The pending U.S.-South Korea Free Trade Agreement is not a good deal for Hawaii or the United States. As state legislatures across the country struggle to rebuild our economies after the global financial crisis, and balance state budgets, we urgently need forward-thinking policies that will create American jobs.
Unfortunately, the Korea trade deal, like the 1990s job-killing North American Free Trade Agreement (NAFTA), does little to help us out of our current situation.
Even the U.S. International Trade Commission, the government agency tasked with forecasting trade agreement economic outcomes, says the Korea deal will actually increase the U.S. global trade deficit. A study by the Economic Policy Institute concluded it would cost 159,000 American jobs in the deal’s first seven years.
I began serving in the state House 19 years ago, shortly before NAFTA was implemented. Since NAFTA and a batch of NAFTA-style deals with other countries, we’ve suffered an exploding trade deficit, the loss of more than five million manufacturing jobs, and stagnation of real median wages for American workers at 1970s levels. Meanwhile, we have been flooded with unsafe imported food and goods, and foreign investors have used NAFTA to challenge important state environmental laws before foreign tribunals.
After these damaging outcomes, implementing another NAFTA-style deal is unimaginable. And, this would be the most economically significant — and jobs-threatening — deal of its kind since NAFTA. Plus, this deal even includes limits on financial regulation. It does not include any of the important trade reforms President Barack Obama promised and that small business, farm, labor and consumer groups have long demanded.
The Korea deal is supported by the large banks that wrecked our economy and by our country’s chronic job-offshoring multinational corporations. They are trying to sell the deal here with the same rosy promises to Hawaii’s agricultural producers made before NAFTA. Once again, they are pointing to cuts in Korean tariffs and promising this will translate into more exports.
The reality is that even with zero Korean tariffs, most of Hawaii’s agricultural products cannot come close to the low prices for which these products are sold to Korea by others. For example, Indian banana and papaya farmers sell their crop at one-fourth to one-third the price local farmers require. Peruvian farmers sell guava at $173 per metric ton; our price is $346. Farmers in Thailand, the largest pineapple producer, sell their pineapples at $120 per metric ton compared to $458 locally. How do we compete in this market?
Also keep in mind that any new tariff cuts in this deal could easily be erased if Korea again devalues its currency, as it has a history of doing, after implementation of the deal. Contrary to the demands of U.S. farm organizations, the trade deal with Korea does not include provisions to prevent or counter currency manipulation.
Like NAFTA, the Korea deal has the potential to undermine our environmental regulations, public health standards and economic development policies. There are more than 2,000 corporate affiliates in the U.S. and Korea that would be empowered under this deal to directly challenge domestic laws in foreign tribunals and seek taxpayer money as "compensation" for what they claim are lost expected future profits.
Multinational corporations have repeatedly exercised these rights under NAFTA. This is one reason why groups ranging from the bipartisan National Conference of State Legislatures to Korean Americans for Fair Trade have been critical of this style of trade deal. The Hawaii Legislature also recognizes this problem. In 2007, we enacted bipartisan legislation requiring greater state legislative oversight of Hawaii’s commitments in international trade agreements in an attempt to minimize risks to state laws. Despite our best efforts, threats to state governance continue to loom large under the Korea trade deal.
I urge our congressional delegation not to be distracted by the false promises of this trade deal and vote it down — and instead shift focus toward implementing policies that will stimulate real job growth in Hawaii and the rest of our country.