KORUS – Another NAFTA-Like Trade Deal

The Korea-US Free Trade Agreement (KORUS) was passed by the overwhelming majority of both parties in both houses of Congress. Signed by President Obama, the White House promised Americans more jobs and increased exports, in spite of several economic studies that showed the deal would actually cost American jobs.

It hasn’t taken long to see that the critics of this agreement were right.

The agreement went into effect in March 2012. The trade deficit with South Korea nearly tripled in one month to $1.8 billion. That month also showed a $700 million increase from April of 2011. May 2012 saw an additional increase. The first two months showed a 63 percent increase in our trade deficit over the previous year. Our exports actually fell by 12 percent in the first month; exactly the opposite of what we were told would happen by our leaders.

This year has shown a continued trend of growing deficits. Several months of trade data since the implementation of KORUS are available from the Census Bureau. In each month our trade deficit with South Korea has grown. August 2012 is particularly striking, as our trade deficit more than doubled from the year before – $737 million to $1.59 billion.

Our annual trade deficit under the KORUS FTA is and will continue to be much higher than prior to this misguided agreement. Our leaders, many under pressure from the sponsors who fund their campaigns, want us to believe what they tell us, not what we see.

We say we have a “free trade” agreement with South Korea, as if that is supposed to be a good thing, but the KORUS FTA is actually stacked against us.

Our domestic auto industry is one area that will certainly see disastrous effects from this agreement. While the KORUS FTA is supposedly a “free” trade agreement, American automakers will continue to get limited access to the small South Korean market, while South Korean manufacturers enjoy full and open access to our large auto market.

 

The Overwhelming Lopsided Difference
U.S./Korean Vehicle Trade Flow Even Before the South Korean Agreement

 

 

2006

2007

2008

2009

2010

They Shipped Us

695,134

674,710

615,853

476,857

515,646

We Shipped Them

5,732

12,510

13,654

7,663

15651

 

The most we have shipped to them in any one year was 15,651 – yet the deal gives South Korea unfettered access to the U.S. car-buying market. In the last five years South Korea has shipped us an average of 595,640 cars per year. In that same time, we’ve shipped them an average of 11,022 cars per year. That is a 54-to-1 negative ratio, and it will now dramatically increase.

The United States needs to recognize that the free trade agreements we sign benefit only a small minority of wealthy individuals. They reap the benefits by outsourcing our manufacturing and making huge profits from cheap exported labor, while other Americans lose their jobs. Our government continues to push these agreements despite the fact that they are horrendous for our country.

To Pull Ourselves out of this irresponsible, downward economic spiral we must recognize what harm this is doing to us and immediately cancel this and all other disastrous “free trade” agreements.

 

 

Our Politicians Should Have Known Better

 

There is much misunderstanding surrounding the KORUS FTA (Korean-U.S. free trade agreement) and its fine print, making it easy for America to be deceived. America’s balance of trade deficit is averaging $600 billion a year, on top of our $14 trillion national debt. While our economic problems seem dire now, now that this new FTA has been signed matters will only get worse.

By passing this agreement, Congress may very well have driven the final nail in our economy’s coffin.

With the KORUS FTA now signed into law, it will not only further deplete our manufacturing base, it will also take international trade, banking and finance out of our control, putting it the hands of the foreign World Trade Organization.

That we have even considered this disastrous trade agreement is to have contemplated economic suicide.

The following points detail why the KORUS FTA is so disastrous for America:

    1. According to the Economic Policy Institute the KORUS FTA will now dramatically export more jobs – not our products, as promised – and dramatically increase our trade deficit.
    2. Korea has gained unhindered liberties to change U.S. law. Even prevailing wage laws can be challenged (see chapters 11, 13 & 19 of the agreement).
    3. The U.S. government has lost the ability to regulate the American banking industry.
    4. KORUS will now facilitate takeovers of U.S. companies by Korean companies.
    5. Korea will be able to insource low-wage jobs to the U.S., but American companies will NOT get the same access to South Korea.
    6. The textile tariff reductions are not equal, American textile workers have been put further in harm’s way.
    7. The beef industry will suffer now as Korea will be able to limit our inspection of Korean beef imports, despite constant refusal by Korea to import U.S. beef.
    8. More foreign food is now projected to legally enter the U.S., increasing our chances of importing even more unchecked toxic food as no more than 2 percent is ever checked.
    9. “Buy American” food support has become illegal as a trade impeding barrier (see chapters 2 & 6 of the agreement).
    10. South Korea will continue to use import barriers that the U.S. does not use.
    11. U.S. taxpayers can now become liable to South Korean companies for lost profits (see chapter 4 of the agreement).
    12. There is nothing in the KORUS FTA to stop South Korea’s currency manipulating practices.

This is another “free trade” agreement that has taken away our right to do what is in the best interest of our country. Under the conditions of this “free trade”agreement, it will not be possible to accumulate anything other than a massive trade imbalance with South Korea. By selling to us below our cost, they are by design forcing our companies to move out of the country, sell out or go out of business – which has already been happening at an accelerated rate. The KORUS FTA will only hasten our demise.

Our leaders have NOT made things better for the U.S. by signing this deal. Americans must start asking the important questions – namely, who are our leaders working for? Signing a deal like this can only mean our leaders are not reading what they are signing or are working for the best interest of multinational corporations, special interest groups or foreign powers.

In 2010, our trade deficit with Korea was $10 billion. In 2011, by August our trade deficit was $8.5 billion and growing which is extrapolating to an even higher trade deficit than 2010. Everyone should monitor our trade imbalance as it grows with Korea. We predict that it will only continue to grow with the newly signed KORUS FTA.

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