The second presidential debate will take place tonight at Hofstra University in Hempstead, New York. The topics will range from domestic to foreign policy, meaning the issue of “free” trade* is sure to come up. On this topic, there is little daylight between the two candidates. In 2008, candidates from both the Republican and Democratic Party participated in an “anti-NAFTA off”, competing in Rust Belt states that have lost hundreds of thousands of manufacturing jobs. Sherrod Brown (D-OH), stated clearly after the election that the “results demonstrated Americans’ continued rejection of NAFTA style trade agreements."
Nevertheless, the last four years have seen a series of “NAFTA-style trade agreements” passed despite significant opposition from within the Democratic Party. President Obama has signed trade agreements with Colombia, Panama and Korea and is now negotiating the Trans-Pacific Partnership (TPP), a trade deal with at least 10 countries that Public Citizen’s Lori Wallach describes as “NAFTA-on-steroids with the world.” During the last debate, President Obama touted the trade deals as boosting exports while Romney said he would push for even more “free trade.” Wallach writes:
In an election dominated by the urgent agenda of U.S. job creation, it is a sorry statement about the domination of corporate money in American elections that both presidential candidates tout these NAFTA-style "free trade" deals. Repeated polls show that opposition to these NAFTA-style deals is one of the only issues that unites Democratic, Republican and Independent voters.
And as for the trade agreements’ record on job creation? Not so good either, reports Wallach:
Obama's claim that the three trade deals are boosting exports does not survive a basic fact check. To start with, the Panama deal has not even taken effect. And, since implementation of the Korea Free Trade Agreement (FTA), U.S. goods exports to Korea have declined by nine percent (a decrease of over $1.2 billion) in comparison to 2011 levels for the same months, while exports to Colombia since implementation of the Colombia FTA have barely increased (by $358 million). Under the FTAs, the United States has suffered a six percent fall in combined exports to the two new U.S. FTA partners.
Meanwhile, imports from both countries have risen substantially since implementation of the pacts. Neither candidate ever talks about the net effect of these deals, which is the measure that effects jobs and wage levels. But the bottom line is that the combined U.S. trade deficit with Korea and Colombia under the deals has jumped 29 percent above the 2011 levels for the same months.
Using the same ratio employed by the Obama administration, this trade deficit expansion implies the net loss of more than 15,000 U.S. jobs in just the first few months of the new trade deals.
*As CEPR has repeatedly pointed out elsewhere, these trade agreements cannot factually be labeled as “free trade,” as they increase costly protections, notably in the area of intellectual property, where the protections may raise the price of a commodity by as much as several thousand percent. By contrast, tariffs on manufactured items rarely raise the price by more than 20-30 percent.