The Consequences Of The Lousy Trade Agreements

Daniel Larison, The American Conservative Voters are more bearish on trade deals than the business class that want them. Even some Republican voters aren’t sure if they want new trade deals. But no Republican voter wants a “radical” who believes in “world government” to get a promotion. You’ve got an elite argument and a populist argument, pushed from different sides, working in tandem. ~Dave Weigel What’s odd about this is that the Republican voters worried about “world government” are the same voters who loathe free trade agreements above all because they infringe on national sovereignty. If Senate Republicans are trying to placate populist constituents, holding up the nominee for Commerce as a tactic to expedite approval of free trade agreements is something that ought to backfire badly. Why not just announce that they are engaged in meaningless political theater to distract the public from the bad trade policies they want to support? There wouldn’t be much difference. Another reason this should backfire is that the Korean free trade agreement is still a lousy economic deal for the U.S., and the Colombian and Panamanian FTAs will bring negligible benefits to the U.S. Support for these three agreements has become a standard Republican slogan over the last two years, but the two most important agreements with South Korea and Colombia are very badly flawed. KORUS will greatly increase the trade deficit at the expense of American workers, and the Colombian FTA mainly benefits U.S. agribusiness and large landed interests in Colombia at the expense of small Colombian cultivators. The Korean agreement is awful for the U.S., and the Colombian agreement is ethically indefensible. Both should be defeated. Clyde Prestowitz described the problems with KORUS earlier this year: In contrast, it is not clear that the proposed FTA with South Korea will produce any net gains for the United States at all. The U.S. International Trade Commission has calculated that the result of the proposed U.S.-Korea FTA is likely to be an increase in the overall U.S. trade deficit. And this is without accounting for the fact that South Korea’s currency management policies can easily offset any tariff reduction that may be made. Of course, some U.S. companies might benefit from the arrangement, but for the United States as a whole, any increase in its trade deficit at this time of high unemployment will only contribute to a further increase in the unemployment. Perhaps I have missed something, but when unemployment remains above 9% what could possibly be the thinking behind approving trade deals that are going to increase unemployment? The consequences of KORUS passage for for the U.S. are not only economic in nature. Here’s Prestowitz again: And tariffs are not the real barriers to foreign penetration of the Korean market, especially since the Korean government can and does manipulate its currency to offset the effect of any tariff reductions. As for facilitating foreign investment in Korea, why do we especially want to do that when we need investment in the United States? Moreover, the proposed deal on investment as presently constituted actually allows the U.S. branches of Korean companies to take disputes over U.S. regulatory rulings and impacts out of the American legal system by appealing to the World Bank and the International Court [bold mine-DL]. Isn’t that something? The United States has consistently refused to join the International Criminal Court on grounds of protecting national sovereignty, but was just on the verge of signing a trade deal that would enable foreign companies to evade the sovereignty of the U.S. legal system in certain disputes. I wonder if the Republicans who have been promoting the deal understand that. The Republicans promoting the deal may understand that, but it is likely that many of their voters don’t. They should understand that their political leaders are not defending their interests or their values when it comes to trade policy, and they haven’t been for a long time. Perhaps it was time that they began demanding better leaders and representatives. P.S. I should note that Dan Phillips at Conservative Heritage Times, who is also a regular commenter here, has been making the conservative case against KORUS for quite a while. Read original post here.