Trade pacts fail to benefit U.S. companies – CPA

San Diego Union Tribune

Trade pacts fail to benefit U.S. companies

Michele Nash-Hoff, author of this article, is Chair of the CPA CA Chapter.

[Reposted from the

San Diego Union Tribune
| Michele Nash-Hoff | August 27, 2015]

Promoters of the Trans-Pacific Partnership Agreement make the same promises made by promoters of past trade agreements. Did their promises come true?

Promoters of the North American Free Trade Agreement (NAFTA) predicted an economic benefit for the U.S., but instead our trade balance with Mexico went from a surplus of $1.35 billion in 1994 to a deficit of $53.8 billion in 2014. President Clinton promoted China’s entry into the World Trade Organization by predicting substantial exports and job creation. Instead, our trade deficit with China worsened from $70 billion in 1999 to $348 billion last year, representing 64 percent of our trade deficit. Promoters of the Korea-U.S. trade agreement (KORUS) projected a $4 billion-to-$5 billion trade surplus from the 2011. Instead, our trade deficit increased by 59 percent in three years.

Free trade is only beneficial if a country benefits from the trade by exporting more than it imports. In 2014, the U.S. imported $2.34 trillion in goods compared to exporting $1.62 trillion in goods, resulting in a trade deficit of $721.6 billion. Because of a surplus of services exports, our total trade deficit was reduced to $505 billion. While California exported $174.1 billion in 2014, we imported $403.3 billion. It is apparent that we are not benefiting from our current trade agreements as we should, so a trade agreement with 11 more countries would only make our trade deficit much worse.

The U.S. has the worst trade performance in the history of the world with 40 years of trade deficits causing debilitating and potentially permanent job losses, stagnant incomes, industry losses and foreign debt. Many otherwise competitive manufacturing supply chains have left California and the U.S. Industries largely invented here that have departed include fabless chips, compact fluorescent lighting, lithium ion and lithium polymer batteries, advanced composites and advanced ceramics.

We lost more than 800,000 manufacturing jobs because of NAFTA, 3.5 million manufacturing jobs due to China’s entry into the WTO, and nearly 60,000 jobs due to KORUS. Trade agreements seem to benefit only the large multinational global corporations and hurt smaller American-only companies. More than 95 percent of American manufacturers are companies with fewer than 100 employees, so the TPP would hurt far more companies than it would benefit.

Free-trade agreements have failed to stop trade cheating by other countries through market-distorting practices. Many countries reduce tariffs with a trade agreement only to add consumption taxes (also know as value-added taxes, or VATs) on our exports. Others devalue their currency, artificially making our goods more expensive and their goods cheaper. Several Asian countries massively subsidize state-controlled industries to sell abroad at artificially low prices or “dump” products at below cost to destroy the competition in other countries.

The TPP is the opposite of free trade; it is government-controlled trade and is so overreaching on nontrade issues that it would control many aspects of the lives of all Americans. The TPP is much more than a trade agreement; it is a Trade and Global Governance Agreement because only five of the 29 chapters relate to tariffs and quotas. The other 24 chapters cover domestic regulation, food and product safety, financial regulation, investor rights, immigration, intellectual property, patents, copyrights, trademarks, immigration, environment, labor standards, etc., Provisions may overrule prior acts of Congress without new legislation being introduced, passed in Congress and signed by the president.

For the manufacturing industry, the most adverse effect would be that the U.S. would have to agree to waive “buy American” procurement policies. What this means is that the TPP’s procurement chapter would require all companies operating in any country signing the agreement to be provided access equal to domestic firms to bid on government procurement contracts at the local, state and federal level. There are many companies that survived the recession because of the “buy American” provisions for government procurement. The TPP could be a death blow for many of our smaller defense companies in the San Diego region.

Because the international corporate elite shipped middle- and working-class jobs away from cities in the U.S. to Third World nations like China, millions of hardworking Americans have been plunged into economic devastation.

The result has been the end of the American dream for an unfairly impoverished population living under an ever-declining standard of living. There are still nearly 2 million fewer jobs nationwide than in December 2007, before the recession started. What good does it do to have cheaper consumer goods if you don’t have a job?

The Trans-Pacific Trade Agreement is bad for American companies, American workers and American consumers.

Nash-Hoff has been in San Diego’s manufacturing industry for over 35 years. She is past president of the San Diego Electronics Network, Electronic Representatives Association and the High Technology Foundation.