President Obama and South Korean President Lee Myung-bak toured a General Motors plant in Orion Township, Michigan, on Friday, with the promise of creating more jobs at the plant and others like it nationwide under the new free-trade agreement soon to be ratified between their nations. That promise—and quelling fears of anything to the contrary—are Obama’s focus when discussing the trade deal he signed on Wednesday.
“I know folks that some of you here may think that with the implementation of the Korean-U.S. Free Trade Agreement, that somehow your jobs may be exported or go somewhere else,” Obama told the crowd gathered at the plant. “But let me tell you one thing: That is not true.”
However, some economists say the White House projections of the free-trade agreement’s impact on job-growth ignores factors that will cause American companies to contract and outsource jobs.
For one, Obama — like all presidents since Clinton — failed to account for the effect of imports when calculating jobs numbers. The tens of thousands of jobs Obama touts would come directly from new trading partners' increased demand for cheaper American products. But, according to Robert Scott of the Economic Policy Institute, Obama isn’t accounting for imports that could weaken the sale of U.S. goods at home.
Scott’s analysis reveals that the demand for American exports won’t be enough to make up for the jobs lost as a result of foreign competition within the domestic market because foreign trading partners have a way of manipulating the market in favor of their own goods without raising a single tariff. South Korea has done so, he says.
“Korea is constantly changing standards and requirements for autos to protect their domestic producers,” Scott said. “They may change the size or location of the license plate bracket every year, for example.”
Fluctuating foreign standards could hinder companies from profiting in the Korean market. And unions fearthat automakers will outsource jobs overseas to find cheap labor; such was the case with the Mexican free-trade pact.
Lee came ready to counter that charge.
“I am here with President Obama today because I want to give this promise to you. And that is that the Korean-U.S. Free Trade Agreement will not take away any of your jobs. Rather, it will create more jobs for you and your family, and it is going to protect your job,” Lee said. “And that is the pledge that I give you today.”
To workers at a plant once on the brink of shutting down, the prospect of job security is music to their ears, even if it lacks consensus from those outside politics.