Unions say Korea US trade pact means job losses in both countries

The White House and House Republican leaders reached a deal last week that will allow Congress to begin deliberations on the South Korea/US trade agreement, also known as KORUS FTA. The Economic Policy Institute (EPI), a research organization with ties to organized labor, says that KORUS FTA 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.”

The Korean Confederation of Trade Unions says that “KORUS FTA privileges the rights and benefits of transnational corporations over the rights of workers, consumers and the general public” in both the US and South Korea.

KORUS FTA was originally negotiated during the Administration of George W. Bush, but opposition in the US and Korea put the agreement on hold. It was revived last year when the two governments negotiated changes to the original agreement that addressed some concerns raised by opponents.

One of the changes will allow more cars manufactured in the US to be sold in Korea. Korean leaders agreed to exempt cars manufactured in the US from Korea’s more stringent safety and emission standards and to immediately reduce its tariffs on auto imports from the US. The agreement requires both countries to phase out auto tariffs over the next five years, but to protect the US market from a surge of Korean auto imports, it allows tariffs to be reimposed if imports increase over a certain level. Because of these changes, the United Autoworkers supports the passage of KORUS FTA.

While the agreement gives some protection to the auto industry, it doesn’t afford the same protections to companies that manufacture auto, electronic, and other parts for consumer goods. These industries are already facing intense market competition, resulting in much of the work that they do being outsourced to other countries. KORUS FTA will likely cause more job losses in these sectors, which has led most other unions in the US to oppose it.

“KORUS will open the door for multi-national corporations that have already shipped thousands of jobs overseas to ship even more jobs overseas.,” read a statement by the International Association of Machinist, which represents workers in the parts industry.
“Under KORUS, those same corporations can continue avoiding paying US taxes.”

The US International Trade Commission estimates that while some workers will lose their jobs, the trade agreement will create other jobs, so that there will be no net loss of jobs. But EPI says that the same thing was said about NAFTA, but after NAFTA was passed in 1993, the US trade deficit with Mexico increased substantially causing the loss of 560,000 jobs in the first ten years of the pact.

In a letter to Congress, The United Steelworkers President Leo Gerard said that because of NAFTA and subsequent trade agreements like it “large U.S. multinational companies cut their workforces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”

“Trade deals force working Americans to assume all the risk and encourage big multinationals to reap all the rewards,” Gerard said.

Along these same lines, the Korean Confederation of Trade Unions (KCTU) said that KORUS FTA will encourage multinational corporations to move work out of both the US and Korea. According to the confederation, KORUS FTA grants tariff exemptions to vehicles with 65 percent of their value coming from parts manufactured in other countries, which means that corporations in both countries will have an incentive to use parts made in low-wage countries.

KCTU also opposes KORUS FTA because it lowers barriers to professional service corporations like investment firms from doing business in Korea and eliminates some of the regulations that have protected Korea from the financial abuses that caused the financial crisis in the West.

KCTU argues that before the countries agree to a trade deal, they both need to improve the protection of labor rights which is weak in both the US and Korea. “Before adopting new trade agreements both countries should revise the labor laws to guarantee workers’ basic rights. . . including (the) right to collective bargaining and the right to collective actions, so that workers of both countries can equally enjoy the potential benefits of trade,” said a KCTU statement on the pact.

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