Don't Buy the Hype: 20 Years of Data Reveals 'Free Trade' Fallacies

Fast-tracked international trade deals have led to exploding U.S. trade deficits, soaring food imports into the U.S., increased off-shoring of American jobs, and an "unprecedented rise in income inequality," according to new data released Thursday by the watchdog group Public Citizen.

The report, "Prosperity Undermined" (pdf), compiles and analyzes 20 years of trade and economic data to show that the arguments again being made in favor of providing the Obama administration with Fast Track trade authority--effectively handing over extensive new executive powers and delegating away core congressional constitutional authorities--have repeatedly proved false.

As an example, Public Citizen points to the damaging consequences of a 2011 trade deal with Korea, which expanded on the NAFTA model:

Since the Obama administration used Fast Track to push a trade agreement with Korea, the U.S. trade deficit with Korea has grown 50 percent--which equates to 50,000 more American jobs lost. The U.S. had a $3 billion monthly trade deficit with Korea in October 2014--the highest monthly U.S. goods trade deficit with the country on record. After the Korea FTA went into effect, U.S. small businesses' exports to Korea declined more sharply than large firms' exports, falling 14 percent.

President Barack Obama is expected to push Fast Track for the corporate-friendly Trans-Pacific Partnership (TPP), which has been negotiated largely in secret--with significant input from Wall Street and big business interests. Even in the face of evidence that prior trade deals are not working, Public Citizen says, Obama has "doubled down on the old model with TPP."

"It's not surprising that Democrats and Republicans alike are speaking out against Fast Track because it cuts Congress out of shaping trade pacts that most Americans believe cost jobs while empowering the president to sign and enter into secret deals before Congress approves them," said Lori Wallach, director of Public Citizen's Global Trade Watch. "In their speeches and commentary, the administration, corporate interests and GOP leadership disregard the real, detrimental impacts that previous fast tracked trade deals--which serve as the model for the Trans-Pacific Partnership--have had on America's middle class over the past 20 years."

President Obama is likely to use next week's State of the Union address to push for TPP passage and Fast Track authority, Dave Johnson predicts in an op-ed published Thursday. Echoing many of Public Citizen's criticisms of NAFTA and the Korea-U.S. trade deal, Johnson notes: "The reason our trade policies are working out this way is because the beneficiaries of this kind of trade deal are the ones controlling and negotiating these trade deals."

He continues:

The giant, multinational corporations and Wall Street make money from offshoring U.S. jobs and production--partly because our tax laws encourage this activity. The rest of us, including our "Main Street" businesses and the country at large, are net losers. This is obvious to anyone who drives through much of the country or who talks to regular, working people. This is obvious to anyone who looks at the timeline of that trade deficit chart and compares that to the economic shifts of our last few decades.

Our trade negotiating process is rigged from the start. Giant, multinational and Wall Street corporate interests are at the negotiating table. Consumer, labor, environmental, human rights, democracy, health and all the other stakeholder representatives are excluded and the results of these negotiations reflect this. A rigged process called "fast track" is used to essentially force Congress to pre-approve the agreements before the public has a chance to analyze and react to them.

Obviously the giant, multinational and Wall Street corporations would want the public to believe that everyday small businesses gain from our trade deals, when in fact they do not. It is less obvious why President Obama would want to present at the State of the Union the story of one small business that does not reflect the reality of the trade deals he is promoting.

While Public Citizen's report focuses on Fast Track authority, it is at its core opposed to the so-called free trade pacts that authority is designed to promote.

"Economists across the political spectrum agree that trade flows during the era of free trade pacts have, in fact, contributed to rising U.S. income inequality, including Vice President Joe Biden's former economic adviser, Jared Bernstein," the analysis reads. "The only debate is the extent of the blame to be placed on trade. Even the pro-NAFTA Peterson Institute for International Economics has estimated that 39 percent of observed growth in U.S. wage inequality is attributable to trade trends."