Last month marked the start of the United States-Korea Free Trade Agreement. The Obama administration describes it as the most commercially significant free trade agreement in almost two decades, and says it will support 70,000 jobs in the U.S. But the Economic Policy Institute says the deal will displace 159,000 American jobs. Our correspondent reports from Los Angeles about people who hope to be the winners and those who fear they will be losers in this trade deal.
In downtown Los Angeles, sewing machines and fabric cutters seems to be always on the move. California-based Rhapsody Clothing opened three retail stores in South Korea last year in anticipation of the US-Korea Free Trade Agreement. Company president Bryan Kang says he will now save an average of 13 percent every time he ships garments to South Korea. That, combined with a Korean middle class with more disposable income, means profit.
“They have more consuming power than ever, so we chose Korea," said Kang.
The trade agreement eliminates tariffs on more than 7,000 South Korean products and nearly 62,000 American goods and services.
“It comes at a very critical time for our economic future based on the president’s national export initiative where we’re trying to double U.S. exports by the end of 2014," said International economist, Ferdinando Guerra.
He says the trade pact is also significant because South Korea had already signed a free trade agreement with the European Union last year.
“Now we’re at a level playing field, now we’re able to compete with the European countries as far as getting goods into South Korea and services," he said.
Many farmers who grow specialty crops such as fruits, vegetables, and nuts expect to profit from the deal.
Ken Gilliland is the International Trade Director for Western Growers.
“I would think conservatively we would probably see a five to 10 percent growth in our specialty crops and then again, as tariffs go down, that should increase significantly," said Gilliland.
South Korean farmers fear they will be the losers. That’s why Park Jung-Ok marched on the streets of Seoul, protesting the trade agreement.
She said female farmers are against the U.S.-South Korea FTA. The government policy, she said, is to export industrial products and to import agricultural products, which would kill the farmers.
Labor movements on both sides of the Pacific also strongly oppose the free trade agreement, saying jobs will be lost. David Campbell represents a steel workers' union in Los Angeles.
“These trade deals are not doing anything for Main Street," said Campbell. "They may be good for Wall Street but they’re not doing anything for Main Street. They’re a deal for the one percent and not for the 99 percent.”
“Anything that frees up trade gives business some advantage over labor," added Chris Tilly, the director of the Institute of Resesarch on Labor and Employment at the University of California, Los Angeles. He says while some jobs will be lost, it is uncertain whether the displaced workers will find jobs in other industries.
As to whether one country will benefit more from this trade deal - economists say it will depend on exchange rates and the economic health of both countries.