Want to Know if the TPP Will Be a Disaster? Just Look at the Korean Trade Deal
Labor
U.S. exports to Korea have been flat since the deal.
By Leo Gerard / AlterNet
Photo Credit: Wikimedia
On the fourth anniversary of the Korean trade deal, its lofty promises have been revealed as putrid pie in the sky: More jobs lost. No exports gained.
Just like NAFTA, just like China’s entry into the World Trade Organization (WTO), free traders swore that the Korean deal would shower jobs and economic prosperity down on America.
It didn’t happen. Actually, the exact opposite did. In all three cases, the schemes enticed corporations to close American factories and offshore work. That enriched CEOs and shareholders. But it impoverished millions of American workers and bankrupted communities.
Now, a backlash is evident in the groundswell of support for insurgent presidential candidates on both the left and right who denounce these failed free trade policies. This is an uprising against a quarter century of Washington, D.C., based free-trade boosterism. Its first victim should be the proposed Trans-Pacific Partnership (TPP), a massive scheme between the United States and 11 Pacific Rim countries.
“It’s gonna be great!” That’s what the TPP groupies keep saying. Just like the NAFTA junkies did. Remember when the free traders breathlessly said letting China in the WTO would open up its market of a billion consumers to U.S. manufacturers? Instead, tens of thousands of American factories have closed and China is selling its iPhones, televisions and steel to American consumers.
The deal with Korea is the most recent example of just how badly free traders hurt American workers and communities. The promise from free trade promoters was that the Korean deal would expand U.S. business opportunities and “support” 70,000 American jobs. The U.S. International Trade Commission estimated exports to Korea would rise by at least $10 billion.
None of that happened. U.S. exports to Korea have been flat for the entire four years. Meanwhile, imports from Korea rose 26.8 percent. As a result, the U.S. trade deficit with Korea more than doubled in just four years.
That means American workers lost jobs. Instead of Americans manufacturing commodities, Koreans did. Then the goods were shipped to the United States duty free under the deal that was supposed to be so great for American workers.
Robert E. Scott, senior economist and director of trade and manufacturing policy research at the Economic Policy Institute, calculated that in just four years, that trade deficit with Korea cost 95,000 Americans their jobs, mostly in manufacturing.
Free traders bragged at the time the Korean deal was signed that it would finally give American car and parts manufacturers access to the Korean market. And if an increase of less than $1 billion worth of vehicle and parts exports to Korea over four years is access, then it’s a success. By contrast, imports of Korean cars and parts to the United States increased by $10.6 billion over the same period. Frankly, that’s ten times more successful. For Korea.
That’s not the kind of news that devastated former car and car part manufacturing towns like Flint and Ypsilanti, Mich., want to hear after that 70,000-job promise made by those Korean free trade deal pushers. It’s certainly not good news either to devastated steel towns like Duquesne and Monessen, Pa., where the metal for cars and car parts was once forged.
The abject failure, the upside-downness of the Korean deal, is illustrated by these two statistics: The U.S. trade deficit with all nations over the past four years declined slightly, by 5 percent. At the same time, the trade deficit with Korea surged up 115 percent.
Clearly, something is very, very wrong with the Korean deal. And with NAFTA, which is still sucking manufacturers like Carrier over the border to Mexico, a corporate desertion announced in February that will cost 2,100 American workers their jobs at two Indiana plants.
And, similarly, clearly something is wrong with China’s entry into the WTO, considering that U.S. Steel Corp. just filed a petition with the U.S. International Trade Commission asking it to outlaw all Chinese steel because of numerous violations, including five Chinese military officials hacking into the corporation’s computers to steal trade secrets.
All of the free trade schemes had the same bad effects. But each time a new one is proposed, like the TPP, its cheerleaders say, “No, no, trust me, this one is the one. This time it’s going to be great!”
Dean Baker, co-director of Center for Economic and Policy Research (CEPR), and CEPR economist David Rosnick suggested a reason for this. The free traders keep using the same rosy, but broken model to predict results from proposed trade deals.
That rosy model claims that gains to the U.S. economy from the TPP would be 0.5 percent of GDP when the impact of the agreement is fully realized in 2030. By contrast, another model by different economists found that the deal would cause a loss in GDP of .54 percent by 2025 and cost the United States 448,000 jobs. Frankly, based on experience from NAFTA, China and the Korean deal, the second, less-perky model seems much more realistic.
And that’s what Baker and Rosnick pointed out. They compared the projections from the rosy model to what actually happened. They found the model failed, both for Korea and NAFTA. That raises serious questions about why anyone is using it to predict rosy results for the proposed TPP deal.
The first step toward achieving trade deals that work for American workers is admitting that what’s going on now has failed. The process is flawed beginning with who sits at the bargaining table – that would be corporate lobbyists, not laid-off auto workers from Flint. Every one of the TPP’s 5,544 pages should be shredded. Then negotiators, including all stakeholders, can concentrate on seeking fair deals under which American workers, American communities and American businesses all prosper.
Leo W. Gerard is president of the United Steelworkers union. President Barack Obama appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. Follow him on Twitter @USWBlogger.
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