Reps. DeLauro and Slaughter, Economists, and Labor Representatives Mark 2nd Anniversary of U.S.-Korea Free Trade Agreement, Address Agreement’s Legacy of Job Loss and Trade Deficits

WASHINGTON – Today, economists, union representatives and Members of Congress held a briefing to mark the second anniversary of the U.S.-Korea Free Trade Agreement (KORUS). Just two years after passage of KORUS, the U.S.-South Korea trade imbalance has reached its largest deficit on record, and an estimate from the Economic Policy Institute pegs the number of American jobs lost due to the agreement at over 60,000. Almost every U.S. economic sector has seen declining exports to Korea since the agreement went into effect, with agricultural exports especially hard hit. This evidence serves as a warning sign to Members of Congress being pressured to support the Trans-Pacific Partnership, another trade agreement that will result in higher trade deficits and fewer manufacturing jobs for the United States.

“When Congress debated the Korea Free Trade Agreement those of us who opposed it argued that it would increase the U.S. trade deficit and wipe out more U.S. manufacturing jobs because it continued and expanded the same flawed trade policies we have seen in NAFTA.,” DeLauro said. “Those concerns have proven true, yet this same model is being used in the Trans-Pacific Partnership. Making promises about jobs and exports that we know will not pan out is not ok. We have to do better by the workers we represent. That means learning lessons from Korea and NAFTA and not fast tracking another bad trade deal.”

“KORUS is the latest chapter in the American story of giveaway trade,” Rep. Slaughter said. “From forcing American workers to compete against underpaid foreign counterparts to non-tariff barriers that keep American goods out of foreign markets, America’s manufacturing sector has been decimated by these flawed trade agreements. We need to end this era of giveaway trade and protect our jobs and industries, starting by stopping the TPP.”

The U.S.-South Korea trade deficit reached a historic high of $20.673 billion this year, an increase of $8.6 billion (47 percent) from 2011—the year before KORUS took effect. In addition, exports are down $2 billion since 2011 and down $700 million since 2012. This widening trade gap shows lost opportunity and lost jobs for American workers and companies. The trade data also shows that the United States’ overall trade deficit with the 11 countries currently participating in TPP negotiations is $154 billion. If TPP has the same impact as KORUS, this deficit will only grow larger.

KORUS was passed in the 112th Congress under Fast Track Authority, which prevented members of Congress from amending the trade deal on behalf of their constituents whose jobs were threatened by it. This time around, opposition to Fast Track by key Congressional leaders combined with a new poll showing strong majorities of Americans oppose TPP have slowed the trade deal’s momentum.

In the case of Korea, non-tariff barriers such as a new burdensome auto parts certification process enacted after KORUS and a proposed vehicle emissions and penalty system designed to target U.S. auto sales have also also hurt U.S. exports and cost American jobs. As a result, only 11,657 American cars have been sold in Korea (0.8 percent of the market), while 1.26 million Korean cars have been sold in the U.S. (8 percent of the market) since the trade agreement went into effect. KORUS contains a “snap-back” provision that would return tariffs to pre-agreement levels if non-tariff trade barriers are not removed or new ones put into place, though this safeguard cannot yet be utilized due to language delaying implementation. Rep. Slaughter, who is the author of the Reciprocal Market Access Act that would require “snap-back” provisions immediately for all trade agreements, said that without market reciprocity, the U.S. would continue to be taken advantage of in trade agreements.