Free Trade Pacts Will Cost Tennesseans Jobs

Robert E. Scott, Knoxville News Sentinel News Sentinel columnist Greg Johnson recently claimed that proposed free trade agreements with South Korea, Colombia and Panama would mean "millions of dollars and thousands of jobs for Tennessee" ("Labor unions blocking free trade agreements," July 8). He also attacked me for estimating that free trade agreements could lead to "trade deficits and job displacement." In his column, Johnson refers only to exports that might result from proposed FTAs, and he ignores the growth of imports and jobs that will likely be lost as a result. Counting exports only is like reporting only the score of the home baseball team. It might make you feel good, but tells you nothing about who won the game. Johnson refers to me as a "labor shill" because a small share of the Economic Policy Institute's funding comes from organized labor, and some labor unions are represented on our board. I am proud to speak for the interests of working people (both union- and non-union). Far too many speak only for the interests of Wall Street and CEOs. If that makes me a shill, so be it. Johnson also falsely claims that I am "hardly an academic from an impressive institution presenting objective observation." I have a Ph.D. from the University of California at Berkeley and was on the faculty of the University of Maryland, both impressive academic institutions. Attack journalism may be fashionable, but it is no substitute for clear analysis of pros and cons of the issue. I have studied the effects of U.S. trade on employment for many years. The methods and models I use are exactly the same ones used by staff economists of the Federal Reserve Bank of New York, who are well-known for their objective research. This research is based on the observation that exports support domestic jobs, but imports displace domestic production that can cost U.S. jobs. Objective research must consider the effects of changes in both imports and exports. My most recent FTA report was on the impacts of U.S.-Mexico trade after the North American Free Trade Agreement. The United States had a trade surplus with Mexico before NAFTA, in 1993. In 2010 the United States had a $97.2 billion trade deficit with Mexico that displaced 682,900 U.S. jobs. Exports to Mexico supported 18,600 jobs in Tennessee, but imports displaced 35,100 jobs, for a net loss of 16,400 jobs in your state. The growth of trade deficits with Mexico after NAFTA was due to a tremendous surge in outsourcing and foreign direct investment in Mexico, which tripled after NAFTA. Reductions in tariffs between the U.S. and Mexico were of secondary importance in explaining changes in trade and jobs after NAFTA. Based on past U.S. experience with NAFTA and other trade agreements, I have estimated that the U.S.-Korea and Colombia FTAs will displace 214,000 U.S. jobs. These job losses will fall hardest in industrial states like Tennessee. Workers there would be well-advised to think twice before supporting these job-displacing trade agreements. Read original post here.