LANSING, Mich. (AP) — Many manufacturers and agribusinesses support a new trade deal with South Korea, one reason President Barack Obama and his counterpart from that nation are heading to suburban Detroit on Friday to tour a General Motors plant where cars are being built with South Korean parts.
But the pact also will make it easier for South Korea to undercut some U.S. companies, leaving many workers leery of the deal — especially in economically struggling areas.
The trade deal Congress passed Wednesday has the support of the United Auto Workers and the United Food and Commercial Workers. Both say it will create jobs in the U.S. by increasing auto and beef exports. Textile and steel workers say it will cost jobs, and even the U.S. International Trade Commission acknowledges the textile industry is likely to be hard hit.
For its part, the Obama administration estimates that the trade deal will generate $11 billion in annual U.S. exports and 70,000 jobs. The Economic Policy Institute projects 159,000 U.S. workers will lose their jobs in the first seven years of the South Korea pact, including those in high-wage manufacturing, while the U.S. trade deficit will increase by $16.7 billion.
"America's families need a new way forward on trade, one that promotes the export of U.S. goods rather than jobs," said Richard Trumka, president of the AFL-CIO, whose 56 unions have a combined 12.2 million members. He made the statement as Congress was passing agreements with South Korea, Panama and Columbia this week.
United Steelworkers International President Leo Gerard warned that even if autoworkers benefit, the overall impact on U.S. workers will be negative. He fears South Korea will outsource auto parts manufacturing to China and then sell the parts more easily in the U.S. under the trade pact.
"There are more USW-member jobs in the auto-supply chain than jobs in the entire auto assembly sector," Gerard said, adding that the trade deal's weak limits on how much of a vehicle's parts may come from foreign countries "will cause that U.S. job sector great harm."
Autoworkers like the fact that the deal will give U.S. carmakers much better access to the South Korean market, immediately allowing 75,000 American cars into the country. The UAW opposed the agreement until the Obama administration made changes to benefit the U.S. auto industry, including protecting against "surges" of South Korean vehicles into the U.S. market and phasing out tariffs on its cars and trucks instead of eliminating them immediately.
Obama and South Korean President Lee Myung-bak will tour General Motors Co.'s Orion assembly plant about 30 miles north of Detroit Friday. Workers there are excited about the visit, said UAW bargaining chairman Mike Dunn.
The plant shows the good that can come from free trade, he said, because it's where the Chevrolet Sonic subcompact is being built with Korean parts. GM began building the Sonic a few weeks ago, helped by an agreement with the UAW under which some workers are paid lower wages that are more competitive with those in GM's foreign plants. The Sonic's predecessor, the Chevrolet Aveo, was built in South Korea.
Bill Jasper, president of the National Council of Textile Organizations, sees the pact as a threat.
"This is a dangerous agreement which threatens 40,000 textile and related industry jobs," he said after the group delivered petitions last week signed by textile workers from more than 400 companies urging Congress to vote against the trade deal.
Although a federal jury last month awarded $919.9 million in damages to the DuPont Co. in a trade-secrets lawsuit filed against South Korean textile competitor Kolon Industries, Jasper said Kolon will get better access into the U.S. market for its products than U.S. textile makers will get into South Korea.
That could hurt markets for products such as DuPont's Kevlar and cost jobs in states such as South Carolina, where the company manufacturers the high-tech material often used in body armor.
"The Korea trade deal is the largest offshoring deal of its kind since NAFTA," Lori Wallach, director of Public Citizen's Global Trade Watch, writes on the group's website. "Even the official U.S. government study on the Korea pact says that it would increase our trade deficit, and it hits the 'jobs of the future' sectors hardest — solar, high-speed trains, computers."
Despite the heat he's taking from some workers, Obama's counting on the promise of more jobs to improve his standing with voters. His Michigan visit comes just weeks after Republican Gov. Rick Snyder returned from South Korea, where the state hopes to sell not only more cars and chemicals but agricultural products such as soybeans, cheese and dried cherries and blueberries.
South Korea currently charges a 42 percent tariff on dried cherries, according to Michigan agriculture director Keith Creagh. He said two-thirds of the agricultural tariffs will be gone immediately under the pact, while "the rest will go away over time."
South Korean customers bought an average of $626 million worth of goods from Michigan businesses between 2008 and 2010, an amount Snyder now expects to grow.
"As more foreign consumers see what Michigan has to offer, demand for our products will continue to climb," he said in a statement.
The pact with South Korea, which still requires approval from that nation's legislature, is the biggest U.S. free-trade agreement since the 1994 North American Free Trade Agreement with Canada and Mexico. South Korea is the world's 12th largest economy, and U.S.-South Korea trade amounted to $90.2 billion last year.