Trade agreement with South Korea would just intensify America’s devastating job crisis

Hawaii’s congressional delegation should reject the U.S.-South Korea "free trade" agreement because it will increase the U.S. trade deficit, destroy tens of thousands of U.S. jobs, displace Korean workers, and undermine labor rights and environmental protections. Hawaii has nothing to gain from this and much to lose.

Proponents of this trade deal — who are mostly multinational corporations — conveniently omit crucial details and mislead the public on a number of key points.

First, they always neglect to mention that the Korea deal provides special access for goods that contain up to 65 percent Chinese or North Korean inputs as long as they are assembled in South Korea or the U.S.

A trade deal that outsources the manufacturing supply chain may boost large multinational corporations’ profits, but it will hurt workers in both countries. Indeed, South Korean unions have led massive protests against this lose-lose deal.

Proponents of the Korea deal also like to cite only the U.S. International Trade Commission’s (ITC) projected increase in U.S. exports to Korea, without mentioning the projected increase in imports. This is like only counting deposits to your bank account and not withdrawals.

The ITC actually projects that the agreement will lead to an increase in the overall U.S trade deficit — greater growth in imports than exports. And the ITC projects numerous U.S. industries will lose out under this trade deal. The sectors that the ITC identifies as losers under this deal employ nearly 3,000 workers in Hawaii.

One will also sometimes hear proponents of the Korea deal say that the U.S. Census Bureau predicted numerous jobs would be created. This is false on its face. The Census Bureau simply does not make those types of estimates. That number actually comes from a U.S. Chamber of Commerce study that has been widely criticized for its flawed model.

A similar model was used to predict that China’s entry into the World Trade Organization in 2001 would increase the U.S. trade deficit with China by only $1 billion. In reality, the trade deficit with China skyrocketed by $167 billion and tens of thousands of U.S. jobs were lost.

The Chamber has repeatedly projected major gains from trade deals when, in fact, the agreements end up costing tens of thousands of U.S. jobs.

Instead of looking to unreasonable predictions from flawed models, we merely need to examine the job impacts of the projected changes in the U.S. trade balance. Using that methodology, the Economic Policy Institute estimated that the Korea trade deal would cost 159,000 U.S. jobs in just its first seven years.

Backers of the trade deal argue that it would cut Korean tariffs on Hawaii goods such as papayas and coffee. But this deal will not increase Hawaii’s exports. Hawaii’s coffee farmers receive about $3.20 per pound while the global market price is about $2. So, eliminating the relatively low 8 percent Korean tariff on roasted coffee from Hawaii won’t make us competitive with Vietnam, which is Korea’s top supplier. Similarly, the price of papaya from India, which is the main Korean supplier, is less than one-third the Hawaii price. The main goods that Hawaii can export to Korea at a competitive price are already duty-free under global trade rules.

Finally, the Korea trade deal’s supporters don’t mention the fact that a devaluation of the Korean currency — whether caused by market forces or government policy — would wipe out any possible gains for any U.S. exports from the deal’s tariff reductions. In fact, that is what happened with Mexico immediately after NAFTA, with devastating effects for U.S. workers.

Korea is one of only three countries, along with China and Taiwan, that the U.S. Treasury has ever formally cited as a currency manipulator. This trade deal contains no penalties for a country intentionally manipulating its currency to gain a trade advantage.

This trade deal with Korea will not help increase Hawaii exports. It will only intensify the job crisis now devastating many working families.