In 2009, the US Department of Commerce, International Trade Administration began publishing a new data series, one that tracks Net Exports, that is, exports minus imports, on a state-by-state basis. This data series is the first time that the US government has provided state-level data on Net Exports in an easy to use format.
Net Exports is an important number - because it reveals the true picture of the effects of international trade on the US economy. If Net Exports is a negative number, i.e., we import more than we export, it means that trade is a drag on the economy, subtracting from GDP and therefore economic growth. If Net Exports is a positive number, i.e., we export more than we import, it means that trade adds to economic growth.
Net Exports has been a negative number since 1970, meaning that the United States has consistently imported more than it has exported and that international trade has been a constant drag on the American economy, which would be considerably larger today if Net Exports had been a positive number. Breaking the export/import figures down at the state level shows how individual states fare in international trade - whether trade propels or retards their economic growth. It turns out that a majority of the states do not fare well at all.
Even the new data series, which now provides five and a half years of data - from January, 2009 to today, has its problems. It turns out that it is much easier to compile trade statistics at the border, as goods and services enter and leave the United States. It is much more difficult to trace the imports as they make their way to their final destinations in the respective states.
Nevertheless, the data series is a very useful tool. It does give us the best picture currently possible of the effects of international trade on a state-by-state basis. The fact that it is not perfectly aligned with the other national trade figures, which may be compiled on a balance of payments basis or include goods and services, for example, does not mean that it can be dismissed inaccurate.
Why try to discredit the series as inaccurate? A quick look at several of the most prominent sites that address state trade data supplies the answer. Such web pages as those found on the sites of the US Trade Representative, the US Chamber of Commerce, the Business Roundtable, and the National Association of Manufacturers, and ad hoc, so-called pro-free-trade organizations all provide state level EXPORT data in depth. They appear to make a very positive and convincing case for more free trade agreements, such as the TPP (Trans-Pacific Partnership) and TTIP (Trans-Atlantic Trade and Investment Partnership), which are currently being negotiated.
However, there is a glaring problem with these websites and the way they use trade statistics: they present only one side of the picture - just exports and information about exporters. If any of the business organizations involved ran their companies by looking only at one side of the ledger, revenues, and never at the other side, expenditures, they would soon be on the dust heap of business history. They are simply not presenting an honest, total picture of the effects of international trade on the states. It is particularly disturbing that a US government entity, the Office of the US Trade Representative (USTR), which has ample access to the state-by-state data, has chosen to ignore it and instead cultivate a glowing picture of international trade as conducted under the agreements its employees have negotiated. Obviously, there is a certain self-interest involved in not presenting the full picture.
It is as if USTR were to tell you that the score in a baseball game between the Yankees and Red Sox was Red Sox 8. And that Red Sox hit two grand slam home runs to reach their eight run total - and that they scored three more runs than in any game yet in this season. All very interesting - but did they win or lose the game? That's what counts, not all the peripheral information, not half the box score. One needs to know the full box score. Did the Yankees score more or fewer than the Red Sox 8 runs? Who won? Well, it turns out in this particular game the Yankees scored 14 runs, trouncing the Red Sox.
And so it is with the trade picture. Half the ledger and lots of interesting statistics about what type of businesses exported what type of goods do not tell us whether any particular state won or lost overall in the international trade game. They do not tell us on net how many factories and jobs were gained or lost in that state. They do not tell us how many workers are on unemployment, Medicare, and food stamps due to the loss of their jobs to international competitors - very often using unfair or mercantilist trade practices that violate the very free trade practice and agreements USTR is so fond of negotiating.
Congressional offices are bombarded constantly with the export half of the story - all in an effort to raise support for the TPP, TTIP, and other trade agreements. The free-trade propaganda machine also generates op-eds, press releases, Congressional testimony, blogs, and the like with half the story - for the same reason: furthering the goals of the special interests that do benefit from such agreements.
One can infer from all this activity that there are many special interests that stand to gain from the passage of these trade agreements, even if the US population and economy as a whole do not. And then there are many free trade acolytes - academics, columnists, reporters, news casters, et alia - raised on or adhering to what has become a quasi-religion of free trade theory. They do not want to question the assumptions behind their economic world view - or the negative results it produces in reality. And finally, there are the lobbyists, with their political campaign donations, whose very good livelihoods depend on pushing free trade agreements. They may or may not have the fanatical belief in free-trade theory that their fellow enthusiasts do, but their McMansions, pricey cars, private schools for their children, and fancy vacations depend on getting FTAs passed, regardless of their overall effect on American society and economy.
In conclusion, it must be noted that the United States has incurred over $10 TRILLION in merchandise trade deficits since the North American Free Trade Agreement went into effect on January 1, 1994. In no year since that day has the United States run a goods trade surplus. International trade has been a massive, cumulative drag on the American economy all these years. Today's low labor force participation rate, the vast number of American who have given up looking for work, the great number of Americans who must work part time because there are no full time jobs available for them, the all-time high number of food stamp recipients, the college graduates living back in their parents homes because they cannot find good jobs, and many other hallmarks of the "new normal" can be traced to our enormous trade deficits and the depressing effect they have had on the American economy over the last 40 years. NET EXPORTS have been a negative number all those years, but one will never learn that simple fact on the websites boosting so-called free trade and the TPP and TTIP agreements.