Debate over Free Trade Agreements (FTAs) is often highly charged and filled with misinformation. The latest example is Rebekah Friend’s “My Turn” The Trans-Pacific Partnership’s a bad trade-off if you’re not a global investor. Here’s why she’s off base:
Friend’s central argument is that free trade results in manufacturing job losses. This notion calls into question the sincerity of her lead-in that “the Arizona labor movement is not against trade deals.” When American jobs go offshore, there are a variety of reasons.
For starters, the U.S. has the industrial world’s highest corporate income tax rate combined with an oftentimes abusive regulatory structure. U.S. employers also have to contend with labor-backed wage policies that seek to dramatically raise the minimum wage and make hiring more expensive. On the flipside, advances in automation result in productivity gains that allow more goods to be produced with less labor. To say job losses are directly attributable to growth of free trade is naive.
Further, Friend’s claim that agreements like the Trans-Pacific Partnership (TPP) benefit global corporate interests over working families is easily refuted by numerous studies and economic analyses. One such report from the White House Council of Economic Advisors (CEA) noted, “the average industry’s increase in exports in the 1990s and 2000s translated into an additional $1,300 in annual earnings for the typical middle-class worker.” This makes sense when you consider that American’s real income goes up when the goods they buy are cheaper thanks to enhanced trade.
Friend also reiterates a common myth echoed by both ends of the political spectrum; that Trade Promotion Authority (TPA), or “fast-track” as its known, allows trade agreements to be “negotiated in secret” and “rubber-stamped” by Congress. While it’s true Congress must give a yes or no vote, it also reserves its constitutional right to withdraw or override the fast-track rules at any time with either a House or Senate vote. This is a right that has been exercised in recent history as Nancy Pelosi did in 2008 during debate over the Colombia FTA.
The fact is, trade agreements such as NAFTA, have been win-win, particularly for border-states like Arizona. A U.S. Chamber report, which examined the results of NAFTA at its 20-year anniversary, reports that “trade with Canada and Mexico has risen three-and-one-half fold to $1.2 trillion, and the two countries buy about one-third of U.S. merchandise exports.”
Passing TPA that would fast-track agreements such as the TPP is an action this Congress can take to significantly increase the U.S. and global GDP. A widely referenced estimate is that TPP would increase U.S. GDP by over $75 billion, or 0.4 percent by 2025. It would also create a market-opening pact with Japan, the number three economy in the world, and ensure that U.S. free-trade principles, rather than China’s, pervade in the Pacific Rim.
Trade increases prosperity and lowers barriers for U.S. companies so they can export and create new jobs. These are outcomes that improve the outlook for all Arizonans.
