Statement by AFL-CIO President Richard Trumka On Korea Trade Deal

For more than a decade, the labor movement, environmental groups, development advocates and others have advocated for a new trade policy that is part of a more coordinated and coherent national economic strategy. The proposed U.S.-Korea trade deal does not live up to that model and does not contribute to a sustainable global future. We believe we must move towards a more democratic, sustainable and fair global economy with broadly shared prosperity for working people around the world. Reaching that goal will require deep-seated reforms in current trade policy, as well as in our own domestic labor laws and other policies.

We welcome the tremendous efforts by the Obama administration and particularly Ambassador Ron Kirk and his team to address the urgent concerns of autoworkers and auto companies with respect to market access, safeguard provisions and some non-tariff barriers. Ways and Means Chairman Sander Levin and Ranking Member Dave Camp also pressed hard for key improvements in the auto provisions, and we appreciate their strong efforts. These newly negotiated provisions will give some much needed breathing room to the auto industry, and we appreciate the hard bargaining that was necessary to win these important changes.

However, the labor movement’s concerns about the Korea trade deal go beyond the auto assembly sector to a more fundamental question about what a fairer and more balanced trade policy should look like. In particular, the labor movement has consistently and for many years argued that the investment and government procurement provisions in the Korea deal will encourage off shoring. And despite the progress made in improving the labor chapter in 2007, it is clear that in both the United States and South Korea, workers continue to face repeated challenges to their exercise of fundamental human rights on the job – especially freedom of association and the right to organize and bargain collectively. This deal does nothing to improve or strengthen the provisions negotiated by former President George W. Bush in these crucial areas. It is essential that both countries bring their labor laws and practice fully into compliance with international standards prior to implementation of the agreement. And for American workers to benefit from trade deals, we must strengthen U.S. labor law to harmonize social activity. Going forward, we hope to work closely with the Obama administration to address all of these concerns in any future deals,particularly the pending Trans-Pacific Partnership agreement.

The Korea deal also fails to address the potential problem of currency manipulation and contains lax provisions on rule of origin (allowing up to 65% foreign content in autos eligible for the lower tariff treatment,in contrast to the EU-Korea agreement, which allows only 45% foreign content) and duty drawback (which disadvantages domestic parts production). These provisions will undermine both S. Korean and American workers. There is significant opposition by many S. Korean unions to the trade agreement, as the agreement fails to address key offshoring and outsourcing issues facing S. Korea. In fact, the weak offshoring protections and rule of origin make the agreement a back door for increasing offshoring to China and other countries from South Korea,as well as from the United States.

We are also concerned that the trade agreement leaves open the possibility that goods produced in the North Korean free trade zone, the Kaesong Industrial Complex (KIC), could in the future gain access to the United States. We shouldn’t leave open the possibility of including these goods for two reasons: 1) grave concerns over the atrocious labor rights record in the KIC and 2) the impact on jobs and wages of the exports of these goods — produced at perhaps the lowest wage levels in the world.

In addition to much needed reforms in trade policy, the United States must implement a well coordinated industrial strategy that includes tax policy, infrastructure, skills development and technology investments to support a vibrant, growing and modern manufacturing sector.

The experiences of union members and working people with too many flawed trade deals like the North American Free Trade Agreement and China’s accession to the World Trade Organization do not justify optimism that this deal will generate the promised new jobs. We’ve seen U.S. multinational companies take advantage of the investment and other corporate protections in past trade deals to shift production offshore, while maintaining access to the U.S. consumer market and undermining the jobs, wages and bargaining power of American workers.And the results have been catastrophic, with chronic and unsustainable trade deficits that sap economic growth and domestic job creation.

So long as these agreements fall short of protecting the broad interests of American workers and their counterparts around the world in these uncertain economic times, we will oppose them.