It's time for the second installment of Trade-ifact: Keeping the Media Honest about Trade Deals. Since our last installment, FTA proponents in the administration and Congress have worked to move along the negotiations for curtailing Trade Adjustment Assistance (TAA), all while maintaining a straight face when claiming that these trade pacts will create jobs. Late yesterday, White House Chief of Staff Bill Daley said that they would submit the FTAs for Congressional approval within days, so next week expect the FTA debate to turn white-hot (and a wave of questionable claims to reach tidal wave heights).
Doug Palmer (Reuters)
US showdown looming on Korea trade without deal soon (7/10/2011)
Palmer writes, "A year ago, Obama moved to resolve Democratic concerns with the deals." Democratic concerns with the three FTAs remain unresolved. Despite small tweaks to the auto provisions in the Korea FTA, imports of Korean autos are still projected to slam U.S. autoworkers. Plus, nothing was done to address the Korea FTA's prohibitions on certain vital financial sector regulations. Murders of labor union leaders in Colombia continue, and many Democrats are vowing to oppose the Colombia FTA as a result. Finally, Panama's status as a tax haven will remain unchanged if the Panama FTA is approved. The FTA's investor-state provisions would even allow the Panamanian government and corporations to challenge U.S. policies targeting tax havens. Overall, there has been no fundamental change to the NAFTA trade model that Obama promised while he was a presidential candidate.
Palmer claims that Fast Track trade negotiating authority "has long been considered vital for securing trade deals with U.S. trading partners worried that without it their agreements could be picked apart by Congress." As noted in our book on the history of Fast Track, scores of trade agreements have passed Congress without Fast Track protection, including 130 trade and investment agreements under the Clinton administration alone (Clinton lacked Fast Track authority from 1995 to the end of his second term). In 2000, former Clinton U.S. Trade Representative went as far as to say, "if you look at our record on trade since 1995, I don't think the lack of Fast Track impeded our ability to achieve our major trade goals."
Obama said ready to move on South Korea trade bill (7/14/2011)
Palmer says that Obama demands an "extension" of TAA be approved along with the three FTAs. The Obama administration's proposal on TAA is actually to narrow eligibility and cut benefits. As Inside U.S. Trade reports, under the new TAA plan workers displaced by trade could receive a maximum of 130 weeks of income support while undergoing retraining, while currently workers can receive up to 153 weeks of income support. It also would restrict income support eligibility for workers who are not in retraining programs, cutting the types of waivers for income support from six to three. Chairman of the House Ways and Means Committee, Republican Rep. Dave Camp, said of the deal, "The final result is a program that has been cut not only from 2009 levels, but also below 2002 levels in several key areas." The "2009 levels" are the elements of the TAA program that expired earlier this year, while the 2002 levels are the elements that are currently in effect. The cuts are a burden on displaced workers when they can least afford it.
Vicki Needham (The Hill)
Republicans split on trade tactics (7/13/2011)
Needham, like Palmer, writes that Fast Track "has been considered a necessity for brokering trade deals because it provides some certainty to potential trading partners that Congress won’t carve up the agreements." Again, scores of trade pacts have been negotiated and passed without Fast Track, including the Jordan Free Trade Agreement.
Josh Boak (Politico)
Mixed feelings on trade program (7/12/2011)
Boak writes, "While the agreements could bolster exports by $13 billion and create more than 70,000 jobs, even supporters acknowledge that several thousand workers could lose their livelihoods." While it is laudable that Boak reports on the consensus of possible job loss from the FTAs, the magnitudes he cites (70,000 v. “several thousand”) present a misleading picture of the net impact. As we noted in Trade-ifact Part I, the U.S. International Trade Commission (the administration’s source for export projections) reports that the Colombia and Korea FTAs will increase U.S. imports by $482 million more than it will increase U.S. exports.
Any increase in the trade deficit is associated with a loss of jobs in the U.S. economy. Indeed, the Economic Policy Institute looked at the impact of past trade deals on U.S. trade deficits, and concluded that the Colombia and Korea FTAs would displace 159,000 more jobs than it would create.
The $13 billion figure that Boak reports looks only at the bilateral export increase predicted by the USITC (and even then, rounds up by $1 billion), and does not look at the overall import increase. The 70,000 job figure is based on the Obama administration’s illegitimate pairing of two completely distinct methodologies, and even then applying this illegitimate method only to exports (and ignoring import-related job displacement).
Boak also says that "Democrats want to renew" TAA, even though the current plan for TAA calls for benefits to be cut and eligibility to be curtailed.
Eric Martin (Bloomberg)
Daley Says Obama May Submit Korea Trade Bill (7/15/2011)
Martin describes the draft legislation approved by the Senate Finance Committee last week as containing an "extension" of TAA, when in fact TAA was to be curtailed under the plan.
Martin writes, "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." As we note above, the U.S. International Trade Commission actually projects that the Korea FTA will reduce annual U.S. net exports by up to $416 million, and the Colombia FTA will lead to a $66 million fall in net exports.