Once in a while, it’s worth reminding ourselves that, yes, America still makes things and sells them to other countries. The United States’ top exports are cars, refined petroleum, aircraft and medicine; this stuff mostly goes to Canada, Mexico and China.
You might be surprised to learn, though, that New York’s top export is diamonds (New York City hosts one of the world’s major diamond districts). Or that Minnesota is a big exporter of pointy medical things (It is host to big medical manufacturers).
Other states are agricultural powerhouses: beef in Colorado and Nebraska, and corn in — where else! — Iowa.
Not Idaho, though, where the top export is not the potato, but computer memory chips. Remember flash drives? There’s a fair chance yours was made in Idaho, where major chipmaker Micron has its headquarters and some factories. Oregon and New Mexico are also big semiconductor states because they host some of Intel’s domestic fabrication plants—though the chip giant has increasingly migrated its production line overseas, to places like China and Israel.
Oh, that pesky word, “offshoring.” The Obama administration is in the middle of two major free trade deals with Asia-minus-China and Europe, and it really doesn’t want you thinking about that word.
Especially not right now, when everyone is watching Congress to see if it will give Obama the negotiating power he needs to make these deals go down smoothly.
This is why the administration released a glossy report Thursday charting trade in all the 50 states. It wants to show that trade is a growing part of the U.S. economy, touching lives in every corner of the nation, from semiconductor factory workers in Idaho to corn farmers in Iowa. Maybe members of Congress will agree.
Massive trade deals are on the horizon
Currently, exports of goods and services are about 13.5 percent of U.S. GDP. According to calculations from the Department of Commerce released Thursday, exports account for 11.7 million jobs, or around 8 percent of employment in the U.S.
It’s not really important how they came up with this number, which like any economic statistic is a gruesome sausage crafted out of assumptions and doubt. To oversimplify: Researchers tallied all the things America sold overseas, and guesstimated all the industries and workers—from factory workers to truckers — involved in bringing those items to market.
You might think this is an underestimate, because these workers end up using their salaries to buy stuff locally, supporting restaurant jobs and that guy who works at the gas station. (This is called the multiplier effect.) You might think this number is an overestimate, because in the absence of trade, it’s not like 11.7 million jobs would disappear overnight; many of these companies would start selling more domestically and still employ a lot of people. (This is the substitution effect.)
Whatever. By any account, trade is not an overwhelming part of the U.S. economy, not compared to other countries. Combined, exports and imports have been around 30 percent of U.S. GDP for the past couple of years. In the Canada and Britain, exports and imports are over 60 percent of GDP; in China, they are 50 percent; in Germany, they are 85 percent.
That might change if these big trade deals are signed. There’s the Trans Pacific Partnership (TPP), which involves Asian countries that aren’t China, and the Transatlantic Trade and Investment Partnership (T-TIP), which involves the EU.
The Obama administration has been putting a lot of effort into making them happen, but like any international negotiation, the process has been shot through with controversy.
Though we call them trade deals, they’re really more than that. The big negotiating carrot is that countries want to sell more overseas, and vice versa—but increasing trade is more than just a matter of everyone lowering their tariffs. But every country also has different regulations; the EU is more likely to ban chemicals it thinks might be toxic; there are different safety requirements for cars, electronics, and even bike helmets; differences in labor standards also need to be looked at. All this stuff is tough to hash out, and the deals will live or die by these individual issues.
One big sticking point is that the United States wants everybody to play by some pretty tough rules on drug patents (remember, drugs are a big export), and copyright law. In 2013, a leaked version of a draft TPP agreement outlined strict punishments for people involved in pirating software or entertainment, provisions that the Congress tried and failed to enact domestically in bills like SOPA and PIPA.
Then, of course, factor in the fact that trade deals always involve winners and losers. U.S. consumers win because we get to buy foreign things more cheaply. But those who work in vulnerable industries like manufacturing might see more jobs displaced or offshored. (We’re worried that some jobs might move to Asia thanks to the TPP; Europe is worried that some European jobs might move to the U.S. thanks to the T-TIP.)
My colleague Lydia DePillis has written excellent guides to both the TPP and the T-TIP — at least on what is publicly known. That’s because these treaties have been negotiated in secrecy, and most of what we’ve seen has come from leaks.
Will Congress let Obama seal the deals?
Now, in order for Obama to seal these deals, he needs Congress to give him the negotiating power.
Congress, of course, has final say on any trade deal the president brings back. But the fear is that legislators might pick apart these carefully worded agreements (which are the culmination of years of statecraft).
Obama is asking for something called “trade promotion authority” which would give him the power to force Congress to vote on a trade deal intact—no amendments, and no filibustering. It’s pretty much believed that without this power, these trade deals will fall apart. Literally: Japan has said that Obama needs TPA or else the Pacific trade deal probably won’t end successfully.
“It is very high hurdle to reach an agreement to Japan-the U.S. trade talks unless we see clarity on the prospect for TPA bill,” Japan’s economic minister said at a news conference in March.
The last time Congress voted to give the president this kind of power, George W. Bush was in the White House. Now, Obama faces a coalition of both liberals and conservatives who want to stop these trade negotiations. The easiest way to nix both deals is for Congress to torpedo the Trade Promotion Authority bill that is currently languishing in committee.
Now that negotiations over the Asia-Pacific deal are reaching their deadline, this bill becomes the bottleneck. Soon Congress must decide if it will give Obama the go-ahead to finalize two of the largest and most influential trade deals in history.