In June 2007, President Bush inked a free trade agreement with South Korea. South Koreans were not pleased.
Hundreds of thousands of South Koreans demonstrated in protest. The 150,000 man metalworkers union went on strike. A South Korean man lit himself on fire. Yet, despite this vast protest, the South Korean government reassured its people and went and signed the treaty anyway.
Americans, embroiled in two wars and a looming economic meltdown, took little notice. What would be a foreign policy triumph for any President barely made the news.
The South Korean government faced down political pressure that would make Republicans and Democrats wince with pain. Republicans have not burned themselves alive or stage nationwide strikes to at least stay the hand of health care reform. Yet, the South Korean government faced incredible domestic pressure to not even have a free trade agreement, but did it anyway. One must ask, why?
A quick look at the deal illustrates why. American negotiators, perhaps envious of the botched arms control deals their forbears made during the Cold War, have continued making bad deal after bad deal.
The text of the free trade agreement is available at the US government's trade site: Full Text of US Korea Free Trade Agreement
| Topic | South Korea | United States |
|---|---|---|
| General Treaty | Must recognize that Bourbon Whiskey is a distinctive American brand. Must reduce tariffs on cars to 8%. Other tariffs remain as is. South Korea may export goods from China, to the USA, duty free. | The United States already has few tariffs. |
| Agriculture | Allowed to have quotas on: beef, pork, onions, garlic, peppers, beans, sweet potatoes, roots and tubors, apples, green tea, ginger, malt and malting barley, barley, popcorn, maize, buckwheat, cereal, groat, worked grains, flour, meal, powder, flakes, pellets of potatoes, maize starch, potato starch, manoic starch, other starch, ground nuts, sesame seeds, ginseng, sesame oil, sugar, alcohol, dextrins. | No quotas. |
| Textiles | Must gather names and addresses of textile workers. | None |
| Pharmaceuticals | Must honor US intellectual property and allow drug advertisements. | None |
| Media | Must honor US intellectual property. | None |
The US Trade Office hails this agreement as a net win for the United States. Under this agreement, the United States would eventually gain 10 billion dollars in exports to Korea. This is some careful wording. The United States is running about a 10 billion dollar annual trade deficit with South Korea. We are clearly meant to infer that this trade agreement will close our deficit to zero, and perhaps even create a surplus, but there is no mechanism within the agreement to do so, and certainly no time table for which trade might be balanced.
The concept of a net win, for the United States, is critically important. This trade agreement, like other trade agreements, is a parlay where jobs are divvied up. By this agreement, South Korea, with its hugely powerful Samsung and other manufacturing giants, is clearly meant to get manufacturing. The United States is meant to get movies and pills and both sides agree to share banking.
You can see this by the special provisions each party has argued. Both parties gave careful consideration to protecting industries they felt to be important. Koreans fought for and got quotas on things like sugar and maize, but Americans made no such effort on things like cars, televisions, trains or televisions. All Americans got was a special commission to investigate trade. However, Americans negotiators did go out of their way to get special consideration for copyright and patent holders, investors and bankers. Clearly, Hollywood and Microsoft are more important to American negotiators than Detroit.
For Americans, benefits and costs are somewhat shared by political party. The destruction of American manufacturing seems a bipartisan project, as Red Southern manufacturers take a beating as much as their Blue Northern counterparts. Democrats gain in protections for Hollywood and Banking (all the major us banks are in solidly blue states), whereas Republicans get gains in mining, farming and in liquor. But clearly, manufacturers in the rust belt are going to be screwed as well as manufacturers in the red states. Alabama should oppose this deal nearly as much as Ohio.
| State | Outcome |
|---|---|
| California, New York, New Jersey, Delaware | Potential winners - movies, music, banking, pharma and software |
| Ohio, Michigan, Illinois, Pennsylvania, Alabama, Virginia | Solid losers - manufacturing ceded to South Korea. |
| Kentucky, Tennessee | Losers - special whiskey provisions probably do not offset loss of manufacturing |