April 16, 2015
The Americas Blog’s friend for the week is none other than Senator Robert Menendez, the Democrat from New Jersey! Currently under federal indictment on bribery and corruption charges, Senator Menendez recently took a break from trashing Venezuela and fighting the administration over its attempts to normalize relations with Cuba and reach a deal with Iran in order to add his voice to the overwhelming majority of Democrats in Congress who criticize “Fast Track,” also known as Trade Promotion Authority.
Late last night, Senators Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) announced a Senate Finance Committee hearing with just 12 hours notice. The hearing started off this morning with three Cabinet level officials giving testimony, despite the fact that the “Fast Track” bill had not been published. All three said they had not seen the final text of the bill, which in any event was introduced several hours later, at around 2:30 PM this afternoon.
This rushed timeline and lack of transparency was the focus of a statement published by Menendez and signed by half of the Democrats in the Senate Finance Committee:
With millions of jobs on the line, American workers and manufacturers deserve more than a hastily scheduled hearing without an underlying bill. Congress should undergo a thorough and deliberative committee process for debating trade agreements that account for 40 percent of our world’s GDP. And we should be debating a bill that has seen the light of day and contains strong provisions to protect American workers against illegal trade practices like currency manipulation.
During his time for questions, Senator Menendez rightly pressed the U.S. Trade Representative, Ambassador Michael Froman, on his estimate of the net jobs effect of the proposed Trans-Pacific Partnership (TPP). Here is the exchange, taken from a transcript prepared by CQ Congressional Transcripts:
[…] Ambassador Froman, I asked you at our last hearing on the broad question of trade, how many jobs do you expect to be created — net jobs, I would say, because in every process of trade, there are winners and losers — net jobs to be created in TPP within the first year, the first five years, the first 10 years?
You didn’t give me any figures, and I’m wondering if, at this point, you’re in the position to describe what that would be.
So when the — the agreement is complete, there’ll be a full economic analysis done.
I think the most authoritative analysis right now is probably the one that comes from the Peterson report — the Peterson Institute that talks about expanding exports when fully implemented by $123 billion a year, adding $77 billion to U.S. GDP and contributing to many more high-paying jobs.
It depends a bit on where you are on the spectrum of full employment. If you’re not at full employment, then it adds jobs. If you are at full employment, then it adds better jobs. And so it’ll bend a little bit…
So — so we don’t have a number on the jobs? You’re talking about just gross?
What we know is that every billion dollars of exports, additional exports, somewhere between 5,000 and 7,000 jobs and that those jobs pay on average 18 percent more than non-export-related jobs in the same sector.
And the net — and the loss of jobs?
Well, we’ve been looking, and we’ve been doing some — some studies state by state or — or in various districts to see, because we have so few tariffs ourselves, so few import-sensitive sectors ourselves, where there — where there might be job loss.
And, you know, with our average tariff of 1.4 percent and with no — no — we don’t use non-tariff measures as a…
So we don’t have an answer on that, exactly?
We don’t — we don’t — we don’t have have (inaudible).
Of course, this is not the first time an Obama administration official has cited the Peterson Institute’s report. In an earlier instance when Secretary of Agriculture Tom Vilsack did try to provide a jobs gain number, the Washington Post Fact Checker gave the administration “Four Pinocchios for their fishy math.” In this case, it seems like Froman wanted to use the same study to answer the same question, but could not actually give a straight answer without overtly repeating the inappropriate calculation.
In any event, the gains from the proposed TPP cited by Froman are completely out of context. When compared to the size of the U.S. economy these gains are very small and, due to the in-equalizing effect of trade on wages, the gains would only go to a small group of people. In fact, a large majority of workers would lose as a result of an agreement like the TPP.