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May 14, 2010  

Chamber of Commerce at It Again With Latest Report Distorting the Record of Flawed Trade Deals

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch Division

There is no funny U.S. Chamber of Commerce math that can overcome the fact that U.S. government data show that we have lost 5 million net manufacturing jobs since the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) went into effect. The U.S. trade deficit peaked at $830 billion during this period, and U.S. real median wages still lurk at 1972 levels.

The latest study touting job gains from past Free Trade Agreements (FTAs) is perhaps the most outlandish, given that the actual government data show we have a $54 billion non-oil trade deficit with the 17 U.S. FTA countries, including a deficit with Mexico and Canada that grew 848 percent since NAFTA went into effect. There are many ways to calculate the U.S. jobs effects of this trade flow data, but any honest method comes up with jobs losses in the millions.

An honest analysis of the data shows that U.S. export growth to our FTA partners has actually been slower than with non-FTA counties – between 1998 and 2008, total goods exported to non-FTA partners grew 47 percent faster than exports to FTA partners. In dollar terms, this FTA export penalty amounted to $25 billion in lost potential U.S. exports for 2008 alone. And utilizing the job multiplier assumed by the Chamber, this translates into the loss of 302,585 additional American jobs that could have softened the blow of the Great Recession.

The implication of the actual FTA record for President Barack Obama’s laudable goal of doubling exports in the next five years is clear: There are many ways to increase exports and support jobs, but FTAs ain’t one of them.

I suspect that more Americans are likely to believe reports of UFO sightings than Chamber of Commerce claims about trade agreements creating millions of jobs for them, given that many Americans have personally experienced the damage wrought by the job-killing trade deals pushed by the Chamber on behalf of their serial-offshoring multinational corporate members. It’s high time that corporate lobbyists owned up to the fact that promised job and export gains from FTAs never materialize.

If the Chamber supports trade expansion, then instead of serving up another batch of improbable numbers defending the damaging trade agenda of the past that most Americans fiercely reject and that is dead in Congress, the Chamber should help promote the TRADE Act, which rebuilds consensus for trade expansion by providing new trade terms that can benefit more people.

American public opinion polls show bipartisan opposition to NAFTA-style trade policy across numerous demographics and regions. Already in the 2010 election cycle, candidates in Democratic and GOP House and Senate races are opposing the very pacts the Chamber is promoting. During the 2006 and 2008 election cycles, 72 representatives and senators who supported the status quo were replaced by those who campaigned on trade reform.


• This latest Chamber report replicates the flaws of previous Chamber trade studies by comparing the “average” FTA country export performance to the “aggregate” non-FTA country performance. The soundest method is to compare aggregates to aggregates, in other words to compare the inflation-adjusted, total increase in exports between FTA and non-FTA countries, on a year-to-year basis, only considering the FTAs that are in place in any given year.

• Using a consistent, accurate methodology, it’s clear that the FTAs have penalized U.S. exports severely. Between 1998 and 2008, total goods exports to FTA partners grew by 31.3 percent and total goods exports to non-FTA partners grew by 46.7 percent. In other words, between 1998 and 2008, total goods exports to non-FTA partners grew 47 percent faster than exports to FTA partners.

• Even if one chooses to consistently employ the Chamber’s method of taking the average export growth to FTA countries, then comparing that with the average export growth to non-FTA countries, the “FTA penalty” is even more startling: Exports to non-FTA partners grew 152 percent faster over 1998-2008 than exports to FTA partners.

• Other Chamber and corporate studies that claim an FTA export benefit have not included all FTA countries, failed to adjust for inflation, incorrectly calculated rates of growth and included “re-exports” that pass through U.S. ports but were not made by U.S. workers. Closer examination of the latest report may find similar errors.

Public Citizen will be publishing a new report, How Corporate Lobbyists Distort Record of Flawed Trade Deals, imminently. It takes apart past Chamber studies in detail explaining methodological flaws (and also math errors) and provides analysis of the trade flow data using consistent methodologies and inflation-corrected data.


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