Obama, Free Trade, and Korea

The Obama administration hailed a free trade agreement with South Korea as a winner for U.S. workers:

The White House announced Friday night that the United States and South Korea have reached agreement on a comprehensive free trade pact that is a major objective of American business but could meet significant opposition from liberal Democrats in Congress.

The way was cleared for the deal after negotiators for the two nations reached a deal on auto, the last major obstacle to completing the agreement and sending it to Congress next year.

In a statement issued by the White House, President Barack Obama said the “landmark” deal is expected to increase annual exports of American goods by up to $11 billion and support at least 70,000 American jobs. He said he looks forward to “working with Congress and leaders in both parties to get this done.”

On a day when it was announced that the unemployment rate unexpectedly shot up from 9.6 percent to 9.8 percent in November, Obama said the Korea agreement "is an integral part of my administration’s efforts to open foreign markets to U.S. goods and services, create jobs for American workers, farmers and businesses, and achieve our goal of doubling of U.S. exports over five years."

Congresswoman Linda Sanchez says Obama has it all wrong:

“While I share the Administration’s desire to increase our exports around the world, I was hoping my recent meeting with the President would convince him that this agreement needs improvements beyond auto and beef provisions. There are still fundamental flaws in the agreement, particularly with respect to the labor and investment chapters and textile tariff reductions. These provisions send jobs offshore and make it harder for American workers and companies to compete. Without changes to benefit working families in the 39th district of California, I cannot support this agreement.”

Firedoglake says the Economic Policy Institute estimates significant job losses over the next five years as a result of this agreement:

Advocates of free trade agreements, including the U.S. Chamber of Commerce, rely on deeply flawed projections for estimating the jobs impact of signing new free trade agreements (FTAs). As a result, these projections generally show that signing new FTAs will create jobs in the United States, when in fact doing so may destroy or displace jobs.

This Economic Policy Institute analysis examines the likely jobs impact of signing pending FTAs with Korea and Colombia. It shows, based on past experience, that these trade agreements will increase the U.S.’s trade deficit with both countries. Contrary to the Chamber’s projections, the EPI analysis then shows that the increased trade deficit per se will correspond to the loss of 214,000 jobs in the U.S. by 2015.

Depending on economic conditions, other factors may intervene to offset job losses, although they won’t change the fact that these jobs are displaced: The trade deficit per se will correspond to lost jobs in industries that compete with imports. While other factors could help spur job creation in other parts of the economy, for the factory worker who loses his or her job, this macroeconomic fact matters little. And given the weak U.S. economy, it’s unlikely that workers displaced from their jobs will find other employment quickly or easily.

If the Economic Policy Institute is correct about the number of job losses as a result of this free trade agreement with South Korea, I am sure that Obama will find a way to blame teachers and public schools for the losses, not his own neo-liberal free trade policies.