Wikipedia defines free trade as "Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports)." We don't have free trade, what we have is government managed trade where favored groups get favored treatment. That's why our FTAs are thousands of pages long. They are written to benefit transnational companies who finance reelection campaigns and provide other incentives to those in power. Under that kind of FT it's very difficult for us to compete with other nations.
True FT allows for individuals to specialize in providing goods and services based on what they have to offer and exchange it for goods and services they can't produce as competitively as others. In some countries what they excel in might be cheap labor, in others it might be highly creative products, in another highly trained workers and skilled services. This allows goods/services to be produced and offered in the most efficient and cost effective manner. Global competition will likely cause a shift in job types, but does not necessarily cause a loss of jobs.
The statistics do show a change in jobs since FT agreements like NAFTA have been implemented, but they do not show a job loss. Notice the graph below realizing NAFTA went into effect in January of 1994. The shaded areas are recessions. The line going from 1980 to the present is basically unchanged in its upward trend until we hit the current recession. Looking at it, you would not ask, "What happened in 1994?" There continued to be job growth after NAFTA.
One of the problems with FT as it's currently implemented is it utilizes "treaties" which erode our national sovereignty as well as costing us jobs. For example, British Columbia began growing cannabis hemp crops in 1996. President Clinton banned ALL Cannabis, when he signed NAFTA. In 2003, Bush AG Ashcroft banned cannabis hemp sales in the USA. Canada sued over loss of income in NAFTA, and won. So today, the USA farmers cannot grow cannabis hemp. The mills do not produce hemp paper, rope, board, fuel, fiber, instead, Americans buy billions of dollars worth of hemp annually from Canada. True FT would remove these regulations and British Columbia would have to compete with our farmers and see who could produce best hemp for the best price.
The problem in the scenario above isn't that FT took away these jobs, it's that government managed trade took away these jobs instead of letting us compete for them. It's true that the US cannot compete with cheap labor, as available in many underdeveloped countries. But our educational system can equip people to be prepared for more highly skilled jobs or to come up with creative ideas and ways of manufacturing. We will then benefit from the cheap labor being done elsewhere - as those countries will also benefit from having new jobs and possibilities open up for them.
Yes, the working conditions in many of these countries is horrible by our standards. So are the living conditions. But FT is not the cause of this - it is bringing them jobs which is offering them a way out of these conditions. Which is why workers line up to get them. Consider what happened after Sen. Tom Harkin of Iowa complained about sweatshops in Bangladesh. Some shops closed. Then Oxfam discovered that kids who were laid off often turned to prostitution to support themselves. As David R. Henderson, an economist at the Hoover Institution said, ""In fact, they're better off taking those jobs. ... The mistake Americans make is they think they would never work in a sweatshop and therefore they say these people shouldn't. Well, no one's offering those people green cards. Those people are stuck in those countries. They're choosing their best of a bunch of bad options. And when you take away someone's best of a bad option, they're worse off." This doesn't mean it's okay they are in "sweat shops" - I hate that. But it doesn't mean FT is the problem either. If anything, true FT would result in an improvement in their conditions and opportunities.
I've heard it said many times that "everything we buy is made in China" but that is another FT myth. A recent publication (8/8/2011) by Galina Hale and Bart Hobijn, two economists at the Federal Reserve Bank of San Francisco, titled “The U.S. Content of ‘Made in China’” looked at this very issue. One of the several questions they ask is: What is the fraction of U.S. consumer spending for goods made in China? Their data sources are the U.S. Census Bureau, the Bureau of Labor Statistics and the Commerce Department’s Bureau of Economic Analysis. They found that the vast majority of goods and services sold in the United States are produced here. In 2010, total imports were about 16 percent of U.S. gross domestic product, and of that, 2.5 percent came from China. A total of 88.5 percent of U.S. consumer spending is on items made in the United States, the bulk of which are domestically produced services — such as medical care, housing, transportation, etc. — which make up about two-thirds of spending.
Chinese goods account for 2.7 percent of U.S. personal consumption expenditures, about one-quarter of the 11.5 percent foreign share. Chinese imported goods consist mainly of furniture and household equipment; other durables; and clothing and shoes. The authors point out that most of the price of these products goes for transportation in the U.S., rent for the store where they are sold, profits for shareholders of the U.S. retailer, and marketing costs, which include the salaries, wages and benefits paid to the U.S. workers and managers responsible for getting sneakers to consumers. On average, 55 cents of every dollar spent on goods made in China goes for marketing services produced in the U.S.
It is not a perfect world and FT is not a perfect system. Even if what we had going on was FT, which it isn't. But neither is it the cause of all our troubles.