September 21, 2021

Warren, Brown, Merkley, Baldwin, and Markey Raise Concerns Over Distorted Findings in Trade Commission’s Economic Impact Report, Urge USITC to Improve Its Analysis of Trade Deals

USITC report ignores key issues that “get to the heart of whether the American economy is healthy, resilient, and working for all of us”

Text of Letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.) sent a letter to the U.S. International Trade Commission (USITC) expressing serious concerns about a disturbing series of assumptions and omissions that distort the findings of the USITC June 2021 report on the economic impact of numerous U.S. trade agreements. The USITC found that these trade agreements have had a “small but positive effect on the U.S. economy,” but that conclusion is based on an analysis that uses wholly unrealistic models of the U.S. labor market and that systematically ignores the negative effects of trade agreements on workers, particularly workers of color, and on the overall health of the American economy.

Pursuing a new trade policy that puts American workers before corporate profits requires an understanding of where trade policymaking has gone wrong. But, by presuming full employment and frictionless adjustment between jobs, the USITC takes the worst impacts of trade on workers and rules them out by fiat, rendering the report’s topline findings useless because they are based on a series of assumptions that do not reflect reality. The USITC report also ignores how trade affects workers differently based on their region, race, and other characteristics. If the USITC is relying on analyses that ignore the regional and racial effects of U.S. trade policy, trade policy will continue to exacerbate inequities and hurt the most disadvantaged American workers and communities. 

“We urge the Commission to reconsider how it assesses the impact of trade agreements, both with respect to backwards-looking analyses, such as this report, and for any analysis of new trade deals in the future. We must get this analysis right and ensure that future trade deals work for American workers,” the senators wrote

The senators identified additional flaws, writing that the USITC’s report “takes a myopic view of the U.S. economy and the effects of trade agreements.” Additional concerns raised by the senators include:

  • The failure of the USITC to examine whether jobs created by trade policy improved standards of living, raised workers’ wages, or reduced income inequality. 
  • The failure of the USITC to assess whether trade agreements have intensified the threat of outsourcing and reduced American workers’ ability to bargain with their employers.  
  • The failure of the USITC to consider whether U.S. trade policies have increased market concentration, helping large corporations at the expense of smaller businesses and consumers.  
  • The failure of the USITC to determine if offshoring manufacturing has caused the United States to lose technological expertise and capacity, making us less resilient and less capable of absorbing supply chain shocks like those seen in the early days of the COVID-19 pandemic.  
  • The flawed USITC assumption that important domestic rules and regulations such as labor standards, environmental protections, and consumer safety provisions are “unnecessary obstacle(s) to trade” that we should seek to eliminate during trade negotiations.  

“These issues get to the heart of whether the American economy is healthy, resilient, and working for all of us,” the senators wrote. “For too long, U.S. trade policy has worked very well for giant corporations, but not for American workers and families. We need to clearly assess the impacts of past trade agreements, especially the impacts on workers and on the health of the economy as a whole, in order to negotiate better trade agreements going forward.”

The lawmakers have requested responses no later than October 5, 2021. 

Senator Warren has been fighting for a more labor-centric trade policy that demands focus on negative impacts that trade deals can have on workers, and elevating the voices of workers. Most recently in 2021 at a Finance hearing, Senator Warren urged then-U.S. Trade Representative Nominee Katherine Tai to commit to ensuring trade advisory committees have more representatives from labor, consumer, environmental groups than corporations.