The policy institute EPI reported in July that the proposed NAFTA-style Korea Free Trade agreement would mean 159,000 jobs lost due to a $13.9 billion trade deficit.
The Obama administration has announced that it intends to finalize a new free trade agreement with South Korea (KORUS FTA) in time for the next G-20 summit in November. Although the U.S. International Trade Commission (USITC) projects this will have a small positive impact on the U.S. trade balance, and “minimal or negligible “ impact on U.S. employment, history shows that such trade deals lead to rapidly growing trade deficits and job loss in the United States.
The Charts below [top right – ed] compare USITC’s estimates of the impact of the forthcoming free trade agreement with Korea to EPI’s own calculation. Unlike USITC’s forecast of a small positive impact, EPI’s research shows it 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.
The USITC has a history of vastly underestimating the negative impacts that free trade agreements have on the U.S. economy. In 1999, it estimated that China’s entry into the World Trade Organization would increase the U.S. trade deficit with China by only $1.0 billion, and have no significant impact on U.S. employment. In fact, the U.S. trade deficit with China increased by $185 billion between 2001 (when China entered the WTO) and 2008, and 2.4 million U.S. jobs have been displaced or lost. The U.S. trade deficit with Mexico also rose rapidly after the North American Free Trade Agreement (NAFTA) took effect in 1994.
Changes to the agreement in recent days did not deal with core issues that would result in a $13.9 billion trade deficit that will cost the US 159,000 jobs. The tariff levels remained the same, as did the length of the agreement. Meanwhile, the Obama Administration can only claim this NAFTA-style Korea Free Trade deal will only “support” 70,000 jobs – they can’t even say they “save” or “create” any jobs.
EPI explains why it’s just an awful idea to even consider this kind of NAFTA-style plan:
With U.S. unemployment close to 10%, and an employment gap of nearly 11 million jobs, it would be foolish and self destructive for the United States to implement a free trade agreement with Korea that leads to further job loss.
The UAW thinks they’ll get 800 jobs out of this, while the country loses 159,000 jobs. Any union that doesn’t vocally oppose this NAFTA-style Korea Free Trade deal is complicit in the loss of 159,000 American jobs.