The vast majority of products traded are manufactured products. And manufacturing jobs pay much better than other jobs, especially those created since the last recession. As a result, more than 60 percent, or more than 400,000 of the nearly 700,000 jobs lost because of the U.S. trade deficit with Mexico, were in the manufacturing sector. Of the 3.2 million jobs lost as a result of our growing trade deficit with China, more than 75 per cent, or 2.4 million jobs, were in the manufacturing sector. As a result, the effects of free trade and investment agreements have not been positive for manufacturing, nor have the vast majority of other U.S. workers. We note that the cumulative decline in IPV over the 1993-2013 period, due to trade agreements, was 0.24% in our baseline estimate. Of this overall effect, we account for about 55% of the direct impact on the prices and quality of imported products. The remaining 45% is due to lower input prices, adjusted for quality, which reduces the prices of domestic products. Although this is not a major effect, it represents a considerable saving for EU consumers, around EUR 24 billion per year.
Most of our trade deficits and job losses in manufacturing are due to monetary manipulation by China and some 20 other countries, including Japan, Malaysia, Singapore and Vietnam, under the proposed Trans-Pacific Partnership. This policy acts as a 30 to 40 per cent subsidy on all its exports to the United States and a tax on all our exports to those countries and all the other countries where we compete with their exports (mainly the rest of the world). Environmental protection measures can prevent the destruction of natural resources and crops. Labour laws prevent poor working conditions. The World Trade Organization imposes rules on free trade agreements. Our approach does not allow us to identify the exact sources of these quality improvements, but we discuss possible mechanisms. One explanation that is consistent with growing literature using data at the enterprise level is that foreign exporters are improving the quality to serve the EU market after the implementation of trade agreements (2008, Iacovone and Javorcik 2012). Since Nafta, demands on job creation have been used to justify trade and investment agreements to Congress and public opinion. In 1993, Jeff and his co-author, Gary Hufbauer, stated that the agreement with Mexico would „create about 170,000 net U.S. jobs“ by 1995. President Bill Clinton used this research to assert in 1993 that Nafta would „create 200,000 American jobs in the first two years“ and „one million jobs in the first five years.“ Presidents Clinton and George W.