Chief economist argues KORUS made up to 194,000 Americans unemployed
Washington. The Coalition for a Prosperous America (CPA) will testify today at a hearing of the U.S. International Trade Commission (ITC). CPA Chief Economist Jeff Ferry will detail flaws in the ITC’s most widely-used economic model for trade and will offer a revised model that predicts results more accurately. CPA’s economic team back-tested their model against the U.S.-Korea Trade Agreement (KORUS) and determined that CPA’s results were far more accurate than pre-KORUS models in predicting results.
Specifically, the CPA model found that the KORUS deal led to a doubling of the U.S. manufacturing goods trade deficit with Korea, and resulted in as many as 194,000 Americans being out of work for an extended period.
“Economic models have repeatedly forecast benefits from trade deals with many different countries and in reality those trade deals have destroyed U.S. jobs and led to declines in income for millions of workers,” said Ferry. “By tweaking the standard trade GTAP model, we have demonstrated that the model can be improved to generate forecasts that are closer to reality. We are today urging the ITC to adopt such modifications.”
In his testimony, Ferry will argue that the ITC model for KORUS published in 2007 forecast the deal would shrink the U.S.-Korea annual trade deficit by $3.6 billion and boost GDP. Instead, America’s total goods trade deficit with Korea grew by $10 billion, while the U.S. manufacturing trade deficit with Korea doubled to $33 billion.
Michael Stumo, CEO of the CPA, said, “For the past quarter-century, Americans have repeatedly been promised great things from free trade agreements. And yet, the predictions for these trade deals have proven incorrect every time. Our team has updated longstanding economic models to more accurately determine the economic toll that results from poorly conceived trade agreements. We urge the ITC and political leaders to bring a more critical, evidence-based eye to evaluating future trade deals.”
Read more about CPA’s new economic modeling of trade agreements.
Melissa Tallman, Director of Marketing and Communications
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