Free trade agreements: good or bad for us?

By Mark Hopkins

Free trade agreements have come under fire in the presidential campaign, and it may be the right time to review such agreements and their relative merits.

The first such agreement that made headlines was in 1985 between the U.S. and Israel. There have been three more major ones and several minor ones since then. In general, the basic theory of free trade agreements is that if governments (taxes, duties and tariffs) are not a party to international business transactions, the companies involved will increase their income. In fact, that theory has proved to be correct. The downside is that certain jobs in the U.S. have been eliminated to the benefit of other countries.

Despite the fact that such agreements in today's politically heated atmosphere appear to be partisan, that is not the case. Such agreements have been sponsored by both Democrat and Republican presidents. The 1985 free trade agreement was during the Clinton (D) administration. A second, called NAFTA, was signed in 1994 by George H.W. Bush (R). The Trade Act of 2001 was during the George W. Bush (R) administration. The most recent one being debated today is under the Obama (D) administration and is called the Trans-Pacific Partnership. It is a free-trade agreement that includes the U.S., Australia, New Zealand, Chile, Peru, Singapore, Vietnam and Brunei.

It is true that many jobs have been discontinued in recent years and that is a tragedy for workers who depended on those jobs. The "rust belt" in the Northeast is symbolic of the loss of our steel plants and other "fabrication" industries. The South has felt the economic pressures of losing the textile mills that were so much a part of the economic and social well-being of the South. Unfortunately, no amount of political posturing will bring those jobs back. That ship has sailed.

It might be a shock to learn that though manufacturing jobs have declined over the past 20 years, U.S. manufacturing output has increased by almost 40 percent over that time period. Manufacturing now adds a record $2.4 trillion to the U.S. economy each year. How could it be that we have lost jobs but gained productivity? Improvement in technology caused about 85 percent of the loss of manufacturing jobs from 2000 to 2010. Free trade agreements accounted for less than 13 percent of the losses.

No amount of political posturing is going to bring manufacturing jobs back to those now defunct industries. If all free trade agreements were wiped out, the primary result would be higher prices in many of those commodity areas. Not only would that adversely affect our economy, but the paying public would be very unhappy with the result.

Better education and job training for our people is the answer to lost jobs. Jobs in more technical areas are listed in the want ads every week and continue to go wanting due to not having enough trained personnel in the marketplace.

Like so many of the issues in our society, solving the problems comes back to education and how to better prepare our people for a more technological workplace. Mercifully, community and vocational schools dot the landscape. We currently have more than 1,500 of them spread across the country. Much of their effort is focused directly on training our people for the job market in the local area.

One of the major discussion topics in the current political campaign focused on providing free education for the first two years of study. Some dismissed that proposal as socialistic rhetoric. Considering our economy's need for better trained workers and the number of lost jobs due to the development of technology, we may need to give the "free" vocational training idea another look. Considering the amount of money we have invested supporting those out of work with little hope of gainful employment, it doesn't take genius thinking to apply some of that money to job training in technological areas where the jobs are.