On June 30, 2007, the governments of the United States and Korea signed a free trade accord and pledged to work together to secure legislative approval for the agreement in both countries.1 Korea is the worlds thirteenth largest economy and the United States seventh largest trading partner, and if ratified by the parties, the accord would create a free trade area for the United States second in dollar value only to that created when the North American Free Trade Agreement (NAFTA) entered into force in January 1994.2
Human Rights Watch generally takes no position on free trade per se, and the US-Korea Free Trade Agreement (FTA) is no exception. Instead, we believe that trade agreements can provide important leverage and opportunities to promote workers rights, and we advocate for meaningful, enforceable labor rights protections in the fabric of accords. Therefore, we are especially concerned that an important annex to the US-Korea FTA creates the possibility that North Korean goods from specially designated outward processing zones,3 produced by workers whose rights are not protected in law or practice, could enter the United States duty free under the agreement.
Annex 22-B of the US-Korea FTA directly flouts the spirit of the recently amended workers rights provisions in the accord. These provisions were changed to reflect the strengthened labor rights protections elaborated in the new trade policy template agreed to by the US Trade Representative (USTR) and congressional leadership on May 10.4 Human Rights Watch applauds these improvements and the potential they hold for greater respect for the rights of workers producing goods for export under the accord. As drafted, however, Annex 22-B not only rejects these stronger workers rights provisions in the main accord, but adopts as an acceptable reference point for assessing labor conditions one of the worst human rights standards in the worldthe situation elsewhere in North Korea.
Annex 22-B could use free trade as an agent for positive change. North Korea is presently one of the most closed countries and has a dismal human rights record. The government often quashes basic human rights and freedoms, sometimes resorting to arbitrary detention and torture against those who resist, and fails to protect some of the most fundamental workers rights. North Korean outward processing zones provide an important opportunity for engagement with this otherwise hermetically sealed country. If the United States and Korea seized this opportunity by offering possible trade accord benefits to those zones where respect for workers fundamental rights could be credibly and continuously demonstrated, significant rights improvements could result. Such improvements would impact zone workers immediately and could possibly extend to others beyond the zones in the future, as they learned more about the new culture of rights. As drafted, however, Annex 22-B falls far short and squanders this critical moment. Accordingly, Human Rights Watch strongly urges the United States to negotiate amendments to Annex 22-B based on our recommendations below and calls on the US Congress to reject the US-Korea FTA if Annex 22-B remains in its present form.
1 South Korea, US sign free trade agreement, Associate Press Newswires, July 1, 2007. Korea in this paper refers to South Korea.
2 See, e.g., Remarks by U.S. Trade Representative Susan C. Schwab U.S.-Korea Business Council Luncheon, June 14, 2007; Top Ten Countries with which the U.S. Trades, April 2007, http://www.census.gov/foreign-trade/top/dst/current/balance.html (accessed June 28, 2007); World Bank, Total GDP 2006, July 1, 2007, http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf (accessed July 6, 2007).
3 The US-Korea FTA does not define outward processing zones. Similar terms, such as export processing zones and qualified industrial zones, however, generally refer to specially designated geographic areas of manufacturing where foreign and domestic capital are jointly invested and where normal trade barriers, such as import and export tariffs, bureaucratic requirements, and corporate taxes, may not apply, in whole or in part.
4 The new, stronger workers rights provisions include the requirement that each party adopt and maintain in its statutes and regulations, and practices thereunder the fundamental labor rights articulated in the International Labour Organization Declaration on Fundamental Principles and Rights at Work and its Follow-Up. They also establish enforcement parity for labor and commercial provisions, ensuring that the mechanisms to enforce the labor rights obligations are no longer different from and inferior to those available to enforce commercial duties. See, e.g., Human Rights Watch, The 2007 US Trade Policy Template: Opportunities and Risks for Workers Rights, June 2007.