Overall, the agreement is expected to increase imports into the United States by as much as $7 billion, with the textile industry potentially being hardest hit.
“You can see how various American companies can benefit,” Prestowitz said. “It’s hard to see how the United States benefits.”
About 6,000 farmers gathered in Seoul last week to protest against the South Korea-US Free Trade Agreement, which is currently awaiting ratification by the South Korean and the U.S. lawmakers. (Oct. 6)
Oct. 11 (Bloomberg) -- Alan Keir, HSBC Holdings Plc's global head of commercial banking, talks about the bank's quarterly report on global trade volumes. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse."
European Central Bank chief warns of recession
To soften the blow of increased imports, Congress also renewed the Trade Adjustment Assistance Program, which provides job retraining and temporary income support to workers who lose their jobs as a result of free-trade pacts — the final piece of a bipartisan agreement that cleared the way for ratification of the agreements after a nearly four-year wait.
The trade agreements are a central part of Obama’s strategy for increasing exports to drive economic growth. With U.S. consumer demand lacking, Obama is looking to sales abroad to fuel job creation at home.
The pacts were first negotiated under President George W. Bush but were updated by Obama to include more guarantees for labor and human rights and environmental protections. The pacts were recently held up in a dispute between Obama and congressional Republicans over renewing the worker assistance program.
During Obama’s bid for the Democratic presidential nomination, he tended to underscore the risks that free trade posed for U.S. workers and the environment rather than potential benefits.
But for much of the past year, passing the trade pacts has been a tenet of Obama’s plan to bolster the economic recovery, along with other measures including an overhaul of patent laws, which Congress passed last month.
Lately, though, the trade pacts have been relegated to a supporting role, because the number of jobs would, at most, be a mild economic stimulant. Obama is urging Congress to pass elements of his jobs plan, which is worth as much as $447 billion in fresh spending and tax cuts. The Senate voted Tuesday not to proceed with this plan in its current form.
On Wednesday, the congressional Joint Economic Committee warned that free trade often has high costs for workers, particularly those in the manufacturing industry, who tend to be older and without a college education.
The report said: “Given the already high national unemployment rate and depressed home values still evident in most states, policies that seek to liberalize trade may impose even larger costs on these workers, bolstering the need for additional investments in training or other forms of trade-adjustment assistance.”
In pursuing the trade pacts, Obama has aligned himself with the U.S. Chamber of Commerce over key labor groups, including the AFL-CIO and the Teamsters.
Richard Trumka, president of the AFL-CIO, called the deals “lousy” in a speech in Washington this month.
Trumka asked: “Should we say yes to the Korea [pact], which will destroy 159,000 U.S. jobs? Should we approve an agreement with Colombia, where 51 trade unionists were assassinated last year? Should we trade away even more jobs to Panama, a country that routinely tramples workers’ rights and shelters money launderers and corporate tax dodgers?”
But Obama successfully enlisted support from other important members of the labor movement, including the United Auto Workers and the United Food and Commercial Workers. The unions tend to represent workers in industries that could gain from the pact.
The administration said this week that the South Korea pact would slash tariffs on 95 percent of U.S. exports of industrial and consumer goods and make it far easier for automakers and agricultural companies to sell their products into the $1 trillion economy. The administration also said it had worked out “high standards” for protecting labor rights and environmental concerns in its deals with Colombia and Panama.
Overall, the trade pacts with South Korea, Panama and Colombia could increase U.S. exports of goods by $12 billion or more a year. American companies will also have an easier time selling services in those countries, making the deals yet more advantageous. But the amount of goods imported is also likely to increase significantly, dampening the overall effect on the economy.
South Korean President Lee Myung-bak is to deliver a joint address to Congress Thursday and then travel with Obama on Friday to a General Motors plant near Detroit that is described as a likely beneficiary of the agreement.
Obama has a mixed history on trade. As a candidate in 2008, he questioned whether free-trade pacts give an edge to countries with low labor and environmental standards and criticized the North American Free Trade Agreement. Later in the campaign, however, he strongly endorsed trade agreements that addressed labor and environmental concerns.
The United States has similar agreements with 17 other nations, striking its last deal in 2007 with Peru. Other countries with such agreements include Canada, Israel and Australia.
Staff writer Felicia Sonmez contributed to this report.
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