Impacts from FTAs are twisted by politicians

anglesDown with TPP: Are Free Trade Agreements beneficial to the United States?

destiny

Free trade agreements (FTAs) are often used as scapegoats for politicians who dance around complicated issues.

Donald Trump accuses past FTAs such as The North American Free Trade Agreement (NAFTA) for job loss, increased outsourcing and higher trade deficits.

Hillary Clinton made a dramatic shift in policy by opposing future FTAs such as the Trans-Pacific Partnership (TPP). She also argues that past initiatives “have been sold to the American people with rosy scenarios that did not pan out.”

However, many of these claims fall short of surmounting evidence that prove FTAs are beneficial to the United States.

While it is true that NAFTA did cause some job loss, the number of jobs and the reasons why are greatly exaggerated.

Since joining NAFTA in 1994, the U.S. has lost 1.9 million jobs in but gained more than 34 million jobs—a vast improvement over fellow NAFTA members Canada and Mexico, which generated 3 million and 10 million jobs respectively, according to a Newsweek article in June.

Additionally, automation is key to the deterioration of the American manufacturing sector. A study conducted by Ball State University concluded that 90 percent of jobs lost in manufacturing were due to productivity gains.

Despite this, the U.S. is still the second largest manufacturer in the world, producing 17.2 percent of global output. Overall, employment is affected by total labor demand.

Large trade deficits are not a result of FTAs either. The Harvard Business Review explains that trade deficits depend more on a country’s saving habits than its trading policies.

Furthermore, 91 percent of the U.S. trade deficit stems from countries who do not share an FTA with the U.S., such as China and Japan.

In 2015, trade was nearly even in exports and imports within the 20 countries the U.S. has trade agreements with, according to the Wall Street Journal.  

FTAs also allow the average American consumer to live a higher quality of life.

When Russia placed a ban on food imports from the U.S., EU, Australia and other countries, domestic produce prices skyrocketed. Cabbage inflated to 353 percent of its original cost and peppers are 654 percent. If the U.S. were to shy away from FTAs, the price of domestic goods could inflate.

Another study by the Peterson Institute found that the average American household saves around $8,156 per year because of cheaper products obtained from FTAs and that lower-income citizens have the most to gain from the agreements.

This means families have more money to spend on more expensive items, such as cars, homes and education.

However, this does not mean Americans are purchasing less; it means they are buying more than they would have before the agreement and still saving money.

Finally, FTAs allow the U.S. to regulate conditions and impose a greater international influence through globalization.

Undoing past FTAs would make the U.S. vulnerable to trade wars and tariffs akin to the Great Depression.

The benefits of globalization, as a whole, outweigh the costs.

 

Destiny Pinder-Buckley is an English and international affairs major from Mitchell, S.D.

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