Why would Congress pass three leftover Bush NAFTA-style "free trade" agreements with Korea, Panama and Colombia?
A report issued by the Economic Policy Institute concluded that the Korea FTA agreement not only fails to create jobs for American workers, it would result in the net loss of 159,000 U.S. jobs in its first seven years. And when one considers the details of the agreement, it is not hard to see why.
Under the proposed Korea FTA, the United States will eliminate tariffs on South Korean cars and trucks, increasing South Korean imports here, without requiring them to buy more of our vehicles. As a concession, South Korea did agree to waive certain environmental and safety requirements for up to 25,000 cars per U.S. maker -- if suddenly there is demand for U.S. cars in South Korea, whose consumers historically have not bought U.S. imports. More than 95 percent of the cars sold in South Korea today are made in South Korea.
Additionally, no changes were made to the low domestic content rules. Under the proposed agreement, up to 65 percent of the value of a vehicle can be sourced in low-wage nations like China and still qualify for the FTA's duty-free access. As a result, this agreement is an open invitation to the auto industry to send American auto parts jobs to China. Indeed, the Korean Auto Workers Union opposes this FTA because the low domestic content rules will also invite the South Korean parts industry to outsource their jobs to China. Meanwhile, Europe's trade agreement with South Korea requires 55 percent domestic content. Even NAFTA required 50 percent domestic content.
But while this FTA does not follow NAFTA's domestic content requirements, it does replicate NAFTA's special privileges for foreign investors. This allows foreign investors to evade domestic courts and use foreign tribunals to get reimbursed for regulatory costs from U.S. taxpayers. There are more than 270 Korean corporate affiliates in the U.S. who would be empowered to use these tribunals to raid our Treasury if the Korea FTA were implemented.
Among the laws exposed to attack are financial regulations that the U.S. and Korea implemented to restore stability after the devastating global financial crisis. The banks and securities firms that wrecked the global economy would be newly empowered under this deal to attack the policies designed to get them under control. Not surprisingly, the Korea FTA is loved by Wall Street's titans.
And the FTA even includes President Bush's ban on references to the International Labor Organization's Conventions -- the global labor standard. The agreement does nothing to require South Korean labor law to be put on equal footing with U.S. law, as under South Korean law, union members can be fired for striking and then sued for their employers' lost profits. The AFL-CIO, Teamsters, and many other American and Korean unions oppose this FTA.
With the Big Three beginning to recover and hire more workers thanks to major U.S. government assistance, it seems problematic that Congress would support an agreement that could boost the auto industry's profits, but only at the cost of more off-shored jobs.
The proposed Korea FTA is a bad deal for our country and America's workers. It's time to put the American worker first and stop these trade deals.
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