Economic Impacts of the KORUS-FTA Progressive Caucus Briefing Robert E. Scott, Ph.D. Economic Policy Institute February 23, 2011

Table 1 Projected Impacts of Trade Agreements (billions of dollars) ExportsImports Trade BalanceGDPJobs U.S. International Trade Commission (USITC) KORUS-max* Bilateral negligible Global US Colombia minimal/none**** total-USITC** minimal Chamber study*** ,352 *The ITC KORUS study project a range of trade impacts: Exports $ billion, and Imports $ billion. **The ITC predicts that the US-Panama TPA would have a "small" impact on the U.S. economy; it did not estimate the impacts of this agreement on U.S. global trade flows (USITC 2007b). Total-USITC reflects sum of global trade impacts of the KORUS-max scenario and the US-Columbia trade estimates (no global impacts estimated in that study). ***Combined impacts of falure to enact US Korea, Colombia and Panama trade agreements, including the global impact of the KORUS agreement (only--bilateral U.S. Korea trade is not included) and the bilateral impact of the U.S.-ColumbiaTrade Promotion Agreement. ****U.S. output (quantity and revenue) of sugar were projected to decline by 0.3%, and employment of skilled and unskilled labor in this sector is also projected to decline by the 0.3%. Sources: USITC (2006, and 2007b) and Baughman and Francois (2009), Scott, Robert E Trade policy and job loss; Washington, D.C.: Economic Policy Institute. Working paper #289, Febraruary ; Table updated to reflect global resultshttp:// in USITC March 2010, corrected printing. U.S. International Trade Commission "U.S. Korea Free Trade Agreement: Potential Economy- wide and Selected Sectoral Effects." Washington, D.C.: U.S. International Trade Commission. Publication Corrected printing. March

USITC projections versus actual

FTA and WTO impacts

Likely impacts of trade agreements with Colombia and Korea

Trade agreements with Colombia and Korea: Jobs impact

Lessons from NAFTA 1.U.S. Mexico Trade was balanced in 1993, prior to the agreement 2.The U.S. has experience rapidly growing trade deficits and job displacement since NAFTA was implemented 3.Job losses are concentrated in motor vehicles and electronics 4.Oil is a big part of trade with Mexico, but has only minor impacts on employment.

NAFTA takes effect 1/1/94

Source: EPI analysis of Census Bureau, ITC, and BLS data Preliminary analysis: NOT FOR QUOTATION OR DISTRIBUTION U.S. Mexico trade and job displacement, U.S. trade with Mexico ($billions, nominal) Changes in: ($billions) Percent change U.S. domestic exports*$68.4$100.4$119.4$131.6$32.0$18.9$12.292% U.S. imports for consumption % U.S. trade balance % Average annual change in the trade balance % U.S. trade-related jobs supported and displaced (thousands of jobs) Changes in: (thousands of jobs) Percent change U.S. domestic exports % U.S. imports for consumption- jobs displaced ,347.21, % U.S. trade deficit-net jobs lost % Average annual job displacement %

Preliminary analysis: NOT FOR QUOTATION OR DISTRIBUTION Source: EPI analysis of Census Bureau, ITC, and BLS data Change in net jobs created or displaced by industry, 2010 Industry total*Share of total Agriculture, forestry, fisheries8, % Mining-21,0003.1% Oil and gas-17,6002.6% Minerals and ores-3,3000.5% Utilities-2,0000.3% Construction-11,1001.6% Manufacturing-415, % Non-durable goods-22,2003.3% Food and kindred products5, % Beverage and tobacco products-3,6000.5% Textiles and fabrics6, % Textile mill products-3,4000.5% Apparel and accessories-22,1003.2% Leather and allied products-5,2000.8% Industrial supplies3, % Wood products-1,5000.2% Paper4, % Printed matter and related products-2,5000.4% Petroleum and coal products1, % Chemicals13, % Plastics and rubber products-2,3000.3% Nonmetallic mineral products-10,0001.5%

Change in net jobs created or displaced by industry, 2010 (Continued) Industry total* Share of total Durable goods-396, % Primary metal-22,9003.4% Fabricated metal products-39,2005.7% Not specified metal industries00.0% Machinery, except electrical-7,2001.1% Computer and electronic parts-150, % Computer and peripheral equipment-27,6004.0% Communications, audio and video equipment-82, % Navigational, measuring, electromedical, and control instruments-14,9002.2% Semiconductor and other electronic components & magnetic and optical media production-24,9003.6% Electrical equipment, appliances, and component-38,6005.7% Transportation equipment-105, % Motor vehicles and parts-108, % Aerospace product and parts2, % Railroad, ship, and other transportation equipment % Furniture and fixtures-9,6001.4% Miscellaneous manufactured commodities-22,3003.3% Preliminary analysis: NOT FOR QUOTATION OR DISTRIBUTION Source: EPI analysis of Census Bureau, ITC, and BLS data

Jobs lost through imports, jobs gained through exports, and net job change, due to trade with Mexico, 2010 Top 12 hardest hit states Import jobsExport jobsNet job change Total employment Share of total state employment in Rank Michigan-80,50036,800-43,6004,552, %1 Indiana-49,50025,000-24,4003,000, %2 Kentucky-25,20013,000-12,1001,863, %3 Ohio-75,10040,200-34,9005,412, %4 Tennessee-35,10018,600-16,4002,778, %5 New Hampshire-8,2004,100-4,000694, %6 Illinois-73,00038,300-34,7006,087, %7 Alabama-24,50013,300-11,1001,995, %8 Massachusetts-33,70016,600-17,1003,241, %9 Texas-113,10057,500-55,60010,602, %10 California-174,20087,700-86,50016,565, %11 Wisconsin-37,20022,700-14,5002,849, %12 Preliminary analysis: NOT FOR QUOTATION OR DISTRIBUTION Source: EPI analysis of Census Bureau, ITC, and BLS data

Links Snapshot: Free Trade Agreement with Korea will Cost U.S. Jobs. July 1, 2010.Free Trade Agreement with Korea will Cost U.S. Jobs Working paper: Trade Policy and Job Loss. February 25, 2010.Trade Policy and Job Loss Research Assistance by Anna Turner.