September, 17 2014, 04:45pm EDT
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As President's Export Council Meets, No Chance to Meet Obama's Export Doubling Goal; Export Growth Falls Under Free Trade Agreements
Even as He Calls for More of the Same, Obama’s Quest for Fast Track and Trans-Pacific Partnership Pact Are Undermined by Past Trade Pacts’ Outcomes
WASHINGTON
At Thursday's biannual Export Council meeting, President Barack Obama is expected to call for help to overcome congressional opposition to Fast Track authority for the beleaguered Trans-Pacific Partnership (TPP) even as recent government data show U.S. export growth with U.S. Free Trade Agreement (FTA) partners lags behind the rate with non-FTA nations. Obama's efforts to push more-of-the-same trade policies has been sidelined by the dismal outcomes of his 2011 U.S.-Korea FTA, with the U.S. goods trade deficit with Korea up 50 percent and U.S. exports to Korea down 5 percent in the first two years of the pact.
"Given the dismal outcomes of our past trade deals, why would President Obama be pushing for more of the same?" asked Lori Wallach, director of Public Citizen's Global Trade Watch. "Maybe the corporate interests that dominate the Export Council want more of the same, but the American public and many members of Congress have had it, and that is why opposition to Obama's Trans-Pacific deal and Fast Track trade authority is so strong."
The dismal outcomes of the current free trade agreement model are having a significant impact in Congress, where skepticism is growing about both Obama's request for the rarely used Fast Track trade authority and the TPP.
- It is virtually impossible to meet Obama's 2010-stated goal of doubling exports by the end of 2014. At the paltry 1 percent annual export growth rate seen over the past two years, the export-doubling goal would not be reached until 2054, 40 years behind schedule.
- The U.S. export record under past FTAs is undermining Obama's efforts to push Fast Track and the TPP. Past U.S. FTAs have resulted in an export growth penalty: Growth of U.S. exports to nations that are not FTA partners has actually exceeded U.S. export growth to countries that are FTA partners by 30 percent over the past decade.
- The United States has a trade deficit of $180 billion with the 20 countries with which it has FTAs. This is dominated by a $177 billion deficit with North American Free Trade Agreement (NAFTA) countries, the $23 billion and growing deficit with Korea and the $3 billion deficit with Central America Free Trade Agreement (CAFTA) countries.
- For members of Congress not in office during the 1993 NAFTA fights, the Korea FTA is the basis of their experience of presidential promises regarding trade pacts. In contrast to the administration's promise that the Korea FTA would mean "more exports, more jobs," the export record of the Korea FTA is even worse than NAFTA. U.S. goods exports to Korea dropped 5 percent during the Korea FTA's first two years (a decline of $2.3 billion per year), compared to the two years before FTA implementation, while imports into the United States from Korea climbed 8 percent (an increase of $4.7 billion per year). From the year before the FTA took effect to its second year of implementation, the U.S. goods trade deficit with Korea rose 50 percent (a $7.6 billion increase). The trade deficit increase indicates the loss of more than 50,000 U.S. jobs under the deal's first two years, according the trade-jobs ratio that the Obama administration used to project gains from the deal.
In the face of this damaging record, the Office of the U.S. Trade Representative (USTR) has begun to provide Congress with distorted data that misrepresent the actual U.S. trade balance with FTA countries by counting foreign-made products that pass through the United States without alteration before being "re-exported" abroad as "U.S. exports." This has led to a series of increasingly upset exchanges from Congress. A July 10 letter from 14 members calling on USTR Michael Froman to stop using the distorted data and provide Congress with the accurate numbers has received no reply in the past 10 weeks. For more on the data-cooking techniques being employed by the USTR, please see https://www.citizen.org/documents/Korea-FTA-USTR-data-debunk.pdf.
"If the president is serious about growing U.S. exports, he would do well to ditch these NAFTA-style pacts that export U.S. investment dollars and American jobs and look for a new model," said Wallach. "As long as the administration keeps pushing more of the same instead of acknowledging the damaging record of the past trade deals, the president's trade agenda will remain sidelined by public and congressional opposition."
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
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"Our proposal for a common minimum tax on billionaires is now on the map. G20 finance ministers have started to engage with it—and there is no going back," said progressive economist Gabriel Zucman.
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Despite pushback from the United States delegation, finance ministers at a meeting of the G20 countries in Rio de Janeiro on Thursday agreed on the need to develop a global taxation system in which the richest in the world are taxed at a higher rate—potentially unlocking hundreds of billions of dollars annually to help close the international wealth gap.
Ahead of the G20 Summit scheduled for November, which Brazilian President Luiz Inácio Lula da Silva's government will host, the finance officials met this week to discuss economic issues and ultimately agreed to start a "dialogue on fair and progressive taxation, including of ultra-high-net-worth individuals."
The Lula government pushed for a proposal by progressive economist Gabriel Zucman, who serves as a G20 adviser and is a professor of economics at University of California, Berkeley.
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"Finally, the richest people are being told they can't game the tax system or avoid paying their fair share. Governments have for too long been complicit in helping the ultra-rich pay little or zero tax."
The agreement to discuss higher taxes for the rich was reached despite objections from Germany and the U.S., whose treasury secretary, Janet Yellen, said that "tax policy is very difficult to coordinate globally."
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Although the agreement only states that countries will discuss the need for the wealthy to pay their fair share to help fight poverty and fund public education and other services, the global anti-poverty group Oxfam International said the meeting represented "serious global progress."
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Zucman expressed hope that the agreement between the G20 finance ministers marked a "historic" moment, and called it "an important step in the right direction."
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The findings released this week by Oxfam highlighted polling that "consistently" found people across the world support raising taxes on the richest individuals.
"Eighty percent of Indians, 85% of Brazilians and 69% of people polled across 34 countries in Africa support increasing taxes on the rich," said the group. "Nearly three-quarters of millionaires polled in G20 countries support higher taxes on wealth, and over half think extreme wealth is a 'threat to democracy.'"
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Leaders across the board must wake up and step up their #ClimateAction.
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They must #ActNow as though our future depends on it – because it does.
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Humanitarians applauded the government's decision. Rohan Talbot, director of advocacy and campaigns at Medical Aid for Palestinians, called Tory opposition to the proposed arrest warrants "a disgraceful attempt to delay justice."
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