Many manufacturers and agri businesses support a new trade deal with South Korea, one reason President Barack Obama and his counterpart from that nation headed to suburban Detroit on Thursday to tour a General Motors plant where cars are being built with South Korean parts.
But the pact also will make it easier for South Korea to undercut some US companies, leaving many workers wary of the deal — especially in economically struggling areas.
The trade deal Congress passed on Wednesday has the support of the United Auto Workers and the United Food and Commercial Workers. Both say it will create jobs in the US by increasing auto and beef exports. Textile and steel workers say it will cost jobs, and even the US International Trade Commission acknowledges the textile industry is likely to be hard hit.
For its part, the Obama administration estimates that the trade deal will generate $11 billion (Dh40.4 billion) in annual US exports and 70,000 jobs. The Economic Policy Institute projects 159,000 US workers will lose their jobs in the first seven years of the South Korea pact, including those in high-wage manufacturing, while the US trade deficit will increase by $16.7 billion.
"America's families need a new way forward on trade, one that promotes the export of US goods rather than jobs," said Richard Trumka, president of the AFL-CIO, whose 56 unions have a combined 12.2 million members. He made the statement as Congress was passing agreements with South Korea, Panama and Colombia last week.
Autoworkers like the fact that the deal will give US carmakers much better access to the South Korean market, immediately allowing 75,000 American cars into the country. The UAW opposed the agreement until the Obama administration made changes to benefit the US auto industry, including protecting against "surges" of South Korean vehicles into the US market and phasing out tariffs on its cars and trucks instead of eliminating them immediately.
Obama and South Korean President Lee Myung-bak toured General Motors Co's Orion assembly plant about 30 miles north of Detroit. Workers there are excited about the visit, said UAW bargaining chairman Mike Dunn.
The plant shows the good that can come from free trade, he said, because it's where the Chevrolet Sonic sub-compact is being built with Korean parts. GM began building the Sonic a few weeks ago, helped by an agreement with the UAW under which some workers are paid lower wages that are more competitive with those in GM's foreign plants. The Sonic's predecessor, the Chevrolet Aveo, was built in South Korea.
Bill Jasper, president of the National Council of Textile Organisations, sees the pact as a threat. "This is a dangerous agreement which threatens 40,000 textile and related industry jobs," he said.
Overall impact likely to be negative
United Steelworkers International President Leo Gerard warned that even if autoworkers benefit, the overall impact on US workers will be negative. He fears South Korea will outsource auto parts manufacturing to China and then sell the parts more easily in the US under the trade pact. "There are more USW-member jobs in the auto-supply chain than jobs in the entire auto assembly sector," Gerard said, adding that the trade deal's weak limits on how much of a vehicle's parts may come from foreign countries" will cause that US job sector great harm."