Obama Does a "Lose-Lose" by South Korea Free Trade Agreement

Remember all of those promises during campaign 2008 to finally reform trade and stop NAFTA like trade agreements? Chalk up another one to the win elections rhetoric dust heap. While Obama claims this NAFTA style Bush era trade agreement is the very ole and tired corporate-speak win-win, odds are it's another lose-lose. A loss for the American people and a loss for Obama himself in 2012.

Obama has announced a new trade agreement with South Korea. There is just one new tweak that is better than before, the tariff schedule on autos.

The new agreement calls for South Korea to reduce its tariff on U.S. auto imports from 8% to 4%, and fully eliminate it in five years.

Meanwhile, the 2.5% U.S. tariff on auto imports will remain in place until the fifth year, instead of being immediately eliminated as specified in the 2007 agreement.

Here's what Public Citizen said about the auto tweaks:

Merely tweaking the “cars and cows” market access provisions of Bush’s NAFTA-style Korea trade pact but leaving in place the offshoring-promoting foreign investor protections is a slap in the face to the majority of Americans who, according to repeated polls, oppose the same old trade policy that has cost millions of American jobs.

The Economic Policy Institute performed an analysis on this trade agreement. Contrary to the rhetoric (which also flies in the face of statistics) claiming jobs will be created. EPI found the South Korea trade agreement with lose 159,000 American jobs and increase the trade deficit by $16.7 billion.

If you believe this NAFTA style trade agreement has been reformed, it has not.

The current text includes the extraordinary investor rights that promote offshoring and expose domestic financial, environmental and health laws to attack in foreign tribunals. 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. The pact also explicitly forbids reference to the International Labor Organization’s conventions that establish internationally recognized core labor standards.

How insane is it, with a horrific jobs report, the United States is clearly exporting jobs, to sign up for yet another offshore outsourcing agreement, endorsed by our government?

Buried in another article reading the press release instead of the actual trade agreement, we have this quote by a U.S. Chamber of Commerce watchdog group:

It's crystal clear why the US Chamber is supporting a deal effectively shipping over 150,000 American jobs overseas: As the nation's chief cheerleader for outsourcing, the Chamber gets to go to bat for its top corporate members ... and gets a jump-start on one of its key goals for 2011: tax breaks for outsourcers.

Below is a graph from trade reform on the current deficit with FTA (free trade agreement) countries:


FTA trade deficit 2009


Reuters has a factbox up on the trade deal. Notice how the finance, labor, tax incentives to offshore outsource jobs is not mentioned.

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Excellent summary

It's important to make the same fundamental point over and over - the people of this country don't authorize the rulers selling them out to benefit huge concentrations of capital and those who control that capital. Your summary graph says it all. Thanks for continuing to tell the truth in the face of massive dissembling.

graph only to 2009

To put together a special graph of just the countries with Free Trade agreements and their various deficits is a job, but note that graph only goes to 2009, when global trade was still collapsed.

It's much worse in 2010. Some of the information is in the trade deficit economic monthly report overview.

But considering even Ben Bernanke is warning on the China trade deficit, it's just astounding we get no action and instead yet another trade agreement with the same incentives and free flow of capital, finance, to guarantee we'll have more manufacturing, jobs moving to S. Korea now.

Can you tell any difference here between Bush and Obama from that press release? It's identical and odds on written by the U.S. Chamber of Commerce is what I suspect. Those numbers are clearly spin and snow, almost identical to jobs and trade, export numbers quoted in every single bad trade deal made.

I think the limit on U.S. autos is 750,000. That's peanuts.

Krugman sums it up nicely in a blog post

almost sarcastic. He printed out the basic GDP equation and shows how imports subtract from economic growth and also mentioned China.