Are Trade Deals Good for the American Worker?

An Article from Politico on the intertwined NAFTA and TPP

Posted by Terrence Isert, March 7, 2017

Help or hindrance? At ProMicro Consulting, I’ve thinking a lot about the recent national discussions around trade deals and the popular conception that free trade hurts American manufacturing workers and jobs A recent arti. is recent article in Politico juxtaposes criticisms and advantages of the recently rejected TPP as a pathway to a better NAFTA.  Much has been made of the manufacturing job losses totaling 5 million since 2000. However, manufacturing have seen a recent uptick of 800,000 jobs in the period of 2010 to 2014. This number is significant in that some economists have quantified this amount as the number of manufacturing jobs shipped to our trading partners, particularly Mexico.

The story of free trade and jobs runs deeper than that however.

The economics of these trade deals are tricky and in this case interwoven more with trade deficits, the Great Recession, the pace of manufacturing outputs and politics in the US. According to the US Census, the trade deficit alone ballooned since 2000  (30.2B, March) to 2017 (48.3B, January figures) according to the at least indirectly affecting industries such as manufacturing. NAFTA was always manufacturing and agriculture-heavy in its focus, the former losing 5 million jobs since 2000(see EPI article) although a modest rebound of 800,000 jobs has occurred since 2010. By comparison the TPP was focused more heavily on service industries where the US has a large trade surplus even with Mexico. The new trade deal under TPP was designed to address some of the labor-protection issues, open up access to new markets (dairy industry in Canada) and insert environmental measures missing from NAFTA.

What is clear is that the US missed an opportunity to update a trade deal with its North American partners to improve its trading relationships benefiting more American workers and an opportunity for broader and deeper access to new and existing Asian markets. Those deals may be harder to strike unilaterally and now less favorable to US jobs and its economy.