SummaryA bilateral trade agreement to lower tariffs on trade between South Korea and the United States, following the model of bilateral trade accords over the past years that have left the U.S. with trade deficits of more than $1 billion a day.
Details & Argument
The United States-Korea Free Trade Agreement Implementation Act would approve the United States-Korea Free Trade Agreement entered into on June 30, 2007 with the government of South Korea.
The bill would authorize the President to proclaim specified tariff modifications. Before passage of the law, U.S. industrial goods faced an average tariff of 6.2 percent in Korea, at a cost of more than $1.3 billion a year, while Korean exports entering the United States faced an average tariff of only 2.8 percent. The agreement will significantly lower tariffs affecting exports to the Korean market. Certain non-tariff restrictions would also be reduced.
In particular, South Korea would immediately cut its tariff on U.S. autos in half and fully eliminate those tariffs after five years. The impact of removing tariff and non-tariff trade barriers on automobiles would increase auto exports by $250 million a year. The legislation would also prescribe certain safeguards with respect to imported Korean motor vehicles under the agreement.
The legislation contains language covering intellectual property rights, such as copyrights, patents, trademarks, and trade secrets. The agreement would lengthen terms for copyright protection, cover electronic and digital media, and increase enforcement to go beyond the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights. Both parties would be obliged to provide appropriate civil and criminal remedies for willful violators of intellectual property rights.
The agreement authorizes such groups as trade associations, unions or businesses to petition the International Trade Commission for relief if, as a result of the reduction or elimination of a duty provided for under the agreement, a South Korean item is being imported into the United States in such increased quantities as to be a substantial cause or threat of serious injury to the domestic industry producing a competing item.
The bill would amend the Trade Agreement Act of 1979 to make a product or service of a party to the Agreement eligible for U.S. government procurement.
H.R. 3080 was sponsored by House Majority Leader Eric Cantor, R-Va., and had the support of the Obama administration.
The House passed H.R. 3080 by a vote of 278-151 with 219 Republicans and 59 Democrats voting in favor of the bill, and 21 Republicans and 130 Democrats voting against the bill. The Senate passed the bill by a vote of 83-15, with 45 Republicans, 37 Democrats and one independent voting in favor, and one Republican and 14 Democrats voting in opposition.
The Middle-Class Position
The middle-class position is to oppose this agreement. A good trade deal helps working people and the economies on both sides of the trade border. The worlds economy benefits. But we have seen what bad trade deals can do to America's workers and our economy. And the South Korean free trade agreement is a bad deal.
This deal was negotiated as if South Korea plays by the same economic rules as the United States. It does not. It is a mercantilist, export oriented country similar to China, with a government that strategically supports and promotes its industrial sector in ways that the United States' government does not. Many of the practices that South Korea engages in to support its manufacturers and exporters fall outside the terms of the trade agreement.
"There are many ways to impede imports other than tariffs and quotas," wrote Clyde Prestowitz Jr., a labor economist and president of the Economic Strategy Institute. "In Korea, for example, antitrust enforcement is very weak. Large chaebols like Samsung and Hyundai control much of the distribution chain. So even if tariffs are zero, foreign exporters may not be able to find distributors to carry their products. Or take intellectual property: The best treaty language in the world for protection of intellectual property won't protect it if the nationalistic court system doesn't enforce the law."
While the United Auto Workers and the United Food and Commercial Workers supported the South Korea Free Trade agreement, most labor unions opposed the agreement, as they did trade agreements with Colombia and Panama. Their conclusion was that the South Korea deal merely replicates a broken trade model that encourages American corporations to shift jobs overseas and encourages foreign countries to flood the United States with products made cheap by underpaid labor, lax regulation and environmental enforcement, and government subsidies. The deals threaten to worsen our trade deficit, not narrow it. All three agreements should have been renegotiated to offer stronger protections and better wages for workers on both ends of the deal and lift up environmental standards globally.