Korea FTA – Passed 2011
Increased US Trade Deficit with South Korea and Job Loss
- The Economic Policy Institute found that implementation of the Korea FTA would boost the U.S. trade deficit with Korea by $13.9 billion over the next seven years.
- Rising Korean imports would displace approximately 888,000 U.S. jobs over this time period, with the FTA directly responsible for about 159,000 net job losses.
- Living wage jobs in both countries will be displaced by lower-wage, insecure jobs in the service sector
No Enforceable Labor Rights/Human Rights
- The FTA only ‘urges’ the US and South Korea to adhere to the ILO (International Labor Organization) “Declaration on Fundamental Principles and Rights at Work,” which is not even enforceable.
- Meanwhile, the 8 ILO Conventions that specify acceptable working conditions are excluded from the FTA (including conventions against child labor or forced labor)
- Weak Rule of Origin Standards in the FTA means that 2/3 of a product labeled ‘Korean’ can be made in third party countries, including China and North Korea.
Further De-regulation for Corporations
- Gives investors and corporations special rights to sue government through special tribunals. The tribunal system does not contain even basic legal controls – such as the requirement to first bring the challenge through domestic courts or the requirement to follow an appeals process – that could limit abuse of this private right of action.
- Forbids “Buy America” policies; and requires that companies in South Korea be given the same access as that of U.S.-based companies to state and federal government contract work – even though that work is paid for by American tax dollars and Americans should have the right to determine how their tax dollars are spent.
- Prohibits the use of controls of capital flows, even though there is broad consensus among economists and policy-makers after the recent global financial crisis that capital flow controls are an important tool for preventing such crises. For example, 250 eminent economists, including free-traders and former IMF officials, recently signed a letter urging the US to allow capital flow controls.
- Contains other financial deregulation provisions written before the global financial crisis that will prevent the U.S. and South Korea from using such policies as limiting the size of banks or insurance companies, or from banning risky derivatives..
Environmental and Health/Safety De-regulation
- Under the FTA, environmental and public health and safety protections in both countries can be challenged by foreign companies as barriers to trade – putting corporate profits above community health.
- As part of the FTA process, Korea was required was to reduce its air pollutant emissions standards as well as auto safety standards.
WA State Losses
- Wheat: Washington State’s 3rd most lucrative agricultural commodity is a net loser under the Korea FTA, suffering a reduction of its trade surplus by $14-69 million, according to the US International Trade Commission (USITC).
- Washington State’s 1st, 2nd and 4th most important commodities are touted as winners, since tariffs by South Korea will be lessened and eventually eliminated. However there is nothing in the FTA to protect Apples, Dairy and Beef from currency devaluation-which happened under NAFTA. Korea is one of only 3 countries certified by the US Treasury Department as a currency manipulator (along with China and Taiwan). If South Korea devalues its currency, it will wipe out any potential gains for these 3 commodities, since devaluation would be the equivalent of:
- 10% tariff for dairy products
- 18.2 % tariff for vegetables, fruit, and nuts
- 12 % tariff for beef
- The U.S. wood products trade deficit is supposed to worsen by at least $171 million, according to the US International Trade Commission (USITC)
- The paper products trade deficit is supposed to worsen by at least $96 million
- At least 60,000 jobs are at risk in WA State in motor vehicles and parts, other transportation equipment, electronic equipment, metal products and textiles and apparel
- According to the Economic Policy Institute, High Tech and Green Tech sectors are also at risk of job loss
High Tech Sector
- USITC projects a drop in exports of electronics/high tech products amounting to a loss of $293-$381 million.
Investors Rights vs Public Interest
- Under the FTA, both Korean corporations operating in Washington State as well as Washington State corporations operating in South Korea are not necessarily under domestic/state laws, and have special rights to enforce FTA privileges by suing in special FTA tribunals