Wednesday, February 23, 2011

Background on KORUS--the South Korea Free Trade Agreement

We'll be sending out an alert tomorrow asking our members and supporters to call their representative and voice their opposition to the South Korea Free Trade Agreement, the biggest FTA since NAFTA. Here's some background on the agreement and its likely effects, from our allies at the Alliance for Responsible Trade.

KORUS is highly controversial in both South Korea and the US, and has been the source of major demonstrations in South Korea. Despite the positive spin some members of both parties are trying to put on the agreement, Americans have not been fooled.

There are a number of particularly troublesome parts of the measure. The labor community has largely rejected the agreement due to its poor standards. Environmentalists are appalled at the US efforts to lower environmental and safety standards. Oddly, one of the only reasons many Democrats had hesitated to pass the agreement was due to non-tariff barriers to trade. In this case that actually meant that South Korea had too high of standards for car and food safety, as well as miles per gallon auto standards for the US to compete. Now that the Obama administration has negotiated for South Korea to lower its car safety and emissions standards for US automobiles, the administration is ready to push the bill through. Clearly, this agreement is another example of a labor and environmental race to the bottom.

We should all be irate over clauses allowing the World Bank and UN tribunals to allow South Korean companies to sue to the US government (or US companies to sue South Korea) for lost profits, should local regulations impede their financial gains. This bill will actually create a net job loss in the US, where we are already suffering from staggering unemployment rates. The US International Trade Commission (one of free trade's biggest cheerleaders) says that the agreement will increase the trade deficit with South Korea (meaning a net loss of jobs.) Cumulatively, the Economic Policy Institute estimates that it will costs the US 159,000 jobs in the next 5 years as a net loss. Moreover, the jobs lost will mostly be in high end manufacturing and electronics, while the jobs gained will be in low paying sectors such as cattle production.

The KORUS FTA is detrimental to US and Korean workers. It forces South Korea to lower its environmental and safety standards, and exposes our tax-payers to possibly having to pay claims in United Nations or World Bank tribunals by Korean companies alleging lost profits based on our environmental or labor laws. Moreover, the U. S. International Trade Commission has predicted that KORUS will actually increase the US trade deficit. The Economic Policy Institute maintains that KORUS will make the US trade deficit with Korea twice as bad, up to $26.9 billion annually within seven years. This will result in 888,000 jobs lost as a result of Korean imports. If one figures in employment created by increased US exports and jobs lost because of the already existing deficit with South Korea, there are some 200,000 jobs that will be lost.

The Obama administration has failed to live up to its promises for true reform. Instead they have framed this detrimental agreement as a victory. The majority of us, however, do not see this agreement in that light. We are tired of failed NAFTA-style trade agreements that have cost us so many jobs, and will continue to do so in these tough economic times.

Please, do your best to donate a bit of time to do this. Many of us at ART are convinced that if we can stop the Korean FTA from being implemented, it will shut-down efforts by many to implement the Colombian and Panamanian Free Trade Agreements. Those agreements as you know will do even more damage.

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