As Other Nations Prosper, So Will the United States

President Obama’s recent decision to negotiate broad new free-trade agreements with Europe and several nations in the Pacific has revived the usual objections at home first heard two decades ago with the enactment of NAFTA. The Transpacific Partnership, in particular, raises the potential of deepening economic links between the U.S., Mexico, Peru, and Chile, on the one hand, and the dynamic economies of East Asia on the other. Despite the promise of benefits for all sides, however, these initiatives are indeed politically risky. Polls indicate that trade agreements are not popular with the American public and increased trade generates suspicion and the familiar concerns from organized labor and others fearful of the impact on jobs of more international competition. But trade with emerging economies has been assigned a villainous role that far exceeds its impact, as demonstrated by new research we have conducted. Many Americans blame our trade deficit for shrinking employment in manufacturing, for example. But we find the much bigger factor in that decline is that Americans prefer to spend more on services.