Congress Needs to Vote NO on the Korea FTA
More of the Same Bad Trade Policy: The Korea-U.S. “free trade agreement” (FTA) poses serious negative consequences for New York’s economy and regulatory policies. This deal replicates many of the same threats to state sovereignty and New York’s economy as the North American Free Trade Agreement (NAFTA).
Job Loss: New York has lost over 342,167 manufacturing jobs (or 40.9 percent) during the NAFTA-WTO period according to the Bureau of Labor Statistics. Studies conclude the Korea FTA will also have a negative impact on jobs in New York. The Economic Policy Institute (EPI) analyzed the U.S. International Trade Commission (USITC) deficit data and found that the implementation of the Korea FTA will cost the U.S. economy another 159,000 net jobs.
Exacerbating the Trade Deficit: In 2009, 1.4 million cars were sold in South Korea, 7,000 of which were from the U.S. In that same time period, 700,000 Kias and Hyundais were sold in the U.S. The USITC found that the Korea FTA would result in an increase in the total U.S. goods trade deficit. None of the recently announced changes to the pact’s auto provisions alter the basis for the USITC’s conclusion. Indeed, the Korea FTA would provide duty free treatment for Korean automobiles that contain 65 percent Chinese and other third-country content.
Dangerous Financial Sector Deregulation: The Korea FTA text, written before the financial crisis, includes financial service deregulation that contradicts efforts to restore stability to the global economy. These rules simply forbid commonly used regulatory mechanisms – such as bans on risky financial goods and services – even when such policies are applied equally to foreign and domestic firms.
Giving Foreign Investors More Rights Than States: The Korea FTA’s foreign investor privileges replicate the same extreme investor rights found in NAFTA that have been the basis for repeated foreign investor challenges to sub-federal laws in recent years. There are nearly 300 Korean establishments operating in our country that would be newly empowered to attack U.S. state and federal policies. Eighteen of those Korean-owned multinational corporations are in New York including: Woori Bank of American, Korea Electric Power Corp., Asiana Airlines, Air Couriers International Inc., Hyosung American Inc., Pusan Bank, The Korea Development Bank, Samsung American Inc., KEB NY Financial Corp., Korean Air, SK Global America Inc., KB Financial Group, Export-Import Bank of America, Hana Bank, Tong Yang American, Inc., Fila Retail Inc., Hynix Semiconductor America, and Hysong USA Inc.
Korean Companies in the U.S. Can Sue When Our Environmental Laws Interfere With Their Profits: Like NAFTA and the Central American Free Trade Agreement (CAFTA), the Korea FTA provides greater substantive rights for foreign investors operating in the United States than U.S. companies have under domestic law. The Korea FTA includes the investor-state enforcement mechanism which allows foreign corporations to sue our federal government for taxpayer compensation outside the U.S. court system before World Bank and United National Investor tribunals when federal or state laws, such as environmental or public interest laws, negatively impact their investments.
Ratifying This Pact Would:
• exacerbate our trade imbalance with Korea;
• further erode our U.S. manufacturing base;
• jeopardize our efforts to guard against another global economic meltdown;
• and make the U.S. government vulnerable to lawsuits from Korean companies doing business within our borders