Tax-Free Budget Stimulus on the Back Burner

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In the recent discussions about budget proposals and spending cuts, one piece of legislation that would boost our economy—the South Korea–United States Free Trade Agreement (KORUS FTA)—has been absent.

During KORUS FTA negotiations, much attention was paid to the reactions of US automakers. American auto giants like Ford and General Motors originally opposed the deal, claiming South Korea made too few concessions in opening their market to foreign automakers. But after new concessions were made in late 2010, US automakers and the United Auto Workers union have stated publicly their hope that Congress will pass the current version of the FTA.

But lost amid this focus on American auto companies is the boon for thousands of American workers who benefit from the jobs that South Korean automakers like Hyundai and Kia create. Hyundai (which owns Kia) has experienced explosive growth over the past few years. In 2010, their US sales increased 24%, and Hyundai Motor America Chief John Krafcik predicts they will capture over 5% of the US market share this year.

While the knee-jerk reaction of American unions may be to oppose this sort of growth, a closer examination shows that Hyundai’s rise is a much needed shot in the arm for American manufacturing workers.

In Philadelphia’s Packer Avenue Marine Terminal, American workers unload thousands of Hyundai and Kia vehicles off Korean-made cargo ships, using Korean-made cranes. In addition, Hyundai Rotor Company, a subsidiary of the automaker, is shipping rail car chassis to the port for assembly and sale to the local transit authority. These imports translate to hundreds of jobs for union longshoremen, mechanics, and assembly workers, according to the head of port operations.

Additionally, Hyundai has a manufacturing facility in Montgomery, Alabama, engineering facilities in Detroit, and research, design, and testing grounds in California. Together, they employ over 5,000 workers. Combined with employees at Hyundai dealerships and various vendors, Hyundai employs an additional 26,000 Americans. When Kia’s recently completed Georgia factory hits full production, it will employ 2,500 people, and create an additional 7,500 jobs in the region.

These kinds of complementary benefits are why manufacturers on both sides of the Pacific are excited about passing the FTA. And unlike concerns that arose after the signing of the North American Free Trade Act or China’s ascension to the World Trade Organization, the KORUS FTA is unlikely to significantly increase outsourcing.

In the current discussions on boosting economic growth and decreasing unemployment, lawmakers need to think seriously about how the KORUS FTA can supplement their efforts. The KORUS FTA isn’t a panacea for our fiscal woes, but it’s ready-to-go legislation that will signal Congress is serious about bipartisan efforts to help the American economy.

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design & development: Fathom Creative, Inc. (fathomcreative.com), Matthew Stevenson, Efrat Levush, Brent Maxwell