Trading Issues

The history of NAFTA is tied up with an earlier free trade agreement with Canada negotiated by the Reagan administration in the late 1980s.  In fact, there was a series of post-WWII trade agreements with wealthy countries that had support from labor, because of labor's fierce anti-Communist tendencies.  Both George Meany and Lane Kirkland, who were the leaders of the AFL-CIO during this time period, both took pride in their support of the Vietnam war at the expense of domestic priorities.  Meany famously said that he proudly never walked a picket line in his life.  Before globalization started earnestly in the early 1970s, this made sense, as reducing tariffs didn't hurt the leverage of American workers, and liberal internationalists were running the government.  The trade agreement with South Korea might seem to follow this trend, since both are wealthy countries.  Here's the problem.

Significantly, Washington accommodated Seoul's requests to consider development of Kaesong, the South Korean-run industrial zone in North Korea.

Kaesong is a slave labor camp.  

Tags: Fast Track, free trade, NAFTA, South Korea (all tags)

Comments

21 Comments

Re: Trading Issues

I appreciated this bit from the article you linked to.

■ Autos: Tariffs on passenger cars with an engine capacity of below 3,000CC will be abolished immediately, and within three years for bigger cars. Korea will overhaul and streamline its tax schemes for autos.

Great, so they're going to make it easier for GM to shift more of its small car production overseas.  

The Chevy Aveo?  Made in South Korea.

This is going to be disastrous for the UAW and for the industrial Great Lake states.

by ManfromMiddletown 2007-04-22 08:55AM | 0 recs
Re: Trading Issues

Nice that Edwards came out against it. Has anyone else yet (besides Kucinich of course)?

by adamterando 2007-04-22 09:24AM | 0 recs
Re: Trading Issues

Not that I know of.

Korea is much better than it once was, but there's a strong handed chaebol-governmental complex at constant war with the militant labor sector (10% union density)that forced democratization in 1988.

by ManfromMiddletown 2007-04-22 09:40AM | 0 recs
Re: Trading Issues

Maybe I'm confused, but this part of the agreement forces Korea to remove tariffs it places on auto imports from the US.  

How does that make it easier for GM to shift overseas?  It removes one of the major blocks that cuts into the ability for US manufacturers to export cars.

It's a pretty big deal because currently the US sells about 4000 cars in Korea, while they sell about 800,000 here.

I'm not sold on the FTA by any means, but it has some good elements, and an agreement that Korea removes a domestic tariff on goods from the Great Lake states seems like it could be one of those.

by Baldrick 2007-04-22 10:02AM | 0 recs
Re: Trading Issues

Dude, I get that you think that Ricardian comparative advantage is the way the world market acutally works, but it's utter bullshit based upon a set of assumptions that don't exist in the real world.

Ricardo assumed that trade occurred inter-sectorally, across industrial sectors.  His example was Portugese wine traded for English cloth, comparative advantage was largely geographically determined.  However in the real worlx, most trade between modern, industrialized states isn't inter-sectoral, it's intra-sectoral meaning that often nation have the same natural comparative adavantage, and the origin of acutal advantage comes for externalizing economic and social costs.  

The limitation of free trade to cars with less than 3000cc engines opens the American market where Korean manufacturers are dominant, while leaving the production of large vehicle where American companies have an advantage closed.  The net effect is to export what litte is left of small car manufacturing in the US to a country who's economic development occurred through severe labor repression.

And is now banking on offloading the low value added work to slave labor camps in the North. The social conditions of production are embedded within economic products, by allowing free trade with nations that don't have similiar legal and regulatory frameworks, nations compete at the expense of their workers.  The Europeans realize this, hence why every nation joining the EU has to integrate 85,000 pages of community code in order to create social floors below which the conditions of production are not allowed to fall.  In US trade agreements, the tendency has been to create ceilings above which social protection is not allowed to pass.  The European model converges up, while the American model converges down.

Free trade agreements like NAFTA, CAFTA, and KORUS are masked attempts to rewrite US law without democratic debate and consent.

by ManfromMiddletown 2007-04-22 10:20AM | 0 recs
Have You Bought A Car Recently?

No offense ManFromMiddletown but how many cars in the US are made with engines smaller than 3000 ccs?  I bought a car 2 years ago and if you wanted anything with an efficient 4 cylinder or small 6 cyl engine you had to go with a foreign model.  American car companies just don't build anything other than big, hulking gas guzzling SUVs.  And anything from US car companies that isn't an SUV is such a piece of crap it isn't worth the money you'd pay to own one.  Too bad but basically true according to Consumer Reports.

If you have watched Who killed the Electric Car, you'd know GM killed its electric car program just as oil prices were going up and now finds itself chasing Toyota, Honda, etc once again.  It's like reliving the 1970s all over again.  These people just don't get it.

Count me as one who thinks the US car companies are a huge part of our dependence on foreign oil and has little interest in bailing them out for the 2nd time in 30 years.

by John Mills 2007-04-22 11:22AM | 0 recs
Re: Have You Bought A Car Recently?

I somewhat agree but not totally. We own a 1994 Ford Escort. I don't know what the CC's translate too, but it has a 1.9L engine, gets 35 mpg or so and we have 170k miles on it.

Just sayin' that you can find some decent small cars made in the US if you try. They probably don't hold a candle to a civic or a prius but they're still pretty good.

by adamterando 2007-04-22 03:25PM | 0 recs
Re: Have You Bought A Car Recently?

Early 90s was a lot different than today.  You had Saturn, Dodge Neon, Escort, Geo Prizm (made in CA), Pontiac Sunbird/Chevy Cavalier and a few others that were decent economy cars.  The Neon, Prizm, Escort and Sunbird aren't made anymore and Saturn has dropped off the face of the earth.  The only US economy cars I can think of are Ford Focus and Chevy Cobalt.  THe pickings are pretty slim today.

by John Mills 2007-04-22 07:17PM | 0 recs
Re: Have You Bought A Car Recently?

Left out the Pontiac Vibe and Sunfire but the pickings are still not robust.

by John Mills 2007-04-22 07:35PM | 0 recs
Re: Have You Bought A Car Recently?

One more rant on US car companies and I'll be done.  US car companies put all their engineering know how into these SUVs and seem to build a fine reliable product (never owned one so I don't know for sure) but don't do the same with small cars.  They then complain they can't make any money with small cars but Toyota, Honda, etc have made tons of money selling Corollas and Civics over the years.  Always seemed like a BS excuse to me but what do I know.  

by John Mills 2007-04-22 07:32PM | 0 recs
Re: Trading Issues
For more on Kaesong:
http://www.atimes.com/atimes/Korea/HD06D g01.html
The article is full of creepy corporatist language on the camp, "there have been no labor disputes," but additional information is here nonetheless.  
by Dayle 2007-04-22 09:03AM | 0 recs
Re: Trading Issues

I assume that those opposed to Kaesong are in favor of a harsh regime of economic sanctions on North Korea?

If not, can you distinguish what kind of trade you would be in favor of?  Kaesong is a terrible place and no one should ever be forced to work under such conditions.  The fact that we live in a world with such forced choices is a sad statement about the human race.

But, all that said, are there better options for those starving to death in North Korea?  Does the US have policy tools available to force the notoriously isolated, corrupt, evil Kim regime to change?  Is there any chance that the South Korean "Sunshine" strategy of limited economic openness can do more to improve the quality of life of those in the DPRK?

I don't know the answer, and I've been studying Korea for almost a decade.  I wouldn't trust anyone who stated unequivocally that they have the solution.

As a sidenote, it's worth mentioning that they haven't included Kaesong, at least not yet.  In an effort to conclude the deal in time to subject it to a vote while TPA lasts, they basically agreed to review whether to include goods produced at Kaesong.  Sources from both sides of the Pacific disagree on the likelihood of it being covered.  If I had to guess, I would say that it will be, but there's certainly a world where the FTA passes but Kaesong is not covered.

by Baldrick 2007-04-22 10:12AM | 0 recs
Re: Trading Issues

"But, all that said, are there better options for those starving to death in North Korea?"

Yes, it's called non-slave labor. And not everyone is starving in North Korea. It's a horribly sad place but people do tend to have jobs. It is a communist state after-all.

by adamterando 2007-04-22 10:27AM | 0 recs
Re: Trading Issues

Well, that's great, but how you do make it happen?  It's nice to say that we should support non-slave labor, but what policy proposals do you have that further that goal?

I agree not everyone is starving in North Korea, but a pretty substantial section of the population is, and it is arguable that US sanctions (i.e. - refusal to trade) with them is a big cause of it.

It's not indisputably true, but it's arguable.  And I wish people would engage in those arguments instead of engaging in (easier but probably less worthwhile) polemics.

by Baldrick 2007-04-22 11:50AM | 0 recs
Re: Trading Issues

And I wish people would engage in those arguments instead of engaging in (easier but probably less worthwhile) polemics.

One more of this 'some people should calm down' lines and you're banned.  It's needlessly disruptive and you are too smart to punctuate your commentary with inflammatory rhetoric.

by Matt Stoller 2007-04-22 02:45PM | 0 recs
Re: Trading Issues

Look, man, it's your site and you can ban me if you want, but I really don't think I'm being needlessly disruptive.  Or, if I am, then so is a pretty strong majority of people commenting here.  I do my best to add to the discussion and avoid attacking people.  But it's frustrating to write a long argument and receive a one-line response that (at least from my perspective) fails to grapple with any of the issues I raised.  

When such things happen, I feel obliged to encourage people to go deeper on the question.  You got mad because I said the word polemic, but frankly I don't know how else to read this thread.  I said:

"But, all that said, are there better options for those starving to death in North Korea?  Does the US have policy tools available to force the notoriously isolated, corrupt, evil Kim regime to change?  Is there any chance that the South Korean "Sunshine" strategy of limited economic openness can do more to improve the quality of life of those in the DPRK?

I don't know the answer, and I've been studying Korea for almost a decade.  I wouldn't trust anyone who stated unequivocally that they have the solution."

The response was:

"Yes, it's called non-slave labor."

What am I supposed to do with that?  I understand and sympathize with the point being made, but I just can't see how it pushes the debate further.  I get that a pithy, one-line response is often good insofar as it communicates "you are complexifying the simple" - maybe that's the case here and I just don't get it.  But it seems a lot more likely that it's an ideological response to a question that needs BOTH an ideological perspective AND a detailed policy response.

I think we can all agree that slave labor is bad and our policy should be to stop it.  But is that really sufficient?  Does that end the conversation?  Is it not fair to ask people to expand on what that means, or what they think is the alternative to Doha, or whether the advantages of a world without a strong multilateral trade regime would truly be better?  

It is very possible that on all of these issues, the simple response of "trade liberalization makes things worse" is correct, but surely it's worthwhile to get into a deep debate in order to be sure.  And if we can't be sure, isn't it worthwhile to admit that while we have a good idea, it would be wrong to state something unequivocally?

Maybe there's a more diplomatic way for me to make that point, and I'll search for it, but it's difficult when the tone is that anyone willing to argue for free trade is engaged in treason, or "a self centered little fuck from an Ivy League school with shit for knowledge of the real world," as I was referred to a couple months ago.  

I don't know.  I think it's important to be somewhat combative insofar as that entails calling people out for not challenging their ideas.  I expect people to do it for me, and when they've done so here, I feel like I've learned a lot.  If you think my contributions are negative in that respect, I guess you'd better ban me.  Given that I never would have expected someone to be offended by the post you're responding to, I'm not sure I could even come close to self-regulating.  And frankly, if MyDD is going to be a place where telling someone that their position fails to deal with the nuances of a situation is a ban-able offense, I'm not sure it's a place I want to be.  I'm sorry if that's melodramatic, but I'm just trying to be honest.  As I said, it's your site so do as you will.

by Baldrick 2007-04-22 09:50PM | 0 recs
Re: Trading Issues

Thanks Matt.  I generally like free trade agreements with equals in that I think equal competition makes us better.  However, I am definitely opposed to slave labor camps.  I am going to read up on Kaesong.

by John Mills 2007-04-22 11:25AM | 0 recs
Re: Trading Issues

Question - If you removed Kaesong, is there a reason to oppose this deal?  I am trying to determine if this is a bad deal if you fix this piece.

by John Mills 2007-04-22 12:47PM | 0 recs
Re: Trading Issues

It probably is, but it's hard to know unless we get more details.  The agreement was rushed through because of the Fast Track deadline.

by Matt Stoller 2007-04-22 02:35PM | 0 recs
Re: Trading Issues

I need to read more on this as I reflexively don't like trade deals with 3rd World countries where outsourcing occurs but have generally not opposed them with wealthier countries.  Maybe that is wrong.  I am going to investigate.

by John Mills 2007-04-22 07:24PM | 0 recs
Re: Trading Issues

Slave labor camps give the "race to the bottom" a new meaning.  Instead of bombing Detroit and hoping for electricity and reconstruction, we can all get imprisoned and finally get universal health care and free room and board.  People who support free trade are like people who support the war in Iraq.  All talk and totally unwilling to put their money or their asses where their mouths are.

by dkmich 2007-04-22 12:32PM | 0 recs

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