The free trade pact between South Korea and the United States originally negotiated in 2007 by the Bush administration and tweaked by the Obama administration and South Korean negotiators last week is a good deal from the point of view of the White House, the Democrat-hating U.S. Chamber of Commerce, the Ford Motor Co., the United Auto Workers, Senate minority leader Mitch McConnell of Kentucky, House Ways and Means Chairman Sandy Levin and his soon-to-be Republican successor Dave Camp, both of Michigan.
Here's a summary of key parts of the pact, KORUS, which must be approved by the U.S. Congress and South Korea's parliament. More details from the White House can be found here as well as the administration's take on the economic benefits here.
“This agreement will create thousands of new jobs, advance our national goal of doubling exports in five years, and demonstrates that America is once again ready to lead on trade,” [Chamber of Commerce President Tom] Donohue said. “The administration has done its part. Now it’s time for the new Congress to make passage of KORUS a top priority in January. We will do everything in our power to round up the votes.”
Opposed are Rep. Mike Michaud, who heads the House Trade Working Group, an 80-member caucus of Democrats, Public Citizen’s Global Trade Watch, U.S. Chamber Watch, Sen. Max Baucus, Sen. Sherrod Brown and Rep. Linda Sánchez.
Said Michaud on Friday:
We had what I thought was a productive meeting just a few weeks ago at the White House on changes we’d like to see in the agreement. At the time, we told the President that we believe the agreement as it exists now has several fundamental problems that go beyond the issues with beef and autos.
But after talking to Ambassador Kirk today, I learned that these concerns were not addressed. I had hoped for more from this White House, which campaigned on a need to change the way we negotiate trade agreements so that they truly benefit American workers and businesses. The deal reached today, while beneficial to the auto industry, falls far short of that goal.
Lori Wallach of Public Citizen's Global Trade Watch, NAFTA-style free-trade pacts, said:
Why the administration would consider moving another NAFTA-style trade deal is inexplicable, especially given that export growth under past U.S. free trade agreements was less than half of that to the rest of U.S. trade partners. Bush-era International Trade Commission studies show the Korea deal will increase America's trade deficit, and Americans across diverse demographics are united in opposition to more-of-the-same trade policy.
Choosing to advance Bush's NAFTA-style Korea free trade agreement rather than the new trade policy President Obama promised during his campaign will mean more American job loss and puts the White House at odds with the majority of Americans who, polling shows, oppose more-of-the-same job-offshoring agreements.
Some fence-sitters on the pact, like Mike Lux - a former AFL-CIO lobbyist, special assistant to the President in the Clinton administration and co-founder of the political consulting firm Political Strategies - are waiting to make up their minds until they hear from Leo Gerard, the United Steel Workers president whose critical views on trade policy are among labor's toughest. Said Gerard, whose union also represents rubber and tire workers and whose board will meet Monday:
I guess some people feel they're smart enough to make decisions based on rumors. I want to be more thoughtful. … Even if it was the best agreement ever negotiated in the history of mankind, if we have no industrial strategy, what the hell good is it? I'll have a direct discussion with Bob, and our paths overlap, and sometimes they don't overlap.
"Bob" refers to Bob King, head of the UAW, who has spoken in favor of the pact for quite some time, unlike his predecessor.
Marcy Wheeler, who has strong connections in the car industry and blogs as emptywheel, had a decidedly negative view of the deal. Changes in the original agreement from 2007, she wrote, would allow U.S. automakers to export an additional 55,500 cars to Korea, four times the number in the original deal. But since each car takes about 30 hours to build, that would mean the equivalent of a mere 800 jobs for the U.S. auto industry.
OK. Eight hundred jobs in the auto industry, and, according to the administration, as many as 69,200 other new U.S. jobs. Wouldn't that be worth it? Certainly sounds good. If the pact really will generate that many new jobs. But will it?
Although the U.S. International Trade Commission (USITC) projects this will have a small positive impact on the U.S. trade balance, and “minimal or negligible “ impact on U.S. employment, history shows that such trade deals lead to rapidly growing trade deficits and job loss in the United States.
The Charts [on the right, Click here for a larger version] compare USITC’s estimates of the impact of the forthcoming free trade agreement with Korea to EPI’s own calculation. Unlike USITC’s forecast of a small positive impact, EPI’s research shows it will increase the U.S. trade deficit with Korea by about $16.7 billion, and displace about 159,000 American jobs within the first seven years after it takes effect.
Scott pointed out that this isn't the only official prediction of great U.S. gains from trade agreements being off the mark. They frequently are, he said. For instance, in 1999, the USITC "estimated that China’s entry into the World Trade Organization would increase the U.S. trade deficit with China by only $1.0 billion, and have no significant impact on U.S. employment. In fact, the U.S. trade deficit with China increased by $185 billion between 2001 (when China entered the WTO) and 2008, and 2.4 million U.S. jobs have been displaced or lost. A study by Josh Bivens in 2008, Everybody wins, except for most of us: What economics teaches aboutglobalization, found that all of the neoliberalization benefits in the U.S. from 1982-2007, generated about $9 per household. That's not a typo. $9. And it amounts to about $1.5 billion total.
It's crystal clear why the US Chamber is supporting a deal effectively shipping over 150,000 American jobs overseas: As the nation's chief cheerleader for outsourcing, the Chamber gets to go to bat for its top corporate members ... and gets a jump-start on one of its key goals for 2011: tax breaks for outsourcers.
Given the array of sharply differing statistics being proclaimed by various groups with various points of views, including from the group that cheered loudest when the Supreme Court's Citizens United decision was announced, the U.S. Chamber of Commerce, one thing that isn't crystal clear – not yet anyway – is whether the free trade agreement between South Korea and the United States represents significant progress or will be another corporate-boosting, neoliberal boondoggle that slam-bangs American workers yet again. There are many elected Democrats who obviously think it's the latter.