"A free trade agreement would be very easy to write; you could write it in about three pages: we have no tariffs, they have no tariffs; we have no non-tariff barriers, they have no non-tariff barriers; we have no subsidies, they have no subsidies. It would be a couple of pages."
- Joseph Stiglitz, 2001 Nobel Prize in Economics Recipient
This page was significantly updated from the post-TPP version in 2016. To see the 2016 version (and very original pre-TPP release), please click here.
Trade agreements- sometimes called "free trade agreements" (FTA)- are those political-economic tools that typically exist in the economic shadows as guidelines and measures affecting the global market. In 2018, under President Trump, the spotlight once again shines upon these agreements. Are they beneficial? Do Americans suffer from them? Are US firms getting a bad deal? And just what the heck are these agreements in the first place? On this lengthy page, I seek to explain all of that as best I can so that a foundation can be set and understood. Awareness of this topic is key to sifting through news media, blogs, tweets, Facebook posts, and more.
As this is a long page with tons of information, feel free to use these links to more quickly navigate.
What Is Free Trade?
Comparative Advantage and Division of Labor
Free Trade Agreement Basics
Understanding Trade Deficits
Does America benefit?
What About Protectionism? Good, Bad, or Neutral?
Steve's Stance on Trade Agreements
What Is Free Trade?
Free trade refers to policy designed to eliminate discrimination against imports and exports. These days, such international deals focus on what should be mutually beneficial arrangements for two or more countries. Why would a company export goods and services if they can make more money locally? They wouldn't, thus trade becomes a matter of tariffs and other logistics (legal and otherwise), changes in ratios to allow for all parties to enjoy greater economic growth. Trade agreements, like Joseph Stiglitz mentions, should be concise and to the point.1
The United States has an internal version of free trade that is often taken for granted. Under the Commerce Clause and Article I, Section 10, states are prohibited from levying tariffs and duties on imports from other states.2 America is one giant free trade zone, and it works. Interstate commerce has birthed hundreds of nationally-operating firms that can exist because negotiating complex agreements for the purchasing or shipping of goods from multiple isn't required. States are free to levy taxes within their borders, or offer tax benefits to firms looking to do business there, but on principle, Maryland cannot place a tariff on goods from Florida.
This setup was further solidified under the Uniform Commercial Code established in 1952.3 The UCC's primary purpose is to create consistency across business financial law, which in turn creates a certain level of predictability in business activities. This includes contracts, leasing equipment, borrowing money from financial institutions, and more.
These rules and regulations that benefit interstate commerce and allow our economy to flourish are analogous to free trade in international commerce. Free trade agreements seek to establish, amongst other things, consistency and predictability between Parties to said agreement- two very important ideas that bring peace of mind to firms looking to grow. When a businesses' domestic growth and market reach begin to to peak, looking outside of the country is a natural next step in divining new revenue streams and avenues for profit. Deals may involve selling goods and services, or entail procurement of cheaper goods and service elsewhere for cost-saving measures.
This concept was important decades ago before technology and the internet emerged, back when labor laws and foreign wages were low enough to make sweat shops both desirable and profitable. Why pay American workers fair wage and benefits when you could get poor foreigners to do the same work for a fraction of the cost? To maximize shareholder value, it would be a travesty not to. But now the world has changed. Countries like China have grown into economic powerhouses which, in turn, has led to increased wages.4 The internet also played a role, shedding light on international travesty and inhumane conditions- at least, those conditions we'd consider inhumane. Sweat shops are in decline, costs are going up around the world, and thus businesses need new avenues for making money, avenues that play by an established set of rules and regulations without the overhead of inconsistency and unpredictability of outcome.
To understand why firms and their home countries seek out such revenue streams and the necessary free trade agreements, we need to understand two important economic concepts: comparative advantage and division of labor.
Comparative Advantage and Division of Labor
Why would a nation engage in free trade to begin with? The global economy is highly interdependent, with countries each having their own strengths and weaknesses. Some of these are resource based, meaning some countries simply do not have access to the raw materials others do. There are no national economic autarkies in this day and age.5 Each firm and, likewise, each country, has certain things they are relatively good at and things they are relatively bad at. Some of these things may be innate- land use and natural resource availability- while others are based on socio-economics, such as labor market pools (education levels, skillsets, mental and physical capacity, etc) and available capital.
Comparative advantage refers to advantage one party has over another. This does not necessarily refer to an absolute advantage where one party simply cannot compete, but the two ideas may overlap. An example of a comparative advantage would be growing of citrus fruits in Florida versus Maine; Florida's climate lends itself to orange production more-so than Maine. The United States has an absolute advantage over, say, Finland when it comes to growth of oranges and other popular citrus fruits. For Finland, it makes more sense to purchase goods and services it's bad at (like oranges) and, instead, sell things it's good at, such as large flat-rolled stainless steel.6
Division of labor is born out of the law of comparative advantage. When parties focus on what they are good at, overall productivity output increases. As an example, take person A and person B. Person A can produce 36 cupcakes or 2 large wedding cakes in an hour; person B can produce 36 cupcakes or 3 large wedding cakes in an hour. If they make both goods evenly over the course of an eight hour workday (four hours each), then we get
- Person A - 144 cupcakes, 8 large wedding cakes
- Person B - 144 cupcakes, 12 large wedding cakes
- TOTAL - 288 cupcakes, 20 large wedding cakes
If each person focuses on what they have a comparative advantage in, person A focuses on cupcakes and person B focuses on large wedding cakes for the entire eight hours, this leads to 288 cupcakes and 24 large wedding cakes being produced. Division of labor in this case yielded greater output and benefit to the firm employing both individuals.
Trade agreements are born when nations pursue comparative advantage. If a country has a comparative advantage in producing high end manufactured goods like computer chips but lacks high volume of physical labor needed to efficiently manufacture consumer electronics, they will seek to export the former and import the latter from another Party. Trade allows both Parties to maximize productivity and, thus, revenue through focus on what each is good at. Now all a country needs is an opportunity without the risk of their trade partner screwing them over. What they need... is a trade agreement.
Free Trade Agreement Basics
Free trade agreements are negotiated and agreed upon rules and regulations between countries to ensure mutual benefit. Unlike treaties, trade agreements have real consequences. Thanks to the World Trade Organization (WTO) and its Dispute Settlement Body (DSB), countries that take part in trade agreements can be forced into compliance. This is vastly different than, say, the Kyoto Protocol where countries can, theoretically, exit anytime they please.7 If a country violated a provision in a trade agreement, a State or corporation could go to the WTO and seek to have the offending laws or policies of the country changed. In extreme cases, should the offending country not wish to change their policy, the WTO allows the "prevailing" country or corporation to impose sanctions, injunctions, and more upwards of hundreds of millions or even billions of dollars. The United States, for example, imposed a steel tariff in the early 2000's to combat a perceived surge in steel imports. The EU and many other nations filed suit with the DSB, won, and sought to impose a $2+ billion sanction on US imports if then President Bush didn't remove the tariffs in question.8 He did.
From the State's perspective, trade agreements should be fairly straight forward as Stiglitz said. They seek to remove tariffs and subsidies, ensure equal treatment between Parties, and establish dispute mechanisms to ensure compliance with agreement obligations. But the world is complicated and countries participating in free trade do not engage in "open border" policies. Instead, standards and guidelines from the WTO are in place to ensure that WTO members and trade agreement Parties can ensure the proper amount of protections to local industries and prevent another nation from abusing power or a comparative advantage.
The WTO and free trade agreements follow rules laid out in the General Agreement on Tariffs and Trade (GATT).9 The GATT serves as the foundation upon with agreements are made. It includes provisions such as "national treatment" (often abbreviated "NT") and "most-favoured nation" (MFN) status.10 National treatment says parties will treat imports like domestic products when it comes to internal taxation or charges (ie, imported bananas and bananas grown in the United States are to be treated the same), while most-favoured nation status means a party will treat all like imports from all its trade partners the same (ie, if there are duties on imports from one country, another country cannot be subjected to higher duties on like imports). These provisions help establish the "free" portion of free trade by seeking a level of equality between partners. This is analogous to my concept of equality of opportunity.
The GATT also establishes general exceptions that could trigger a Party to levy additional tariffs or charges, such as when their balance of payments is at risk due to low foreign exchange reserves or for national security reasons.11 Developing countries that join the WTO gain extra benefit as they are granted some exceptions with tariff structure and other trade components to help protect the establishment of particular industries, allowing them to grow without fear of being crushed by fully developed nations.12 Exceptions exist due to the complex ebb and flow of markets and monetary policy across the globe.
During the Uruguay Round of trade negotiations, other important agreements got absorbed into the GATT.13 One is the Technical Barriers to Trade Agreement (TBT). The TBT seeks to ensure technical regulations, standards, and the like are non-discriminatory and do not create any unnecessary obstacles to trade.14 That's not to say Parties cannot implement measures to achieve legitimate policy objectives such as protecting human health or the environment, but measures implemented should be based on international standards where possible.15 Forcing Parties to adhere to legitimate standards helps distinguish appropriate technical regulations from protectionist measures. The TBT also includes transparency provisions meant to relieve parties' fear of unpredictability.16
Another agreement absorbed into the GATT was the Agreement on Subsidies and Countervailing Measures (often called "ASCM" or "SCM"). The SCM covers two major topics: rules regarding whether or not a subsidy may be provided by a Party, and then how countervailing duties are to be determined and applied against another Party providing inappropriate subsidies.17 If one Party provides subsidy assistance like tax breaks to manufacturers that export goods which results in those goods being able to be sold for less than domestic manufacturers could, that's grounds for a countervailing measure. This is important because state-owned enterprises may try to gain market advantage through inappropriate subsidies.
There are many other nuanced aspects to free trade agreements, the GATT, and WTO such as the agreement on Sanitary and Phytosanitary (SPS) Measures18 and the Anti-Dumping Agreement19; all of these rules, provisions, and guidelines were put together over decades by countries around the world in an effort to keep trade as free and fair as possible amongst WTO members and between individual countries seeking to establish free trade agreements with each other. Whenever a new trade agreement is pursued or a trade agreement seeks to be altered, these guidelines serve as a base for mutual benefit between all Parties involved.
The last piece to mention when it comes to free trade basics is dispute settlement. All the rules and provisions are for naught if there is no legal recourse. The Dispute Settlement Understanding (DSU) is the main WTO agreement on how to handle situations when one country believes another country is violating an agreement or commitment it made to the WTO or in their FTA.20 Free trade only works when agreements are faithfully implemented. DSU and Dispute Settlement Mechanisms (DSM's) such as the Dispute Settlement Body (DSB) and Investor-State Dispute Settlement (ISDS) offer recourse to keep Pparties from unilaterally taking actions- which would break the rules and render the agreement meaningless in the first place. DSM's are somewhat complicated affairs involving panels, timeframes, appeal processes, and many procedural steps along the way.21 But their importance is critical to ensuring a country does not create unnecessary barriers to entry or raise tariffs under false pretenses.22
Dispute settlement is often misunderstood. I freely admit to misunderstanding it at first based on media stories. The big concern with ISDS is that corporations are perceived to have more power than countries to the point where countries have to "change their laws" to appease those firms.23 Some groups push the idea that foreign corporations will sue countries, including the United States, under ISDS and have laws they perceive to the harmful to their business repealed, with ISDS being on their side.24
However, the complex nature of these cases ultimately proves that such perceptions rarely mirror reality.25 What ISDS strives for (and succeeds at in varying degrees) is to provide an avenue for a foreign firm to not be discriminated against by a government or governmental entity; this concept is important when dealing with nations that may seek to take action against a foreign firm for political reasons. Just like we expect US firms to receive fair treatment in another country they do business, so to does the general reciprocity of a free trade agreement ask that foreign firms receive fair treatment on US soil. The concept of equality of opportunity is not just something I support and push for in domestic issues, but something I feel should spread across the globe. Investors- foreign and domestic- should receive guarantees of basic principles like fair and equal treatment, non-discrimination, defense against the illegitimate taking of their private property for government or public use, etc.
Dispute settlement is a basic component of free trade for a reason. Please try and keep an open mind about it.
Understanding Trade Deficits
Trade deficits and trade surpluses refer to the difference in dollars imported versus exported. Generally speaking, a nation has a trade surplus if it exports more dollar value than it imports, and a trade deficit if it imports more than it exports. Some people believe a trade deficits subtract from overall economic growth (GDP) because more money is "spent" (imports) than "earned" (exports). This is pure political speak based on the math beyond GDP calculations-
GDP = Consumption + Investments + Government Spending + (Exports - Imports)26
When you look at that equation, subtracting imports implies a lower GDP and, thus, supports the narrative of "more imports than exports (ie, a trade deficit) is bad." But that narrative fails to take comparative advantage and division of labor into account. Contrary to what one might think, trade deficits can be an indicator of economic strength; when the economy is healthy, making the most of comparative advantage means increasing imports of goods and services that one is not as good at. It should be no surprise that trade deficits increase when the economy is doing well and decreases when it does not. A simple comparison of the trade balance and GDP shows just this-
We see deficits increase after NAFTA in the mid-90's just as GDP increases. With the early 2000 recession, GDP stalls and trade deficits decrease as consumption drops, only to increase as the economy comes roaring back in the mid-2000's. When the 2008 recession hits, the trade deficit drops at rapid pace as does GDP; firms cannot afford to take advantage of division of labor as underlying fundamentals and revenue suffer. As we see the recession go away, the trade deficit one again increases as does GDP, though not to the levels seen in the mid-2000's.
This relationship is based on the idea that imports are intrinsically fine, serving to fill existing demand for those goods by firm and manufacturers seeking to be more efficient. If Apple was to design and build the iPhone purely in the United States to avoid importing anything, assuming natural resources allowed them to, they would be a less profitable company than they are now because of all the extra money spent on tasks it's less suited to do when compared to everyone else in the iPhone supply chain.27 That loss of productivity, in turn, would result in higher costs, fewer sales, and an overall decline in revenue... which means lower capital investments, lower consumer spending due to effected wages, etc. Walmart would not exist if it had to produce every non-domestic product it sold.
This is critical to understand: imports are consumed. They do not languish, they are fully utilized by firms in the production of other goods and services, or utilized by consumers at the end of the chain. In both cases, those imports put the benefit offered by comparative advantage and division of labor in the spotlight.
Does America benefit?
America without a doubt benefits from free trade. Everyone that utilizes comparative advantage and understands the benefits surrounding division of labor will come out ahead. This applies in trade and business. If you have an employee that can bake the best cake in town but their job is to man the cash register because "reasons", your business is failing to maximize opportunity by not utilizing the comparative advantage that cake baker has.
The United States has comparative advantage in a number of areas. Compared to many countries, we have a large land footprint- the 3rd largest land area in the world. We also have a lot of capital thanks to a healthy economy and a lot of investing by public and private entities. We also are one of the top countries in the world when it comes to mental labor, aka "human capital."28 For goods and services that focus on these three areas, America has a comparative advantage, one that shows in our overall economic value.
Our agricultural exports are an example of such an advantage. We have a trade surplus in this sector, even with slower world economic growth lowering the amount of agricultural exports in recent years.29 Highly automated high-end manufacturing is another area that requires capital and mental labor; our abundance of that has helped push exports of airplanes and semiconductors to record levels.30 And that value in human capital contributes to the US exporting large amounts of white collar services and intellectual property.31
You don't have to take my word that America benefits. IGM Chicago's economic experts panel thinks we do as well!32
Let's use NAFTA as an example. The general train of thought today in popular media is that NAFTA is terrible and killed jobs, especially manufacturing. However, the general consensus among economists is that the US did benefit from NAFTA and it had little effect on the labor market.33 US manufacturing jobs, believe it or not, increased under NAFTA.34 From 1994 through the dot com burst in 2001, manufacturing was on the uptick in America. But the recession, poor planning, and poor decisions by the manufacturing sector crippled them in the recession of the early 2000's.35 It was as much- if not more- a fault of poor management than free trade for the decline of manufacturing in the 2000's. Poor management forced wage changes, investigation into automation technology, and so on. And yet, while manufacturing jobs declined, manufacturing output continues to soar to near record levels, with only recessions causing a damper on the sector's real output.36
One more point on NAFTA to note. When organizations like citizens.org and the EPI blame NAFTA for the loss of over 1 million jobs, they are doing special math.37 EPI calculated jobs lost by looking at the amount of imports against exports, treating imports as jobs lost and exports as jobs gained. Because imports is greater than exports, the calculation results in a deficit, which means a loss of jobs.
That concept doesn't mesh with the job reality of the time. The EPI's article on jobs lost even cites a Federal Reserve Bank of New York paper from 2005 for job loss calculations on imports.38 The headline of "net number of U.S. jobs lost... 2.4 percent of total U.S. employment as of 2003" sounds scary, but the paper focuses on job loss and the recession of the early 2000's. It shows net job growth post NAFTA into the recession and the net effect on jobs. Where the 2.4% number comes from is when the recession is taken into account. Remember the paper was written in 2005, shortly after the recession. Focusing on gross jobs versus net jobs is disingenuous and ignores the economic reality of business dynamism.39
Does this mean no one lost in NAFTA or in other free trade agreements? Absolutely not. Because the United States has a comparative disadvantage in the physical labor category compared to nations with larger physical labor markets, there was a time when job displacement and reallocation (again, business dynamism) meant positions in some firms were off-shored. Even today, factory and other physical jobs are outsourced to nations with the comparative advantage in the physical labor category.40 This hurts those whose primary means of contributing to the US economy was by offering their manual labor. And in areas that depended upon those blue collar workers, the economy took a hit. So while the US economy as a whole experiences net gains, local economies can take a hit from free trade.
That's why domestic policy needs to take that issue into account. The United States already has the Trade Adjustment Assistance (TAA) program under the Department of Labor. However, that program is weaker than it should be. Revisiting the program and increasing its funding is critical in the pursuit of greater free trade. Incentives and funding for re-education, rural sourcing, and infrastructure to transform local economies are an absolute must. Because even with these local economy loses, free trade promotes competition and lower cost goods and services. Research even shows how lower prices due to free trade benefit poorer communities thanks to the percentage of their food expenditures to income versus middle income and wealthy groups.41
If that wasn't enough, free trade is a huge benefit to small businesses, the labor market, and the nation's GDP. Consider this-
- 21 states exported more than 50% of their goods to partners we have trade agreements with42
- 98% of exporters can be classified as startups or small businesses43
- Those startup and small business exporters accounted for 34% of the total value of goods exported in 201444
- They brought in roughly $782 billion in revenue, or 4.6% of the GDP that year. Without those exporters, we would've had negative GDP growth!45
- Woman and minority owned startups and small businesses that export, on average, employ more and pay more than non-exporters46
- Every $1 billion in US exports supports nearly 5,600 jobs47
- Given that small businesses brought in roughly $782 billion in export revenue in 2014, that amounts to roughly 4.83 million jobs associated with free trade
- Roughly 97% of manufacturing firms that do export are small business firms48
Here's a link to the above stats (and more) in a nice infographic.
America benefits as a whole. All the evidence points to it.
What About Protectionism? Good, Bad, or Neutral?
Protectionism is the antithesis of free trade. Based on all the material discussed previously in this thesis, protectionism hurts America as a whole. Lack of reciprocity and favorable treatment means US exports will generate less revenue. Countries may impose additional barriers to entry or support state-owned enterprises with subsidies. When the etiquette of fairness collapses, the baron of greed steps in to wreak havoc at the expense of ego. In an all-out trade war, short of sanctions and banning of imports, flooding the US market with cheap raw materials crushes domestic firms; tariffs raise costs that get passed on to the consumer who not only keeps losing out on wage increases, but now has to pay more for goods and services. Firms that depend on exports will cut production as foreign buyers look elsewhere, which means loss of local jobs since there's no reason to keep unnecessary labor.
No, protectionism is a problem. Rhetoric towards protectionism and trade wars does nothing to ensure economic predictability. Firms depend on knowing the general path ahead, what rules and regulations to deal with, and how investments will take. When protectionism rears its ugly head, Americans suffer. Once you have awareness of the trade basics above, it's easy to see how moving away from trade liberalization into the real of domestic favoritism, regardless of inefficiencies that may exist, yields pain for the majority of Americans.
Roughly every billion dollars lost to exports costs thousands of jobs. Every extra dollar spent on tariffs cuts into firm revenue. If trade revenue from small businesses alone was cut in half, the United States would experience almost no GDP growth. The vast vast majority of US exporting firms are small businesses who gain nothing from higher costs of raw materials and greater duties on exports.
Protectionism is bad.
Steve's stance on trade agreements
Based on everything mentioned previously in this thesis, I support free trade and, by extension, free trade agreements.
However, I did not support the TPP. After reading through the whole thing, there was both good and bad, and I thought the bad outweighed the good. Carve-outs in free trade are problematic, as was the intellectual property chapter. Sanitary and phytosanitary measures were disingenuous and favored bad science while measures to protect the environment had no teeth. The labor chapter brought all Parties to standards set by the International Labor Organization, but lacked concrete requirements. In short, the free trade pieces were decent, but the rest was not.
Deeper trade liberalization with our current trade partners would go much further than pulling back into a protectionist shell. Expanding to new markets like Africa offers potential as well. There is a lot of global market to capture, a lot of comparative advantage to make use of; we should pursue those goals for firms large and small, for established organizations and startups with much to gain by selling at most-favored-nation status to trade partners. Jobs and the economy will expand. Continue trade agreement pursuit, but cut the carve outs, favoritism, and draconian intellectual property practices that hinder competition and innovation. The country needs it.
- See Making Globalization Work for a transcription of the Carnegie Council event Stiglitz spoke at.[top]
- See Article I of our Constitution, specifically Sections 8 and 10.[top]
- See Uniform Commercial Code for complete details.[top]
- See China Wage Levels Equal To Or Surpass Parts Of Europe . The trade situation surround China has changed since their admittance to the WTO in 2002.[top]
- Autarky refers to the concept of self-reliance. A country that is self-sufficient without need of external trade or aid would be considered an autarky. Wikipedia has a general overview of the concept.[top]
- See MIT's Observatory of Economic Complexity (OEC) entry for Finland for more trade information.[top]
- See Canada under fire over Kyoto protocol exit. The Kyoto Protocol was a treaty designed to reduces carbon emissions (amongst other things) in an attempt to fight global warming.[top]
- See US Tariffs on Steel Are Illegal, World Trade Organization Says.[top]
- See From the GATT to the WTO: A Brief Overview for a brief history on how the GATT and WTO came about[top]
- See GATT text from the WTO. Text is from the 1947 version.[top]
- Ibid., especially Articl XVIII: Governmental Assistance to Economic Development.[top]
- The Uruguay Round negotiations refers to negotiations between parties between 1986 and 1994 that resulted in many additional agreements and decisions being made. These set the stage for modern free trade as we know it.[top]
- See Agreement on Technical Barriers to Trade from the WTO.[top]
- Ibid, specifically Article 2: Preparation, Adoption and Application of Technical Regulations by Central Government Bodies.[top]
- See Agreement on Subsidies and Countervailing Measures from the WTO[top]
- See Sanitary and phytosanitary measures from the WTO.[top]
- See Anti-dumping, subsidies, safeguards: contingencies, etc from the WTO[top]
- See Understanding on Rules and Procedures Governing the Settlement of Disputes from the WTO.[top]
- See WTO & GATT Dispute Settlement from the Georgetown Law Library for a very brief overview.[top]
- It's generally believed that tariff increases by President Trump under the guise of "national security" runs afoul of GATT provisions. See for example Fights Among Friends: Trump’s Tariffs and the Global Trading Regime.[top]
- Many stories and blogs came out about this when the TPP was being considered. See Should corporations be able to sue foreign governments? The U.S. could owe billions. from the Washington Post, The obscure legal system that lets corporations sue countries from The Guardian, or even from Citizens.org to name a few.[top]
- This compiled document from Public Citizen is one of the most cited for firms using ISDS against nations.[top]
- In regards to the Public Citizen document previously referenced, one example cited was Ethyl Corp bringing Canada to dispute settlement because Canada banned a fuel additive they use based on health reasons. From a media standpoint, this sounds great and makes it seems like corporations are more powerful than countries. However, Canada's own government did a number of studies on the additive and Health Canada concluded the additive not a threat to human health or welfare. See the Statement of Claim for more info. Other cases involve governments constantly changing regulations after contracts for work are signed... repeated changing them, to the point where it becomes discriminatory against the firm. Dispute settlement is complex and requires a broad perspective to determine where there is legitimate reason for claim and when a firm is being dumb. In the case of Eli Lilly suing Canada... dispute settlement ultimately favored Canada, dismissing Eli Lilly's claims unanimously, costing Eli Lily millions. See Eli Lilly and Company v. Government of Canada from the Global Affairs Canada website.[top]
- See Domestic Product (GDP) from Investopedia for more details.[top]
- See The global supply chain behind the iPhone 6. The article is four years old, but serves to show how ignoring comparative advantage may affect an entity.[top]
- See Global Human Capital Report 2017 Key Findings from the World Economic Forum. "Human capital" is defined as "the knowledge and skills people possess that enable them to create value in the global economic system. Human capital is not defined solely through formal education and skilling. It can be enhanced over time, growing through use—and depreciating through lack of use—across people’s lifetimes. The Global Human Capital Index featured in [this Report] thus treats human capital as a dynamic rather than fixed concept."[top]
- See Agricultural Trade from the United States Department of Agriculture.[top]
- See Aerospace Spotlight: The Aerospace Industry in the United States Overview from Select USA.[top]
- See There’s a Bright Spot for U.S. Exports (Hint: It’s Not Goods). Note that even with export of intellectual property through licenses and other distribution methods being so high, I still maintain my stance regarding intellectual property reform. It's necessary to achieve even greater socio-economic heights.[top]
- See Free Trade from the IGM Chicago website. Yes this is somewhat of an "appeal to authority" argument, but when there are dozens of authorities in different areas and at different capacities agreeing, that's usually a sign of correctness in my opinion.[top]
- See The Impact of NAFTA on the United States from the Journal of Economic Perspectives.[top]
- See NAFTA's Promise and Reality: Lessons from Mexico for the Hemisphere, page 27 for US employment in manufacturing numbers. For another take, see the St. Louis FRED Data set on Manufacturing Employment for 1989 through 2005. Employment drops during the early 90's recession, then rises post NAFTA until the dot com bust and subsequent recession, when technology started taking over thanks to computer power.[top]
- See The Economics of Modern Manufacturing from 2002 as an example from that time period on why manufacturing suffered. Firms were betting on continued growth in the face of the recession, investing and producing far more than they should have in those circumstances. Thus when the recession hit, the firms were crushed.[top]
- See Manufacturing Sector: Real Output from the St. Louis FRED data.[top]
- See NAFTA's 20-Year Legacy and the Fate of the Trans-Pacific Partnership from Public Citizen, citing the EPI.
See EPI's report here.[top]
- See U.S. Jobs Gained and Lost through Trade: A Net Measure.[top]
- See my About Jobs page for BLS data on job and firm growth before, during, and after NAFTA.[top]
- Physical labor has also been getting automated in situations where certain tasks are better performed by machines... but that's a different discussion.[top]
- See Measuring the distributional effects of trade through the expenditure channel from the VOX CEPR Policy Portal which finds the relative prices of goods consumed intensively by the poor fall more with free trade.[top]
- See Benefits of Trade Agreements from the USITC.[top]
- See U.S. EXPORT FACT SHEET February 2016 Export Statistics Released April 5, 2016 from the US International Trade Administration.[top]
- Math to take the total value of goods exported and multiply it by 0.34 to get the revenue percentage attributed to SME's.[top]
- See U.S. Census, Survey of Business Owners, Ownership Characteristics of Classifiable U.S. Exporting Firms: 2007[top]
- See US International Trade Administration, US Trade Overview, 2013[top]
- See U.S. EXPORT FACT SHEET February 2016 Export Statistics Released April 5, 2016 from the US International Trade Administration.[top]