Any U.S.-Kenya FTA Must Build from Floor Set by New NAFTA

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch

Note: At a meeting today at the White House, Kenyan President Uhuru Kenyatta and U.S. President Donald Trump announced that the two countries intend to launch negotiations for a bilateral Free Trade Agreement (FTA).

Any new U.S. trade agreement being negotiated from scratch – whether it is with Kenya, the United Kingdom, European Union or other nations – must build from the floor set by the new North American Free Trade Agreement (NAFTA).

Trying to fix an existing bad deal like NAFTA to reduce its ongoing damage is very different from creating a truly good trade deal that generates jobs, raises wages and protects the environment and public health.

Any new U.S. trade pact, including with Kenya, must build on the floor set by the new NAFTA, meaning no special protections for foreign investors or Big Pharma, stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, binding climate standards, enforceable rules against currency cheating and no limits on the protections needed to ensure that our food and products are safe, our privacy is protected, monopolistic online firms are held accountable and big banks do not crash the economy again.

One question is why Kenya would want to take on take on a raft of new obligations under a U.S. FTA when it already enjoys largely duty-free access to the U.S. market under the African Growth and Opportunity Act (AGOA).

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Trade Deficit in Trump’s Third Year Is 14% Higher Than When He Took Office, Not Quickly Eliminated as He Promised as a Candidate

Drop of $28 Billion in U.S. Goods and Services Deficit in 2019 Relative to 2018 Explained by $44 Billion Improvement in U.S. Energy Trade Balance

Contrary to candidate Donald Trump’s pledge he would quickly end the U.S. trade deficit, today’s release of annual 2019 trade data show the overall U.S. goods and services deficit in Trump’s third year in office is 14% ($77 billion) larger than the deficit in 2016, the last year of the Obama administration. (Figures are inflation-adjusted* In nominal terms, the overall 2019 goods and services deficit 22% ($109 billion) larger than in 2016.)

Given the trade deficit has increased during Trump’s presidency, today the administration is spotlighting the drop in the 2019 deficit relative to the deficit in 2018, but:

  • A $36 billion decline in U.S. oil imports and an $8 billion increase in oil and gas exports – a $44 billion improvement in the U.S. energy trade balance relative to 2018 – entirely explains the overall $43 billion decline in the U.S. goods trade deficit between 2018 and 2019. The improvement in the energy trade balance also is considerably larger than the decline in the overall U.S. goods and service deficit of $27 billion or 4% – from $646 billion in 2018 to $619 billion in 2019. The energy trade balance shift is not a sustainable way to decrease the U.S.-world trade deficit and poses serious climate change threats.
  • The 2019 non-energy goods trade deficit is up $1 billion relative to 2018 and up 17% ($122 billion) relative to the end of the Obama administration.
  • The 2019 manufacturing trade deficit in Trump’s third year is up 14% ($130 billion) relative to 2016, the last year of the Obama administration. Because these are the inflation adjusted terms, so they represent the growth in the deficit in constant December 2019 dollars.
  • The sizeable 2019 decline ($82 billion) in the goods trade deficit with China relative to 2018 was countered by a $39 billion increase in the goods trade deficit with the rest of the world. (The China goods deficit dropped from $432 billion in 2018 to $350 billion in 2019 while the rest of the world goods trade deficit increased from $469 billion in 2018 to $508 billion in 2019.) Economists note that such “trade diversion” is driven by imbalances in currency values: While tariffs on Chinese goods may promote a decline in Chinese imports to the United States, deficits with the rest of the world increase. This is likely to continue while the U.S. dollar remains unsustainably high in value, in part because countries such as China hold massive dollar reserves, while other countries’ currencies remain undervalued. Note: The U.S. goods trade deficit with China in 2018 was the largest ever recorded, at $432 billion, up from $396 billion in 2017. This compares to $373 billion in 2016, Obama’s last year.

“Donald Trump has not delivered on the trade promises so central to his 2016 victory in Midwest states: The U.S. trade deficit is up significantly during Trump’s presidency, U.S. job outsourcing has continued and the manufacturing sector’s four-year employment boom that started two years before he took office flatlined in 2019,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

The U.S. goods trade deficit with North American Free Trade Agreement partners Mexico and Canada increased to $243 billion in 2019 – up 31% and $58 billion since the start of the Trump administration. As Trump stonewalled congressional Democrats for a year before reopening and rewriting the revised NAFTA that he signed in 2018 to remove giveaways to Big Pharma and strengthen anti-outsourcing terms, the deficit grew 10% ($23 billion) between 2018 and 2019.

*Data Note: Trade data is sourced from the U.S. Census Bureau. We present deficit figures adjusted for inflation to the base month of December 2019 and expressed the data in constant dollars so the figures represent actual changes in the trade balances. We also offer the “nominal” figure, which is the number you will see in the U.S. Census Bureau data for figures earlier than 2019. Some economists view the nominal data as more accurately reflecting the overvalued U.S. dollar. “Manufacturing” is defined by BEA’s scope for manufacturing trade flows.  

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Ongoing Job Outsourcing, Jump in Trade Deficit During Trump Era Clash With Expected Trade Triumphalism During SOTU

Trump Betrayed Additional Campaign Trade Promises: Serial Job-Outsourcing Firms Get New Federal Contracts, Manufacturing Sector Slides Into Recession

President Donald Trump is likely to focus on trade in his State of the Union address. Yet, he has not delivered on the pledges that were central to his 2016 victory in key Midwest swing states: U.S. job outsourcing has continued, the manufacturing sector’s four-year employment boom that started two years before he took office flatlined in 2019 and the U.S. trade deficit rose 19% in inflation-adjusted terms (25% in nominal terms) relative to the end of the Obama administration.

Trump is likely to tout what he calls a “phase 1” China deal and the new North American Free Trade Agreement (NAFTA), which finally passed after Democrats forced him to reopen and redo the deal he signed in 2018 to remove giveaways for Big Pharma that would have locked in high drug prices and strengthen terms to counter outsourcing. But for the wide swath of American voters outside Trump’s base of whatever-he-says believers – namely the voters he must persuade to support him – decisions will be made based on the factors that affect their daily lives, not the inside-the-Beltway news about  trade deals being completed. Thus, for instance, many people know they did not get the tax cuts they were promised and have seen more firms outsource jobs – whether or not they know that Trump’s tax bill incentivized more outsourcing by providing a major tax cuts for firms that move offshore.

  • Tens of thousands more U.S. jobs have been government-certified as lost to outsourcing during the Trump era. This includes outsourcing by General Motors, Boeing, Honeywell, Siemens, IBM, Hewlett Packard, United Technologies (the Carrier plant candidate Trump insisted would not leave), Caterpillar, Electrolux, General Electric, Harley-Davidson, Honeywell, Kohler, Intel, Thompson Reuters, AT&T, Dun & Bradstreet, Verizon and Ministry Health. Ford and Nabisco also have outsourced under Trump but have not yet been processed on the certified list.
    • The new NAFTA will not bring back hundreds of thousands of jobs: Nothing makes that clearer to voters than recent U.S. layoffs and new investment in Mexico by U.S. auto makers. GM is closing numerous U.S. plants while making popular models in Mexico. Ford is even making its new Mustang electric SUV in Mexico – the first Mustang not to be made here.
  • Manufacturing job growth hit a wall in 2019 as the sector slid into recession. Manufacturing job creation nearly stopped after a job growth boom that started two years before Trump was elected. December 2019 actually saw a contraction, with 12,000 manufacturing jobs lost compared to November 2019. Late last year, an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading (for December 2019) since the June 2009 financial crisis. The PMI is up slightly in January 2020, but excluding periods in 2013 and 2016 has not been so low since 2009. The U.S. manufacturing sector was in a technical recession for the last two quarters of 2019.
  • During the Trump administration, the overall U.S. goods and service trade deficit with the world rose 19% in inflation-adjusted terms (25% in nominal terms) relative to the last year of the Obama administration from $542 billion to $646 billion ($503 billion to $628 billion nominally). The U.S. trade deficit in goods increased from $792 billion in 2016 to $901 billion through 2018 in inflation adjusted terms (or $735 billion to $875 billion in nominal terms). When the annual 2019 trade data are released later this week, the 2019 manufacturing trade deficit is expected to be more than 12% above that in 2016. (The Census data is released Feb. 5, 2020.)

Year (11-month comparisons - 2019 data released on 2/5/2020)

U.S. Manufacturing Trade Deficit with World

2016

$853.9 billion

2017

$896.2 billion

2018

$968.5 billion

2019

$962.9 billion (12.8% higher than 2016)

  • Dramatically lower U.S. oil imports and growth in U.S. oil and gas exports will likely result in the overall 2019 U.S. trade deficit declining relative to 2018 even as it will remain significantly higher than in 2016. The increase in the U.S. oil and gas trade balance will be more than $41 billion – larger than entire 2018-2019 decline in the U.S. trade deficit with China, which will be around $39 billion. The energy trade balance shift is not a sustainable way to decrease the U.S.-world trade deficit and poses serious climate change threats.
  • The U.S. goods trade deficit with the rest of the world jumped 22% in real terms – from $323 billion in 2016 to $443 billion in 2019 during the 11-month period for which data is available even as the U.S. goods trade deficit with China is projected to decline from 2018 to 2019.
  • Economists note that imbalances in currency values drive this trade diversion phenomena. While tariffs on Chinese goods may promote a decline in Chinese imports to the United States, growing deficits with the rest of the world increase. This is likely to continue while the U.S. dollar remains unsustainably high in value, in part because countries such as China hold massive dollar reserves, while other countries’ currencies remain undervalued.
  • Contrary to his campaign promises, Trump has rewarded firms that outsourced jobs with lucrative government contracts. The list is sizable. Consider just the state Trump visited last week: In December 2018, the Siemens plant in Burlington, Iowa, closed after 148 years of operation. The plant closure eliminated 107 jobs, which was part of a nationwide loss to outsourcing of 1,800 jobs by Siemens. But during 2019, Siemens received $877,354,618 in federal contracts.

Firms That Have Caused TAA-Certified Job Losses in Iowa

Value of Federal Contracts Received in Last 12 Months

Siemens

$877,354,618

Verizon Communications

$754,077,723

United Parcel Service (UPS)

$637,292,359

Hewlett Packard

$265,824,579

Cummins

$255,917,252

Cargill

$184,535,591

Delta Air Lines

$141,014,806

John Deere

$18,517,349

Bayer Pharmaceuticals

$6,578,386

  • Many American did not get Trump’s promised tax cut. Will they connect Trump’s tax bill with continuing job outsourcing? If a firm shuts down production in the United States and moves to Mexico, its U.S. federal tax rate is cut in half. (A firm in the U.S. would pay a 21% corporate tax rate, while offshore income is taxed at a 10.5% rate.)
  • It remains to be seen if what the White House is selling as a “phase 1” China trade agreement will incentivize more job outsourcing or translate into positive changes in trade flows or Chinese policies.
    • The China agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs.
  • China’s action since the deal’s announcement suggest the promise of one-time increased purchases of $50 billion in energy supplies, $35 billion in services, $32 billion in agricultural goods and $80 billion in manufactured goods may prove elusive.

# # #

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Trump to Visit Michigan, Iowa: His Zeal to Tout His Trade Agenda Complicated by Agricultural Export Declines, Ongoing Auto Sector Job Outsourcing and New Federal Contracts to Serial Job-Outsourcing Firms

President Donald Trump is very keen to talk trade to distract from his impeachment trial. Central to his victory in key Midwest swing states were his pledges to stop job outsourcing, rebuild American manufacturing and end the job-killing trade deficit. He’s off to Michigan and Iowa after yesterday’s signing ceremony for the new North American Free Trade Agreement (NAFTA) and last week’s preliminary China trade deal. But his impeachment-distraction trade mission is complicated by some inconvenient facts:  

  • Tens of thousands more U.S. jobs have been government-certified as lost to outsourcing during the Trump era. This includes outsourcing by General Motors, Boeing, Honeywell, Siemens, IBM, Hewlett Packard, United Technologies, Caterpillar, Electrolux, General Electric, Harley-Davidson, Honeywell, Kohler and Intel Thompson Reuters, AT&T, Dun & Bradstreet, Verizon and Ministry Health. Verizon, Ford and Nabisco also have outsourced under Trump, but have not yet been processed on the certified list.
  • Manufacturing sector job growth hit a wall in 2019, as the sector slid into recession. Manufacturing job creation nearly stopped after a job growth boom that started two years before Trump was elected, while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since the June 2009 financial crisis days. The U.S. manufacturing sector has been in a technical recession for the past two quarters.
  • The overall U.S. trade deficit increased 14% in Trump’s first two years. Despite expectations that the 2019 deficit will be smaller, the manufacturing sector deficit will be up again, while the overall decline reflects a jump in U.S. exports of oil and gas and lower oil imports. During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.
  • The new NAFTA will not bring back hundreds of thousands of jobs, as Trump nonsensically claims. Nothing makes this clearer than recent developments in the U.S. auto sector. Post-NAFTA renegotiation, U.S. auto companies have announced plans to expand production in Mexico. GM is closing numerous U.S. plants while making popular models in Mexico. Ford is even making its new Mustang electric SUV in Mexico – the first Mustang not to be made here. Over time, the labor standards and enhanced enforcement terms Democrats forced into the new NAFTA may help raise wages in Mexico, and this also may reduce U.S. corporations’ incentives to outsource more U.S. jobs to Mexico to pay workers less.
  • Contrary to his campaign promises, Trump has rewarded firms that have outsourced jobs with lucrative government contracts. Sadly there are many instances, but consider a state on today’s trip: In December 2018, the Siemens plant in Burlington, Iowa, closed after 148 years of operation. The plant closure eliminated 107 jobs, as part of a nationwide loss to outsourcing of 1,800 jobs by Siemens. During 2019, contracts for $877,354,618 were granted to Siemens.

Firms That Have Caused TAA-Certified Job Losses in Iowa

Value of Federal Contracts Received in Last 12 Months

Siemens

$877,354,618

Verizon Communications

$754,077,723

United Parcel Service (UPS)

$637,292,359

Hewlett Packard

$265,824,579

Cummins

$255,917,252

Cargill

$184,535,591

Delta Air Lines

$141,014,806

John Deere

$18,517,349

Bayer Pharmaceuticals

$6,578,386

 

  • Trump’s tax bill promotes more outsourcing. If a firm shuts production in the United States and moves to Mexico, their U.S. federal tax rate is cut in half. (A firm in the U.S. would pay a 21% corporate tax rate, while offshore income is taxed at a 10.5% rate.)
  • On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies, and the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive.
    • Chinese purchasing agency commodity orders in early January did not reflect a shift to U.S. purchases, while Chinese officials have said they will not increase agricultural import quotas.
    • The China agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs.
  • The government has certified tens of thousands of Michigan workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that the TAA certified for China job loss in Michigan are Yale Lift-Technologies, Lear Corporation, Chrysler, Ameriwood Industries, and A123 Systems LLC. The top five firms certified for NAFTA job loss in Michigan are Tyco Electronics, Lear Corporation, Copper Range Co., Collins and Aikman and Kraft Foods. As well, Chrysler, Ford and General Motors all have extensive Michigan TAA certifications for production relocation that do not specify to what country the work has been relocated.
  • The government has certified tens of thousands of Iowa workers as trade job-loss victims under TAA. The top five firms that the TAA certified for China job loss in Iowa are Maytag, Ocwen Loan Servicing, TMK-IPSCO, Lands’ End, and IMI Cornelius. The top five firms certified for NAFTA job loss in Iowa are Eaton Corporation, John Deere, GFSI, Intier Automotive Seating of America and International Automotive Components.

Data Notes: Deficit figures are adjusted for inflation to the base month of December 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to December 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. The TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, the TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here. The federal contract data is sourced from usaspending.gov.

For more information visit State-by-State Outcomes of NAFTA.

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New NAFTA Signed Into Law Only After Democrats Force Trump to Rewrite His 2018 NAFTA 2.0 Deal to Remove Big Pharma Giveaways, Add Better Labor and Environmental Terms

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: Today, President Donald Trump signed the implementing legislation for the revised North American Free Trade Agreement (NAFTA). This follows passage in the U.S. Senate by a margin of 89-10 and in the U.S. House of Representatives by a margin of 385-41 with 193 Democrats and 192 Republicans supporting. The White House did not invite any congressional Democrats to the 400-person signing event. By gaslighting the Democrats central role in creating a new NAFTA, Trump has generated new attention to the reality that the revised NAFTA deal he signed in 2018 was DoA in Congress and Democrats forced Trump to reopen that deal and rewrite it so that it might actually counteract some of NAFTA’s ongoing damage.

Donald Trump has a new NAFTA to sign into law today only because congressional Democrats forced him to reopen the NAFTA 2.0 deal he signed in 2018 to remove Big Pharma giveaways that would have locked in high medicine prices and to strengthen labor and environmental terms so a new NAFTA might counter outsourcing.

The corporate-rigged NAFTA 2.0 deal that Trump signed in 2018 betrayed his campaign promise to fix NAFTA and was “dead on arrival” in Congress. It included new Big Pharma giveaways that would have locked in high drug prices, making it worse than the original, and labor and environmental terms too weak to counteract NAFTA’s outsourcing of jobs and pollution.

Trump is desperate to pretend that this is his victory, but Public Citizen’s new Timeline of #ReplaceNAFTA Advocacy shows that the new NAFTA exists only thanks to relentless work by House Democrats, unions, consumer and faith groups, and activists nationwide who forced improvements to the 2018 deal Trump signed.

The unusually large, bipartisan congressional votes for the “revised revised” NAFTA show that to be politically viable, U.S. trade pacts no longer can include broad monopoly protections for Big Pharma or extreme corporate investor privileges and must have enforceable labor and environmental standards.

After congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage to workers and the environment.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims, despite U.S. auto manufacturers’ recent announcements that they plan to increase production in Mexico. This includes Ford’s decision to make its new Mustang electric SUV in Mexico. while GM has closed U.S. auto plants even as it has shifted production of its most popular vehicles to Mexico.

One important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic policies or actions violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other safeguards and bolster countries worldwide seeking to exit the illegitimate ISDS regime. 

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first. Trying to fix an existing bad deal like NAFTA to reduce its ongoing damage is very different from creating a truly good trade deal that generates jobs, raises wages and protects the environment and public health.

Any new trade deals, including with the European Union and United Kingdom, must additionally include binding climate standards, even stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, and enforceable rules against currency cheating. And any new deals must not limit the protections needed to ensure our food and products are safe, our privacy is protected and monopolistic online firms are held accountable, and big banks do not crash the economy again.

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Broad Bipartisan Congressional Votes on Revised NAFTA Cement New Floor for Trade Pacts: Pharma Giveaways, Extreme Investor Rights in Past Pacts Are Out, Better Labor and Environmental Terms In After Democrats Forced Trump to Redo His 2018 NAFTA 2.0 Deal

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The U.S. Senate today passed the revised North American Free Trade Agreement (NAFTA) by a margin of 89 to 10. This follows passage in the U.S. House of Representatives by a margin of 385 to 41 in December 2019.

The unusually large, bipartisan votes in the Senate and House on the revised NAFTA set a new standard that to be politically viable, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopoly protections for Big Pharma and must have enforceable labor and environmental standards, in contrast to the 2016 Trans-Pacific Partnership, which never got close to congressional majority support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as creating a good trade agreement that creates jobs, raises wages and protects the environment and public health. That would additionally require climate provisions, stronger labor and environmental terms, and truly enforceable currency disciplines, and not limit consumer protections for food and product safety and labeling, the service sector, online platforms and more.

The NAFTA 2.0 deal that President Donald Trump initially signed in 2018 betrayed his campaign promise to fix NAFTA: It included new Big Pharma giveaways that lock in high drug prices, making it worse than the original, and its labor and environmental terms were too weak to counteract NAFTA’s outsourcing of jobs and pollution.

However, after congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage to workers and the environment. Although the new deal still includes problematic terms, the alternative is status quo NAFTA, not a more improved deal.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims. Nothing makes that clearer than U.S. auto manufacturers’ recent announcements that they plan to increase production in Mexico – from Ford’s decision to make its new Mustang electric SUV in Mexico to GM closing U.S. auto plants while expanding production in Mexico.

One clear and important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic laws, regulations and court rulings violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other public interest policies and send a signal worldwide to the many countries also eager to exit the illegitimate ISDS regime. 

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first.

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Dem Debate: The Data on Iowa’s Ongoing Trade Job Loss, Decline in Ag Exports

With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, the Democratic candidates are likely to talk trade during Tuesday’s debate in Iowa. Below are key trade data points relating to Iowa.

On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.

  • U.S. Department of Agriculture data show that Iowa’s agricultural exports to the world have decreased 23% this year relative to last year –from $4.3 billion in the first 11 months of 2018 to $3.4 billion in the first 11 months of 2019.

  • Iowa agricultural exports to the world are down 8% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office. 

With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.

  • During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.

  • Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.

  • Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era.  Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.

  • The government has certified tens of thousands of Iowa workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for China job loss in Iowa are Ocwen Loan Servicing, TMK-IPSCO, Lands’ End, Maytag and IMI Cornelius. The top five firms certified for NAFTA job loss in Iowa are Eaton Corporation, John Deere, GFSI, Intier Automotive Seating of America and International Automotive Components.

  • Iowa metro areas Department of Labor-certified trade jobs loss:
    Waterloo-Cedar Falls (3,342)                   Cedar Rapids (2,466)
    Newton (2,195)                                         Des Moines (1,878)
    Dubuque (1,162)     
                                  
  • According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.

  • During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a good trade surplus with Mexico and Canada in the top 10 products that Iowa exports to the NAFTA nations. We now have a massive $90 billion deficit in trade of those good with NAFTA nations.

  • The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.

  • Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.

Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

For more information visit State-by-State Outcomes of NAFTA.

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Trump Visits Milwaukee: The Data on Wisconsin’s Ongoing Trade Job Loss, Decline in Ag Exports to China

With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, Trump is likely to talk trade during his Tuesday rally in Milwaukee. Below are key trade data points relating to Wisconsin.

On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.

  • U.S. Department of Agriculture data show that Wisconsin’s agricultural exports to China have decreased 22% this year relative to last year –from $106 million in the first 11 months of 2018 to $82.7 million in the first 11 months of 2019.

  • Wisconsin agricultural exports to China are down 27% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office. 

With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.

  • The government has certified 83,047 Wisconsin workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for trade-related job loss in Wisconsin are Briggs & Stratton, Honeywell, Master Lock, NewPage Corporation and Humana Insurance Company.

  • Some Wisconsin metro areas’ Department of Labor-certified trade jobs loss numbers:
    Milwaukee-Waukesha (22,856)                      Appleton (8,172)
    Green Bay (4,235)                                          Oshkosh-Neenah (3,722)
    Manitowoc (3,676)
  • During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.

  • Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.

  • Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era. Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.

  • According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.

  • During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a goods trade surplus with Mexico and Canada in the top 10 products that Wisconsin exports to the NAFTA nations. We now have a $146 billion deficit in trade of those goods to NAFTA nations.

  • The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed, and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.

  • Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.

Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

For more information visit State-by-State Outcomes of NAFTA.

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NAFTA Vote Reveals New Reality for Trade Deals: Passage Possible Only After Democrats Forced Trump to Cut Pharma Giveaways and Extreme Investor Rights Plus Strengthen Labor and Environmental Terms

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The U.S. House of Representatives today passed the revised North American Free Trade Agreement (NAFTA).

The unusually large, bipartisan vote on the revised NAFTA shows that to be politically viable, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopoly protections for Big Pharma and must have enforceable labor and environmental standards, in contrast to the 2016 Trans-Pacific Partnership, which never got close to majority House support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as creating a good trade agreement that creates jobs, raises wages and protects the environment and public health. That would additionally require climate provisions, stronger labor and environmental terms, and truly enforceable currency disciplines, and not limit consumer protections for food and product safety and labeling, the service sector, online platforms and more.

The NAFTA 2.0 deal that President Donald Trump initially signed in 2018 betrayed his campaign promise to fix NAFTA: It included new Big Pharma giveaways that lock in high drug prices, making it worse than the original, and its labor and environmental terms were too weak to counteract NAFTA’s outsourcing of jobs and pollution.

However, after congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage. Although the new deal still includes problematic terms, the alternative is status quo NAFTA, not a more improved deal.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims. Nothing makes that clearer than U.S. auto manufacturers’ recent announcements that they plan to expand production in Mexico – from Ford’s decision to make its new Mustang electric SUV in Mexico to GM closing U.S. auto plants while expanding production in Mexico.

One clear and important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic laws, regulations and court rulings violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies, largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other public interest policies and send a signal worldwide to the many countries also eager to exit the illegitimate ISDS regime.

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first.

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Lori Wallach Slams Trump Fake Out on Drug Prices

In response to the Trump Administration’s announcement today about allowing some prescription drug imports from Canada, Public Citizen’s Global Trade Watch Director Lori Wallach released the following statement:

“Trump is talking out of both sides of his mouth on this. Access to cheaper drugs from Canada won't help many Americans when Trump is also pushing Big Pharma giveaways that would push up the price of life saving drugs in Canada and lock in high prices here — including skyrocketing the prices of treatments for diabetes, osteoporosis, and heart failure. Ultimately — Trump cares far more about corporate profits than people."

Fast Facts on the revised NAFTA agreement Trump signed last year, but that is up for revision currently in Congress:

  • Requires signatory governments to guarantee pharmaceutical corporations monopoly powers to block generic competition.
  • Requires governments to guarantee 10 years of marketing exclusivity for biologic drugs and provide patent evergreening opportunities for all drugs, blocking competition to bring down prices. 
  • Locks the United States into policies that keep medicines, including critical cancer treatments, outrageously expensive. 
  • Exports our failed prescription drug pricing system to Mexico and Canada.
  • Provides longer monopoly benefits for medicines such as: diabetes treatments Victoza, Saxenda, Glucagon and Ozempic; osteoporosis treatment Forteo; heart failure treatment Natrecor; and short bowel syndrome treatment Gattex.

Public Citizen's Global Trade Watch has joined Congressional Democrats to demand these terms are eliminated before any vote is scheduled on the new deal.

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