Free Trade Deals To Have 'Negligible' Impact On Jobs, Studies Say

free trade dealsTo mention the U.S.'s latest free trade agreements (FTAs) is to start a discussion about jobs. When Congress passed free trade deals this week with Colombia, Panama and South Korea, it ended a four-year drought for the federal government getting FTAs approved. The last such bilateral accord was reached with Peru in 2007.

Such agreements have detractors and supporters on both sides of the aisle. Presidents George W. Bush and Barack Obama have been vociferous advocates for the deals, on the basis that the U.S. should both embrace globalization and that the U.S. can only benefit from the opening of markets. But in an era of economic uncertainty, protectionism has proven both a respected policy as well as a go-to talking point for politicians seeking to make easy populist appeals.

What the deals will do for the country's less than rosy employment climate remains a hotly contested issue.

There are many who view the end of bilateral trade barriers as a boon to industry.

"Let me just put it this way. About eight years ago they passed the Chile free trade agreement. Caterpillar exports to Chile tripled," Bill Lane, the Washington director for the heavy equipment maker Caterpillar, told NPR. "These agreements have real-life implications and what they've all done is increase U.S. exports."

But while individual sectors and companies can thank FTAs for a resultant boom in profits, the view of nonpartisan United States International Trade Commission (USITC) is that the impact on employment from these three deals would be "negligible." Indeed, as a report in The New York Times notes, gross domestic product will be estimated to grow by about $14.4 billion, or roughly 0.1 percent.

The heart of the analysis lies in the economies that the U.S. is dealing with. As much as Colombia represents a valuable political ally for the U.S. in its war on drugs, among other fronts, it along with Panama and South Korea fails to represent a sizable enough economy to make a major impact through a free trade deal. Indeed, the combined GDP of the three economies comes in at around $1.1 trillion dollars, or roughly 7 percent that of the U.S.

The deal worth keeping an eye on, most observers say, is the one with Seoul. That deal will enable easier access to U.S. farm goods, including dairy products, beef and poultry. For her part, Secretary of State Hillary Clinton was particularly buoyant over the deal with South Korea.

"By opening new markets to American exports and attracting new investments to American communities, our economic statecraft is creating jobs and spurring growth here at home," she said, before predicting that the deal will help create some 70,000 jobs.

But new markets for farm goods will be paired with new competition for America's already embattled manufacturing sector.

"I've seen firsthand the negative effects that trade agreements have had on our manufacturing sector and this one is estimated to displace 159,000 jobs and increase our trade deficit with Korea by $16.7 billion," Rep. Mark Critz (D-Pa.) told NPR.

For his part, Rep. Ted Deutsch (D-Fla.) was also glum on the deals in a blog for The Huffington Post.

"In the recent past, the American people were sold NAFTA and the Chinese-WTO deal with false promises of job growth and trade surpluses. NAFTA turned our trade surplus with Mexico into a $100 billion trade deficit and shipped 680,000 American jobs south of the border. Likewise, China's entry into the WTO in 2001 has displaced over 2.3 million workers. We cannot risk that the current promises of job creation will once again turn into more outsourced American jobs," he wrote.

"These proposed pacts will only escalate the global race for cheap labor in nations with poor human rights records. The Colombia deal will increase the availability of cheap labor with historically poor worker protections. Likewise, the proposed agreement with South Korea ensures that the United States would be flooded with products built not in Korea but with cheap Chinese and North Korean labor."

Next: We Can Make It In The U.S.A., But Will We Buy It?



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Dan Fastenberg

Dan Fastenberg

Associate Editor

Dan Fastenberg was most recently a reporter with TIME Magazine. Previously, he was a writer for the Thomson Reuters news service's Latin America desk. He was also a reporter and associate editor for the Buenos Aires Herald while living in South America.

Follow Dan on Twitter. Email Dan at daniel.fastenberg@teamaol.com. Add Dan to your Google+ circles.

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