After an unexpectedly fraught journey through the Senate, the fast-track trade bill now moves to the House of Representatives, where it faces a wall of opposition from nearly all Democrats and a sizeable bloc of GOP members. A recent National Journal article by Ronald Brownstein ("The Trade Paradox") questions the basis for Democrats' near-unanimous rejection of fast-track (which would allow the president to send Congress a trade bill for an up-or-down vote with no amendments). The answer lies in the data.
The article notes with puzzlement that most members of Congress representing the 20 metropolitan areas with the "most export-tied jobs" oppose fast-track for the controversial Trans-Pacific Partnership.
But that list of cities says more about the distribution of the U.S. population than about trade's actual impacts on those cities.
Sixteen of the 20 metro areas touted as having the most export-supported jobs are among the 20 most-populated U.S. metro areas. Since they have more people, they simply have more jobs overall. That includes more export-supported jobs and more nontrade jobs—but also more import-competing jobs. That is why, unsurprisingly, many of the largest U.S. cities also have endured the largest job losses under status quo trade policies.
Indeed, 14 of the 20 metro areas that Brownstein describes as having the most export-supported jobs also top the Labor Department's list for having sustained the most job losses due to offshoring and imports since the North American Free Trade Agreement.
Brownstein also notes that 18 of the 20 metro areas with the most export-tied jobs have Democratic mayors. But the same 18-of-20 Democratic-mayor ratio applies to the metro areas that have suffered the most trade-related job losses, according to the certification records under the Labor Department's narrow Trade Adjustment Assistance program.
This legacy of middle-class job erosion under existing trade pacts, and the resulting downward pressure on wage levels, helps explain why members of Congress oppose fast-tracking a pact like TPP, which would expand the same terms found in past pacts.
Thanks to WikiLeaks, we know that TPP would extend the job-offshoring incentives included in NAFTA, providing special protections for U.S. firms that relocate to low-wage nations, including Vietnam. And the administration itself states that TPP's labor terms are based on those that President George W. Bush was forced to include in the core texts of his last four agreements, even though a 2014 Government Accountability Office report found these terms have not halted labor abuses on the ground.
Here's the fundamental problem with the reports on which Brownstein relied: They excluded half of the trade equation. Members of Congress on both sides of the aisle, in addition to their constituents and many economists, care not only about the job-supporting effects of exports but also the job-displacing effects of imports.
Standard economics states that net exports (exports minus imports), not gross exports, impact jobs and growth. When imports outstrip exports, creating trade deficits, the net effect tends to be job displacement and dampened economic growth if the economy is not at full employment (as ours is not).
Considering the net effect of the trade-agreement model that TPP would expand, congressional opposition is understandable. According to government data from the U.S. International Trade Commission, the United States has a $177.5 billion goods trade deficit with its 20 Free Trade Agreement partners. The aggregate U.S.-goods trade deficit with this group in 2014 was more than five times as high as before the deals went into effect.
This track record also helps explain the recent polls showing that while, as always, the U.S. public supports the concept of "promot[ing] the sale of American goods abroad," fewer than one out of five people believe our trade agreements create U.S. jobs, while a plurality believes they lead to U.S. job losses. Just one out of ten people believe that FTAs boost U.S. wages, while four times as many say they lower U.S. wages.
The FTA trade-deficit surge comes not only from ballooning imports but also lackluster export growth under existing pacts. Despite promises that FTAs would boost U.S. exports—a refrain now being recycled for TPP—growth of U.S.-goods exports to FTA partners has been 20 percent lower than U.S. export growth to the rest of the world over the last decade.
Consider the most recent major FTA—a 2012 deal with Korea that American negotiators used as the template for TPP. In FTA's first three years, the U.S.-goods trade deficit with Korea has ballooned 90 percent as imports have surged and exports actually have fallen. Record-breaking U.S. trade deficits with Korea have become the new normal under FTA—in 35 of its first 36 months, the U.S.-goods trade deficit with Korea exceeded the average monthly deficit in the three years before the deal.
Looking at both sides of the equation, the outcomes of the existing pacts on which TPP was modeled suggest that the puzzle of Congress's broad opposition to fast-tracking more-of-the-same trade deals is actually not so puzzling.
Ben Beachy is the research director for Public Citizen's Global Trade Watch.