[ETERNAL WARMING]

October 23, 2002 | EPI Issue Brief #184
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Phony accounting and U.S. trade policy
Is Bush using Enron-like tactics to sell trade deals to the public?

by Robert E. Scott

The U.S. has experienced steadily growing trade deficits for nearly three decades, and these deficits have accelerated rapidly since the North American Free Trade Agreement (NAFTA) took effect in 1994 and the World Trade Organization (WTO) was created in 1995. The toll on U.S. employment has been heavy: from 1994 to 2000, growing trade deficits eliminated a net total of 3.0 million actual and potential jobs from the U.S. economy.1

Proponents of new trade agreements to build on NAFTA and the WTO have frequently claimed that such deals create jobs and raise incomes in the United States. When the Senate recently approved President Bush’s request for fast track trade negotiating authority,2 he called the bill’s passage an “historic moment” that would lead to the creation of more jobs and more sales of American products abroad. Two weeks later at his economic forum in Texas, he argued that “[i]t is essential that we move aggressively [to negotiate new trade pacts], because trade means jobs. More trade means higher incomes for American workers.”

The problem with these statements is that they misrepresent the real effects of trade on the U.S. economy: trade both creates and destroys jobs. Increases in U.S. exports create jobs in this country, but increases in imports destroy jobs because the imports displace goods that otherwise would have been made in the U.S. by domestic workers.

The President’s statements—and similar remarks from others in his administration and from members of both major parties in Congress—are based only on the positive effects of exports, ignoring the negative effects of imports. It is an attempt to hide the costs of new trade deals, in order to boost the reported benefits. These are effectively the same tactics that led to the bankruptcies of Enron, WorldCom, and several other major corporations.

The impact on employment of any change in trade is determined by its effect on the trade balance, the difference between exports and imports. Ignoring imports and counting only exports is like balancing a checkbook by counting only deposits but not withdrawals. The many officials, policy analysts and business leaders who ignore the negative effects of imports and talk only about the benefits of exports are engaging in false accounting.

The impact of trade on employment is one of the most widely used measures of the costs and benefits of trade policies, but also one of the least understood. Table 1 shows the changes in goods trade (excluding services) from 1994 to 2000, measured in constant 2000 dollars. Table 1 also shows estimates of the employment impact of trade. These estimates utilize a detailed, 192-sector model that is prepared annually by the U.S. Bureau of Labor Statistics (see the methodology section for more details).

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[Red Jones]

thanks Eternal Warming. I'm as strong a conservative as there is. And I was a loyal republican up until Trent Lott sold the constitution in 1999. George Washington and Ronald Reagan are my 2 political heroes. But the conflict between liberals and conservatives is yesterday's paradigm. Now, we americans regardless of whether we're dems or repubs, conservatives or liberals, should unite and oppose the New world Order slimeballs. The NWO slimeballs include both Bush's and Clinton. One of the worst days in American history was September 11, 1990 when George Bush announced to us that he was loyal to the NWO.

As america is the nation that is intimidating nations all over the world into the World Trade Organization and is leading the NWO, then I should say 'May God Have Mercy On The United States Of America!'

Proud worldy people are seduced by Bush' drive into the New World Order madness, but decent people tremble.