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Free trade at what cost?

The Morning Call, Allentown, USA

Free trade at what cost?

NAFTA-like debate brewing on Capitol Hill as White House pushes pacts with South Korea, Panama and Colombia.

By Colby Itkowitz and Scott Kraus, THE MORNING CALL

5 July 2011

Inking free trade deals with South Korea, Panama and Colombia is among the highest priorities for the U.S. business community.

Manufacturer B. Braun Medical, for one, anticipates that lowering tariffs, especially south of the border, would greatly increase sales of its medical devices.

"The bottom line is we are trying to keep jobs here in the Lehigh Valley," said Tom Black, the Bethlehem company’s vice president of overseas and emerging markets sales and marketing. "The more we can export into countries in Central and South America, the more it is going to allow to keep jobs here."

From experience, Ed Brill sees pitfalls in overseas deals. One-time owner of the now-shuttered Allentown Metal Works (then called BVI Precision Materials), Brill said free trade is great in theory, but in practice hasn’t been fair to American workers.

"We intensely trained our employees," he said, "but we lost bids when we competed against foreign companies" because of lower wages and lower regulatory costs.

Seventeen years after the signing of the North American Free Trade Agreement by the United States, Canada and Mexico, the contentious issue of free trade is back on Capitol Hill. The White House and some lawmakers are pushing to complete deals with South Korea, Panama and Colombia in the works since George W. Bush’s presidency.

Free trade lowers overseas barriers to U.S. products. But it also makes it easier for foreign competitors to do business here. It’s a complex issue, and many Americans believe such deals are responsible for shipping jobs overseas. The cost benefit analysis is greatly contested between businesses and labor groups.

The pro-business U.S. Chamber of Commerce is pushing hard for Congress to move forward on the agreements, especially since the European Union’s agreement with South Korea went into effect Friday. The Economic Policy Institute, a labor-backed group, insists these deals hurt the American worker.

Different studies show different outcomes. The American Farm Bureau offers statistics showing the three agreements together are expected to increase direct exports from Pennsylvania by $54.9 million annually. The International Trade Administration says exports of manufactured goods support about 258,000 jobs in Pennsylvania.

But the Economic Policy Institute, in a state-by-state analysis, warned that NAFTA resulted in 35,000 lost jobs in Pennsylvania, with 27,000 of them in manufacturing.