A news service for the people of Michigan from the Mackinac Center for Public Policy

Michigan Congressman Dave Camp, R-Midland

Despite Michigan’s economic struggles the past decade, trade with South Korea has been a booming bright spot. Last year, Michigan businesses racked up $750.5 million in sales to South Korea – more than all but ten other states – and up from just $466.5 million in 2006. And the trade is a two-way affair: Michigan purchased $873 million from South Korea last year – good for 13th spot amongst the 50 states.

But the mutually beneficial exchange of goods and services isn’t stopping a new organization called the American Jobs Alliance from targeting Congressman Dave Camp, a Republican from Midland, hoping to sway him against supporting a new free trade deal with South Korea.

The American Jobs Alliance started running TV and radio ads this week. They assert that American jobs will be lost overseas with the agreement, and list Camp’s Washington, D.C. phone number.

Curtis Ellis, executive director of American Jobs Alliance, said the legislation is not good for America.

Ellis gave an example of one of the problems with the proposed free trade legislation. He said it allows vehicles exported from Korea to be only 35 percent made in that country. The other 65 percent can be made in other countries, such as China, which has fewer regulations to deal with than U.S. counterparts.

“U.S. private enterprise would be put in direct competition with state-owned and state-supported enterprises of communist China,” Ellis said. “Chinese goods shipped into the U.S. via Korea would be underselling American goods.”

Ellis said the U.S. International Trade Commission has stated that the free trade legislation could increase the trade deficit by $14 billion.

Ellis said that more Korean imports will mean fewer jobs.

James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, sees it another way.

“What the numbers have shown is that Korea has actually been a boon to Michigan jobs,” Hohman said. “The export numbers keep going up. Michigan is selling more stuff to the world and in particular, South Korea. This is a decade where everything in the state is down. When you look at our exports, they’ve been nothing but positive.”

Megan Piwowar, spokeswoman for Camp, called the ads “misleading” in an e-mail.

Piwowar said U.S. Democrat Senators Carl Levin and Debbie Stabenow, as well as the United Auto Workers, all support the free trade agreement.

Terry Kalley, chair of the East Michigan District Export Council, said his organization supports the free-trade legislation with South Korea.

“We also have a large number of jobs created by insourcing in Michigan,” Kalley wrote in an e-mail. “This occurs when foreign firms set up shop in the U.S. Wages paid to U.S. employees by their foreign owned employers tend to be higher than those of domestically owned corporations. If we engage in campaigns against free trade, these jobs will not come to Michigan or the U.S.”

Kalley said other European countries have already struck free-trade deals with South Korea and that this puts the U.S. at a disadvantage.

“Unless we pass the Korea FTA [Free Trade Agreement], we will be at a competitive disadvantage and this will cost us Michigan jobs,” Kalley wrote. “China and India are also in discussions with Korea regarding future free trade agreements. I believe that the Canadians are too. While the U.S. has failed to pass any free trade agreements in recent years, the rest of the world is moving ahead on multiple fronts without us. I believe that of the 300-plus free trade agreements signed globally, only 11 involve the U.S. This puts U.S. corporations at a serious competitive disadvantage, crimping the ability of U.S. companies to export and thereby reducing job creation in the U.S.”

Daniel Griswold, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute, released a study last month that found exports rose faster than imports as a result of free trade agreements made with 14 counties in the past 10 years.

“These agreements tend to deliver a bigger kick to U.S. exports than they do imports,” Griswold said. “These agreements give us the level playing fields the politicians always say they want. … There is no evidence that these trade agreements open the United States to a flood of imports.”

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See also:

China and Saudi Arabia – Two of Michigan’s Best Customers

Michigan's Mixed Messages on Trade With China

Should China Stop Buying From Michigan?

Michigan Exports to China Grow

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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