My op-ed piece about the pending free trade agreements with South Korea, Colombia and Panama was published yesterday by the Honolulu Star-Advertiser:
Free trade pacts will benefit Hawaii
By Stephen K. Craven
POSTED: 01:30 a.m. HST, Mar 06, 2011
ASSOCIATED PRESS - President Barack Obama and South Korean President Lee Myung-bak chatted at the G-20 summit in Seoul on Nov. 1.
President Barack Obama stands on the verge of asking Congress to ratify the long-awaited free trade agreement with South Korea and, hopefully, will later do the same for the agreements with Colombia and Panama.
It is clear that the U.S.-South Korea deal is a good deal for Hawaii. South Korea was our state’s third-largest foreign market in 2009. Hawaii sold $67 million in hard goods to Korea in what was a down year due to the recession. Those sales helped keep men and women employed in our state during tough times.
In the same year, South Korea was Hawaii’s No. 10 source of imports, supplying vehicles and consumer goods worth $123 million to our stores. This is stuff we use every day that helps keep our consumer prices down and provides retail employment in our islands. It’s not just kim chee.
The free trade agreement with South Korea will lower prices still further by getting rid of customs duties on most products. Perhaps more important, the FTA will hugely ease the burden of non-tariff irritations to trade in both directions, making it easier to move goods and also making Korea a far more attractive market for Hawaii’s services companies, such as those in financial services, telecom-
munications, or architecture and engineering. The U.S.-Singapore free trade agreement went into place seven years ago and Hawaii’s business with Singapore has boomed since then. No coincidence. And the same will happen with South Korea.
Colombia and Panama are unknown markets for most of Hawaii. That doesn’t mean we shouldn’t be there. Colombia is already our state’s 13th largest export market, albeit only about $9 million. And Panama doesn’t appear in our charts, so we are starting from a low base. But I’m not sure Hawaii has ever given these markets a decent try.
We naturally look west, to markets with which we have had some historic or cultural connection. And we don’t have large local ethnic groups with attachments to Latin America. But that doesn’t mean we can’t do good business there. Colombia is no longer the drug-torn country of the old headlines and is today one of Latin America’s most dynamic business centers.
Panama sits on the edge of a boom that will last for years while the Panama Canal is enlarged. There is no reason Hawaii shouldn’t take part in its success, and having free trade agreements in place will make it that much easier. True, Panama and Colombia are outside of our comfort zone, but how do you build business if you don’t try something new?
The South Korea FTA has been renegotiated to tend to issues that were not particularly germane to Hawaii. We have no automobile workers here and the only auto plant on the horizon would be – you guessed it – built by a South Korean automaker. Objections to the Colombia agreement center on the country’s old drug image and a history of mistreatment of union workers. That is, to a great extent, history now. A continued refusal to build business is unlikely to help Colombia’s workers, but an improving economy with increased trade will help. I can’t think of a cogent argument for waiting on the Panama agreement. It is time to tell our congressional delegation to get these agreements in gear. Hawaii needs and wants the business.
Stephen K. Craven chairs the Hawaii Pacific Export Council, a committee appointed by the U.S. secretary of commerce to help Hawaii, Guam, the Northern Marianas and American Samoa do business in foreign markets. He runs Kekepana International Services, an international business consulting firm.
Wait, are we talking about the same deal?
The Korea Free Trade Agreement is actually a heavily MANAGED trade deal―just like its predecessor NAFTA―remember that giant sucking sound of jobs going to Mexico?. Get this: it weighs in at over a thousand pages of fine print. Multi-national corporate elites get favors, exceptions, and precedence, while hard-pressed middle-to-small sized U.S. Industries (such as manufacturers of cotton products and car parts) shoulder obligations and restrictions. The Economic Policy Institute estimates that KFTA would increase the U.S. trade deficit with Korea by $13.9 billion over the next seven years. Rising Korean imports would displace approximately 888,000 U.S. jobs over this time period, with the KFTA directly responsible for about 159,000 net job losses.
The KFTA’s “investor-state” compliance system empowers Korean corporations to sidestep our court system and directly challenge U.S. laws before foreign tribunals established at the U.N. and World Bank to demand our tax dollars for any domestic policy Seoul claims could undermine their special foreign investor KFTA privileges.
The non-partisan National Conference of State Legislatures issued a statement warning that unless the controversial investor-state language in the proposed Korea Free trade deal is removed “to protect state sovereignty and federalism, we fear that it may be more dangerous to include [the] flawed investor-state language in the U.S.-Korea FTA than to forego the provision all together.”
And here’s a real KFTA stick-in-the-eye: our tax dollars will actually flow into North Korea via its Kaesong Industrial Complex, a “free trade zone” haven for sweatshops where South Korean firms employ some 44,000 North Koreans for wages in the range of 25-38 cents an hour (their autoworker counterparts in the South earned $23.30 an hour in 2007). North Korea-manufactured automobile parts would be built into South Korean cars sold in the U.S. The proposed trade deal allows up to 65% of the auto parts to be purchased from North Korea, then shipped here duty-free.
Congressman Ron Paul, consumer advocate Ralph Nader, entrepreneur Donald trump and the Sierra Club are among the diverse coalition fighting this treaty. Before we adopt another feel-good bill of 1000 pages – like the ObamaCare bill – let’s read and debate it thoroughly.
I appreciate the reasoned remarks, Peter. And especially the collective wisdom of Donald Trump, the Sierra Club, Ralph Nader and Ron Paul – all of whom have adequately demonstrated their understanding of international economics in past trade issues.
I am not at all surprised by the length of this agreement. They tend to be complicated matters. Nor does it bother me that individuals or organizations have problems with particular parts of an agreement. A trade agreement is necessarily a compromise since we are dealing with at least two different countries that can have an infinity of both supporters and opposers. We can all find something we don’t like and I’d be surprised if you didn’t. But that misses the point.
The U.S.-South Korea FTA was originally agreed upon between negotiators nearly four years ago – and we have been debating its merits and demerits ever since. There has been more than ample time and opportunity to discuss the agreement, which is why we went back and renegotiated parts of it. And the emerging consensus is that this agreement is of net benefit to the United States.