S. Korea pact becomes trade war fodder

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Opponents of a massive Asia-Pacific trade deal are using the two-year anniversary of the South Korea agreement to push back on the White House’s trade agenda. 

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Two leading House Democrats say the nation's widening trade deficit with South Korea, falling exports across several sectors and U.S. job losses should serve as a warning to lawmakers who are considering whether to support the 12-nation Trans-Pacific Partnership (TPP).

“We believe in trade, but it’s never been fair for the U.S., and we should work together to end giveaway trade,” said Rep. Louise Slaughter (N.Y.).

Slaughter (N.Y.) and Rosa DeLauro (Conn.) are among a number of lawmakers fighting against TPP and the push to give expanded trade powers to President Obama.

In the past, Slaughter said that under fast-track authority most lawmakers in Congress were not given details of the trade deals such as Korea, Colombia and Panama, and that is “why we want to do away with the evil thing.”

“It’s a dereliction of duty and that’s why we’re fighting it so hard,” she said.

The skirmish is part a broader battle that is playing out between the Obama administration and skeptical lawmakers, particularly when it comes to fast-track powers.

Under fast track, Congress sends President Obama a detailed list of trade goals so that when any agreements reach Capitol Hill, they only need an up or down vote. 

U.S. Trade Representative Michael Froman has spent the past several months on Capitol Hill talking with wary lawmakers about the details of TPP to quell concerns about the negotiations. 

As part of their argument against fast-track and TPP, Democrats say that the deficit with Korea rose to nearly $20.7 billion in 2013, according to Commerce Department data. 

Democrats say a TPP deal will further widen the trade gap with other nations, including the 11 others involved in the Asia-Pacific agreement.

“If we were doing so great we wouldn’t have the trade deficit we have,” Slaughter said. 

But the U.S. Trade Representative’s office offered more expanded data, which includes service exports to Korea, dropping the deficit to $10.7 billion through the first nine months of last year. 

Those figures could drop lower on updated data set for release next week. 

A senior U.S. official said the overall decline in U.S. exports to South Korea resulted from a sharp drop in two major commodities for reasons unrelated to the free trade agreement (FTA).

U.S. corn exports to Korea fell by $1.7 billion in 2013 as compared to 2011 due to a historic drought in the United States. The drought caused U.S. corn exports to the world to fall by 53 percent. 

There also was a $1 billion decline in U.S. exports of mineral fuel, primarily coal, due largely to a sluggish Korean economy.

Excluding these two sectors, U.S. exports were up 2.3 percent ($904 million) instead of being down 4.3 percent ($1.8 billion).

“What we want to convey is that U.S. exports have gone up under this agreement,” the official said. 

At the two-year mark, the U.S. Trade Representative’s office said it is pleased with the progress of the Korea deal despite counter arguments from opponents.

“Since the Korea agreement went into effect, U.S. exports to Korea are up for our manufactured goods, including autos, exports are up for a wide range of our agricultural products, and exports are up for our services,” said U.S. Trade Representative Michael Froman. 

“While our trade balance has been affected by decreases in corn and fossil fuel exports, changes that are due to the U.S. drought in 2012 and change in Korea’s energy mix, both of which were unrelated to the agreement.”  

Officials acknowledge bumps in the road on the Korea deal but say they are optimistic it will reap benefits.

“The true test of the success of the agreement will be evident over time,” a senior official said. 

Opponents of the direction of the trade agreements argue against the figures, saying that even if corn is taken out of the equation, overall U.S. agricultural exports to Korea still show a decline.

In addition, taking coal out of the numbers does little to change the overall drop in monthly exports, according to Lori Wallach, director of Public Citizen’s Global Trade Watch.

“When Congress debated the Korea agreement, those of us who opposed it argued that it would increase the U.S. trade deficit and wipe out more U.S. manufacturing jobs because it continued and expanded the same flawed trade policies we have seen in NAFTA,” DeLauro said.  

“Those concerns have proven true, yet this same model is being used in the Trans-Pacific Partnership. Making promises about jobs and exports that we know will not pan out is not OK.”

A recent report from Public Citizen said the Korea pact has not produced the expansion of jobs and exports promised by the Obama administration. 

“Most Americans won’t be surprised that another NAFTA-style deal is causing damage, but it’s stunning that the administration thinks the public and Congress won’t notice if it recycles the promises used to sell the Korea pact, now proven empty, to push a Trans-Pacific deal that is literally based on the Korea FTA text,” Wallach said. 

“The new evidence of the Korea FTA’s damaging record is certain to make it even more difficult for the Obama administration to get Congress to delegate its constitutional trade authority via fast track for the TPP.”

The U.S. Chamber of Commerce’s Tami Overby agreed that the trade deal has provided mixed results so far, but said she’s optimistic about the overall benefits.

Overby, the Chamber’s vice president for Asia, said some sectors are seeing benefits while noting significant shortcomings in its implementation for others. 

“The trade numbers paint a mixed picture,” she said.

“We are seeing significant growth in U.S. exports of manufactured and agricultural products that have benefited from immediate elimination of tariffs, and services exports have grown significantly,” she said. 

“We still think the U.S. business community is much better off today with the agreement, given the ongoing opening of the Korean market as tariffs and non-tariff measures are eliminated under the agreement.”