Should Democrats Support “Expanding” Trade?

Dave Johnson

Former Clinton Chief of Staff Thomas ‘Mack’ McLarty has an op-ed in the Wall Street Journal calling on Democrats to support more “free trade.” His basic argument: More trade is always better. But is the goal more trade, or trade that benefits We the People of the United States and our economy?

In “Why Democrats Should Back the President on Free Trade,” McLarty says Democrats should support “expanding” trade, and praises President Obama because, “The president has signed three free-trade agreements, with South Korea, Panama and Colombia in 2011.”

Let’s look at, for example, this agreement with Korea. Saturday was the second anniversary of that agreement taking effect so a couple of organizations looked at the results so far. The numbers vary but none of them are good. According to Public Citizen’s Global Trade Watch, exports to Korea are down 11 percent and the trade deficit with Korea has gone up 47 percent since this agreement was signed. According to the Economic Policy Institute 60,000 American jobs have been lost (mostly in manufacturing), exports to Korea are down 7.5 percent and the trade deficit is up 59.6 percent.

So trade with Korea “expanded,” but to the benefit of Korea’s economy (and a few U.S. multinational corporations and billionaires) at the expense of working Americans and our country’s economy.

Similarly, trade officials laud NAFTA for “expanding” trade. But how has NAFTA worked out for American workers and our economy? Last month was the 20th anniversary of NAFTA, so “PBS Newshour” had former U.S. trade representative and NAFTA negotiator Carla Hills on the air with Public Citizen’s Lora Wallach.

Hills praised NAFTA for “expanding” trade, saying “our trade with Mexico and Canada has soared 400 percent, and our investment is up fivefold.”

Wallach replied, pointing out that the trade” expanded” against American workers and our economy, costing about a million jobs and increasing our trade deficit 480 percent.

So we have had a growth in our trade deficit of almost 500 percent, 480 percent. So just the numbers, before NAFTA, we had a slight surplus with Mexico in trade. And with Canada, we have about a $30 billion deficit. The end-of-year U.S. International Trade Commission official government trade data came out last week. We have a $177 billion combined NAFTA trade deficit.

Using the administration’s old multiplier of what that means for jobs, that’s a net loss of accumulation of over a million jobs.

So again in the NAFTA example, “expanded” trade hurt our economy and cost American jobs. This job loss also increases wage pressure on everyone else.

Now China… Wow. Trade with China has greatly “expanded” in the last couple of decades. But the result has been that we have an enormous, humongous trade deficit with that country – $27.8 billion in January alone. That trade deficit means millions upon millions of lost jobs and lower wages for the rest of us. More than 50,000 American factories closed and the work moved to China. Entire industries were killed off in our country and entire regions wiped out. But trade “expanded.” (And, of course, the billionaires and their giant, multinational corporations made out like bandits.)

In “Trade, Wages, and the Conventional Wisdom (or lack thereof),” economist Jared Bernstein explains how these trade deals hit the wages of those Americans who manage to keep their jobs:

… the wage levels of the countries with whom we trade is a key determinant of the impact of trade on American workers. He emphasizes the impact of our increasing share of trade with low-wage countries, as that shift has had far-reaching wage effects here. For example, he reports that “…growing trade with less-developed countries lowered wages in 2011 by 5.5 percent—or by roughly $1,800—for a full-time, full-year worker earning the average wage for workers without a four-year college degree. One-third of this total effect is due to growing trade with just China.”

So yes, these trade deals have “expanded” trade. But if you are watching a football game, and at the end you are told that there were 56 points scored, you’d say, “Wow a lot of points in a football game! Wow!” But what really matters is if your team scored more points than the other team. That’s what counts.

Trade deals can be written to boost the living standards of working people on all sides of trade borders. The trade deals we have been making have been great for a few billionaires around the world but have hurt working people here, there and everywhere.

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