A New York Times op-ed by Sen. Josh Hawley (R-MO), "The W.T.O. Should Be Abolished,” says “we must face facts” about the World Trade Organization (WTO). If we must face facts, here are some facts about the unsubstantiated claims made in his op-ed.
Claim: America’s liberal trade policy sent American production overseas.
Fact: The Federal Reserve Bank’s industrial production index of real (inflation-adjusted) output has increased by 48 percent since 1995, when the WTO opened its doors.
Claim: Under the WTO’s auspices, capital and goods moved across borders easier than before, no doubt, but so did jobs. And too many jobs left America’s borders for elsewhere.
Fact: Thanks to reductions in barriers to the movement of capital and goods, the United States has created millions of new jobs. The United States has added more than 33 million jobs since 1995. Capital flows created tremendous new opportunities for U.S. workers. According to the Bureau of Economic Analysis, foreign direct investment in the United States is responsible for 8.1 million American jobs.
Claim: The WTO allowed countries to maintain trade barriers.
Fact: According to World Bank data, world tariffs fell from an average of 6.44 percent in 1995 to 2.59 percent in 2017. The biggest remaining barriers are in areas like subsidies, state-owned enterprises, and digital trade. These are not governed by WTO rules to the same degree tariffs and quotas have been.
Claim: Foreign agriculture won concession after concession, while American farmers struggled to get fair access to markets.
Fact: According to USDA data, under the WTO U.S. agricultural exports have more than doubled since the WTO was created. According to the Farm Bureau, about 25 percent of U.S. farm products are exported. Leaving the WTO would be a devastating blow to farmers and ranchers, who increasingly rely on world trade.
Claim: Inflation adjusted, working wages stagnated.
Fact: If we turned back the clock to 1995, most Americans would be poorer. According to Bureau of Labor Statistics data, inflation adjusted median weekly earnings for full-time wage and salary workers have increased by more than 17 percent since 1995. Trade allowed the American economy to create new, higher-paying jobs while making traded goods like clothing and electronics more affordable.
Sen. Hawley is entitled to his own opinions, but not his own facts. The facts show that Americans have benefited tremendously from growing trade and investment under the WTO.
It’s probably no accident that Sen. Hawley’s op-ed neglects to mention the father of the WTO is Republican President Ronald Reagan, who wrote: “The United States remains committed to full multilateral liberalization, as reflected in the fact that we are the driving force behind the current Uruguay Round of multilateral negotiations under the General Agreement on Tariffs and Trade.” These negotiations led to creation of the WTO, an institution that can and should be improved and strengthened, not abolished. The Senator from Missouri would be wise to keep in mind an important lesson of American history: the last time a trade restrictionist named Hawley had his way with American policy, he rightly received blame for the economic devastation it wrought.