Tag Archives: south korea

US free trade agreement to support 70,000 jobs

The term “Made in America” could soon take on a new level of importance with new free trade deals passed last week. The US Congress approved three new agreements with South Korea, Columbia and Panama on Oct. 12 that could help to preserve and create tens of thousands of American jobs.

By decreasing and removing tariffs on certain American products exported to the three foreign countries, 95 percent of US goods could become duty-free within the next five years. In what is considered to be the most groundbreaking deal since the North American Free Trade Agreement with Mexico and Canada in 1994, it could account for a $10 billion to $12 billion annual boost in US exports.

The trade agreement was originally drafted in 2007 while President George W. Bush was still in office, but it has been delayed by widespread Democratic objection. Touted by President Obama over the past few years, the deal is expected to benefit the economies of all countries involved.

Although criticized by many that are skeptical of any increase in jobs from exported US goods being eliminated by layoffs due to more competition from imported goods, the deal could benefit American workers in multiple industries, including automakers, farmers, ranchers, manufacturers and various small businesses.

The new agreement was backed by many different US organizations such as Ace, Citigroup, Pfizer, Caterpillar, General Electric, Whirlpool, General Motors, Ford and Chrysler.

The US auto industry is expected to profit substantially from the new deal with South Korea, where tariffs on imported American vehicles will be initially cut in half and eventually lifted entirely over the next five years. The agreement was promoted by both the UAW and Ford, which supported the cause through newspaper ads and a website.

The city of Detroit and the rest of Southeastern Michigan play an important role in the new pact with South Korea. Both President Obama and South Korean President Lee Myung-bak toured the Orion Township GM plant north of Detroit on Oct. 14, announcing their agreement and pushing its potential to boost the hard-hit area’s economy by creating jobs and increasing production.

The GM plant in Orion Township was reopened earlier this year to manufacture the Korean-developed Chevrolet Sonic subcompact, currently the smallest vehicle produced in the US.

Production of the Sonic was moved to the US from countries such as South Korea and Mexico. The new free trade deal includes a provision that will allow 40 percent of GM workers involved in manufacturing the vehicle at the Orion Township plant to earn more than the standard first-tier rate of $28 per hour.

General Motors currently exports the Chevrolet Camaro, the Cadillac CTS, SRX and Escalade to South Korea. Plans to export the Chevrolet Corvette are also in the works for the end of the year.

Detroit and the auto industry could benefit greatly from the free-trade pact with South Korea, and it is a welcome change for many in the area who have suffered from high unemployment rates and a depressed economy.

The new deal has been widely criticized because of its decrease on tariffs of goods imported to the US from other countries. Many Democrats believe that more imported goods will ultimately lead to fewer American jobs.

But the main advantage of the new pact is the fact that more US goods will be exported. In the long run, more products and services that America can sell overseas means more jobs created right here in the US.

 

WORKS CITED:

Abrams, Jim. “Congress passes 3 free trade agreements” Yahoo! News http://news.yahoo.com/congress-passes-3-free-trade-agreements-003629553.html  Accessed 10/15/11

Martin, Eric and McQuillen, William. SFGate http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/14/bloomberg_articlesLSZD6X6S9728.DTL  Accessed 10/15/11

Thompson, Chrissie. “Obama: New trade deal with Korea to support 70,000 American jobs” Detroit Free Press http://www.freep.com/article/20111014/NEWS15/111014037/Obama-New-trade-deal-Korea-create-70-000-American-jobs  Accessed 10/14/11