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Public Citizen: Exports Greater to non-Free Trade Agreement Countries

A new report from Public Citizen upends the prevailing wisdom on free trade agreements as a spur to export growth. Actually, it’s quite the opposite:

The group, Public Citizen, will release a study Wednesday saying that in the last 12 years, exports to the 17 countries with which the United States has free-trade agreements grew at a slightly slower pace than exports to other countries.

Public Citizen, a left-leaning group that is critical of globalization, also found that last year, when trade fell worldwide in response to the financial crisis, American exports to free-trade partners shrank at a slightly higher rate than exports to other nations. And free-trade deals, moreover, have helped exacerbate the nation’s overall trade deficit, a major source of global economic imbalance.

The report is largely a response to arguments made by the United States Chamber of Commerce and the National Association of Manufacturers, two powerful business groups, that believe the free-trade agreements are crucial to the success of President Obama’s National Export Initiative.

Let’s dig into the report a bit more. It shows that NAM and the Chamber of Commerce have used misleading statistics to promote free trade agreements for years. Public Citizen finds a math error that makes a Chamber report show a positive trade number with Korea, Panama and Colombia after free trade agreements, instead of a $30 billion loss in US exports over five years. Here’s an excerpt from the report:

· Between 1998 and 2009, U.S. goods exports to FTA partner countries grew by an annual average rate of only 0.8 percent while goods exports to non-FTA partner countries grew by an average of 2.2 percent. If 2009 is excluded (to replicate a recent Chamber study that claimed that FTAs boost export growth), the average for FTA countries is 3.0 percent vs. 4.2 percent for non-FTA countries.

· Defenders of the past U.S. FTAs regularly claim that these pacts’ existence helped avoid a worse falloff in trade related to the global economic crisis. In fact, in 2009, exports to FTA countries shrank 21.1 percent, while exports to non-FTA countries shrank 18.4 percent.

· If the difference between the FTA and non-FTA export growth rates for goods for each year were to be put in dollar terms, the total FTA export “penalty” would be $72 billion.

I like this report because it challenges neoliberalism on its own terms. It puts aside for a moment the 5 million manufacturing jobs lost since NAFTA and its clones in 1994 (but only for a moment – this painful adjustment is reason enough to be skeptical of FTAs), and it puts the lie to the prevailing wisdom that this job loss is balanced by increased trade and “open markets” and economic growth, which lifts up the US economy in other sectors. Wrong. It’s trade reform, not trade liberalization, that increases exports. As the director of Public Citizen’s Global Trade Watch, Lori Wallach, noted, “There are many ways to boost U.S. exports and create American jobs, but the data show that more of the same trade deals is not one them.”

This data-driven report does the best job possible to measure the impact of free trade agreements, and finds that the neoliberal argument comes up short. This happens on the eve of a meeting of the President’s Export Council, an advisory committee charged with doubling US exports in five years. They should pay attention to this study.

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David Dayen

David Dayen