At 'Three Amigos' summit, Obama overshoots trade benefits between Mexico, Canada

President Barack Obama joined Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto June 30, 2016, to celebrate their countries’ partnerships.

The "Three Amigos" press conference — part of the North American Leaders Summit in Ottawa — saw the three leaders addressing issues of globalization. All claimed better relationships with their neighbors, and Obama in particular said the United States thrives as a result.

"During my administration, for example, we boosted U.S. exports to Canada and Mexico by about 50 percent," he said. "That supports about 2.8 million American jobs."

The statement resonates this election as free trade policies have been front and center. Both Donald Trump and Bernie Sanders have attacked Hillary Clinton on her trade record, claiming it cost domestic jobs.

Yet Obama suggests exports have supported, not destroyed, jobs. So we took a closer look at whether his claims hold up.

On the rise

We looked to the Bureau of Economic Analysis to verify the number. The White House told us they started from 2009, the first year of Obama’s term, as they do for all measures of economic change.

So to calculate the percentage change, we first need to identify the total amount of exports, both goods and services.

We calculated a 51 percent increase between 2009 and 2015. As for trade with Mexico, there was a 76 percent spike. Canada saw a 36 percent increase.

The White House used quarterly data, which yields a 57 percent increase. We used annual data upon advice of multiple experts.

A year makes all the difference

So the baseline numbers support Obama’s assertion about the rise in exports. But experts say the specific timeframe Obama used, "during my administration," is misleading.

Obama took office in 2009 at the height of a global economic recession. As such, exports to all countries were depressed.

In this case, that is actually good for Obama. If exports were so low in 2009, it’d be easier to claim rapid growth when the larger trend might not be as eye-catching, said Mark Perry, a scholar at the American Enterprise Institute.

Several experts told us 2008 — the year prior to Obama taking office — serves as a better baseline year and the economic standard for measuring accomplishments "during" a president’s administration.

Using the same methodology as before, but starting from 2008, Canadian exports increased by 10 percent and Mexican exports by 50 percent.  

That translates to a 25 percent increase in total exports — not 50 percent.

Ambiguous claims

Obama also claimed the United States job market has been bolstered by the export trade.

His office cited a study from the International Trade Administration within the Commerce Department, which found that, in 2014, exports to Mexico supported 1.1 million jobs and Canada 1.7 million.

Add that up and you get 2.8 million jobs, of course.

But Obama’s specific comments don’t necessarily reflect what the study said.

In Ottawa, Obama said that the rise in exports to Canada and Mexico supported 2.8 million jobs. But the Commerce Department figures reflect the total number of jobs supported by exports to our neighboring countries — not the number of jobs created by the increase.

The report indicates an increase of 514,000 jobs between 2009 and 2014 stemming from exports to Mexico and Canada.

The 2.8 million figure applies to the "number of jobs in 2014" supported by all exports to Mexico and Canada.

Job displacing

The statistic is also misleading as a picture of trade because it fails to consider "job-displacing" imports and the trade balance, said Robert Scott, a senior economist at the Economic Policy Institute.

Total imports from Canada and Mexico to the United States have increased less than exports, percentage-wise, since 2008. As a result, Scott said, our total trade deficit with Canada and Mexico has declined.

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That’s good for job growth, he said, but not as good as Obama makes it out to be.

Doing his own research, Scott estimated net job growth since 2008 by comparing the trade deficit to United States’ gross domestic product, and then looking at the historical relationships between GDP and employment.

Point being, Scott used the trade deficit, not just exports, and found that at most 500,000 jobs could have been created by U.S.-Mexico-Canada trade since 2008.

It is important to note the economists still debate the relationship between jobs and trade.

More pro-free-trade economists argue imports actually boost American jobs because of increased economic demand. Some, like Gary Hufbauer at the Peterson Institute of International Economics, said two-way trade has little net effect on jobs.

Cause and effect

The last piece to this claim is whether the Obama administration is truly responsible for the increase in exports. Obama did launch the National Export Initiative in 2010 to promote export-conducive conditions in the private sector.

His goal was to double exports from its $8.5 billion level in 2009, but the number has fallen far short, said Edward Alden, a senior fellow at the Council on Foreign Relations. Perry also noted exports to Canada and Mexico have fallen as of late, with Canadian exports below their 2008 peak levels.

Obama’s accomplishments have had some effect on exports, but experts said there were larger influences at play. Gradual economic recovery in Canada and Mexico after the recession played a significant role, for example.

Oil discoveries — both abroad and domestically — as well as currency exchange rates also helped boost American exports, Scott said. Exports of oil have increased from 858,000 in 2010 to 1.7 million in 2015 to all countries (not just Mexico and Canada), according to the Energy Information Administration.

Agricultural products also make up a significant portion of exports to both Canada and Mexico — America's largest and third largest agricultural export market, respectively. 

Our ruling

Obama said, "During my administration, for example, we boosted U.S. exports to Canada and Mexico by about 50 percent. That supports about 2.8 million American jobs."

The first claim is plausible, though experts say Obama should have used 2008, not 2009, as his baseline. That change would have cut the growth down to about 30 percent.

The second claim is wrong, so long as you believe Obama to be suggesting that 2.8 million jobs were created due to export increases.

We rate these claims Mostly False.

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