A slow-growth economy where it seems wages are stagnant and so many people are struggling to keep afloat produces scapegoats.
Some presidential candidates have chosen to target free trade agreements (FTAs).
It’s human nature to find someone or something to blame, but facts are facts. Here are a few facts about FTAs you won’t hear on the campaign trail.
FTAs Level the Playing Field
For decades, the U.S. has lead the world in lowering trade barriers, opening markets for U.S. goods, and allowing the development of complex global supply chains that generate efficiencies and allow for the creation of a variety of goods and services never seen before.
Today, the United States has FTAs with 20 countries. These agreements have strengthened our economy and support millions of jobs. They’ve been great deals for American workers, businesses and families.
The U.S. is largely open to imports. It’s why Americans can easily buy French wine, Italian cheese, German engineering tools, and Japanese electronics. Improved access to imports gives American households a $10,000 boost to their income.
But as John Murphy, U.S. Chamber senior vice president for international policy, has written, the same can’t be said for U.S. companies wanting to sell globally: “American exporters face higher tariffs abroad than nearly all our trade competitors. Nontariff barriers add substantially to these challenges.” He added:
U.S. goods arriving in foreign markets face an average tariff of 5.9%, according to a report from the World Economic Forum (WEF). That’s more than four times the U.S. level, but tariffs slapped on key U.S. manufactured and agricultural exports often average in the double digits in key emerging markets.
FTAs level the playing field and have increased U.S. exports. Murphy points out, while the U.S. has FTAs with countries making up only 6% of the world’s population outside the United States, they have purchased nearly half of all U.S. exports.
As for jobs, the economic boost from the 20 FTA countries–$300 billion—is enough to support 5.4 million jobs.
But what about American manufacturing? The United States is making more than it ever has. “United States manufacturing output is at an all-time high, worth $2.7 trillion in 2015, up from $1.7 trillion in 2009,” the Christian Science Monitor reports. For many manufacturers, a big problem they face is finding skilled workers.
NAFTA Has Been Nifty
NAFTA, the 22-year-old trade agreement among the U.S., Canada, and Mexico draws particular scorn, but like other FTAs, it has been a success.
Murphy explains in a May 2016 Above the Fold piece:
Since NAFTA entered into force in 1994, trade with Canada and Mexico has risen nearly fourfold to $1.3 trillion in 2014, and the two countries buy more than one-third of all U.S. merchandise exports.
The trade boom continues. U.S. merchandise exports to Canada and Mexico rose by 66% over just the 2009-2014 period, reaching $552 billion in 2014. In fact, our North American neighbors provided 39% of all growth in U.S. merchandise exports in the same period.
This trade and jobs boost is because NAFTA makes it easier to do business throughout North America. By reducing barriers to goods moving across borders, a Congressional Research Service analysis found NAFTA helps “U.S. manufacturing industries, especially the U.S. auto industry, become more globally competitive through the development of supply chains.”
Pacific Trade Deal Promises More Success
With the success we’ve seen from NAFTA and other FTAs, we should expect nothing less from the Trans-Pacific Partnership, an agreement among 11 Pacific countries, which awaits congressional approval. Half the world’s future growth is expected to take place among TPP nations, which opens the door to more opportunities for U.S. businesses, workers, and consumers.
For instance, the Peterson Institute for International Economic concluded the trade agreement will increase U.S. exports by $357 billion per year by 2030 and boost U.S. income by $131 billion.
Peterson Institute analysts also noted that reducing tariffs and non-tariff barriers will push U.S. workers into higher-wage, export-related jobs, while at the same time offering families access to a wider variety of goods and services.
Small businesses are on board. One Colorado firm knows TPP will be a “sweet” deal for them.
“In the event the Trans-Pacific Partnership goes through, we would benefit as a small business as it would make it easy to be involved in more trade with countries in the Pacific Rim,” said Tony Landretti, chief commercial officer for Rice’s Lucky Clover Honey.
Elena Stegemann, director of international business for Michigan exercise equipment maker NuStep, is also pro-TPP: “We need it to be competitive globally.”
The track record is clear: Free trade agreements work. Rejecting them will cost jobs, put American companies at an international disadvantage, and make goods and services more expensive for families.
Opposing trade agreements is about as smart as being against apple pie. Candidates should think twice before bashing policies that work.