CAPITALISM, THE KOREA–U.S. FREE TRADE AGREEMENT, AND RESISTANCE

Abstract

Free trade agreements (FTAs) have become an essential part of the corporate effort to establish a global infrastructure suitable to its contemporary accumulation dynamics. Because they establish and reinforce patterns of economic activity that are destructive of majority interests, they should be opposed. This article scrutinizes one agreement: the Korea–U.S. FTA. It examines the motivations that led to its negotiation, the content of the agreement, and the arguments U.S. government officials and institutions have made in support of its ratification. It concludes with a critical evaluation of the efforts of U.S. and Korean opponents of its ratification and a call for a new organizing strategy.

ACKNOWLEDGMENTS:

A version of this article was presented at the May 2011 International Conference on Globalization and Changes in Accumulation Systems and Class Structure organized by the Institute for Social Sciences, Gyeongsang National University, South Korea. Research was supported by a National Research Foundation of Korea Grant funded by the Korean Government (NRF-2010-413-B00027).

Note: all website references current as of 1 June 2011.

Notes

^1. Hereafter, I refer to South Korea as Korea.

^2. Westra 2010, 330.

^3. Athukorala and Menon 2010, 3.

^4. Hereafter, “components” refers to both parts and components.

^5. I rely on the work of Athukorala and Menon (2010), who used the UN trade database to estimate the share of components in manufacturing trade for the period 1992 to 2006. Because of shortcomings in the UN categorization system, their estimate of the component trade was limited to an examination of trade data for two categories of products: machinery and transport equipment (SITC 7) and miscellaneous manufacturing (SITC 8). While these two categories contain the majority of goods currently subject to international production segmentation, the cross-border production of goods in other categories is also growing rapidly, in particular in pharmaceuticals and chemical productions (SITC 5), machine tools and other metal products (SITC 6), and software (SITC 9). Thus, their results should be taken as a minimum estimate of the importance of the trade in components.

^6. Athukorala and Menon 2010, 8–9.

^7. Ibid., 10.

^8. Asian Development Bank 2009, 99–100.

^9. Asian Development Bank 2010, 49.

^10. Asian Development Bank 2009, 97.

^11. Hart-Landsberg 2010, 17.

^12. Park 2009, 452.

^13. Ibid., 455.

^14. Korean companies successfully opposed an agreement with Japan. Both countries have a similar economic structure and Korean companies feared that they could not match Japan's superior technology. See ibid.

^15. The Korean government is well aware of its dependence. For example, at a January 2011 talk in Washington, D.C., Han Duk-soo, Korean ambassador to the United States, said: “Passage of the Korea–U.S. FTA will solidify the strategic alliance that has served both our countries so well for the last sixty years. Northeast Asia is a region of dynamic change, both in terms of economics and security. We have seen the reality of that just in the past year: North Korea made two unprovoked and lethal attacks against us. A trade agreement with Korea will send a strong message that the United States intends to stay engaged in the region and [retains] its influence there” (Third Way 2011).

^16. Bilaterals.org 2009.

^17. The June signing date was critical for U.S. negotiators. Trade Promotion Authority, which gives the U.S. president fast track negotiating authority over trade agreements, was scheduled to end on the last day of June. Because the KORUS FTA was signed before that deadline, the U.S. Congress does not have the legal right to amend the agreement; it can only vote to approve or disapprove it.

^18. See White House (2010) for a U.S. government summary of the changes made. For a Korean view of the revival of the KORUS FTA see Im (2010).

^19. Schott 2009, 7.

^20. For a discussion of these nontariff barriers and in particular their environmental significance and U.S. objections to them, see Jung (2010).

^21. For a critical analysis of the agreement's likely effect on U.S. auto employment see Emptywheel (2010).

^22. Kirk 2010.

^23. Im 2008; Kwak 2010.

^24. Kim 2010.

^25. Foster 2008.

^26. U.S. International Trade Commission 2007 (U.S.–Korea), 1.7.

^27. Eyes on Trade Blog 2010 (Bogus).

^28. Ibid.

^29. Eyes on Trade Blog 2010 (Workers).

^30. U.S. International Trade Commission 2007 (U.S.–Korea), F.3.

^31. Ibid., xvii.

^32. The United States International Trade Commission (Ibid., chap. 7) discusses several alternative studies. Kiyota and Stern (2007) offer a more detailed examination of these and other studies, highlighting their varying assumptions.

^33. Hart-Landsberg 2006.

^34. Kiyota and Stern 2007, 5–6.

^35. It is worth emphasizing that despite employing numerous assumptions that impart a strong pro-agreement bias, the projected gains for ratification are surprisingly small.

^36. United Nations Conference on Trade and Development 1999; Weisbrot et al. 2005.

^37. Scott 2010.

^38. Ibid., 8.

^39. Ibid., 9–10.

^40. Public Citizen 2010 (Lies), 3, 5.

^42. U.S. International Trade Commission 2007 (KORUS), 13.2.

^41. Wallach 2010, 1.

^43. Ibid., 13.3.

^44. Ibid., 13.12, 13.3.

^45. Macan-Markar 2010.

^46. The “Volcker Rule” was proposed by former U.S. Federal Reserve chairman Paul Volcker; it was endorsed by President Obama in January 2010. It would prohibit a bank or institution that owns a bank from engaging in proprietary trading of financial instruments for its own direct profit and from owning or investing in a hedge fund or private equity fund.

^47. Public Citizen 2010 (Korea), 5.

^48. U.S. International Trade Commission 2007 (KORUS), 13.20.

^49. Ibid., 13.5.

^50. Public Citizen 2010 (Korea), 4.

^51. Ibid. See Alberti (2011) for an examination of the Financial Services Chapter that highlights arguments by both defenders and critics.

^52. U.S. International Trade Commission 2007 (KORUS), 11.24.

^53. Ibid., 11.5.

^56. Ibid.

^54. Ibid., 11.2.

^55. Ibid., 11.28.

^57. Ibid.

^58. Nafta has a similar investor-state dispute settlement mechanism and a Nafta tribunal has already established its willingness and authority to override U.S. laws. See The Loewen Group, Inc. and Raymond L. Loewen v. United States of America (Glaberson 1999; Dispute Resolution Journal 2003).

^59. The Labor Advisory Committee for Trade Negotiations and Trade Policy (2007) offers a critical perspective on the Government Procurement Chapter. Flynn and Palmedo (2007) and Ahn (2011) analyze the Pharmaceutical Products and Medical Devices Chapter.

^60. Scott 2010, 4–5.

^61. Ibid., 7.

^62. By comparison, the Korea-European Union FTA includes a 55 percent “rules of origin” provision (Maggs 2010).

^63. Significantly, Korean auto workers also opposed this low rules of origin. They feared both that it would encourage Korean companies to shift production to China and that U.S. auto producers would boost their market share in Korea using cheap Mexican produced components. See KCTU 2011.

^64. Greenhouse 2010.

^65. Although there is good reason not to take USITC modeling results seriously, post-December 2010 estimates of the trade consequences of the KORUS FTA by USITC staff economists concluded that the agreement would substantially worsen existing trade deficits in both motor vehicles and parts and in other transportation equipment. See Eyes on Trade Blog 2011.

^66. Schott 2009, 7.

^67. Hwang Doo-hyong 2010.

^68. Wade 2010, 55.

^69. Naughton 2011,70.

^71. Eyes on Trade Blog 2010 (Labor).

^70. The United Food and Commercial Workers is the only other union that has endorsed the KORUS FTA. Apparently it believes that the agreement's promise of greater beef exports will yield significant benefits for its members.

^72. Trumka and Kim 2010.

^73. Ibid.

^74. Park 2009, 459–60.

^75. Miller and Dalton 2010.

^76. Yonhap 2011.

^77. Korea Times 2010.