WASHINGTON — As Asia director of Purafil, Andrew Weiller has seen the air filtration products manufacturer lose out in South Korea in recent years because tariffs there put the company at a disadvantage against Asian firms.
But the Doraville-based company stands to reap a multimillion-dollar windfall from the ratification of a new free trade agreement with South Korea, one of three long-delayed pacts Congress is scheduled to take up in the coming weeks.
Weiller said, “The projects that are the real gold mine are going to be in the next five years so the timing of this free trade agreement for us will allow us to be much more competitive” as Purafil submits bids to companies such as Daewoo or Samsung as they plan to build oil refineries in the Middle East and North Africa.
From Purafil to UPS to poultry farmers, many Georgia businesses stand to gain from U.S. ratification of the deals with South Korea, Colombia and Panama to phase out tariffs on both sides for most products over the next few years. That would make U.S. goods cheaper in those countries and allow people here to get better deals on items such as cars and apparel from South Korea.
“I’m very excited about the possibilities,” said Kathe Falls, the director of international trade for the Georgia Department of Economic Development.
But labor leaders argue that Georgia workers stand to lose, claiming the deals will only accelerate the outsourcing of U.S. manufacturing jobs if companies choose countries with lower labor costs now that the products won’t face U.S. tariffs.
“We need to create jobs in this country, not in other countries,” said Charlie Flemming, the president of the Atlanta-North Georgia Labor Council.
All three agreements were negotiated by the George W. Bush administration, though the Obama administration reworked the South Korea pact last year. The agreements were not submitted to Congress until last week as the White House tried to leverage a deal coveted by Democrats to assist displaced workers. The House is scheduled to vote on the agreements this week, with Senate consideration to follow and passage expected in both chambers.
“I would expect all three of them to get significant support, well more than 60 votes,” said Sen. Saxby Chambliss, R-Ga., who is highly supportive of the pacts.
According to data from the U.S. Department of Commerce, Georgia was the 12th-ranked state in merchandise exports last year. Research conducted by the Georgia Department of Economic Development shows that the state’s export growth has outpaced national performance in the wake of past trade deals.
Industries such as medical technology could see growth in all three nations, but South Korea is the gem of the group. The nation is among the state’s top 10 export markets and is one of the world’s biggest economies. Two industries in particular are salivating over more access to South Korean markets — agriculture and automobiles.
The deal will phase out South Korean tariffs that range as high as 27 percent for poultry and 40 percent for beef.
“Opening up these markets for our farmers — certainly beef and poultry — is very, very important, so we’re hopeful that this logjam will break there and we can move forward,” said Georgia Agriculture Commissioner Gary Black, who added that the state also would benefit from increased out-of-state traffic at the Port of Savannah.
South Korea-based Kia opened a $1 billion plant in West Point in 2009 and has been lobbying in favor of the trade agreements. A plant expansion could have a multiplier effect at the company’s Georgia-based suppliers, as well. The agreement will make it cheaper for Kia to manufacture cars in the U.S. by getting rid of tariffs on parts imported from South Korea.
The United Auto Workers union split from most of organized labor to back the South Korea deal, saying a new market for U.S. car manufacturers such as Ford and General Motors would lead to job gains.
Another major cheerleader for the deals is UPS, the global delivery service that stands to gain any time international trade increases. After President Barack Obama formally submitted the deals to Congress on Monday, the company issued a statement in support, and it already has made inroads into Colombia and South Korea in anticipation of the deals’ ratification.
At an investors’ conference in Louisville, Ky., last month, CEO Scott Davis, a member of Obama’s Export Council, stressed, “Trade is the world’s most powerful engine of growth and prosperity, and it offers the best path out of the current economic doldrums.”
The deals have been sold as a cost-free stimulant to a stumbling economy, and big business has made sunny job growth forecasts central to its lobbying push. But labor leaders say they have heard this kind of talk before when the North American Free Trade Agreement was passed in 1993.
Richard Ray, the president of the Georgia AFL-CIO, said NAFTA was at least partially responsible for the loss of textile and other manufacturing plants in Georgia as companies had an easier time moving to lower-cost Mexico. Now, he said, he’s hearing “the exact same argument” for these three deals, and he doesn’t buy it.
Union leaders also are particularly troubled by dealing with Colombia, where violence against labor leaders is common. That alone makes Rep. David Scott, an Atlanta Democrat, unlikely to support the Colombia deal. He shares labor’s concerns about South Korea, though he said he is fine with Panama.
Estimates on how the deals will affect U.S. employment vary widely — from a gain of 280,000 jobs to a decrease of 159,000 — and a report this year by the nonpartisan Congressional Research Service warned that such predictions “often tend to be highly subjective and can be misleading, because they represent a partial accounting of the total economic effects of new FTAs.”
For workers whose jobs move overseas, the Senate passed a bill last month to extend “trade adjustment assistance.” The program funds unemployment benefits, health care and retraining, though at a scaled-back level from the 2009 stimulus bill.
The Republican-controlled House is scheduled to take up the trade adjustment assistance bill along with the trade agreements, in an apparent deal with the White House, which held off on submitting the agreements to Congress until the fate of trade adjustment assistance was secure.
Republicans have opposed the administration on nearly everything, leaving the trade deals as one of the only major policy initiatives the divided Congress is likely to accomplish.
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Top exports via Georgia in 2010 to the three nations with pending free trade agreements
These lists reflect items that were shipped from Georgia. The products may have been manufactured or assembled in Georgia, but it is also possible that they were manufactured elsewhere but distributed and shipped from Georgia.
Country: South Korea
(Rank) Export | Amount
1. Machinery | $148.1 million
2. Aircraft/spacecraft | $84.8 million
3. Wood pulp | $51.1 million
4. Plastic | $41 million
5. Medical instruments | $32.9 million
Country: Colombia
(Rank) Export | Amount
1. Machinery | $60.4 million
2. Electrical machinery | $28.1 million
3. Wood pulp | $26.3 million
4. Medical instruments | $25.3 million
5. Plastic | $14.1 million
Country: Panama
(Rank) Export | Amount
1. Aircraft/spacecraft | $36 million
2. Electrical machinery | $29.4 million
3. Paper/paperboard | $17.4 million
4. Aluminum | $13.6 million
5. Tanning/dye/paint/putty | $12.6 million
Note: Machinery includes items ranging from nuclear reactors to aircraft engines to air conditioning machines to lawn mowers. Electrical machinery includes items ranging from certain electric motors to portable electric lamps to microwave ovens to televisions and radios.
Source: Georgia Department of Economic Development
