Today the Obama Administration notified Congress of its plans to enter into negotiations with the European Union over the Transatlantic Trade and Investment Partnership (TPIP). Actually Obama announced plans to negotiate the pact in his speech to Congress back in February, but it's US practice for the administration to send lawmakers a formal notification at least 90 days before beginning trade talks.
Proponents on both sides of the Atlantic will praise the pact for its potential to breathe life into recession-torn economies via export-related job growth. However, two caveats to this enthusiasm are worth noting.
First, figures from the government's own International Trade Administration show that export growth is responsible for increasingly less job growth. Whereas in 2009 one billion dollars in export growth was noted to be worth 5,998 jobs, in 2012 it was estimated to be worth only 4,926. That's an approximately 18% decline in 3 years. Since the TPPP is likely to take at least a couple years to iron out, its value in terms of job creation should be carefully considered. Especially in light of arguments which relate freer trade to depressed wages and greater income inequality.
Second, just because a free trade agreement has potential to increase export growth, doesn't mean it will. Last Friday marked the one-year anniversary of the U.S.-Korea Free Trade Agreement. Data released from the government show that in the year since its implementation, US exports to Korea decreased by 9%, all while imports from Korea are on the rise. In other words, what’s happened is the exact opposite of what the Obama administration promised: export growth and more jobs.