President Obama set a deadline to announce the fate of the George W. Bush-negotiated Korea Free Trade Agreement that Congress has been unwilling to approve: the Seoul G-20 summit, which begins on Thursday. At issue is whether the Obama administration will remove the investment rules, which promote offshoring of jobs, and the financial deregulation requirements, while fixing the pact's unbalanced commercial terms.
Bush's Korea FTA text, which closely replicates NAFTA and CAFTA, contains key provisions that directly conflict with President Obama's campaign commitments to overhaul America's trade policy to create jobs, guarantee workers' rights, protect the environment and ensure financial stability. This document juxtaposes Obama's campaign statements on trade with what's actually in the text of the Korea FTA.
We review five studies that have attempted to predict the economic effects of the Korea FTA, with particular attention paid to an often-cited study conducted by the U.S. International Trade Commission (USITC). The implementation of the Korea FTA as negotiated by Bush will lead to an increase in the U.S. trade deficit in goods, which will likely cause layoffs here at home. Major changes to the Korea FTA must be made if its harmful effects are to be mitigated.
At the U.S. Chamber of Commerce and other entities seeking more-of-the-same trade pacts, there is excitement at the prospect that the administration will do exactly what its fierce political enemies wish: take ownership of another Bush NAFTA-style trade pact that would simultaneously favor their offshoring agenda, while putting Obama’s re-election in peril. This document provides a brief analysis of the political situation for Obama.