US Trade Representative Ron Kirk was in San Francisco Wednesday promoting pending Free Trade Agreements with South Korea, Colombia, and Panama, a key aspect of the president's "jobs plan." I managed to catch up to him in the spacious lobby of a downtown high tech firm and he was nice enough to engage in a brief interview with no advance notice. My disagreement with many of his trade goals was clear from my opening question, yet he stuck around long enough for a few follow-ups, a full five minutes until his staff pulled him away. In that time, he managed to spit out just about every pro-free trade boilerplate talking point ever spoken, but displayed an alarming disregard for some of the consequences to American workers if the FTAs were to pass.
Kirk doesn't believe that many middle-class manufacturing jobs will be a part of America's future. Like many free trade proponents, he views the loss of these jobs as inevitable, and he opined that Americans don't want them anyway, despite the 16% of Americans looking for full-time work right now. With unemployment what it is, and ever-widening income inequality, some of Kirk's remarks were shocking. If Kirk is truly representing the Obama jobs plan, we're in for a long, ugly ride.
ME: So, Why do you and the Administration continue to talk about exports and the potential for job creation growth in the pending free trade agreements when the USITC [U.S. International Trade Commission] itself has predicted that the global import growth will outpace that of exports, likely costing jobs?I loooove the goods stamped Made in America line and I'm sure it tests well, because I've heard Obama use it several times. It's so quaint, just like the NAFTA-esque idea that Free Trade Agreements increase American manufacturing production. Seriously, who thinks this? Ten years ago, we had 17 million manufacturing jobs, now we have 11 million. SIX MILLION fewer manufacturing jobs since NAFTA.
KIRK: ... I mean, we don't, First of all, I haven't seen all the elements of that... but there's two ways you can approach it. If the implication is that we do nothing, then that isn't going to change the flow of imports, that means that imports are going to go up, and we're going to even have a greater disparity in our trade balance, so to us it only makes since that one way you attack that, then let's make sure those containers go back with goods stamped "Made in America."
KIRK: Let's increase our competitiveness... the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don't want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure. Our advanced services like [at the architecture firm where we met], there's no reason in the world ... why would we not want to capture the economic benefit of that here in America? I mean, I would argue that that is exactly the reason that we're doing it.Alright, wait... so the president's job creation plan includes sacrificing manufacturing workers whose products lack sufficient value? And somehow we'll make up the difference with jet-set service jobs that require multiple degrees? Last time I checked, those folks are doing just fine, and I resent the implication that the rest of us don't want jobs making things. With some of the "losing" sectors in the Korea deal being motor vehicles and parts, electronic equipment, and precision metalwork, you start to wonder what qualifies as something Kirk thinks Americans do want to make. The reference to investing in our education infrastructure is also interesting, given what's happening to public universities and schools across the country.
KIRK: [S]econd from that, we're doing it for the simple reason we know, when you export more, you're going to create more jobs here, you're going to pay higher wages to those workers. Companies that export grow faster, pay higher wages, and pay more workers. If we can meet the President's export goals, to double exports in that five-year period, which we're on pace to do and that's two million jobs at a time when job creation is the number one thing on the minds of Americans.I enjoyed talking to Kirk because occasionally he started waxing about what trade really is good for, perhaps blissfully unaware of the unnecessarily high price Free Trade Agreements ask for such opportunities. People like myself who oppose FTAs still want to win the future, to be globally competitive, and perhaps most importantly, to make goods that are marketable around the world. However, there are over a thousand pages in each of these FTAs that set rules that supersede our own laws, deregulate financial services, hinder access to life-saving medicines in poor communities, and do dozens of other things that have little to do with Kirk's idealistic vision of trade. FTAs cede legislative power to multinational corporations, apply downward pressure to wages and environmental standards, slow trade expansion, and cost jobs.
ME: Ok, I support the president's export goals, but when it is coupled with such a profound increase in imports as well, that job creation isn't going to happen, [with] 9% of Americans right now ... unemployed, [there are] a lot of reasons right now to protect those "low-paying" [jobs] that many people don't [even] have.Since Kirk doesn't believe Americans want jobs making things, please drop him a line if you'd be happy to take a job building cars or electronic equipment, a job that would pay a good wage and likely provide benefits. And to refute his notion that increasing exports necessarily leads to more jobs, I'll turn to Paul Krugman, who recently won a Nobel Prize for his work on trade economics. The whole piece, "Trade Does Not Equal Jobs," is worth a read. The main point follows:
KIRK: Your premise doesn't make [sense], your premise doesn't match. The fact that we're importing goods and we're exporting does not necessarily equate to a job, that's not a one-to-one match, it depends on what you're importing, again if you're importing goods that you either don't make in America or don't want to make in America, you're gonna be importing those anyway. So one, I'm just asking you to go back and re-examine your underlying premise, because I think that's a faulty one and that's an easy track for people to go into, but I would just say for me...
ME: The idea that American workers don't want to make these products when there's 9% unemployment seems to be a faulty premise to me.
KIRK: Well, listen, you can go back and I'll let you go examine that.
"And there's even an argument to the effect that increased trade reduces US employment in the current context; if the jobs we gain are higher value-added per worker, while those we lose are lower value-added, and spending stays the same, that means the same GDP but fewer jobs.So if you happen to run into President Obama during his countless hours campaigning in Midwest swing states, you might want to ask him when the next high-tech services firm will be opening up in your town. And if you happen to make something Kirk might consider a "cheaper product," you should let him know you like your job and want to keep it. I'd like to thank the USTR once again for his time, and to urge all of you to contact the USTR and your Congress member to oppose the Free Trade Agreements with Colombia, Panama, and Korea.
"If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not. If you want the Korea deal, fine; but don't claim virtues for it that it doesn't possess."