Unions' KORUS Rift Reveals True Anti-competitive Intent

The US-Korea FTA has spawned a rather public disagreement among US labor unions - one that, upon closer review, proves that organized labor's altruistic complaints about US trade agreements hide their real motivation: good ol' fashioned protectionism.  AEI's Claude Barfield provides a nice summary of the union spat here:

When the president announced that the United States and South Korea had finally reached a deal on KORUS free trade agreement, the administration touted the fact that it broke new ground by gaining the support of both industry and labor: i.e., the Ford Motor Company, which had led the opposition in the truncated U.S. “native” auto sector, and the UAW, the auto workers union. Well, not so fast: while the food and commercial workers union did endorse the pact, the major industrial unions, led by the AFL-CIO federation, have come out in strong opposition. Virtually identical statements from the AFL-CIO, the steel workers, the machinists, and the communications workers not only decline to endorse (which might have signaled passive opposition), but also vow to “actively oppose” the agreement—meaning that their full lobbying resources will be mobilized against the pact in Congress.

Barfield goes on to predict that the UAW will join its union brethren in finding a "bogus" reason to oppose other pending US FTA with Colombia and Panama, as well as the currently-being-negotiated Trans-Pacific Partnership agreement, and thus that pre-2012 US trade policy will still be a tough slog.  I totally agree on both counts, but I still think the UAW's big change of heart on KORUS and its public rift with the rest of the AFL-CIO are valuable because they provide us with a crystal clear example of just how bogus the unions' usual FTA complaints really are.

Consider this statement from the UAW earlier this year on the KORUS FTA, which notes the union's serious concerns about the agreement:

The UAW believes the auto provisions in the KORUS FTA must be renegotiated. The U.S. should insist that Korea must first open its market to U.S.-built automotive products before we provide any further access to our market. The UAW also continues to have serious concerns regarding the effectiveness of the worker rights provisions of the proposed KORUS FTA in protecting basic labor rights in Korea. In the two-plus years since the signing of the agreement, the Korean government has not sought dialogue with our government or anyone in the industry on how to address these concerns and inadequacies regarding the labor rights provisions of the KORUS FTA.

Now, the UAW's statement of support for the agreement from last week:

President Obama, Vice President Biden and their administration gave the labor movement, and particularly the UAW, an opportunity to be part of the discussions about this agreement. Working in collaboration with the Obama Administration, Congressman Levin, Congressman Dave Camp, and top management from the auto companies, especially Alan Mulally of Ford, we believe an agreement was achieved that will protect current American auto jobs, that will grow more American auto jobs, that includes labor and environmental commitments, and that has important enforcement mechanisms.

Under the 2007 proposed agreement, almost 90 percent of Korea’s auto exports to the United States would have received immediate duty-free access on the day the FTA entered into force. Under the current proposed agreement, [2.5%] duty elimination is now delayed until Year Five of the agreement, giving U.S. automakers the time to reverse the damage caused by decades of South Korean protectionism. Also with this agreement, cuts in the U.S. 25 percent truck tariff are substantially delayed until Year Eight of the agreement and then are phased in though Year Ten of the agreement. Under the 2007 proposed agreement, truck tariffs were cut immediately from the day the FTA entered into force.

Despite its earlier grave concerns, the UAW can't point to a single concrete change to the agreement's labor (or environmental) provisions - that's because it provides for no such changes.  But, as noted at length in its press release, the union did achieve significant delays in the reduction of US car and truck tariffs (read: protectionism), so - hey, look at that! - it now supports the FTA.  And it's not like those labor and other issues have disappeared.  Just ask the AFL-CIO and its fellow labor unions, who still oppose the deal, not because of its lack of anti-competitive protectionism, but instead about vague labor, environmental, and social justice concerns:

However, the labor movement’s concerns about the Korea trade deal go beyond the auto assembly sector to a more fundamental question about what a fairer and more balanced trade policy should look like. In particular, the labor movement has consistently and for many years argued that the investment and government procurement provisions in the Korea deal will encourage offshoring. And despite the progress made in improving the labor chapter in 2007, it is clear that in both the United States and South Korea, workers continue to face repeated challenges to their exercise of fundamental human rights on the job – especially freedom of association and the right to organize and bargain collectively. This deal does nothing to improve or strengthen the provisions negotiated by former President George W. Bush in these crucial areas. It is essential that both countries bring their labor laws and practice fully into compliance with international standards prior to implementation of the agreement. And for American workers to benefit from trade deals, we must strengthen U.S. labor law to harmonize social activity.

So to summarize: UAW complains about labor rights, then gets a deal which provides absolutely no new labor changes and no new competition from Korean cars and trucks for 4 and 7 years, respectively, and it suddenly switches from KORUS opposition to support.  The other unions get no such anti-competitive deal, and so they still oppose based on the same bogus UAW labor concerns (and a few others!).

The lesson, I think, is pretty simple.  If you protect a labor union from import competition but provide absolutely no changes to previous FTAs' labor and environmental chapters, the union will still support your FTA.  If you don't, it won't.  Plain and simple.  Of course, if you submit to the unions' main (usually unspoken) demand, the agreement won't be a "free trade" deal at all.

Details, shme-tails!

So there you go: make a free trade agreement un-free, and you'll get the unions to go along.  Negotiate an agreement that achieves its core trade liberalization objectives, and, just as Barfield suspects, the "bogus" excuses will continue.

Lesson learned.  I hope.