KORUS FTA

December 6, 2010 1:22 PM

The Republic of Korea-United States Free Trade Agreement is the United States' first Free Trade Agreement with a major Asian economy, and its largest trade deal since the North American Free Trade Agreement (NAFTA) in 1993. It has supporters and detractors.
posted by Joe Beese (49 comments total)

Wow. That detractor link is chock-full of crazy. I'm sure there are reasons to oppose the trade agreement, but that guy pretty plainly just doesn't like foreigners.
posted by schmod at 1:59 PM on December 6, 2010

Do I need to watch TV more or something? I had no idea the US was negotiating anything like "the largest trade deal since NAFTA." (I was too busy watching the TSA fondle people's junk and the FBI thwart its own terror plots, I guess.)
posted by spacewrench at 2:12 PM on December 6, 2010

Obama takes credit for free trade deal he once opposed.

I hate this waffler / flip-flopper accusatory bullshit, and wish it would be removed from political punditry forever lest we continually elect dry drunk presidents who can never revisit past decisions no matter how stupid.

As for free trade, I'm against even the terminology. Free trade cannot exist. A subsidy is effectively just the flip side of a tariff, and not factoring externalities like pollution and a humane labor environment into an industry is another way of subsidizing it.
posted by BrotherCaine at 2:14 PM on December 6, 2010 [9 favorites]

that guy pretty plainly just doesn't like foreigners

Huh? Where do you see anything remotely like that in that link? And Jane Hamsher is not a guy.
posted by enn at 2:15 PM on December 6, 2010 [1 favorite]

Looks like the ROK mostly caved on the big sticking point . . . whether US tariffs on auto imports would be lifted immediately, as ROK wished, or in 3 years, as U.S. proposed. The final deal is apparently that they lift in 2 years. This does look very good for the US economy.
posted by bearwife at 2:18 PM on December 6, 2010

Oh, now that I RTFA I see that the claim was a more nuanced one that Obama publicly eschewed the agreement while privately supporting it. I'm embarrassed.
posted by BrotherCaine at 2:19 PM on December 6, 2010

The FDL is shot through with xenophobia...it's the same sort of language I see used on the right in regard to the United Nations or any suggestion that the US might have treaty obligations. the arguments have the flavor of religious dogma rather than any rational consideration of the economics involved. Yes, I do think it's a good idea.
posted by anigbrowl at 2:33 PM on December 6, 2010

Will someone making these claims about FDL actually cite the xenophobia they see there?
posted by enn at 2:37 PM on December 6, 2010

As for free trade, I'm against even the terminology. Free trade cannot exist. A subsidy is effectively just the flip side of a tariff, and not factoring externalities like pollution and a humane labor environment into an industry is another way of subsidizing it.

Thank you so much for articulating what bothers me most about free trade so much better than I ever could.
posted by heathkit at 2:38 PM on December 6, 2010

"As for free trade, I'm against even the terminology. Free trade cannot exist. A subsidy is effectively just the flip side of a tariff, and not factoring externalities like pollution and a humane labor environment into an industry is another way of subsidizing it."

There are winners and losers with anything you do. My favorite example of "why protectionism is bad" is lifted straight from A Splendid Exchange. So you know, fair warning, a book about the wondrous history of global trade is unlikely to favor protectionism.

Anyway.

Back in the day, when the Indian colonies were new, cotton goods were threatening to mostly destroy the English wool industry. Cotton was cheaper, easier to work with, more comfortable, and easier to make into fashionable clothes. The English government's response was to mostly ban cotton clothing, although of course the elite could get around any ban. The poor and what existed of the middle classes were, however, quite effectively forced to purchase inferior woolen clothing at a higher price. This particular measure was even popular amongst sections of the middle and lower classes, because it preserved the quite large wool industry in England.

Those wool mills did employ a lot of people, and those people were hurt when the trade wall against cotton goods came down. On the other hand, the country's poor and middle class were able to spend a smaller percentage of their income on clothing that was more comfortable and looked better.

This tends to be how protectionism works, as well as why it's popular: it does protect a small section of society at the expense of everyone else. Since those costs are diffused across a wider, harder to define group of people than "the people working in wool mills" or whatever, it's often popular.

You mention humane labor practices, and to be sure sweatshops are a problem. But if you shut down (or never open) sweatshops in a country, then a lot of the time the sweatshop workers are just not workers for anybody. IMO, it's up to consumers to do things like demand humane labor practices and then demonstrate that they're willing to pay the higher prices for goods that those practices require.

I know people sometimes act and talk as if free trade has no costs and no downsides, and I agree that that's nonsense. What I would say is that the costs - both economic and human - of protectionism are higher than the costs of its alternative. Every time someone in America complains about "outsourcing our economy," I think of the people in India that can support a family on the same job that can barely pay rent in the states.

Also it would be great if no one talked about the high quality of wool outerwear or fine woolen slacks - we know. Filson's field jackets are pretty nice. They're also $2-400 and wouldn't be my choice for light summer apparel.
posted by kavasa at 3:07 PM on December 6, 2010 [3 favorites]

Will someone making these claims about FDL actually cite the xenophobia they see there?

This is how they describe the (obviously necessary) process for resolving treaty disputes: "Forces the United States to submit to the judgment of foreign tribunals"

And this is how they describe allowing corporations to sue the U.S. Government in World Bank tribunals: "Elevates foreign corporations to equal status with the sovereign United States"

I'm not sure how to read that phrasing as anything but an appeal to nationalism.

Also implicit is the assumption that American workers are somehow more important than Korean workers. They assume that this will cost American jobs and refuse to even consider the effect on Korean jobs.
posted by ripley_ at 3:08 PM on December 6, 2010 [2 favorites]

Elevates foreign corporations to equal status with the sovereign United States,

Really? They can declare war and sit on the UN and create currencies and issue passports? Where do I sign up?

rights to sue the U.S. government

Well that's not what I was promised at all. Wait, can't US companies already sue the government? And wait even more, my new Korean multinational is going to get shafted, there's no way a US court would be trusted to be impartial if it was deciding between say GM and Hyundai

before the UN and World Bank tribunals, skirting US courts

Oh. Well that actually sounds reasonable.
posted by Skorgu at 3:12 PM on December 6, 2010 [1 favorite]

Also implicit is the assumption that American workers are somehow more important than Korean workers. They assume that this will cost American jobs and refuse to even consider the effect on Korean jobs.
posted by ripley_ at 3:08 PM on December 6 [+] [!]


Well, as to the first point, Americans can hardly be expected to worry about Korean jobs as much as they do about their own, and their neighbors'. After all, they live and work in America, not Korea.

As to the second, the government apparently has a history of wildly inaccurate projections of job losses and trade deficits resulting from free trade agreements.
posted by r_nebblesworthII at 3:14 PM on December 6, 2010

Well, as to the first point, Americans can hardly be expected to worry about Korean jobs as much as they do about their own, and their neighbors'. After all, they live and work in America, not Korea.

It's not surprising, but that doesn't mean it holds up to any ethical standards. I'm not owed a living any more than some person in Seoul.

If they think that performing a given job in Korea instead of America will result in certain negative externalities, that's reasonable but they haven't provided any evidence of that.
posted by ripley_ at 3:19 PM on December 6, 2010

I think of the people in India that can support a family on the same job that can barely pay rent in the states.

Sadly the picture's not that straightforwardly rosy:

Shoe makers such as Hosiyar, from Agra, talks of the worsening situation for many Indians since trade liberalisation policies took place over 15 years ago: "The work is reduced now, because of the government. They keep importing shoes from outside… We have become jobless."

The picture does not get much better in areas where there has been an increase in employment, such as the garments industry. The majority of these jobs provide little long-term security and are poorly paid. Ninety per-cent of the workforce are casual workers and up to 70% of workers receive no social security. This export led growth is taking place on the back of exploitation. Prakash, from Delhi, who lost his job after asking for a pay rise, says: "I have lost my total income. I’m also indebted… I don’t know what I should do."

posted by Abiezer at 3:20 PM on December 6, 2010

Oops, link
posted by Abiezer at 3:21 PM on December 6, 2010

Will someone making these claims about FDL actually cite the xenophobia they see there?

Allows foreign corporations to operate inside the United States under privileged international trade agreements rather than having to obey our laws that apply to our businesses.

'Our laws' includes treaty obligations. the same applies for US companies doing business in Korea. Trade agreements usually designate a neutral forum for dispute resolution to avoid endless wrangles about favoritism.

Elevates foreign corporations to equal status with the sovereign United States, empowering foreign companies with new rights to sue the U.S. government before the UN and World Bank tribunals, skirting US courts.

Oh FFS. This is just like the sort of whining that federal law is an imposition on the states or that a UN resolution or some other treaty obligation which binds the US means that body has conducted some sort of political takeover of the US.

Forces the United States to submit to the judgment of foreign tribunals

Ugh, those horrible foreigners, forcing us to submit to their wicked judgments. Because there's no way that the US could ever get fair treatment in a foreign tribunal, or that a foreign tribunal would ever do that to any country besides the US. Because foreigners are all out to get us, right? If they weren't, they would be happy to rely on US courts.

Think that can’t happen? To date, US taxpayers have paid out over $400 million in compensation to foreign corporations from such cases under NAFTA. And we also spent million in legal costs even on cases we won, and there are billions more outstanding in unsettled cases. KORUS would extend that privilege not only to the 300 Korean establishment now in the United States – but to any Chinese or other firms incorporated in Korea that operates here.

So what? It's not like trade complaints never originate from the US end. There are lots of trade disputes. Should we tear up a treaty every time there's a disagreement between two nations, or have a process for dispute resolution that both parties can agree on?

Must I go on?
posted by anigbrowl at 3:33 PM on December 6, 2010 [1 favorite]

It's not surprising, but that doesn't mean it holds up to any ethical standards. I'm not owed a living any more than some person in Seoul.


You aren't owed a career of course; but your government does owe you a duty to advance your interests (since they represent you, not people in Seoul).


If they think that performing a given job in Korea instead of America will result in certain negative externalities, that's reasonable but they haven't provided any evidence of that.

The negative externality at issue is job losses for many Americans. As to evidence, see the links in my first comment.


Also, I have to say, criticizing the self-interested is kind of odd given that it's a free trade agreement we're discussing; the theory behind the agreement is precisely that self-interested trade raises everybody's welfare overall. It seems like you support the free trade agreement but are simultaneously critical of the self-interest it's premised on. But maybe I'm not really getting your meaning right?
posted by r_nebblesworthII at 3:36 PM on December 6, 2010 [3 favorites]

The agreement is chock full of definitions for new tariffs and duties. How in heavens name can tariffs and duties be described as "Free Trade."
posted by JackFlash at 3:36 PM on December 6, 2010 [2 favorites]

Well I am anti-protectionism in quite a few senses, especially when there are steep tariffs that are unrelated to foreign efforts to engage in product dumping or monopoly building. More to the point, in any economy, there are going to be side effects or black markets to try and route around regulatory induced inefficiency. There's no regulatory hurdle that will keep America from exporting manufacturing jobs to the least regulated economies just like US corporations incorporate in Delaware or Made in the USA clothing often tends to actually be made in Saipan.

Sugar tariffs cost the US $3 billion a year, Ag subsidies cost us $20 billion, I can't even guess at the effect of subsidizing water and roads.

'Free' trade agreements are effectively the only way to do an end run around the lobbying efforts of tariff protected industries, but I wish we could instead address the individual tariffs and subsidies, or mandate some kind of legislative sunset for protectionist efforts.

Mostly I object to the terminology, and the relentless 'free trade as an economic panacea' boosterism. If we don't address how countries effectively subsidize their imports, and/or fail to regulate pollution and CO2 output, we all lose in the long run. Just like how a few US States corporate favoring court systems have effectively screwed the consumer.
posted by BrotherCaine at 3:41 PM on December 6, 2010 [1 favorite]

...subsidize their importsexports
posted by BrotherCaine at 3:46 PM on December 6, 2010

Reading around, I see this critique, inter alia, raises concerns about the impact on public health provision in the ROK:

A number of interwoven mandates from several chapters take dead aim at the public provision of health care. This is especially threatening to South Koreans who currently have such a system. These mandates would also make it much harder to create such a system in the United States. Among other things, the FTA provides for the establishment of special economic zones in South Korea where private U.S. insurance companies could set up operations under favorable conditions, thereby undermining the universal coverage and viability of the existing national public insurance system.

Even more deadly, several chapters appear to have the potential to bust South Korea’s health cost-control system. Currently, South Korea has a positive drug list, which is a listing of generic, low-cost drugs that the government believes are medically effective and which its insurance will cover. The FTA provides U.S. pharmaceutical corporations with several avenues to demand that their higher priced drugs be placed on the list. Such an outcome would put a huge financial strain on the country’s health care budget, potentially leading the government to abandon its public commitment.

The financial deregulation, if as described, also looks extremely dodgy.
posted by Abiezer at 3:49 PM on December 6, 2010 [8 favorites]

The current president of South Korea has always wanted to experiment in privatizing healthcare. Among my co-workers and Korean friends this has met with wide derision, but it's always been an issue.

Coming from America- where I waited 4 hours and paid 600 bucks for an appointment- to Korea- where I paid 20 bucks and waited 15 minutes- was like going from the stone age to some Jetsons-style thing. I hope the FTA doesn't muck up the healthcare, although Korean doctors will prescribe you a grocery list of pills for any ailment.
posted by GilloD at 3:54 PM on December 6, 2010

The negative externality at issue is job losses for many Americans.

If you make a living by using legislation to stop others from patronizing your competitors, purely out of self-interest, do you deserve that living? I would say no, which is why I tend to ignore that particular externality.

(also, it will probably be offset by lower costs for consumers and more producer surplus in Korea anyway)

Also, I have to say, criticizing the self-interested is kind of odd given that it's a free trade agreement we're discussing; the theory behind the agreement is precisely that self-interested trade raises everybody's welfare overall. It seems like you support the free trade agreement but are simultaneously critical of the self-interest it's premised on.

Not all self-interest "raises everybody's welfare overall". I never praised self-interest unconditionally.
posted by ripley_ at 4:01 PM on December 6, 2010

FDL went off the deep end a long time ago.
posted by Ironmouth at 4:02 PM on December 6, 2010

Looking at the fact sheet, I'm pleased about some of it, specifically that there appear to be fewer baked in exceptions to the tariff structures than I expected.
posted by BrotherCaine at 4:10 PM on December 6, 2010

Not all self-interest "raises everybody's welfare overall". I never praised self-interest unconditionally.
posted by ripley_ at 4:01 PM on December 6 [+] [!]


Well, I never said you did, and asked you to clarify - which you did - thanks. I still don't agree that it's unethical for Americans to be more concerned about American welfare than Korean welfare, but whatevs.
posted by r_nebblesworthII at 4:14 PM on December 6, 2010

obama is well on his way to becoming the herbert hoover of this generation.

anyway

free trade = yay! for US service industries: banking, software, systems integration and big media
boo! for US manufacturing
posted by ennui.bz at 4:17 PM on December 6, 2010

This is how they describe the (obviously necessary) process for resolving treaty disputes: "Forces the United States to submit to the judgment of foreign tribunals"

As a Canadian, I would like to know when the US started submitting to the judgement of these tribunals
posted by Hoopo at 4:41 PM on December 6, 2010 [3 favorites]

I support a Free Trade Agreement with Wikileaks.
posted by symbioid at 4:43 PM on December 6, 2010

To paraphrase Ghandi, I think free trade is a wonderful idea.
posted by smoke at 5:03 PM on December 6, 2010 [1 favorite]

Made in the USA clothing often tends to actually be made in Saipan

I don't think this is true at all. Many countries allow "made in ___" statements to be made when only the final assembly, or some percentage by value thereof, is performed in that country, but the US has some of the strictest labeling requirements and "made in the USA" means exactly that.

The "tribunals" stuff is ridiculous, sure. The rest of the FDL claims don't seem that odd to me, and the response here — to cry protectionism — totally misses the point. There is a lot of room in between protectionist tariffs and treaties like this one which limit the ability of the government to regulate the conditions under which things can be made if they are going to be sold in this country. Just because it says "free trade" in the name of the thing doesn't mean that all the treaty does is remove tariffs. By signing these things we are basically agreeing to live in a regulation-free Tea Partier's utopia.

And the idea that people should care as much about the jobs available in our trading partner countries as those in the country in which they are resident is ridiculous. Set up a Schengen-style free work area, and then you'll have a point; in the meantime, it's silly to expect people to care as much about jobs for which they cannot be hired as those for which they can.
posted by enn at 5:08 PM on December 6, 2010 [1 favorite]

And the idea that people should care as much about the jobs available in our trading partner countries as those in the country in which they are resident is ridiculous. Set up a Schengen-style free work area, and then you'll have a point; in the meantime, it's silly to expect people to care as much about jobs for which they cannot be hired as those for which they can.

Just think about this in terms of costs, ignore jobs for a minute. Is it right for the US to impose costs on South Korea (and American consumers) to benefit some American manufacturers?

I think most people would say no if the cost was pollution, and I don't think that should change because the cost is being denied access to a market.
posted by ripley_ at 5:31 PM on December 6, 2010

enn: Saipan is a U.S. Territory. Clothes made there are considered "Made in USA."
posted by Navelgazer at 5:50 PM on December 6, 2010

ripley_: I don't see not buying things from somebody as imposing a cost on them. Putting something up for sale does not create in the rest of the world an obligation to buy it.

Navelgazer: ah, that makes sense, thank you.
posted by enn at 6:16 PM on December 6, 2010

For fuck's sake, now we're exporting our shitty health care system?
posted by Kraftmatic Adjustable Cheese at 6:36 PM on December 6, 2010 [5 favorites]

as hoopo said, Canada has won several nafta judgements against the usa, which the usa has since ignored.
posted by Iax at 7:05 PM on December 6, 2010

In elevator pitch terms, why is this not going to fuck us in the ass like NAFTA did?
posted by Joe Beese at 8:03 PM on December 6, 2010

Did NAFTA fuck us in the ass? I mean we lost manufacturing jobs, but we probably gained service jobs. Can you even tell how much economic shift or total job creation/destruction are due to these treaties?

One of my fears is that these FTAs plus subsidies means we'll build up a vast export industry of a subsidized good like corn and basically pay outrageous sums of money to feed another countries population.
posted by BrotherCaine at 8:19 PM on December 6, 2010

Did NAFTA fuck us in the ass?

The crux of the matter seems to be whether we traded some good jobs for a greater number of lousy ones.
posted by Joe Beese at 8:43 PM on December 6, 2010 [1 favorite]

Well, it certainly fucked Mexico and precipitated the present drug war, if Charles Bowden's to be believed.
posted by Abiezer at 8:50 PM on December 6, 2010

I've yet to see an FTA with the US that didn't result in the other country getting fucked over twenty ways till Christmas. There are never, never, never any concessions on anything powerful US lobbies care about (as Aussie farmers can tell you), and the a vigourous shafting is applied on a variety of fronts (in the Aussie case the US phamaceutical industry wrote into the agreement that Australian healthcare would agree not to cut back on use of generics, with an escalation in healthcare costs for Australians).
posted by rodgerd at 9:20 PM on December 6, 2010 [2 favorites]

Free trade can help create efficiency in markets. But, the benefits of that efficiency flow to investors, not workers (or at least, not workers in higher-wage countries, who are replaced with workers from lower wage countries)

The other problem is things like subsidies. China, for example, gives tons of subsidies to industry, so industry moves there and then trades with the US who gets screwed. Except for all the subsidies to military contractors, of course.

Well, it certainly fucked Mexico and precipitated the present drug war, if Charles Bowden's to be believed.

Pretty much, I would think. It's worth noting that while poverty is high in Mexico, the world's richest man is a Mexican.
posted by delmoi at 9:25 PM on December 6, 2010 [1 favorite]

Oh, and if you think that complaining about corporates suing countries under expropriated profits clasues of FTAs is some sort of black helicopter racist whining, I suggest you check out, say, Philip Morris's desire to expand its use of such leglislation to destroy anti-smoking fameworks, as they already are in Uruguay.
posted by rodgerd at 9:49 PM on December 6, 2010 [3 favorites]

In Oz we're used to seeing cheap products being mostly MADE IN CHINA. When I was last in America most stuff I saw was MADE IN ROK, which I had never seen back home.
posted by uncanny hengeman at 2:46 AM on December 7, 2010

So does this mean that Hyundais will get even cheaper?
posted by wierdo at 6:24 AM on December 7, 2010 [1 favorite]

So does this mean that Hyundais will get even cheaper?

Not just cheaper, but more likely the federal government will be able to purchase them. While the GSA used to favor goods made in the USA, reality has forced it to extend that favoritism to goods made in countries with with the US has a free trade agreement.

Companies that mostly manufacture in China (with which the US has no free trade agreement and is unlikely to anytime soon) set up special manufacturing lines in places like Korea to make goods for GSA purchase. Most of them just assemble parts made in China into finished goods. But they get to label them "Made in Korea" and that's all that matters.
posted by tommasz at 8:49 AM on December 7, 2010

For the US, FTAs are a license to demand others' trade barriers be taken down while not reciprocating. Whether it "fucks you in the ass" or not is a matter of your class more than your citizenship.
posted by Hoopo at 8:01 PM on December 7, 2010 [1 favorite]

The AFL-CIO has come out against a proposed trade agreement with South Korea, a deal that still requires congressional approval. In a statement Thursday, AFL-CIO President Richard Trumka wrote that the agreement "does not contribute to a sustainable global future" and demanded that "both countries bring their labor laws and practice fully into compliance with international standards prior to implementation of the agreement."
posted by Joe Beese at 11:07 AM on December 9, 2010