You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Local politics

Advertisement

Korean pact may threaten area jobs

Congressmen reject watchdog’s warning

– A consumer advocacy group claims a U.S.-South Korea free-trade deal would threaten more than 33,000 jobs in northeast Indiana.

Public Citizen contends that Indiana’s 3rd Congressional District is the fifth-most vulnerable district in the nation if the pact is approved.

Rep. Marlin Stutzman, R-3rd, endorses the proposed agreement – called KORUS – and says district businesses do as well.

After South Korea made concessions during negotiations, steelmakers “feel very comfortable with the free-trade agreement,” Stutzman said. “Agriculture has been very supportive.”

For the most part, “I don’t believe the Korean free-trade agreement will cost us jobs,” the freshman lawmaker said.

Under the deal, nearly all tariffs on trade in consumer and industrial products would eventually be eliminated by both countries, agriculture tariffs and quotas would be phased out or eliminated, and access to services and financial services would be eased, according to the Office of the U.S. Trade Representative.

Free-trade proponents believe such deals open new markets for U.S. products and help hold the line on domestic prices.

Foes contend the agreements increase imports and move factories and jobs to countries with lower wages.

According to Public Citizen, nearly 130,000 jobs in Indiana would be at risk if the pact wins passage in Congress; votes might come this month.

Of those jobs, 33,303 are in Stutzman’s 3rd District, with more than 20,700 of them tied to motor vehicles and related parts.

Only nine states – including Ohio, Michigan and Illinois – would face more job losses than Indiana, Public Citizen claims. And only three congressional districts in California and one in Michigan would face more job losses than Stutzman’s.

“I don’t know how they came up with those numbers,” Stutzman said.

Washington-based Public Citizen, founded by noted consumer advocate Ralph Nader, says it used data from a report by the U.S. International Trade Commission. Other U.S. industries that Public Citizen insists would be hurt by the pact include transportation equipment, electronic equipment, metal products, textiles and apparel.

“Trade agreements may seem like obscure foreign policy matters, until they cause job loss in specific communities,” said Lori Wallach, director of Public Citizen’s Global Trade Watch, in a recent statement. “This time, we know upfront the very local, major job threats that the Korea trade agreement would cause in Indiana’s 3rd congressional district.”

Public Citizen says it determined at-risk jobs in congressional districts by electronically mapping out business establishments in the industries the trade commission identified as most vulnerable.

The commission’s report predicted that U.S. imports of South Korean autos and parts would grow by $907 million under the deal, while U.S. auto exports to the Asian nation would increase by $194 million. Last year, South Korean companies led by the Hyundai and Kia brands sold more than 560,000 passenger vehicles in the U.S., while American carmakers sold 13,000 in South Korea.

One reason for the huge disparity is market size: The U.S. population is 310 million; fewer than 50 million people live in South Korea.

Also, the elimination of auto tariffs doesn’t take place until the fifth year of KORUS. While South Korea would immediately cut its current duty from 8 percent to 4 percent, that’s still higher than the 2.5 percent U.S. tariff.

But with all products and goods considered, the trade commission is estimating the deal would increase U.S. gross domestic product by $10 billion a year.

Tougher provisions

KORUS has been described as the biggest U.S. trade accord since the North American Free Trade Agreement took effect – amid much opposition – in 1994.

President George W. Bush’s administration hatched the South Korea deal in 2007, and the Obama administration toughened various provisions last year. For instance, South Korea agreed to more-gradual cuts in U.S. tariffs on Korean-made autos sold in this country, and it will allow U.S. carmakers to sidestep South Korea’s stricter safety and emission standards.

Congress will consider similar trade deals with Colombia and Panama.

Conservative tea party organizations have been among the opponents of KORUS. Stutzman and Rep. Mike Pence, R-6th – who is running for governor in 2012 – have been favorites of the tea party for their fiscal and social views, but both congressmen like the trade deal.

Pence said last week that “to this day, I still hear concerns from time to time from constituents about NAFTA and other trade agreements.”

But he said he has not heard them about KORUS.

“It doesn’t mean I won’t,” Pence said. “It hasn’t come up at town meetings or as I’m traveling around the state.”

Monica Boyer, the leader of Kosciusko Silent No More, said her Warsaw-based tea party has not taken a position on the South Korean trade deal or those congressmen who support it.

“Our priority is here at home,” she wrote in an email, mentioning the $14.3 trillion federal debt. “We need to take a look at our entitlement programs, cut the budget, stop the spending and get serious about saving this nation.

“We are no good to anyone if we are broken,” she wrote.

In March, 20 tea party-type organizations, including Campaign for Liberty, Take Back Washington and American Grassroots Coalition, criticized congressmen who had publicly endorsed the trade pact.

Export leader

Pence is unwavering in his support of KORUS, charging that President Obama is moving too slowly to fulfill a pledge to dramatically increase U.S. exports.

“I just believe that the more markets around the globe that we can open up to what we make and grow in Indiana, the better,” he said. “Indiana is one of the leading exporting states in the Union.”

He also said, “The ability to expand markets is generally supported” by Hoosiers.

Ford Motor Co. came on board after South Korea made concessions on KORUS provisions affecting autos. Pence visited Ford’s headquarters in Detroit in December.

“There was a genuine concern among the Big Three about opening up a flood of inexpensive automobiles in the United States,” he recalled. “By and large, the (U.S. auto) industry is satisfied with the compromises that have been reached.”

Stutzman said he talked with Ford CEO Alan Mulally recently about the agreement.

“His belief is, ‘Put us up against anybody, and we’ll beat them,’ ” Stutzman said. “Ford has been doing remarkably well. GM is on a comeback.

“I think after what we’ve come through” with the late-2000s economic recession, “I don’t see how Korea can compete. China, I believe, is our problem, not Korea.”

Stutzman is a member of the House Job Creators Caucus, a new group of 16 Republican freshmen who have backgrounds as small-business owners. Stutzman, a LaGrange County farmer and a member of the House Agriculture Committee, maintains that U.S. tax and regulatory policies are bigger challenges for American businesses than are overseas industries.

“We’ve put ourselves on an unlevel playing field compared to (other) countries,” he said.

Pence agrees.

“Trade is not the villain,” he said. “I would argue high tax rates, having the second-highest corporate taxes in the world, having a regulatory environment that discourages investment in this country, the capital gains tax, all of those things work more against keeping and attracting businesses to this country than opening up trade barriers.”

Stutzman said that “looking at the terminology and the language in these trade agreements, there is also a fair-trade component. I believe that’s the correct approach for us to take and not to be giving our competitive advantage away to these other countries.”

bfrancisco@jg.net

Advertisement