The Proposed U.S.-South Korea Free Trade Agreement (KORUS ...

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South Korean labor market, such as mandatory severance pay, significantly raise the
cost of investing and doing business in Korea. In contrast, U.S. union representatives
argue that recent changes to make South Korean labor markets more flexible are
reducing the rights of South Korean workers. 139 Korea’s unions have earned a
reputation for activism; the number of working days lost to strikes is regularly among
the highest in the OECD. Hyundai Motors, for instance, has experienced a strike
every year since 1994. Moreover, strikes in South Korea are notable in that they are
sometimes accompanied by violence and the occupation of workplaces and public
spaces (such as highways), to which the government often responds with police
action. In its comments on the KORUS FTA, the Labor Advisory Committee for
Trade Negotiations and Trade Policy (LAC), criticized South Korea for the
imprisonment of around 200 unionists who were “exercising basic labor rights” and
for mobilizing riot police against union activity. 140
Korea’s labor pool is divided into two segments: 1) South Korean “salarymen”
(salaried workers, overwhelmingly men, in large corporations) who comprise less
than one-third of the workforce. Over half of this segment of the workforce is
represented by powerful unions. 2) The remainder of the workforce, comprised of
employees in small-scale firms plus the country’s temporary and day laborers. Few
of these workers are unionized. The proportion of temporary workers has grown
markedly, to nearly one-third of the workforce, one of the highest rates in the
industrialized world. 141 These workers tend to receive low wages and receive limited
coverage by the social safety net, points highlighted by the LAC. Labor markets are
notoriously rigid.
Government Procurement
A great deal of business is conducted by governments through the purchase of
goods and services for their own use. Most governments, including the United States
have laws (The Buy American Act) which require such goods and services to be of
domestic origin. However, the General Agreement on Tariffs and Trade (GATT) and
now the WTO have some provisions, the WTO Government Procurement Agreement
(GPA), under which the countries agree to open up some of their government
procurement business, to foreign companies as a way to promote trade. This
agreement is plurilateral, that is it only applies to those WTO members that have
signed it. The United States and South Korea are among the 39 signatories to the
GPA. The GPA established rules for governments to publish information about
contract tenders, including technical specification, about qualification for suppliers,
the awarding of contracts, with a specific emphasis on nondiscrimination and
transparency in the conduct of government procurement.
The KORUS FTA reaffirms the GPA as a baseline for government procurement
but would expand the criteria to include more contracts. The GPA applies to
139 Report of the Labor Advisory Committee for Trade Negotiations and Trade Policy (LAC)
on the KORUS FTA, April 27, 2007, p. 9.
140 Ibid.
141 OECD, Economic Survey — Korea 2007, p. 128-40.