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Debunking Trade Myths

To hide the facts about failed trade policies, proponents are changing the data

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Fact-Checking the Obama Administration on Trade:

Debunking Data Distortions from Obama's Trade Representative

Years of unfair trade deals modeled after the North American Free Trade Agreement (NAFTA) have contributed to ballooning U.S. trade deficits, mass offshoring of good U.S. jobs, and a historic increase in U.S. income inequality.

But rather than change our failed trade policies, the administration appears bent on trying to hide the facts — by changing the data.

As U.S. Trade Representative (USTR) Michael Froman pushes for the largest expansions of the NAFTA model to date — the proposed Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA) — his office has resorted to data distortions to obscure the dismal outcomes of past trade deals.

Here's a sampling of USTR's recent outlandish claims, based on data distortions and omissions, alongside the sobering realities about our trade policies, based on official U.S. government data.

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Check out these myth-debunking resources from Public Citizen:

USTR's Trade Myths  | "Factoryless Goods"  |  Corporate America's Trade Myths

USTR's Trade Myths


"Almost 95% of the world's consumers are outside America's borders." Less than 2 percent of the world's consumers live in TPP countries with consequential tariffs. Most of those consumers live in Vietnam, where minimum wages average less than 60 cents an hour, meaning they earn too little to afford U.S. exports.
The TPP is "the most progressive trade deal in history."' The TPP includes NAFTA's offshoring incentives, Bush's environmental and labor standards, Wall Street's deregulatory rules, and corporations' parallel legal system to challenge environmental and health protections. What's progressive about that?
"If we don't write the rules, China will." "We" did not write the TPP's rules – multinational corporations did. They did not write them to counter China. They did not write them to benefit us. They wrote them to benefit their own narrow interests, at the expense of the majority.

See the tricks behind USTR's TPP myths.

"The driver on our trade balance with Canada and Mexico" is fossil fuels." The fossil fuels share of our trade deficit with Mexico and Canada has declined under NAFTA, while the total NAFTA deficit has soared 550 percent, topping $170 billion.
We have a manufacturing trade surplus with our NAFTA partners, Mexico and Canada. We have a manufacturing trade deficit with our NAFTA partners of more than $60 billion.

See the data tricks behind USTR's NAFTA trade myths.

"Largely due to these two external factors [declines in corn and fossil fuel exports], total U.S. goods exports to Korea were down 4.0% in 2013 compared to 2011 (pre-FTA)." Our trade deficit with Korea has ballooned 90 percent under the FTA, and exports to Korea have fallen. Without corn and fossil fuels, the deficit rise and export fall remain.
"U.S. exports of key agricultural products benefiting from tariff cuts and the lifting of other restrictions under KORUS continued to post significant gains." Total U.S. agricultural exports to Korea have fallen 5 percent under the FTA.
"U.S. vehicle exports have more than doubled, increasing from 16,659 vehicles in 2011 to 37,914 vehicles in 2014." U.S. imports of passenger vehicles from Korea have ballooned by 416,893 vehicles in the first three years of the Korea FTA, dwarfing the 24,217-vehicle increase in U.S. passenger vehicle exports to Korea.  

See the data tricks behind USTR's Korea FTA trade myths.

The Obama Administration's "Factoryless Goods" Scam
A Proposal to Disguise the Offshoring of U.S. Manufacturing

A recent administration proposal would even further distort government trade data. By counting products made offshore as 'U.S. exports,' this scam would hide the devastation of U.S. manufacturing. It would obscure the U.S. job offshoring that unfair trade deals incentivize.

Under this Orwellian "factoryless goods" rebranding initiative, U.S. firms like Apple that have offshored their production jobs would be reclassified as "factoryless goods" manufacturers. An iPhone made in China and sold in Europe would somehow perversely count as a U.S. manufactured export. This would deceptively deflate the reported U.S. manufacturing trade deficit — and artificially inflate the number of U.S. manufacturing jobs. Apple's brand managers and programmers would suddenly be counted as "manufacturing" workers!

Thankfully, a groundswell of public opposition has helped to stall this proposal. But it has yet to be permanently buried. As we push to change our failed trade policies, we will need to keep pushing against efforts to try to take away the evidence that such a change is direly needed. Learn more.

Corporate America's Fact-Deprived Trade Factsheet Flurry

Corporate proponents of expanding the unpopular NAFTA model through the TPP and TAFTA have been hard at work to churn out "fact"sheets and studies praising the deals. But among the many sheets, you will find few facts. Below we wade through the spin from industry coalitions and corporate-driven think tanks to debunk the counterfactual claims.

Corporate Trade Myths


Peterson Institute of International Economics: The TPP "promise[s] substantial benefits and could lead to...a more peaceful and prosperous world economy."

It was the Peterson Institute that projected in 1993 that NAFTA would create 170,000 net new U.S. jobs in the pact's first two years. The promised jobs never materialized, and instead hundreds of thousands of U.S. jobs have been lost under NAFTA.
Using optimistic assumptions, this pro-TPP study projected the deal could result in a meager 0.13 percent increase to U.S. gross domestic product (GDP) – a fraction of the GDP increase from the latest version of the iPhone. The Center for Economic and Policy Research found that for 9 out of 10 U.S. workers, these tiny gains likely would be outweighed by a TPP-spurred increase in income inequality. The net result? A pay cut for all but the richest 10 percent.
Corporate alliances of the "Trade Benefits America" coalition: The TPP will "open new markets in countries that are not current FTA partners." In fact, U.S. exports have lagged under FTAs. Under the Korea FTA – the U.S. template for the TPP – U.S. exports to Korea have actually fallen. Overall, U.S. export growth to non-FTA partners has actually been 30 percent higher than to FTA partner countries. How can we do more of the same and expect different results?
The Third Way think tank: Fast Tracking the TPP would help the United States "increase U.S. exports by almost $600 billion" to "Asia-Pacific markets." This study's $600 billion projection was based on a hypothetical rise in exports to 12 countries. Seven of them are not even in the TPP. Two more are in the TPP but already have FTAs with the United States. That leaves three of the 12 countries for which the TPP could even plausibly boost exports...if we ignore the fact that past FTAs have not brought higher export growth.
U.S. Chamber of Commerce: The TPP could create "700,000 new U.S. jobs." The Chamber did not say how they decided this would be the TPP's impact on jobs. They simply said it was based on the above Peterson Institute study, which included a miniscule GDP projection, but no jobs projection. It is unclear how the Chamber pulled a jobs number from a study that did not produce one.

See the TPP's threats to U.S. jobs, wages and consumers.

Emergency Committee for American Trade: "recent data suggest that trade agreements, on the whole, actually help to improve U.S. trade balances with FTA partner countries." The aggregate U.S. trade deficit with FTA partners has increased by more than $147 billion, or 443 percent, since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries has decreased by more than $130 billion, or 16 percent, since 2006 (the median entry date of existing FTAs).

See the deficit-boosting record of U.S. "free trade" deals.

European Centre for International Political Economy: Elimination of tariffs under TAFTA could result in a 0.1 to 1 percent increase in U.S. GDP. Tariffs between the EU and the United States are already quite low. That is why this study on the potential impact of TAFTA tariff elimination produced paltry results. Even if we accept the study's unrealistic assumption that TAFTA would eliminate 100 percent of tariffs, the projected gain would amount to an extra three cents per person per day.
Centre for Economic Policy Research: Assuming that TAFTA will not only eliminate tariffs, but "non-tariff barriers," the deal could produce a 0.2 – 0.4 percent increase in U.S. GDP. This study assumed that TAFTA would reduce or eliminate up to one out of every four "non-tariff barriers" – which, according to the study, could include Wall Street regulations, food safety standards and carbon controls. The study used a hypothetical model to project tiny gains from this widespread degradation of public interest protections, while making no effort to measure the economic, social or environmental costs that would result.
The Atlantic Council, the Bertelsmann Foundation, and the British Embassy: Under TAFTA, "all states could gain jobs and increase their exports to the EU." This study was a recycled version of the one above from the Centre for Economic Policy Research. It used the same assumption: that TAFTA would produce small economic gains from the weakening of financial regulations, milk safety standards, data privacy protections and other "trade irritants" – at no cost to consumers.

See TAFTA's threats to consumers and the environment.

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