Proposed U.S.-South Korea Free Trade Agreement and Potential Employment Effects: Analysis of Studies

The Obama Administration finalized negotiations with South Korea in early December 2010 on a bilateral free trade agreement. As a result, the administration is expected to submit implementing legislation to the 112th Congress on the proposed agreement, but to date has not indicated a timeline for doing so. The 112th Congress may also be asked to consider implementing legislation for proposed free trade agreements with Columbia and Panama. Congress not only plays a direct role in approving legislation that implements the provisions of free trade agreements, but also authorizes and appropriates funding for programs that are meant to provide special assistance to firms and workers that are dislocated as a result of lower barriers to trade. Since the proposed agreement covers a wide range of trade and investment issues, it could have substantial economic implications for both the United States and South Korea. South Korea is the seventh-largest trading partner of the United States, and the United States is South Koreas third-largest trading partner. Similar to other trade agreements, the proposed U.S.-South Korea Free Trade Agreement KORUS-FTA has attracted both supporters and detractors, primarily over the impact the agreement could have on employment in the economy. Supporters argue that the agreement could create as many as 280,000 jobs in the economy. Others, however, argue that the agreement could lead to an overall loss of up to 159,000 jobs in various sectors of the economy. Still others contend that the United States stands to lose exports, employment, and extended economic opportunities if it fails to sign a trade agreement, while the European Union and other nations are lining up to finalize similar agreements with South Korea.