AFP Rebuts Senators’ Criticism of ITC Study

Oct 4, 2021 by AFP

Grassroots group sends letter countering flawed economic thinking, inaccurate arguments

Arlington, Va. – Americans for Prosperity (AFP) recently sent a letter to the U.S. International Trade Commission (ITC) countering the arguments made by a few senators about the accuracy of an ITC study analyzing the benefits of free trade for the United States and Americans.

In September, Sens. Warren, Brown, Merkley, Baldwin, and Markey sent a letter to the U.S. International Trade Commission. The letter criticized the ITC’s June 2021 study, “Economic Impact of Trade Agreements Implemented under Trade Authorities Procedures,” arguing it overstated the benefits of past trade agreements. The senators’ letter made assertions based on the misconception that trade is the source of all problems in U.S. labor markets.

Dan Pearson, a trade policy fellow at Americans for Prosperity and a former ITC chairman and commissioner, penned a detailed response to the Commission. The first part refutes the senators’ inaccuracies, pointing out that, “In reality, trade accounts for a modest percentage of jobs lost in the manufacturing sector, yet trade seems to get blamed for all the challenges faced by factory workers.”

He also notes, “the value added by U.S. manufacturing has increased relatively steadily over time, reaching an all-time record of $2.2 trillion (on an annualized basis) in the first quarter of 2021. In other words, the output of the manufacturing sector has never been larger. Because of increased efficiency, that output is produced with a smaller number of workers than in years past.”

The second portion of Pearson’s letter offers a countervailing critique of the ITC’ s trade agreements study. Unlike the position taken by the senators, he references the views of expert trade economists to explain that the Commission’s analysis meaningfully understates the benefits trade agreements have provided to American workers, consumers, and the overall economy. This is a particular problem with respect to the Uruguay Round and NAFTA.

Pearson also offered a suggestion to Congress for future requests for the ITC to do a similar study: don’t examine only the benefits from trade liberalization, but also consider the trade-restricting effects of America’s protectionist measures. He writes:

“Looking just at trade agreements tells only half the story … It would be interesting to know how much the United States would have benefited from trade agreements under circumstances in which the country hadn’t also been going out of its way to curtail imports of a wide range of goods and services.”