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Ext: I/L Turn- US Econ

Lastly, the Korean Embassy’s ostensible concern about the sanctity of the USITC’s findings is belied by the Embassy’s twisting of the quantitative results of the study to claim that the agreement will create 70,000 jobs.12 The 70,000 jobs figure does not come from the USITC study (which assumes that the number of jobs does not change). The Embassy has apparently applied a standard jobs multiplier from the U.S. Department of Commerce to the value of the USITC’s estimate of a change in bilateral U.S. exports to Korea. The figure the embassy has created does not include imports – or the net impact – much less use the appropriate data with respect to how the U.S. would be affected. That would be the ultimate effect of the FTA on the U.S. global trade balance – an increased deficit and the related negative impact of imports on jobs. Put simply, the Embassy should not be in the business of splicing two completely distinct methodologies – one from the USITC, and one from the Department of Commerce. But if the Embassy is going to engage in such illegitimate splicing, it should at least be consistent. Since the USITC predicted a greater deficit with the Korea FTA, a proper accounting of the impact of exports and imports would find a net job loss from the FTA.

SKFTA leads to a conflict in protection of investor rights, leading to a major economic overhaul.

PublicCitizen’11, national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress (The Korea FTA is Lose-Lose for the U.S. and Korea: The Facts, http://www.citizen.org/documents/KoreaFTAisLoseLose.pdf, July 26, 2011)

Korean Embassy’s claim: “The investor-state dispute resolution mechanism in the KORUS FTA is a common feature of free trade agreements and bilateral investment treaties, of which there are more than 3,000 worldwide. NAFTA has an identical investor-state dispute resolution chapter. Since it took effect in 1994, Mexican and Canadian companies have filed 18 requests for arbitration against the U.S. government. They have won none of them.” Elsewhere, the Embassy adds that, “Some opponents of the FTA have alleged that this section will provide Korean companies with rights greater than those afforded to U.S. companies. Not only is that not true, it is directly rebutted in the text of the agreement which says, “foreign investors are not hereby accorded greater substantive rights with respect to investment protections than domestic investors under domestic law where, as in the United States, protections of investor rights under domestic law equal or exceed those set forth in this Agreement.”

Ext: I/L Turn- US Econ - Manufacturing

SKFTA will fail, devastate employment and increase outsourcing devastating domestic manufacturing in both countries

The Korean Confederation of Trade Unions January, 2011 (the KCTU is the 2^nd largest trade union in South Korea “Why We Oppose the KORUS FTA - KCTU Position Paper on KORUS FTA” http://kctu.org/9928)

1. KCTU has great concerns about the bilateral and regional FTAs which are currently expanding in number across the world. We believe that the analysis that FTAs are bad for some industries while good for others is a somewhat narrow perspective. This is because they reduce or greatly remove the ability of governments from relatively less developed countries to pursue independent policies to meet economic and social needs and sustainable social and economic development. In addition while the provisions of FTAs systematically strengthen the rights and privileges of corporations they do not include provisions which support the democratic control of foreign investors. 2. The KORUS FTA privilege the rights and benefits of transnational corporations over the rights of workers, consumers and the general public. We believe that the proposed KOR-US Free Trade Agreement is harmful not only for the Korean workers and working families, but for the workers and working families in the U.S. as well, since the KORUS FTA follows the ‘failed model’ of NAFTA. And it is highly likely that the agreement will have huge negative impacts on small and medium-sized manufacturing enterprises (SMEs) in the two countries, damaging the manufacturing base and worsening already unsecure employment. 3. The KORUS FTA will systematically encourage offshoring, or global outsourcing. The “Rule-of-Origin” provisions of KORUS FTA allow up to 65% foreign content of the value of vehicles eligible for tariff-free treatment, using the Net-Cost- Method. Thus, the agreement will encourage transnational corporations(TNCs) to outsource their production to neighboring low-wage countries such as China and Mexico. This will eventually result in the breakdown of domestic manufacturing industry and unsecure employment. 4. The experience of NAFTA demonstrates the negative impact of FTA on employment. We know that when NAFTA was being negotiated, the US, Canada and Mexican governments made many promises to their citizens - such as creation of jobs and better living standards, just as the Korean and US governments are promising today. However, 15 years of NAFTA has shown that the reality is far from what was promised. In the course of 15 years, NAFTA has eliminated more than 1 million jobs in just the US and increased irregular part-time jobs particularly in service sectors, which pay 23% to 77% less than the jobs that were replaced.

SKFTA will increase outsourcing, hamstring the government’s ability to fix unemployment and damage manufacturing

The Korean Confederation of Trade Unions January, 2011 (the KCTU is the 2^nd largest trade union in South Korea “Why We Oppose the KORUS FTA - KCTU Position Paper on KORUS FTA” http://kctu.org/9928)

The KORUS FTA is advertised for the solution of employment crisis by both governments. The President Orbama announced that the Korea deal will create more than 70,000 jobs in the U.S. just after concluding supplemental agreement on December 3rd, 2010. Also, the Lee Myung-bak Government also argued that the Agreement will create around 335,000 jobs in South Korea for the next 10 years after its taking effect. However, in contrast to the expectation of both governments, the concluded KORUS FTA will not solve the employment crisis in both countries. The Korea US Free Trade Agreement(KORUS FTA) is meant to prioritize the protection of the rights and benefits of transnational corporations. Therefore, it is highly likely that the agreement will have huge negative impacts on small and medium-sized manufacturing enterprises (SMEs) in the two countries, damaging the manufacturing base and worsening already unsecure employment. FTA to Encourage Overseas Outsourcing and Damage Domestic Manufacturing Industry The KORUS FTA will systematically encourage offshoring, or global outsourcing. The “Rule-of-Origin” provisions of KORUS FTA allow up to 65% foreign content of the value of vehicles eligible for tariff-free treatment, using the Net-Cost- Method. Thus, the agreement will encourage TNCs to outsource their production to neighboring low-wage countries such as China and Mexico. This will eventually result in the breakdown of domestic manufacturing industry and unsecure employment. The majority of Korean manufacturing companies are small-scale businesses, and the subcontracting practices between small manufacturing companies and large conglomerates in Korea are disadvantageous to SMEs. Moreover, productivity gap between small and large companies is rising. In this context, the KORUS FTA is expected to aggravate already vulnerable Korean manufacturing sector, dealing damages to domestic small and medium-sized parts and materials manufacturers. Therefore, there is a high chance that small businesses become smaller, while resources are concentrated in a few large companies. The Agreement will cause not just a trade imbalance between the two countries in a short term, but also a devastating impact on the manufacturing basis, forcing small and medium-sized manufacturers to go bankruptcy and resulting in massive restructuring. In addition, the Investment Chapter of the KORUS FTA bans performance requirements. Examples of performance requirements include a technology transfer, obligation to use a certain percentage of local products, succession of employment, succession of collective agreements and obligation to hire a certain percentage of local people. This means that if the FTA increases foreign direct investment, the government cannot implement policies aimed at promoting domestic employment. Moreover, most of the global investment has recently been carried out via portfolio investment such as acquiring corporations or buying stocks. Therefore, foreign investment has come to have little to do with employment. In contrast, corporate acquisition is likely to result in massive restructuring, thus decreasing employment.

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