In a matter of weeks, Congress could vote on the Korea-U.S. Free Trade Agreement. If passed, the Korea-U.S. FTA is predicted to have profound consequences on jobs, workers’ rights, environmental protections, the U.S. trade deficit, banking and financial services, healthcare, agriculture, and both governments’ ability to pass public health and anti-discrimination laws.
Yet here in the United States, there is almost no word about it in the media and no public debate. Large corporations and the South Korean Embassy have been spending millions of dollars to lobby for the FTA while the U.S. people, a majority of whom opposes such deals, are not even aware that the largest trade deal since NAFTA could be passed before mid-summer. It is critically important that we take the time now to learn about this agreement and act.
The Korea-U.S. FTA was negotiated in 2006 and signed in 2007 by Presidents Bush and Roh. It was renegotiated by the Obama and Lee administrations in December 2010. Negotiations were closed to the public while hundreds of corporate advisers were invited in to shape the deal. Because it was signed under Fast-Track authority, Congress has almost no opportunity to engage in meaningful debate about the FTA’s provisions, but must vote up or down within a fixed period of time.
The Korea-U.S. Free Trade Agreement, like most FTAs, fundamentally does two things: it reduces tariffs; and it restricts the ability of governments to regulate corporate activity. While many of the largest corporations in both countries stand to gain, Korean corporations will profit more from tariff reductions, whereas U.S. corporations will benefit by weakening democratic checks on them. The Economic Policy Institute estimates that the Korea-U.S. FTA will cause a loss of 159,000 jobs in the United States. Even the U.S. International Trade Commission, a federal agency, predicts that the deal will worsen the U.S.’s global trade deficit. Despite this, the Obama and Lee administrations have been pushing strongly for this agreement.
The South Korean government has been actively lobbying members of the U.S. Congress and funding a massive public relations campaign to convince Korean Americans that the FTA is good for Korea and good for America, plastering Facebook and the Korean media with ads, and putting pressure on Korean American public figures to speak out in support of the deal. In fact, the FTA is good for neither Americans nor Koreans. It is good only for a narrow group of transnational corporations, but will be disastrous for workers, consumers, small family farmers, the environment, and democratic process—in both countries.
This article addresses the likely impact of the FTA, if passed, in Korea.
Many of us remember Lee Kyung Hae, the Korean farmer and Parliamentarian who took his life in protest at the 2003 WTO meeting in Cancun. Lee climbed up the chain-link fence intended to keep protestors away from the official talks and stabbed himself in the heart. He was wearing a sign that read “WTO Kills Farmers.” Lee’s death became a rallying cry for millions of peasants experiencing the same onslaught caused by so-called free trade, and galvanized them to fight even harder against the WTO. Korean farmers are so militant because for them, this is a struggle between life and death. This FTA—because of the stark differences between Korean and U.S. farms—will drive most farmers to ruin. Korea has only 4.2 million acres of farmland, compared with the US’s 434 million. The average farm size in Korea is 1.2 acres, compared with the U.S.’s 71 acres. The National Family Farm Coalition, an alliance of American small family farmers, opposes the deal because only large U.S. agribusiness corporations will benefit. Meanwhile, the Korean Peasants League estimates that if the FTA is implemented, Korean agricultural production will decrease by 45 percent and force roughly half of Korean farmers off their land. Korean farmers stand to lose their land, livelihoods and lives, and Korea stands to lose its rural farming tradition and culture.
Workers and financial deregulation
Korean workers are famed for their militancy around the world. It is important, however, to understand the conditions facing most workers in Korea, which drive them to be so fierce. Of all OECD countries, Korean men and women work the longest hours. In Korea, 87% of men and 77% of women work over 40 hours a week. While labor laws are on the books, they are widely and casually disregarded.
One of the most dangerous parts of this FTA for people in general and workers specifically is its investment chapter. The deal was negotiated in 2006, at the height of the deregulatory fervor that brought on our current economic recession. The deal grants unprecedented freedoms to investment banks and financial corporations to manipulate the economy. In the late 1990s, many in our Korean American community immigrated to the U.S. because of the Asian financial crisis that ravaged Korea’s economy. Koreans not only lost jobs and savings, they lost significant labor protections while their quality of life and work prospects drastically declined. Even as Korea’s overall economy eventually improved, the lives of ordinary Koreans did not. More people became irregular workers, earning half the salary of regular workers and without benefits or pensions. In 2000, 40 percent of Korean workers were irregular workers; by 2008, that number had grown to 60 percent. Of that irregular workforce, 67.5 percent are women workers. Korea also has the largest gender wage gap of all OECD countries.
Most labor economists say that this FTA will only intensify these trends and eliminate hundreds of thousands of jobs, at a time when both governments are cutting social welfare programs. Furthermore, neither the U.S. nor Korea has ratified ILO Conventions 87 and 98, which are core international labor standards guaranteeing the freedom of association, the right to organize, and the right to collective bargaining.
The Korea-U.S. FTA contains a “rule of origin” provision, which allows up to 65% of the foreign content of many manufactured goods to be eligible for tariff-free treatment. This 65% rule means that many jobs will not go to Korean or U.S. workers. Instead, transnational corporations will seek to outsource production to neighboring countries with lower wages and weaker labor standards, such as China and Mexico. The majority of Korean manufacturers are small-scale businesses, and already the subcontracting practices between them and large chaebols (conglomerates) are unfavorable. Furthermore, the FTA’s investment chapter bans “performance requirements,” which means that governments can’t mandate that a certain percentage of local workers be employed or that materials be sourced locally.
The FTA has also been used to dismantle Korea’s environmental and public health laws. During talks, Korea agreed to a side deal, which basically overturned its 2000 genetic engineering labeling law that kept genetically modified organisms (GMOs) out of Korea’s food supply. By 2008, Korea had approved 102 GMOs for import as feed or food, 70 percent from the U.S. firms Monsanto, Dupont and Dow Chemical.
The Korean government also agreed to lower national emissions standards to accommodate the import of less fuel-efficient and more polluting U.S. vehicles. At a time when the Obama administration should be advocating for more progressive energy policies that restrict greenhouse gas emissions, it is undermining other nations’ efficiency standards. The FTA would also make the passage of future environmental conventions related to international trade more difficult because both countries must agree to them.
Finally, if passed, the FTA has and will continue to seriously undermine democracy in both Korea and the United States. In Korea, perhaps the most egregious example is the dismantling of Korea’s universal healthcare system. U.S. pharmaceutical companies are eager to seize the opportunity to break open Korea’s $8 billion pharmaceutical market, of which they have already cornered $2.6 billion. The FTA has the potential to destroy Korea’s public health care system: It would force open Korea’s list of reimbursable drugs to include non-generics; it would establish an “independent” body with industry representatives determining which drugs can get be reimbursed and influencing which already existing public-health laws can be overturned; and it extends patents, making it more difficult for generic medications to reach the market and easier for U.S. pharmaceutical companies to sue generic drug manufacturers, even after a patent expires. All these changes combined would likely make Korea’s health care system completely unaffordable and pave the way for it to become increasingly privatized. U.S. drug prices won’t be affected since pharmaceutical prices are already set by insurance companies, but if signed, the FTA will certainly reduce our chances in the U.S. of ever getting universal healthcare and negotiating government-set price controls.
What has been the resistance to the FTA in Korea? The resistance peaked in 2008 after the current President Lee Myung Bak, a former Hyundai CEO, agreed to overturn Korea’s limited ban on U.S. beef, which was put into place after American cattle was contaminated with mad cow disease in 2003. This sparked massive protests—over a million Koreans took to the streets, including teens and housewives—unprecedented since the pro-democracy demonstrations in the 1980s.
Despite widespread public opposition, the Lee administration is still pursuing the FTA. In a recent poll conducted by Hankyoreh newspaper, more than half of those surveyed opposed the FTA. Only 36% had a favorable opinion, and 70% felt it was inappropriate that the Korean government renegotiated the trade deal in December, just days after the Yeongpyongdo military crisis with North Korea. Sixty percent were “concerned that Korean government policies will be diminished.” And they are right. Korean legal scholars have found that the FTA violates 169 Korean laws. To silence the opposition, the Lee administration has turned to authoritarian practices reminiscent of past dictatorships. It has used violent police force against peaceful assemblies, banned public assembly against the FTA, and issued arrest warrants for more than 170 civil society leaders who organized against the FTA. The Lee government has also blocked anti-FTA advertising from airing on TV while running its own pro-FTA commercials. Korea’s National Human Rights Commission has found that the government’s tactics are inconsistent with the Korean Constitution.
FTAs are fundamentally undemocratic and undermine farmers, workers, small businesses, and the right of people through governments to enact laws that govern their health and environment. This is why the Korea-U.S. FTA is opposed by the Korean Confederation of Trade Unions and the AFL-CIO; by the Korean Peasants League and the National Family Farm Coalition; and by thousands of grassroots and advocacy organizations in Korea and the United States.
Finally, we should note that FTAs are intended to consolidate corporate power, and if the Korea-U.S. FTA passes, it will make the passage of the other FTAs much more likely. We need to come together to fight this FTA and the Colombia and Panama FTAs as well.
For more information and to take action: · Korean Americans for Fair Trade · Korea Policy Institute · Global Trade Watch · Citizens Trade Coalition
*Christine Ahn is Executive Director and Seung Hye Suh is a board member of the Korea Policy Institute. Both are active in the national network Korean Americans for Fair Trade.