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Will US free trade agreements create jobs?

Will it create jobs?

Perhaps the most controversial element of the free trade agreements with South Korea, Panama and Colombia, respectively, has been the impact on jobs in the U.S. While the figures varied in the wake of the announcement, USA Today reported that the deals' proponents estimated the deals would create or save as many as 380,000 U.S. jobs. At the same time, skeptics worried that the U.S. could lose as many as 214,000 jobs. So how could the same deals produce such wildly different estimates?

The variation probably depends on where you sit in the American economy. If your business benefits from having high tariffs on imports from Panama, South Korea and Colombia, the deals are likely to be alarming. But Meyer says, "Companies exporting goods and services abroad will almost certainly see upticks as well as the sectors supporting those companies with other goods and services."

Looking at the macro picture, Eugene Laney Jr., vice president of international trade affairs and compliance at DHL Express U.S. in Washington, D.C., says "these agreements mean significant job growth."

Citing data from the International Trade Commission, Laney says the U.S. could see a net gain of 250,000 jobs, though that figure can change based on the economic momentum of our new trading partners.

"South Korea, Colombia and Panama are growing faster than the U.S., which means greater and freer access to these markets results in more sales and job growth for U.S. businesses," Laney says. "These free trade agreements are a step in the right direction in improving the current U.S. economy."

While Brush agrees with that overall assessment, her figures aren't so optimistic.

"The Department of Commerce estimates that for every $1 billion in product exports, 6,000 jobs are created, and for services, the number is 4,500 jobs," Brush says. "If the agreements generate the expected $10 billion to $15 billion, this would create 45,000 to 90,000 jobs."

As for the argument that the free trade agreements could actually cost U.S. jobs, Robert Scott, director of trade and manufacturing policy research at the Economic Policy Institute, a nonprofit, nonpartisan think tank in Washington, D.C., worries the deals will only lead to greater trade deficits with our trading partners, which will in turn hurt U.S. jobs. Even if the deals don't increase trade deficits, Scott doesn't expect the agreements to be a boost to U.S. jobs.

"At best, (proponents) claim that these deals will support a few tens or hundreds of thousands of jobs that could be created over the next decade," Scott says. "But the U.S. has a jobs crisis now. A decade from now, if employment finally recovers, these deals could simply end up moving jobs from one industry to another. Free trade agreements are no answer to the jobs crisis, even in the best case."


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