really going on in ferguson. >> they were so angry, because it could've been them. >> one hour special, only on al jazeera america. >> donald trump moved to the front of the massive republican field and stayed there with a campaign marked by slashing dismissive rhetoric on free trade. and the trade deals that have shaped u.s. economic relations with the world for a long time. a party whose leaders have preached the gospel of free trade for decades are looking at a frontrunner with very different ideas. and they wonder if he's right. trump and trade. it's the "inside story".

welcome to "inside story". i'm ray suarez. the gat, the wto, nafta, cafta, now the tpp. the united states has had leaders from both parties who told the people of this country that free trade creates american jobs. but yes, there would be some job losses over time. but those were jobs that were going to be lost anyway in an increasingly competitive global marketplace, and those who lost jobs would get new ones. fast forward 25 years from the nafta negotiations, and the leading candidate for president, donald trump, is insisting to loud and sustained applause, that american workers got snookred. and in the democratic party,

the surging campaign of bernie sanders also cast out on the free trade creed that sent the american policy since ronald reagan. when the candidates claim that free trade has been a loser for the american worker can they make the case? did the reassurances given to workers in pennsylvania, ohio, wisconsin, that manufacturing jobs lost to mexico, china, malaysia, would return in the form of other jobs, making new things, thanks to increased demand ever come true? and if the united states decided to turn away there that theory with how to do business with the rest of the world, could it work? the country is home to one of the largest markets of high income consumers in the world. could we make an iphone here? could we make a preus here? trump and trade. joining me for that

conversation, scott at the kado institute, here be in washington, she helped trade policy for the clinton administration and was white house deputy chief of staff. and peter, from the university of maryland. how should we do the math, karen, as the campaign wears on? made, trade, with the argument what the united states should do moving forward, how should we understand the arrange wants that we have made? >> we're a major economy, a global economy, and the benefits outweigh the harm done to a cadre of workers.

i think the real problem is, we haven't made the public policy choices that we need to make to help the worker. the executive branch, and the legislative branch hasn't taken seriously those workers who have been harmed, really harmed. and decided, here are the public policy choices we're going to make to help them to transition rapidly back to a changing labor market. i think the argument that mr. trump has made to shut down all trade, or to institute barriers and tariffs and pines and fees is not a wise choice because there is -- there are jobs, millions of jobs that

result in international trade. and they tend to be higher paying jobs. on average, 18% higher paying jobs, and when you shape those public policy choices, you have to keep in mind that there are winners, as a result of international trade, workers who do win as a result of the international trade, so the public policy has to be a balanced approach. >> well, first of all, my tenure, writing about trade agreements, and i was a strong advocate of free trade. and i still remain one, but we don't have free trade right now. it's easy to cheat on trade agreements, for example, the chinese have undervalued their currency, and propped up losing enterprises with subsidies, and massive barriers to our exports. as a consequence, we get more imports and we lose jobs that

way. and we get more exports, but not nearly enough. we have really not had a trade agreement that has created jobs because of that. if you lose jobs because you import more, but you don't export nearly as much more, then you have loss, and economic growth slows down. we have, through most of our history of trade agreements, public policies to help workers move from importing industries where they lost their jobs to other aspects of the economy for exporting industries. for that to happen, you have to have a robust economy, and with a trade deficit of $500 billion a year, that's an enormous drain. so much of what americans spend leaves the country, but doesn't come back to buy american products, and instead comes back to buy american companies. that's why, for example, we see right now, the chinese

basically on a shopping spree, buying up american assets. i estimate that the trade deficit costs us about 4 million jobs a year. when you consider -- or 4 million jobs. when you consider, we have 7 million men between the ages of 25 and 54, too old for college, and too young to retire, neither looking for work or employed, and not counted as employed, put them all back to work, which is more dynamic effects. the manufacturing industries, which is where we lost most of this employment are the big spenders in r&d. if our trade were more balanced, we would have a lot more research and development and would be growing. in reagan's time, coming out of a recession that was just as deep, the growth was twice what it was now. with that kind of growth, we would be in great shape. do i want to shut down trade?

no. i think that trump is right, as is charles schumer, and mitt romney, when he was running, to use some sort of a lever with china to get them to open up their market. >> scott, when you look at the same layup as our two previous guests, where do you come down? has this worked out for the american worker, the american consumer, the american citizen? >> yeah, i think overall, it has worked out for the american worker, and particularly the american consumer. it's one thing we haven't even heard about so far, the immense consumer benefits that international trade provides us. studies show that 90% of all consumer benefit are americans. people who shop at target and can stretch their budgets because of international trade. the idea that we're going to see this grand renaissance of manufacturing jobs, its

blighted by dat a we have been losing american manufacturing jobs, with a share of the total workforce since the 1940s, and numerical numbers, since 1979. long before china was a member of the world trade organization. and if you look at the study on these issues, the decline in manufacturing jobs is not a result of unfair trade. it's the result of productivity gains. and in fact, manufacturing output is still setting records. the united states is the number one global destination for foreign investment. peter talks about foreign companies buying american companies, and i see that as investment and jobs and output, all things that we typically welcome in the united states and wouldn't want to turn our backs on it simply because donald trump's idea of what is fair trade or unfair trade.

and last on that point, i would add that we have fair trade laws in place. we have over 300 dumping and counter duty orders in place over supposedly unfair products. those things already exist. and they're already being enforced, and many studies show that they're quite heavily biased toward the domestic industries already. so the idea that we're operating in this lawless trade marketplace is belied by the facts. >> a lot of the trump campaign is predicated, we have these deals with the rest of the world that haven't worked out for americans, and he intends to do something about it. but what can you do? trump and trade, stay with us, it's the "inside story".

>> welcome back to "inside story". i'm ray suarez. donald trump claims that in his words, america doesn't win anymore. he's promising to make the country great again, and he has repeatedly said, we'll start winning at everything if he's elected president. one area he repeatedly counsels on is free trade deals. we're talking about trump and trade this time. and i'm speaking with my guests, and peter, when donald trump says in front of an audience, we're not going to let carrier air conditioners

back into the united states that are made by mexican workers because carrier has shut down it's american plant. under nafta, i'm sitting on my couch in my living room thinking, can he do that? >> no, not without violating the agreement. and some of the things that donald trump says are absolutely silly. but i would point out that his basic premise is one that has been embraced by economists on the left. for example, the same policy in the new york times 5 years ago. mitt romney ran on the same platform. he wanted to use the dumping laws that you referred to to essentially enforce the equivalent of donald trump's 45% tariff. i've written about it extensively, and the trade commission enforces the touching and subsidy laws. the administration doesn't permit firms to count, for example, the consequences of china's undervalued currency.

it is true, and i want to point this out, when you go to the wal-mart, products are cheaper because of china, and lower income people get products for less money. but because we're only growing at 2% instead of 4, or 4% instead of 5, their income debt is much lower. and if i could give you a toyota camry for $15,000 instead of 25, but your neighbor would lose his job, would you think that would be a good deal for america? that's precisely the bad deal that barack obama is offering americans with the tpp. he announced the trade agreement in south korea as one that was going to create thousands of new jobs, and he had all kinds of analysis that t it would, and all of the think tanks in town are grinding out the studies to show it. since that has come to pass, the debt to south korea has gone up by billions and the

imports have gone out more than the exports have gone out. >> it's a good concrete example of a recently entered into agreement that promised a lot. and like other agreements that preceded it, seems not to deliver. >> are you talking about the tpp or the nafta? >> i'm talking about the agreement with south korea, with the obama administration. >> right, and so i want to get back to this idea. and i think that it's important, let's talk about peter's example. >> hold on a second, a specific question has been addressed to you. the obama administration promised tens of thousands of new jobs from the south korean trade deal. and unfortunately, many more imports have come in than exports have gone out because of the deal. jobs are lost. and you can't deny that, and we should create jobs with an equal number of exports, but we

haven't gotten that. >> thank you, let me answer that. first of all, the idea that one job is lost per import is simply silly. the fact is that over 50% of everything that we import are industrial capital goods and machinery used by other american manufactures to produce globally competitive products, so a lot of them are creating or supporting other american manufacturing jobs. second, those imports save americans money, and allowing them to spend their hard-earned dollars on other american services. american goods. it doesn't civil mean that that money goes poof and disappears. that $25,000 camry, if you save $10,000 on that, you're going to be able to buy other things with that $10,000. and that's the great myt that's surrounded with the trade deficit obsession. >> but aren't a lot of the things that you buy with the

$10,000 you saved also imported? >> they don't have to be. >> but that's the fact of the matter. when you go into a store, you try to buy stuff to fill up your basket to take home, it's all too. >> that's a fantastic point, and that's one of the reasons why there are so many misconceptions about u.s. trade policy. when you go into the wal-mart and see made in china, you think oh, everything is made in china, and the reality is, american consumption, only 5p. of american consumption is actually chinese stuff. and americans make a lot of things that we don't see on a daily basis. satellite and aircraft, and meanwhile, the vast majority of the american economy is services, things that are not tradeable. things like going to the mechanic or paying for a plumber. this is money that we save on chinese goods that you can

spend on american services and american workers, and it's getting reinvested into the american economy. >> so you have a trade deficit argument. and i degree with what has been said. you can't say, because we're exporting less than we're importing, and therefore, we have jobs lost. that is not the -- the structure here. right? >> i'm the one that's burdened with the degree in economics. >> let her finish. >> i'm not questioning your degree in economics. what i'm questioning here is the syllogism, if you will. i think that there are certain facts here, one, as a result of international trade, we do have job growth. two, as a result of international trade, we have job losses. job losses are not more than job growth as a result of

international trade. >> i guess i disagree with that. simply, if you start out in a steady state. >> but those are the facts. >> those aren't the facts. >> i'm not actually making them up. >> by the time i have to go to a commercial, and let me say this, stay with us, it's "inside story". we'll be right back.

>> welcome back to "inside story".agre thak they're the center of his trade policy. donald trump is vowing to usher in new global economics.

i'm talking it my guests, and scott, let's go to the final portion. conversation. play forward donald trump's plans. what would happen if he put the barriers, the tariffs, and the certain costs on the american economy? >> first, there's the assumption that he actually could under u.s. law, and that's pretty unlikely. the fact is in order to raise tariffs, you're going to need congress to go along, and congress wouldn't pass a protectionist bill. but assuming somehow that president trump could get away with his grand plan to impose massive tariffs on chinese imports, the result would be devastating to the american

economy. so in the actual -- the mechanics would be straightforward. we would see a u.s. law that would raise tariffs on all goods from china to 45%, or at least up by 45 percentage points. the result of that would not only be higher costs, and so forth, but instant litigation at the world strayed organization. china would go to the wto or a nafta pam, and win the right quite easily to retaliate against american goods in a similar amount. the nafta calculation shows that china would be able to retaliate against hundreds of billions of dollars against american goods and services and intellectual property. effectively shutting down the chinese market for american experts. >> let me stop through. >> you combine that with the consumer costs, it's a

devastating effect, as various economic analysis have shown for the u.s. economy. >> granted it's a big if, but if president trump were able to do that, one thing that he says in his speeches, withnostic demand stimulated, these things would start to be made here. would they start to be made here? >> no. just because he says it's so doesn't make it so. the reason why some workers are hurting, and it sounds very appealing to have a simple solution, i'm going to pound china or fine mexico, is because these situations are complicated. trade isn't the panacea, but nor is it the cause for every single harm that has happened to workers in the economy. we have technological

improvements, we have education and skills mixes, but what we don't have is a coherent economic policy that deals with winners and losers in the economy, and that's what we should. we should have a focus on how do we attract more jobs in high paying serves. right now, when you look at trade, it supports 2 million jobs in ago kurt. are we going to throw that out the window? it's 4-5 million jobs in services. are we going to throw that out the window? this is not a one size fits all. these are complicated issues, and they require balanced thoughtful public policy solutions and that's not what mr. trump is providing. >> if president trump were to move as he says he wants to, it would neither spur domestic

production, nor would it help us with the rest of the world, we would be entangled in endless lawsuits. >> it depends on how you did it. if you did it through the laws, it would be much more defendable than through the wto because you would be counter-balancing export subsidy. china's exports to the united states are three to four times larger than china, so when we put on a 3-4% duty, they have much more to lose. china has a tariff on automobiles of 25%, and ours is in the single digits. if you use it as a lever to bring them to the table because they have much more to lose than we do, then i think that you can be successful with this strategy. that is the strategy that has been proposed by includingman,

mauricey, schumer, by romney, by may. unfortunately, this whole discussion becomes very distorted by people entrenched in organizations that advocate against anybody with china. and donald trump comes with such a mode of language that even if you propose exactly the same thing as president obama, people would react negatively. unfortunately, there has been an inability to separate the proposal and it's history from the man, and that is one of the reasons we don't have an intelligent discussion about this, other than here. >> i was trying to do it today. >> i congratulate you. >> i want to thank my guests. scott,an junk scholar, karen, she's former white house deputy chief of staff. and peter, professor of business at the university of

maryland. that's the "inside story". join us tomorrow for a look at tomorrow's role in 1976 coup in argentina. i'm ray suarez, have a good night.

>> this is aljazeera america, live from new york city. charged with battery, donald trump's aid is expect to plead not guilty to allegedly grabbing a journalist. new security concerns after a man hijacks an egyptian airplane to get his wife's teams. and addicted to heroin, a national treasure in danger, what is destroying the grand canyon?