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U.S.-S. Korea FTA threatens jobs and state sovereignty

There is a threat to American jobs and state sovereignty looming in Congress. President Obama is in Seoul, South Korea, for the G20 Summit; today he said there that in the coming weeks negotiators will continue to work on details of a pending U.S-South Korea Free Trade Agreement. Despite being riddled with problems and strong anti-free trade sentiment among the public, the Obama administration and many in Congress have shown interest in passing the agreement as-is or with only mild “fixes” to language dealing with market access for some U.S. products. If these fixes were made they would only be trims around the edge of a very destructive trade deal.

Consistent with the commonly held notion that free trade hurts jobs, research from the Economic Policy Institute shows the Korea agreement will increase the U.S. trade deficit with Korea by about $16.7 billion, and displace about 159,000 American jobs within the first seven years after it takes effect.

But it gets worse. Hidden in this trade deal are extreme investor provisions that would grant South Korean firms operating in the United States with special rights to challenge any of our federal, state and local laws, regulations and court decisions that negatively affect their profit-making potential. These challenges would be settled at U.S. taxpayer expense in international tribunals that circumvent our democratically established court system.

Health and environmental policy, financial services regulations, food and product safety protections, toxics standards would all be in jeopardy were the Korea agreement to pass with the investor provisions, as would a host of other public interest policies designed to protect consumers, public health and worker rights.

This is not a hypothetical scenario. These challenges have occurred dozens of times under other free trade agreements like NAFTA and CAFTA, with hundreds of millions of dollars in compensation still pending in many cases. If the pact were to go into effect, at least 79 Korea-based corporations with 270 establishments across the United States would obtain new rights to demand taxpayer compensation through challenges of U.S. laws.

Worse yet, even non-U.S. or Korean multinational companies will be able to access these extreme foreign investor rights under the U.S.-Korea deal. That’s right: Companies from China, Europe and elsewhere could use a Korean subsidiary to challenge U.S. laws. It’s what corporate types call “nationality planning.” It should go without saying that these foreign investor challenges to laws enacted by sovereign nations rarely go in favor of public interest.
 
Passing the Korea Free Trade Agreement without fundamental changes to these destructive provisions would not only illogical, it would be extremely reckless. We need to reform the way our government has been doing trade. No longer can we allow trade deals that override policy decisions made at the local, state and federal level.

The new Congress has an important opportunity to change our trade model in a way that will support American business growth and create jobs without putting the long-term health of our citizens, economy and environment at risk.

Jessica Lettween is the director of the Minnesota Fair Trade Coalition, Minneapolis.

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Comments (5)

  1. Submitted by Richard Schulze on 11/11/2010 - 11:06 am.

    Both Presidents Lee and Obama want a resolution to the deadlock. However with the latter reeling from this week’s mid-term elections, and the former terrified of a repeat of 2008’s overzealous beef protests, neither has much room to bend.

  2. Submitted by James Hamilton on 11/11/2010 - 04:28 pm.

    I see many charges made and no evidence offered in support of any of them. Whatever merit the arguments may have will have to be learned elsewhere.

  3. Submitted by Jessica Lettween on 11/11/2010 - 08:56 pm.

    James:

    The numbers on estimated job loss and trade deficit are from the Economic Policy Institute as noted in the article. A snapshot of the report is available via this link: http://www.epi.org/economic_snapshots/entry/free_trade_agreement_with_korea_will_cost_u.s._jobs/ and the full report is available via this link: http://epi.3cdn.net/87da5b7ec4f5677422_o9m6bh6nv.pdf

    Foreign investor rights are called Chapter 11 provisions in trade agreements (not bankruptcy as what typically comes to mind.) To learn more about these Chapter 11 provisions and see more than 30 cases where these investor rights challenges were used under NAFTA, see the report “NAFTA Chapter 11 Investor-State Cases” via this link: http://www.citizen.org/documents/NAFTAReport_Final.pdf A simple Google search of “trade Chapter 11” will also net you several other sources.

    The number of Korean companies operating in the United States came from research by Public Citizen’s Global Trade Watch Division. I don’t think it’s available online.

    Please reply to my post if there are any other claims made that need supportive evidence. Trade is a complex issue and the space provided in a commentary piece unfortunately doesn’t allow for much supportive, in-depth explanations.

  4. Submitted by Jessica Lettween on 11/11/2010 - 09:12 pm.

    Correction to my previous post:

    The numbers on Korean companies in the U.S. is available online and is actually in the form of a nifty, pinpoint map: http://www.citizen.org/documents/NAFTAReport_Final.pdf

    Here also is a database of NAFTA Chapter 11 cases that you can search by respondent, complaint, and case status: http://www.citizen.org/Page.aspx?pid=4253

  5. Submitted by donald maxwell on 11/11/2010 - 10:29 pm.

    Cheap shot, James Hamilton. Challenge the writer to do your research for you; very handy as you don’t have to bother to present evidence of any findings that conflict with the writer’s presentation.

    If one’s mind is all made up, it probably doesn’t even matter if the writer dumps a bushel basket of evidence on one.

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