Robert E. Scott

February 25, 2010

EPI Working Paper #289

Trade Policy and Job Loss

Advocates of free trade agreements, including the U.S. Chamber of Commerce, rely on deeply flawed projections for estimating the jobs impact of signing new free trade agreements (FTAs). As a result, these projections generally show that signing new FTAs will create jobs in the United States, when in fact doing so may destroy or displace jobs.

This Economic Policy Institute analysis examines the likely jobs impact of signing pending FTAs with Korea and Colombia. It shows, based on past experience, that these trade agreements will increase the U.S.’s trade deficit with both countries. Contrary to the Chamber’s projections, the EPI analysis then shows that the increased trade deficit per se will correspond to the loss of 214,000 jobs in the U.S. by 2015.

Depending on economic conditions, other factors may intervene to offset job losses, although they won’t change the fact that these jobs are displaced: The trade deficit per se will correspond to lost jobs in industries that compete with imports. While other factors could help spur job creation in other parts of the economy, for the factory worker who loses his or her job, this macroeconomic fact matters little. And given the weak U.S. economy, it’s unlikely that workers displaced from their jobs will find other employment quickly or easily.

Read this paper in pdf format.

February 25, 2010
Reuters

BEIJING - The United States has misapplied its own rules by taking action against imports from China, including the newest duties against Chinese steel pipes used in transporting corrosive liquids and gasses, China's Ministry of Commerce said on Thursday.

The United States on Wednesday imposed preliminary duties ranging from 11 to 13 percent on steel pipe from China, saying the duties would offset government subsidies. The case is another in a growing list of trade disputes, as U.S. manufacturers seek government help against competing imports.

February 25, 2010

The Daily News Online (Letter to the editor) 

The real question that should have been raised in your editorial ("Ferry Project's predicament highlights problem with Buy American rule," Feb 18) is why, with unemployment still hovering in double digits, would the Wahkiakum County contractor NOT use American-made steel (made by American workers) to do the work on the Puget Island ferry terminal?

Any contractor familiar with projects using federal transportation funds knows that Buy American rules have been in place since 1982, which contrary to your editorial, have worked smoothly and efficiently. It is the contractor's circumvention of the law that has left Wahkiakum County vulnerable to losing the $2.3 million in federal stimulus money for the project. This has nothing to do with "trade protection" since Buy American is fully consistent with U.S. international trade obligations

According to local reports, the only portion of the project that used foreign steel cost $178,000, and if that were redone with domestic steel, the county would qualify for the promised funding

Thomas J. Gibson, President and CEO, American Iron and Steel Institute (AISI)

February 24, 2010
Reuters

WASHINGTON - The United States on Wednesday imposed preliminary duties ranging from 11 to 13 percent on steel pipe from China to offset government subsidies, the Commerce Department said.

The decision puts further strain on U.S.-China trade relations, already tested by disputes over other U.S. trade actions and China's currency policy.