Now that the House Ways & Means Committee and the Senate Finance Committee have held mock markups of the Korea, Colombia, and Panama FTAs, we could see votes on the FTAs very soon. One of the major unknowns at this point is whether trade adjustment assistance (TAA, or aid to trade-displaced workers) will be included in the implementing legislation for one of the FTAs. Earlier in the debate, President Obama appeared to have secured an agreement from Republicans to allow TAA to move forward – now, things seem less sure.
Now, more than ever, it’s important that Congress and the public be well informed about the likely impact of these deals, which are modeled on NAFTA.
Unfortunately, there has been too little reporting on the deals, and even less that is accurate and balanced. In the interests of accurate reporting, we're launching a new feature on the blog: Trade-ifact. (Think Politifact, but for Trade.)
We will highlight instances where reporters have gotten the facts wrong on the FTAs, starting with a roundup of the reporting of the last two weeks. We'll blog periodically about this accuracy-in-FTA-reporting issue as more FTA stories with errors are published.
The main factual errors that we have found time and again are:
- Misquoting export projections and quoting export and jobs projections without a discussion of the likely import increases and job losses. This is like looking at your family’s budget, but only looking at your paycheck, and not what you owe. Like too many of our households, our nation buys more than it makes, resulting in a massive trade deficit. Reporters should be getting this right, and examining the likely impact of our trade policy on the deficit.
- Describing Obama's supplemental deals over the last few months as successfully resolving concerns with the deals. The key stakeholders demanding changes to the deal are not satisfied with the side deals. The Korea, Panama and Colombia pacts still represent the failed NAFTA model as when Bush negotiated them.
- Describing the TAA deal as an extension of TAA. In reality, the TAA program will be cut relative to 2002 and 2009 levels.
The most common factual issue that we have found in the recent reporting on the FTA involves the U.S. International Trade Commission (USITC) projections of changes in exports and imports due to the FTAs. Reporters often quote the wrong numbers from the USITC reports. Reporters say that the Korea FTA will lead to $11 billion in new U.S. exports (and add in $1-2 billion for Colombia and Panama).
In fact, this is only the increase in projected exports to these countries. But the FTAs will also increase imports, and the USITC projects that changes in trade patterns (including to other countries like China) will mean that, on net, these deals will increase imports by $482 million more than they will increase exports, meaning that net exports would decline by $482 million. In other words, the U.S. global trade deficit will increase by $416 million under the Korea FTA, and $66 million under the Colombia FTA. Because the Panamanian market is so small, the USITC was not even able to provide estimates for that deal.
We've found numerous factual issues in the major national publications and news wires over the last two weeks. Here they are:
Binyamin Appelbaum (NYT):
White House and Congress Clear Trade Deal Hurdle (6/28/2011)
While Appelbaum’s lede characterizes the TAA deal as an agreement to “reinstate benefits”, later in the article he (thankfully) describes how TAA is cut relative to historic levels.
In the article, he cites the $10.9 billion exports number for the boost in exports under the Korea FTA, rather than reporting that the USITC projects that net exports will decline by $416 million under the FTA. He does note, however, that "the trade agreements also are likely to put some Americans out of work as cheaper imports from the three countries undermine existing American manufacturers." This is a useful caveat, but it would have been even more useful to put a number on it, to show that it is not only “some Americans” that will be hurt, but that more Americans will be hurt than there will be Americans that will benefit.
Republicans Boycott a Hearing on Trade (6/30/2011)
Appelbaum’s next story was less balanced, citing a $12 billion new exports number, and describing TAA financing without describing how it was being cut.
Richard Cohen (Politico):
Breakthrough on trade may come (6/27/2011)
Cohen claims that the administration's plan for TAA was to "revive" TAA, when in reality the plan is to cut benefits and tighten eligibility.
Trade agreement meeting blocked by GOP (6/30/2011)
Cohen describes the TAA deal as an “extension,” without noting that TAA will be cut.
He also writes, "As they touted the possible addition of 250,000 jobs from the trade deals, Democrats ignored the fact that many of them and their allies in organized labor have continued to attack the agreements for creating job losses at home. A buoyant Democratic aide said that that he didn’t know whether to welcome the partisan victory or lament the legislative failure." While this makes clear that the numbers are contested, it does not explain the source of these numbers. As we explain here, these numbers are based on a radical misinterpretation of President Obama's statements, among other errors.
Mark Drajem (Bloomberg):
Drajem quote the bilateral export numbers from the USITC report on the Colombia FTA without mentioning the projected impact upon imports, or that the overall trade deficit will increase with the deal. He also describes Obama's demands on TAA as being to "renew" TAA rather than cut its funding levels.
Obama Lures Trade-Deal Support From Business (6/29/2011) (with Eric Martin)
Drajem claims that, "Obama reworked the three free-trade agreements completed by his predecessor, George W. Bush, in response to concerns among Democrats on issues such as labor rights," ignoring the fact that Democrats' concerns on the trade deals were not adequately addressed.
Ticked-Off Republican Senators Block Session on Three U.S. Trade Accords (6/30/2011) (with Eric Martin)
Eric Martin (Bloomberg):
Senate Panel Backs S. Korea Trade Pact (7/7/2011) (with William McQuillen)
Martin describes the TAA deal as renewing aid. In fact, the TAA deal with cut aid to workers displaced by trade.
He also writes that "The South Korea deal would boost U.S. exports by as much as $10.9 billion a year when in full effect, and the accord with Colombia would increase exports by as much as $1.1 billion, according to the U.S. International Trade Commission." The USITC actually predicts that the Korea and Colombia FTAs will lead to a fall in net exports of $482 million.
House to Debate Trade Accords Minus Worker Aid (7/5/2011)
Martin writes that the administration has requested a renewal of TAA, but the administration's proposal is to cut benefits and curtail eligibility for TAA. He also repeats the $12 billion export claim.
Julie Pace (AP):
Breakthrough on trade could clear way for vote (6/28/2011)
Pace writes that the proposed deal on TAA would be a "renewal" of TAA rather than the cut in funding that it is.
In this article, however, Pace accurately describes the TAA deal, writing that "The extension agreed to in negotiations is smaller than the 2009 package and would continue through 2013."
Jim Abrams (AP)
House panel to take up 3 trade agreements (7/5/2011)
Abrams reports that the Obama administration "has also demanded that the trade package be linked to renewal of expired sections of the Trade Adjustment Assistance program," but the administration's plan is to cut TAA benefits.
House and Senate panels take up 3 trade bills (7/7/2011)
In this article, Abrams correctly describes in detail the cuts to the TAA program under the administration proposal, but he claims, "Economists say the trade pacts...could increase U.S. exports by $13 billion a year and create tens of thousands of jobs." The USITC reports say that the Korea and Colombia FTAs will result in a reduction in net exports of $482 million.
Unsurprisingly (given the finding of an increased trade deficit), no credible study has found that “tens of thousands of jobs” would be created. As we explain here, the administration has claimed that 70,000 jobs would be “supported” by the Korea FTA. But this number is highly misleading: it appears to pair the Department of Commerce’s 2008 estimate (that 6,666 jobs are supported per billion in goods exports), and with the USITC’s projections of gross (not net) export numbers. These are two completely different methodologies, and the USITC study does not find any increase in jobs. However, if the administration were to consistently apply Commerce methodology to the USITC’s methodology, they would find a loss of jobs.
Tom Barkley (Dow Jones):
Senate Finance Panel Reschedules Debate Of Free-Trade Agreements For Thursday (07-06-11)
Barkley repeatedly refers to the "renewal" of TAA under the administration's proposal, but TAA benefits are actually being cut.
Rep Camp: Will Advance Trade Pacts, Job Training At Same Time If Delinked (7/7/2011) (with Kristina Peterson)
Barkley again describes the TAA deal as a "renewal" rather than a reduction in benefits.
Senate Finance Chair Signals Flexibility On Trade Timeline (7/7/2011) (with Kristina Peterson)
In this article, Barkley calls the TAA deal an "extension" - different wording, but still the same problem with inaccurately describing the TAA deal.
Retraining Funds Snarl Trade Bills (7/8/11) (for WSJ, with Kristina Peterson)
Barkley writes that the three FTAs "could boost U.S. exports by $13 billion a year," but, as noted above, the official government estimates of the Korea and Colombia FTAs project that net exports will fall by $482 million under the two pacts. No overall estimate was made for Panama.
And, once again, Barkley characterizes the TAA deal as renewal of the program, even though benefits will be cut.
Doug Palmer (Reuters):
Palmer describes the TAA proposal as an "extension" of TAA, though later in the article he quotes Rep. Boehner's spokesperson as saying that the TAA is a "scaled-back version", which is closer to the truth.
However, Palmer claims that "The deals could boost U.S. exports by $13 billion", but net exports are actually expected to decline by $482 million under the Colombia and Korea FTAs, according to the USITC (recall there was no overall USITC prediction for Panama).
Republicans block action on Bush trade pacts (6/30/2011)
Palmer again misleadingly claims that the three trade deals will boost U.S. exports by $13 billion.
Congress begins action on Bush-era trade deals (6/30/2011)
Palmer writes that the deal on TAA will be a "renewal" of TAA, but later clarifies that it will mean a reduction in benefits. Still, he misleadingly claims that the FTAs will boost U.S. exports by $13 billion.
House Republicans defy Obama on trade bill add-on (7/5/2011)
Palmer reverts to calling the TAA deal a "renewal" without mentioning that it actually involves a reduction of benefits.
Senate panel to try again to move trade deals (7/6/2011)
Once again Palmer refers to the TAA deal as a "renewal".
U.S. trade bills advance but clash clouds future (7/6/2011) (with David Lawder)
Palmer claims that "The three agreements are projected to boost U.S. exports by about $13 billion, helping to meet Obama's goal of doubling exports in five years to create new American jobs." In reality, as noted above, the USITC predicted that U.S. net exports would fall by $482 million due to the Korea and Colombia trade deals.
James Politi (Financial Times):
Deal reached to advance US trade pacts (6/29/2011)
Politi says that the deal on TAA is to "extend" it, rather than cut benefits.
Republicans boycott trade vote (7/1/2011)
Again Politi describes the TAA deal as an extension rather than a reduction of assistance.
Shaun Tandon (AFP):
Republicans nix trade pact deal with Obama (6/30/2011)
Tandon writes, "The Obama administration renegotiated [the Korea FTA] to address concerns of critics including automakers and labor unions," but labor unions have expressed their strong opposition to the revised deal, noting that the FTA “includes a NAFTA-style investor rights provision that promotes offshoring. This provision would also expose domestic financial and labor laws to challenge by foreign tribunals.”
US moves on S.Korea deal but rift persists (7/7/2011)
Tandon claims that Obama plans to combine the Korea FTA with "a renewal of benefits for workers who lost jobs due to foreign competition," even though benefits are being cut under the deal.
Elizabeth Williamson (WSJ):
Colombia Trade Deal Loses Key Support (6/28/2011)
Williamson describes the administration's TAA demand as a renewal of TAA rather than a reduction of TAA. She also claims that the administration and Korea added provisions into the Korea FTA "protecting the U.S. auto industry." But a study by the USITC found that the supplemental auto deal will still lead to a huge increase in the auto trade deficit, putting auto workers at risk.
White House Pushes for Votes on Trade (6/29/2011)
Williamson claims that the Korea FTA "represent[s] $11 billion a year in new U.S. exports," but net exports will actually decline by $416 million, according to the USITC's Korea FTA report.
She also writes that the Korea FTA would "afford U.S. financial-services firms the same legal status as Korean firms." In reality, the FTA goes way beyond requiring equal treatment for domestic and foreign financial services firms. It prohibits a range of regulations that would apply equally to domestic and foreign firms, such as firewalls between the sort of financial services one firm may offer, bans on dangerous types of financial derivatives, limits on the size of financial firms, and controls on international flows of capital.
GOP Snubs Scuttles Trade-Deal Hearing (7/1/2011)
Williamson writes that the TAA proposal is to "renew" TAA early in the article, but later specifies that the proposal would "tighten eligibility" for TAA.
She claims that "The government estimates the deals could generate $13 billion in new exports." The government, i.e. the USITC, predicts that the Korea and Colombia FTAs will reduce U.S. net exports by $482 million.
Envoy Hits the Road for Trade Deal (7/6/2011)
Williamson writes, "The South Korean agreement, the most significant U.S. trade deal since the 1994 North American Free Trade Agreement, is expected to boost U.S. exports by $11 billion a year, though it is expected to generate a similar amount in new imports, too." While she gives a rare mention to the impact of the FTA upon imports, she overstates the predicted change in exports and doesn't indicate that imports are expected to rise actually more than exports.
Jobs Study Is Too Late for Debate on Trade (7/6/2011)
Williamson says that discussions in the Ways and Means Committee about TAA are about "renewal" of TAA, when in fact they are about a proposal to cut TAA.