Free trade agreements jolt the economy, but not in a good way
Proponents of the Korea-U.S. Free Trade Agreement must assume that Americans have very short memories or are indifferent to attempts to undermine their best interests.
In the hope that we’ll glaze over the economic and social costs incurred from the North American Free Trade Agreement (NAFTA) and similar successive agreements, today’s free-trade advocates evoke images of lines of cargo ships loaded with American-made goods headed for foreign markets and rosy relationships with trading partners.
If only it were that simple.
Modern agreements delve into areas far beyond the scope of which free trade was originally intended. If they simply addressed tariffs and quotas, the debates around pending agreements would likely be less contentious.
But most trade deals now include imprudent restrictions on food safety standards, harmful agricultural provisions, limits on access to generic medicines and much more.
To boot, if any of our national, state or local policies get in the way of corporations making a buck, trade deals that follow the NAFTA model allow us to be sued in international tribunals for having “barriers to trade.”
Corporate protectionists don’t say anything about those issues. Instead they like to use the fear tactic of saying that America will “fall behind” in the global marketplace if Congress does not approve free trade agreements (“Move forward on free trade,” June 7).
Pointing to the European Union-Korea agreement, they cry the E.U. will beat us to the economic punch. But what they conveniently fail to mention is that the E.U. negotiated a much better trade deal than we did.
One way it did so is by excluding provisions that allow public policies to be challenged in tribunals. Another way was by requiring 55 percent of a product’s content to come from Korea or the E.U. in order to qualify as an E.U. or Korean product.
On the flip side, the Korea-U.S. agreement requires only 35 percent of a product’s content to come from the U.S. or Korea. This means is a majority of a product’s content can come from China, Mexico, Indonesia or elsewhere and still receive duty-free benefits under the agreement.
This will help create jobs in other countries, but not in the United States, as advocates for the trade agreement claim.
In fact, the U.S. International Trade Commission (ITC) says the Korea deal will increase our nation’s already crippling trade deficit. As a result, the Economic Policy Institute (EPI) predicts our country will lose a net of almost 160,000 jobs within the first seven years.
It’s difficult to predict how many of those job losses will occur in our state, but with around 57,000 Minnesotans working in sectors the ITC says will lose out under the Korea deal, approving the agreement is a real gamble with the livelihoods of so many families.
Additionally, the report projects that corn, soy, wheat, forage and other crops important to Minnesota farmers would take a beating under the deal.
While the ITC report does suggest the meatpacking industry could see some modest gains, it completely fails to account for currency manipulation.
South Korea is one of only three countries in the world the U.S. Treasury Department has ever formally labeled a currency manipulator, yet the pending agreement contains no mechanisms to safeguard against those practices.
As has been shown time and again with our massive trade imbalance with China, currency manipulation is often a much more serious trade factor than tariffs alone.
Minnesota ranks sixth in the nation, with three of our congressional districts in the top 50, for total share of job loss to China, according to the EPI. One of those districts belongs to Rep. Erik Paulsen, who has been an outspoken advocate for the Korea agreement.
The other two districts belong to Rep. John Kline, who also supports the deal, and Rep. Tim Walz, who hasn’t stated a position.
It’s easy to understand why multinationals adore the Korea agreement. But with around 7 percent unemployment in Minnesota, a budget crisis, and an electorate that is strongly opposed to more NAFTA-style trade agreements, it is baffling why any member of Congress would endorse a deal that will cost us so much.