The Korea-US Free Trade Agreement (Kor-US FTA) will be a disaster for both the United States and Korea. The FTA was signed and negotiated by the Bush administration in 2007, but prevailing problems with the agreement led both Congress and the Korean legislature to reject the FTA.

The Kor-US FTA is the biggest Free Trade Agreement since NAFTA. This is a much bigger trade deal than CAFTA, and if it passes, the floodgates will open for the passage of the Colombia and Panama FTA and a really ugly Trans-Pacific Partnership.

U.S. International Trade Commission predicts that the Korea FTA will increase the U.S. trade deficit. The ITC has a history of underestimating. In 1999, the ITC estimated that China’s entry into the World Trade Organization would increase the U.S. trade deficit by only $1 billion and have no significant impact on U.S. employment. Instead, the U.S. trade deficit with China increased by $185 billion between China’s 2001 WTO entry and 2008, while 2.4 million U.S. jobs were lost or displaced to China.

The Economic Policy Institute predicts the Korea FTA will double the U.S. trade deficit with Korea to $26.9 billion a year within seven years. The total number of displaced U.S. jobs as a result of Korean imports into the U.S. will be 888,000. Even if you factor in the jobs created due to increased U.S. exports, and discount the jobs that are already lost due to the existing deficit with South Korea, approximately 200,000 jobs still stand to be lost— with a good chunk of them likely coming from the Midwest.

The Korea-US FTA would negatively affect the United States economy in many ways.

· The U.S. auto industry could lose 25,000 jobs as a result of the Kor-US FTA. Korea uses no-tariff barriers to keep U.S. autos out of their market, such as higher insurance rates for U.S. cars and laws regarding license plates that cost U.S. auto manufacturers an enormous amount of money.

· Korea would be allowed to challenge our regulatory agencies, including being able to limit our ability to regulate the quality of food imports. This is already seen in other FTAs and as a result we have toxic imports.

· “Buy Local Food” initiatives are important to economic development in the U.S., but implementing those initiatives could be compromised because they’d be considered a non-tariff barrier to trade.

· In addition to being bad for American farmers, Kor-US would also be bad for Korea since they don’t have the kind of support farmers in the U.S. have. Koreans have so vehemently opposed this FTA that Korea had to outlaw FTA protests.

· The beef industry will suffer as Korea would be able to limit inspection of Korean beef imports, despite constant refusal by Korea to import U.S. beef.

· Kor-US has terms that grant extreme rights for foreign investors within the U.S. that would allow them to play by very different rules. The scope of what can be challenged in the U.S. is extremely broad.

o Any limitation to corporation’s profitability can be challenged.

o Intellectual property rights, property rights, construction, bonds and loans, permits, etc…

§ Kor-US includes MANY of these, even prevailing wage laws can be challenged.

o Provisions in Korea FTA will supersede any regulations we put in place.

This trade deal was negotiated before the financial collapse (June 2007). It contains all sorts of goodies for Wall Street in its financial services provisions, including

bans on regulations limiting the size of banks and insurance companies;

prohibitions against barring the sale of risky derivatives; and

limits on capital controls.

The main beneficiaries of these policies are U.S. companies like Citigroup. Citigroup’s own Laura Lane, a corporate co-chair of the U.S.-Korea FTA Business Coalition, stated, “it is the best financial services chapter negotiated in a free trade agreement to date.”

The United States would be unable to enforce the terms recently laid out in the new financial reform bill.

There has been evidence that Korea manipulates their currency to some extent, and we have already shown an inability to stand up to countries that do that.

The United States cannot afford to enter into another disastrous Free Trade Agreement.

Obama has touted the FTA as a measure necessary to assist in the growth of U.S. exports, but it will do nothing more than widen the already massive trade imbalance. President Obama should stick to his pre-election promises and oppose the Kor-US FTA in its current form. Make sure your representatives know that if the they support the Kor-US FTA, they will not receive your support in future elections. Any elected official that promotes this FTA in its current form does so to the detriment of the United States and should not be in office.

Print PDF