While President Obama's State of the Union reiterated the tired "free trade" = exports = jobs refrain, the newly-released government trade data for 2012 shows that job-eroding U.S. trade deficits have ballooned with "free trade" agreement (FTA) partners while declining with the rest of the world. Why? In part, because export growth has actually been slower under FTAs. Why then did Obama commit on Tuesday night to expand this deficit-boosting FTA model across both the Pacific and the Atlantic in the name of jobs? Maybe he hasn't seen the data. Here it is (click here for the PDF version):

U.S. Trade Deficits Grow More Than 440% with FTA Countries, but Decline 7% with Non-FTA Countries

The aggregate U.S. trade deficit with FTA partners is more than five times as high as before the deals went into effect, while the aggregate deficit with non-FTA countries has actually fallen slightly.1 The key differences are soaring imports into the United States from FTA partners and lower growth in U.S. exports to those nations than to non-FTA nations. Incredibly, the U.S. Chamber of Commerce website states, “For those worried about the U.S. trade deficit, trade agreements are clearly the solution – not the problem.” Their pitch ignores the import surges contributing to growing deficits and job loss, while their export “data” is inflated, using tricks described below.

The aggregate trade deficit with FTA partners increased by more than $144 billion (inflation-adjusted) since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries decreased by more than $55 billion since 2006 (the median entry date of existing FTAs). Two reasons: a sharp increase in imports from FTA partners – notably Mexico and Canada under the North American Free Trade Agreement (NAFTA) – and significantly lower export growth to FTA partners than to non-FTA nations over the last decade. Using the Obama administration’s net exports-to-jobs ratio, the FTA trade deficit surge implies the loss of nearly one million American jobs. (Scroll to the bottom for a chart giving the country-by-country data.)

Trade with Canada and Mexico (our first and third largest trade partners, respectively) contributed the most to the widening FTA deficit. Under NAFTA, the U.S. deficit with Canada ballooned and the small U.S. surplus with Mexico turned into a $100 billion-plus deficit. The trend persists under new FTAs – nine months into the Korea FTA, our deficit with Korea has jumped 26 percent. Reducing the massive trade deficit requires a new trade agreement model, not more of the same.