Washington – Connecticut U.S. Rep. Rosa DeLauro escalated a war on a proposed trade pact between the United States and most Pacific Rim nations by saying on Thursday that the nation’s top trade official is wrong about U.S. imports and exports.
U.S. Trade Representative Michael Froman, who met with members of Congress this week to drum up support for the Trans-Pacific Partnership agreement, said the United States has a trade surplus with its free-trade partners.
“That is wrong,” DeLauro said. “The numbers Ambassador Froman is using to substantiate this claim are plainly misleading and count goods that merely pass through the U.S. on their way to somewhere else. You do not need a Ph.D. in economics to know this is disingenuous at best.”
DeLauro, D-3rd District, was one of eight House Democrats who sent Froman a letter Thursday accusing him of inflating the number of U.S. exports and misleading Congress. The lawmakers also held a press conference challenging Froman’s calculations.
The U.S. Trade Representative (USTR) says the United States had a trade surplus in goods and services of $10.2 billion with its free-trade partners in 2014, a group of 20 countries that includes Mexico, Korea, Australia, Chile, and Canada.
DeLauro, and others opposed to the Pacific Rim trade pact, say the United States had a $177 billion goods trade deficit (excluding services) in 2014. They say when services are factored in, there is still a deficit.
Both sides of this increasingly heated debate over the Trans-Pacific Partnership accuses the other of funny math.
DeLauro cites calculations that use U.S. International Trade Commission data that does not count the export of some of the goods that are imported in to the United States.
But the USTR says the way to officially calculate trade balances is to count any valued added in the United States to a good imported from another country and then re-exported.
That value added could include modifications of, or additions to, the product; testing; and the cost of insurance, freight and storage.
“If you buy something from Canada for 100 dollars and sell it to Mexico for 200 dollars, you aren’t losing 100 dollars,” said USTR spokesman Andrew Bates. “The reality is that the United States runs a trade surplus in goods and services with our collective free-trade agreement partners.”
Using official U.S. government data collected by the Census Bureau and adding up all exports to the United States’ free-trade partners and subtracting all exports results in a surplus, Bates said.
“For an apples-to-apples comparison, you have to look at measures that comprehensively take into account both imports and exports,” Bates said. “That is what the Department of Commerce, the official source of U.S. trade data, does when it releases trade balance data every month.”
Some TPP opponents insist that using the USTR’s own method of measuring trade, there are still deficits.
“Even with numbers padded heavily with re-exports, our trade imbalances have ballooned with every new trade deal, especially in automotive manufacturing,” said Rep. Marcy Kaptur, D-Ohio. ”This is not the first time a bad trade deal has been sold to Congress and the American people on a failed promise of increased exports and jobs, but it needs to be the last.”
The USTR’s Bates said that before the free-trade agreement with Korea, the United States sold very few cars in Korea.
“Last year, we sold over a billion dollars in cars to Korea – double the amount from before the agreement,” he said. “The Big Three market share in Korea is up since the agreement.”
Bates also said it is true Americans are buying more cars, including those made in Korea, as a result of a stronger economy.
“U.S. auto sales and auto exports have increased significantly across the board,” he said. “But the market share of Korean car imports in the U.S. has gone down since the agreement, not up.”
The issue of jobs, especially manufacturing jobs, is at the heart of the dispute. Organized labor is a leading member of a coalition that includes consumer and environmental groups who are lobbying against the trade pact.
DeLauro says the trade pact would cost thousands of jobs in Connecticut and depress the wages of lower-income workers.
DeLauro has become a thorn in the side of the Obama administration with her strong opposition to the Trans-Pacific Partnership. She’s played this role before, opposing former President Clinton’s efforts to finalize the North American Free Trade Agreement, or NAFTA.
The New Haven Democrat also opposes giving the Obama administration “fast track” authority to negotiate the pact, an authority that can only come from Congress.
The TPP would be an agreement among the United States and Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.