Reluctant Opposition To Korea Trade Deal

Dave Johnson

(Updated to include statements from labor and other organizations.)

The President wants a win – but is the Korea-US Free Trade Agreement (KORUS) a win? Jobs are the win we need. A good trade deal can really help working people and the economies on both sides of the trade border. The world’s economy benefits. But we have seen what bad trade deals can do to jobs and our economy. Many now reluctantly say that KORUS falls short.

Trade deals have been sold to the public as good for us because they offer jobs, jobs and jobs. But decades of “free trade” agreements have not brought jobs, they have moved jobs out of the country, kept wages low here by letting employers threaten to move jobs moved out of the country, and they have created huge trade deficits.

This is because these “trade” deals were really about big companies using their influence to get around the protections that We, the People fought for: good wages, worker health and safety rules, protecting the environment. We, the People invested to create the circumstances that enable our business to prosper and asked businesses to pay us our dividend, and some businessowners didn’t want to do that. And these trade deals allowed them to move the jobs to places that did not have the protections of democracy but still sell the same goods here.

Maybe A Short-Term Win, But It’s A Long-Term Lose.

There is also a problem that other countries are not playing the same game with the same rules we are. These trade deals might look good if you assume that trade partners have the same interests and are playing the same “free market” economic game as us. But while some of our companies are mostly interested in short term profits that drive bonuses now, other countries are interested in carefully building an industrial base that serves their economy over the long term. Our own “free trade” economists can’t seem to understand why others would let their government “interfere” with markets by having long-term economic/industrial policies and long-term mercantilist strategies.

But the fact just is that countries like Korea have industrial strategies and we don’t, and they have a variety of protectionist measures that fall outside of the details of trade agreements but still affect trade – and we don’t. So these trade deals just let them play the long game, while we play the short game. Our big companies win short-term, their economies win everything in the end.

Wants A Win

The President used to talk about the bigger picture, but now it seems he wants a pragmatic “win” to show the public and business leaders. If the President goes forward with these agreements with Korea, Columbia and Panama, in pursuit of “wins” it is in direct contradiction with the broader initiative he began when he outlined the need for comprehensive strategies, and demanded that trade accounts be balanced and surplus nations adjust their policies to bring internal demand in line with their export strategies. This is what the US needs, and it is what the world needs.

The President shouldn’t allow the the need for the appearance of a win to get in the way and divert from his own fundamental initiative to get global trade more balanced. This requires taking steps against countries running mercantilist policies.

Labor Mostly Against

The UAW and UFCW see potential jobs for their members, so they endorse KORUS. Others do not. The UFCW endorsed because of possibilities for increased beef exports (the agreement lets more beef in but the Korean culture might not.) The UAW endorsed because the deal adjusts auto exports and imports (if Koreans will buy cars that don’t meet their high safety standards.)

But the Steelworkers just came out against this deal, saying that while the deal has been improved by Obama’s negotiators, it still falls short. The Steelworkers statement also addressed the lack of a comprehensive economic/industrial policy

Our nation fails to have a comprehensive strategy to enhance the competitiveness of our economy, to ensure the strength of our manufacturing base and to increase employment, wages and income.

And they conclude, reluctantly,

South Korea is a strong ally that deserves our friendship and support. They have it. But we do not need to inflict further damage to our manufacturing sector and the lives and livelihoods of our workers to prove the strength of our alliance. We have concluded that, while improved, it still does not merit USW support, and we will oppose its passage.”

The Machinists are also against,

“This agreement could have represented an opportunity to demonstrate real and meaningful change when it comes to building a fresh, new trade agenda,” said [The International Association of Machinists and Aerospace Workers President] Buffenbarger. “Sadly, it will further empower the same old trans-national business interests that are all too eager to shift more U.S. production jobs to countries like South Korea, China, and Mexico.”

The Communications Workers of America (CWA) are against,

This agreement gives investment and legal protections to large multi-national corporations which shift jobs offshore in search of the lowest labor and environmental costs and highest profits. With no counter balance, multi-national corporations whipsaw workers and nations to prevent and eliminate bargaining rights. KORUS, as negotiated, does not create an economic and collective bargaining rights framework to support the aspirations of US and Korean workers.

The AFL-CIO also released a statement opposing, also citing the need for a comprehensive economic/industrial policy:

For more than a decade, the labor movement, environmental groups, development advocates and others have advocated for a new trade policy that is part of a more coordinated and coherent national economic strategy. The proposed U.S.-Korea trade deal does not live up to that model and does not contribute to a sustainable global future. We believe we must move towards a more democratic, sustainable and fair global economy with broadly shared prosperity for working people around the world. Reaching that goal will require deep-seated reforms in current trade policy, as well as in our own domestic labor laws and other policies.

The Citizens Trade Campaign has more statements,

More than 500 faith, family farm, environmental, labor, consumer, manufacturing and civil society organizations across the country had proposed commonsense reforms to the pact’s investment, labor and financial services provisions well before last week’s deal was struck. Implementing those changes could have been a first step towards transforming U.S. trade policy into a real tool for job creation. It’s disappointing that the opportunity to renegotiate the Korea agreement into one that actually works for the majority of working people, family farmers, consumers and the environment was wasted.

Paul Krugman pointed out the other day, in Trade Does Not Equal Jobs, a trade deal that boosts GDP can still mean fewer jobs,

And there’s even an argument to the effect that increased trade reduces US employment in the current context; if the jobs we gain are higher value-added per worker, while those we lose are lower value-added, and spending stays the same, that means the same GDP but fewer jobs.

JOBS are the win that the President, the country and the world need NOW. A coherent, comprehensive economic/industrial policy is also a win for our future, and we don’t have that.

Updates:

United Electrical, Radio and Machine Workers of America (UE),

In KORUS-FTA, instead of requiring specific compliance with the International Labor Organization’s conventions that establish internationally recognized core labor standards and fighting to increase standards around the world, one of the purported accomplishments of the US negotiators is to have forced Korea to actually lower environmental and safety standards. At a time when our children’s future is at serious risk due to the failure to adequately address the causes of global warming, our government has forced the deterioration of standards for food and car safety, including automotive standards for gas mileage.
Nor has the agreement – originally negotiated by President Bush – been altered to eliminate the much-criticized investor-state provisions. These provisions permit companies to sue governments for damages over actions, including financial, health or environmental regulations, that the companies claim interfere with their actual or anticipated profits. In addition, Public Citizen has noted: “Signed before the financial crisis, the pact calls for financial services deregulation that is at odds with the lessons we’ve learned from the economic crisis and that may conflict with recent reforms made by both the U.S. and Korea.”

… This NAFTA-like bill must be stopped.

United Food and Commercial Workers International Union (UFCW):

The recently announced proposed U.S.-Korea Free Trade Agreement represents a small, but not insignificant, step forward on U.S. global trade agreements.

UFCW and its members would like to recognize Ambassador Ron Kirk and his team for the improvements they negotiated to the Bush agreement of 2007. In particular, the Administration insisted on meaningful changes in the automobile sector that will help American autoworkers and manufacturers achieve a more level playing field. Also, academics estimate that the Korean agreement will create over 20,000 jobs in the U.S. meat export producing sectors that employ hundreds of thousands of UFCW members.

All U.S. global trade agreements should seek primarily to assure that the U.S. remains a leader on fair global trade, to restore manufacturing, and to get American workers back on the job. This proposed agreement makes improvements on each of those fronts. Looking ahead, we must work for a fairer global trade structure that benefits workers as much as business.

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