Another test of who is helped or who is hurt by trade pacts

Just a few days ago, Ohio’s two U.S. senators — Democrat Sherrod Brown and Republican Rob Portman — were on the same page regarding a trade issue, both voting Tuesday to pass a bill that would impose tariffs on Chinese products unless China ceases to deflate its currency. Through its currency manipulation, China manages to make its products cheaper in the U.S. and U.S. products more expensive in China.

Passing the bill was the right thing to do, which is reflected by the bipartisan 63-35 vote. It should have been higher. All could be for naught, however, since the Speaker of the House, John Boehner, a Dayton-area Republican, intends to use his power to block the bill from coming to a vote in the House. If there were a vote, there is no doubt it would pass there as well, though not, perhaps, by as strong a margin.

Nonetheless, it didn’t take a seer to predict that the trade marriage between Brown and Portman wouldn’t last, and, indeed, by Wednesday it was over.

All it took was the next vote, this one on new free trade agreements between the United States and Panama, South Korea and Columbia to put Portman and Brown firmly back on separate sides of the aisle.

Difference of opinion

In short, Brown believes that free trade agreements have cost and will cost Americans jobs. He characterized the agreements as more-of-the-same that was produced by the North American Free Trade Agreement, which, he says, has cost Ohio thousands of jobs since it was ratified in 1994,

Portman counters that, “American manufacturers, farmers and service providers will gain greater access to nearly 100 million consumers through lower tariffs on our exports to Korea, Colombia and Panama.” He added that by White House calculations the agreements will create up to 250,000 American jobs.

Who is right? Frankly, we may never know for sure.

Today, 17 years after the passage of NAFTA, economists and partisans on both sides of the issue claim the numbers are on their side. And even President Barack Obama, who urged passage of these agreements and celebrated victory with the Korean president Thursday, claimed during the Ohio primary campaign in 2008 that NAFTA cost Ohioans 50,000 jobs. NAFTA was signed by President Bill Clinton; at the time, Obama’s opponent was Hillary Rodham Clinton.

In an economy as large as that of the United States, it is difficult to pin down the effects of one piece of legislation or one policy, even one as large as NAFTA. We do know that by 2004, 525,000 workers had become eligible for coverage under NAFTA’s Trade Adjustment Assistance program. They were able to show that their jobs were adversely affected by trade with Mexico and Canada. What is not so certain is how many other American jobs were created through U.S. exports to Mexico and Canada.

Heavy equipment makers, most notably Caterpillar, and farmers (from agri-giants to Ohio family farmers), claim benefits from NAFTA and say they anticipate increased exports under the new agreements. So, we know that there are identifiable winners and losers, but there are people on both sides claiming that theirs is the larger number.

Surplus becomes a deficit

There is one set of numbers, though, that seems to be in Brown’s favor regarding NAFTA’s effects. In 1993, the U.S. had a trade surplus with Mexico of $1.6 billion. By 2010, it had a trade deficit of $97.2 billion. That’s a sizeable shift in the export-import dynamic, and even when factoring in that oil represents billions of dollars worth of that imbalance, it’s difficult to come to the conclusion that the U.S. gained jobs in such a lopsided deal.

The best that Brown and U.S. Rep. Tim Ryan, D-Niles, another opponent of the agreement, can do now, is to use their offices to try to track the effect of these new trade agreements with Columbia, Panama and Korea. Sen. Portman can do the same. Perhaps by, say, the year 2016, one side will be able to demonstrate by the numbers which one was right.