like TPP, these past pacts include investment rules that actually incentivize the offshoring of American jobs.

And, U.S. export growth to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the last decade. The aggregate U.S. trade deficit with FTA partners has increased by more than $144 billion (inflation-adjusted) since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries has decreased by more than $55 billion since 2006 (the median entry date of existing FTAs). Even using the Obama administration's net exports-to-jobs ratio and excluding China trade, the FTA trade deficit surge alone implies the loss of nearly one million American jobs. So, let's do more of the same NAFTA-style pacts, but this time with Vietnam, the low-wage offshoring alternative to China.

Maybe the TPP and TAFTA touting is just pure cynicism. For instance, note that the president did not reiterate his 2010 State of the Union goal of doubling U.S. exports in five years by passing more "free trade" agreements. With two years left, the United States should be 60 percent of the way toward achieving this goal. Instead, the U.S. International Trade Commission annual 2012 trade data released this weekend show that under the sluggish 2012 export growth rate of two percent, we will not achieve the president's goal until 2032.

And, the FTAs that Obama touted in last year's State of the Union address have not created the promised industrial jobs. Rather, U.S. government trade flow data tracking the initial outcomes of FTAs with Korea, Colombia and Panama, which took effect in 2012, show that combined U.S. exports to the three countries during the months of FTA implementation fell four percent relative to the same months of 2011. U.S. goods exports to Korea plummeted by 10 percent and the U.S. trade deficit with Korea grew 26 percent. That equates to thousands of lost U.S. jobs just in the first year of that latest batch of more-of-the-same NAFTA-style deals.

Indeed, the annual U.S. trade deficit in goods excluding oil rose six percent in 2012 to $628 billion, the largest non-oil U.S. trade deficit in the last five years. The U.S. trade deficit with China (even with oil included) broke all past records, topping $321 billion. That Obama more-of-the-same trade agenda is working so well, why not more of the same...

But there's more!

While TPP negotiations have been conducted in extreme secrecy for three years, some texts have leaked, including the intellectual property chapter. It contains extreme SOPA-style copyright enforcement terms that would undermine Internet freedom and innovation. Says who? The Electronic Frontier Foundation and some of Congress' most reliable pro-"free-trade" voters from House Oversight Committee Chair Darrell Issa (R-Cal.) to Senate Trade Subcommittee Chair Ron Wyden (D-Ore.) to Rep. Zoe Lofgren (D-Cal.).

And, that Trans-Atlantic FTA? That's the pet project of the Trans-Atlantic Business Dialogue a club of financial, agribusiness, pharmaceutical, chemical and other U.S. and European multinationals. TAFTA's focus would not be trade per se - border taxes (tariffs) are already low. Rather, these talks are aimed at eliminating a list of what multinational corporations call "trade irritants" but the rest of us know as strong food safety, environmental and health safeguards.

The target list? The strongest consumer and environmental policies on either side of the Atlantic. U.S. firms want Europe to gut their superior chemical regulation regime, their tougher food safety rules and labeling of genetically modified foods and their tougher climate policies. European firms are targeting aspects of the U.S. financial reregulation regime, our stronger drug and medical device safety and testing standards and more.

February 12, 2013

New Legal Analysis Shows How Obama Administration Can Avoid Trade Sanctions by Strengthening Popular Consumer Country-of-Origin Meat Labels Ruled Against by WTO

As May 2013 Deadline Looms, WTO Compliance Process Begins; USDA Sends Draft COOL Regulations to OMB

WASHINGTON, D.C. – The United States can avoid trade sanctions by strengthening consumer labeling rather than gutting the popular county-of-origin labeling (COOL) meat labeling program against which the World Trade Organization (WTO) ruled in 2012, said Public Citizen as it released a new legal analysis prepared for several consumer and farm groups by the trade law firm Stewart and Stewart.

“Ensuring American consumers’ right to know where their meat comes from must be the Obama administration’s priority,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The American public’s antipathy toward our current trade policies would be greatly intensified if a WTO ruling empowered big agribusiness corporations to sell mystery meat here, despite U.S. consumers and Congress demanding these labels on which we all rely in grocery stores nationwide.”

By July 2013, the United States must respond to three 2012 WTO rulings against popular consumer policies, including the country-of-origin meat labels, “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes that was aimed to curb youth smoking. As of May 23, 2013, Mexico and Canada, which attacked the U.S. meat labels at the WTO, can obtain authorization to impose trade sanctions against the United States that would remain in effect until the policy is altered.

The new legal analysis shows how the United States can meet WTO rules by strengthening existing regulations to provide more information and more accurate details to consumers. The U.S. Department of Agriculture sent new draft COOL rules to the Office of Budget and Management on Friday.

Background:  After 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program, Congress enacted mandatory country-of-origin labeling for meat in the 2008 farm bill. The policy requires American retailers to label certain foods with the country (or countries) in which animals were born, raised or slaughtered. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO countries are permitted to apply. Canada and Mexico suggested that the United States should eliminate mandatory labeling and return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food firms play a central role. Neither option would provide U.S. consumers with the same level of information as the current U.S. labels.

View the report here.

February 11, 2013

Obama's Export Promise Falls 18 Years Behind Schedule as Exports Decline under FTAs

USITC Trade Data Shows Obama Goal of Doubling Exports Is Even More Remote Relative to Census Bureau Data, Due in Part to Falling Exports under FTAs with Korea, Colombia and Panama

The Obama administration’s attempt to tout the decline in the overall U.S. trade deficit for 2012 as a trade policy success diverted from the three most critical trends that the annual data revealed:

  • The drop in the overall trade deficit represented an increase in U.S. oil exports and a decrease in oil imports. However, the U.S. deficit in goods excluding oil actually rose six percent in 2012 to $628 billion, the largest non-oil U.S. trade deficit in the last five years. The U.S. trade deficit with China (even with oil included) broke all past records, topping $321 billion.
  • Friday’s 2012 annual trade data from the U.S. Census Bureau, despite using inflated figures that count “re-exports” – goods not produced by U.S. workers, showed that President Obama’s goal of doubling U.S. exports is seriously lagging. Data released over the weekend by the U.S. International Trade Commission (USITC) reveals that Obama’s export growth goal is even more remote - at the sluggish 2012 export growth rate, we will not achieve the president’s goal until 2032, 18 years behind schedule. After removing foreign-made “re-exports” from the Census figures, the USITC data shows that U.S.-made goods exports in 2012 were $210 billion (more than 13 percent) below what Census reported.
  • U.S. exports were particularly disappointing to the three countries with “free trade” agreements (FTAs) that the Obama administration pushed to passage in 2011. Under the Korea, Colombia and Panama FTAs, which took effect in 2012, combined U.S. exports to the three countries fell four percent relative to the same months of 2011. Despite this, the Obama administration is pushing an 11-nation Trans-Pacific Partnership (TPP) FTA based on the same model of the North American Free Trade Agreement (NAFTA). The TPP pact includes Vietnam, the low-wage alternative to China for manufacturing outsourcing.

Goal of Doubling Exports off Track

In his 2010 State of the Union address, President Obama set a goal to double exports over the following five years. With two years left, the United States should be 60 percent of the way toward achieving this goal. Instead, the 2012 Census data, despite being inflated by the inclusion of foreign-made re-exports, showed that we are just 37 percent of the way toward Obama's export growth goal, with U.S. goods exports growing at less than one-sixth of the promised pace in 2012. The USITC data, reporting only U.S.-made exports, shows that we are even farther from doubling exports and, under the sluggish 2012 export growth rate of two percent, will not achieve the president’s goal until 2032, 18 years behind schedule. The picture would be worse were it not for the 2010 export growth spurt – an anomalous and predictable rebound after U.S. exports plunged in 2009 amid the global recession.

2012 Trade Data 1

 

U.S. Exports to Korea Plummet 10 Percent under Obama-Backed FTA

The new USITC data shows that under the FTAs that took effect in 2012 with Korea, Colombia and Panama, combined U.S. exports to the three countries have actually fallen four percent relative to the same months of 2011. U.S. goods exports to Korea declined by 10 percent (more than $3.1 billion) in comparison to 2011 levels for the same months. The U.S. trade deficit with Korea grew 26 percent during this period.

Driving the combined FTA export downfall was the decline in U.S. exports to Korea, by far the largest of the three economies, under the first nine months of the Korea FTA. Despite Obama administration promises that the pact would boost exports, U.S. exports to Korea took a dramatic plunge after the deal took effect in March 2012, and have continued the downward trajectory since. Some of the worst declines were in the sectors the administration touted as prospective “winners” under the agreement. U.S. pork exports to Korea declined 17 percent under the FTA in 2012 relative to the same months in 2011, while beef exports fell 11 percent and poultry exports plunged 40 percent. While U.S. auto exports to Korea have increased four percent under the FTA, U.S. auto imports from Korea have surged 17 percent, causing an 18 percent rise in the U.S. auto trade deficit with Korea.

Overall, growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the last decade. Between 2002 and 2012, U.S. goods exports to FTA partner countries grew by an annual average rate of only 4.8 percent.  Goods exports to non-FTA partner countries, by contrast, grew by 6.6 percent per year on average.

2012 Trade Data 3

 

Beware the Re-Export Data Trap…

As the chart below shows, the U.S. Census Bureau methodology inflates the value of U.S. exports by counting goods that actually are made overseas – not by U.S. workers. These “re-exports” are goods made elsewhere that are shipped through the United States en route to a final destination. Since passage of NAFTA and similar FTAs, re-exports have increased dramatically, causing a growing gap between U.S.-made exports and the inflated export numbers reported by the U.S. Census Bureau.

As a result, the actual U.S. trade deficit in goods has exceeded the re-exports-skewed trade deficit data to an increasing degree, soaring more than 20 percent above the skewed number for the last four years. In 2012, the actual trade deficit exceeded the distorted trade deficit by $170 billion, a difference that implies an additional 1.1 million net U.S. jobs displaced by unbalanced trade, according to a ratio used by the Obama administration.  

2012 Trade Data 2

February 08, 2013

Despite Inflating Exports, Today's 2012 Trade Data Falls Short of Obama's Export Growth Promise

The U.S. Census Bureau just released 2012 trade data showing yet another year of massive U.S. trade deficits. You will not find two critical pieces to the 2012 trade story in the release or the accompanying press reportsthe Census data is skewed in a way that inflates U.S. export levels, and even the inflated export figures show that President Obama’s goal of doubling exports is seriously lagging. 

The U.S. Census Bureau methodology inflates the value of U.S. exports by counting goods that actually are made overseas – not by U.S. workers. These “re-exports” are goods made elsewhere that are shipped through the United States en route to a final destination. Accurately determining the impact of status quo trade policy on U.S. jobs requires counting only U.S.-made exports, which will be quietly reported by the U.S. International Trade Commission (USITC), probably over the weekend. We will send out the USITC 2012 year end data Monday.

As the graph below shows, since passage of the North American Free Trade Agreement (NAFTA) and similar "free trade" agreements (FTAs), re-exports have increased dramatically, causing an increasing gap between U.S.-made exports and the inflated export numbers reported by the U.S. Census Bureau. As a result, the actual U.S. trade deficit in goods has exceeded the re-exports-skewed trade deficit data to an increasing degree, soaring more than 20 percent above the skewed number for the last three years. In 2011, the actual trade deficit exceeded the distorted trade deficit by nearly $150 billion, a difference that implies an additional one million net U.S. jobs displaced by unbalanced trade, according to a ratio used by the Obama administration. 

Re-exports

But even with the inflated exports figures, the United States is falling significantly behind the export growth goal set by President Obama, as shown in the graph below. In his 2010 State of the Union address, President Obama set a goal to double exports over the following five years. With two years left, the United States should be 60 percent of the way toward achieving this goal. Instead, the new 2012 exports data, despite being inflated by the inclusion of foreign-made re-exports, shows that we are just 37 percent of the way toward Obama's export growth goal, with U.S. goods exports growing at two-thirds of the promised pace. Though the 2010 export growth spurt came close to promised levels, this rise owed largely to a predictable rebound after U.S. exports plummeted in 2009 amid the global recession. The 2012 data shows far more lackluster export growth.

U.S. exports have been particularly sluggish to countries that have an FTA with the United States. Indeed, under the FTAs with Korea, Colombia and Panama, which the Obama administration pushed to passage in 2011 and which were implemented in 2012, U.S. goods exports to the three countries have actually fallen relative to the same months of 2011. Overall, growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 44 percent over the last decade. 

Re-exports promise
Stay tuned for a press release from us on Monday that will report the more accurate 2012 trade data and what it means for U.S. jobs.

February 05, 2013

25 U.S. Groups Send Letter to U.S. Trade Negotiator to Call For Civil Society Engagement at Sweeping TPP Talks

7986556189_1d70f55e0b

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.

++

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

 

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