Trade Agreements Can Cause Jobs To Go To Countries That Provide Those Jobs

[1] Epi`s latest report is: Scott, R. Bruce Campbell, Carlos Salas and Jeff Faux (2007), Revisiting ALEFTA: Still not working for North America`s workers. Economic Policy Institute Briefing Paper #173. Other reports that use the methodology far from identical are: Groshen, Erica, Bart Hobijn and Margaret M. McConnell (2005); U.S. Jobs Gained and Lost through Trade: A Net Measure, Current Issues in Economics and Finance, Federal Reserve Bank of New York; and, Bailey, Martin N. and Robert Z. Lawrence (2004), What Happened to the Great U.S. Jobs Machine: The Role of Trade and Electronic Offshoring, Brookings Papers on Economic Activity, Volume (2). In addition, it should be noted that experts are constantly using this implicit logic of identifying jobs embodied in trade flows. The Washington Post editorial of April 10 called for the adoption of the free trade agreement between the United States and Colombia, in part on the basis of jobs created in the United States by exports to Colombia: “The trade agreement…

For the first time, allow U.S. companies free access to Colombia, creating jobs in the United States. When considering working practices in income countries, it makes sense to draw a line between what is unpleasant to think and what is morally offensive. For example, low wages and long working hours are unpleasant to think about in poor countries, but for people living in low-income areas of the world, this may be the best option available to them. Practices such as child labour and forced labour are morally offensive and many countries refuse to import products made with these practices. “It depends on the jobs,” Sapiro explains in the podcast. In addition, as described in this table, increased trade flows are affecting employment and wages in the United States. Given that one of the main objectives of trade agreements (such as NAFTA) is to increase these trade flows – and all the evidence indicates that they have been successful – it is safe to say that trade agreements have indeed increased pressure on U.S. jobs and wages by increasing trade flows. However, even if trade increases the overall level of wages, it will still benefit some workers and harm others. Workers in sectors facing competition from imported products may find that demand for labour is decreasing and moving to the left, so that their wages are falling with an increase in international trade.

Conversely, workers in sectors that benefit from selling in global markets may find that demand for labour is shifting to the right, causing trade to increase wages. Here are some recent examples of this “before and after” assessment of the impact of NAFTA from pro-NAFTA sources: Trade Distortions, Washington Post Editorial, 12/3/2007, […] [The impact of NAFTA seems to have been greater and more positive in Mexico…. Mexico`s gross domestic product… more than quadrupled since 1987. (It should be noted that this particular “before and after” snapshot is wrong in almost all respects: Mexico`s GDP has not quadrupled since 1987 and NAFTA came into force in 1994, not 1987. While the loss of jobs due to rising trade deficits is the most visible effect of globalization, its impact on wages is a problem for even more workers.