How U.S. China policy is tilted against American workers

What will it take for the U.S. government to reform its unbalanced China policy?

A new study by the Economic Policy Institute (EPI) lays down the hard facts on a trade relationship with China that is by far the most unbalanced in the world. For example:

 Between 2001 and 2010, the outsized trade deficit with China cost at least 2,800,000 U.S. jobs, 1,900,000 them in manufacturing.
 Included in that total for all sectors were 453,100 jobs lost or displaced from 2008 to 2010 alone.
 World trade in advanced technology products – once hailed as a source of comparative advantage for America – is now dominated by China. Hardest hit are the computer and electronic parts industry.
 China’s entry into the World Trade Organization in 2001 tilted the economic playing field further in favor of multinational companies, which “have enjoyed record profits on their foreign direct investments.”

The impact on American workers is not limited to lost opportunities to get jobs. Competition with China has also driven down wage levels of employed workers, especially in manufacturing. All workers with less than a four-year college degree are the most adversely affected.

The report, written by EPI’s Robert E. Scott, attributes the rapidly growing trade deficit largely to China’s manipulation of its currency in a way that effectively subsidizes China’s exports, “making U.S. goods less competitive in that country and in every country where U.S exports compete with Chinese exports.

In his last two paragraphs Scott evaluates the U.S.-China relationship:

“Is America’s loss China’s gain? The answer is not clearly affirmative. China has become dependent on the U.S. consumer market for employment generation, suppressed the purchasing power of its own middle class with a weak currency, and, most important, now holds over $3 trillion in hard currency reserves instead of investing them in public goods that could benefit Chinese households. Its vast purchases of foreign exchange reserves have stimulated the overheating of its domestic economy, and inflation in China has accelerated rapidly in the past year. Its repression of labor rights has suppressed wages, thereby artificially subsidizing exports.

“The U.S-China trade relationship needs a fundamental change. Addressing the exchange rate policies and labor standards issues in the Chinese economy are important first steps.”

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Principles for fair union elections

On the first day of business for 2011, the United Auto Workers [UAW] released a set of 11 principles for unionizing workers at Toyota and other foreign-owned factories in the United States.

Topmost of those principles is: “The right to organize a free trade union is a fundamental, human right recognized and respected in a democracy.”

The final principle declares that the union has a “Partnership in the mission of the employer”: “11. The UAW pledges that if the workers choose union representation, the union as an institution will be committed to the success of the employer and will encourage our members to engage in the employer’s successful achievement of its mission. The UAW and the employer will work together in fulfilling the mission of the employer. The UAW embraces a performance-based and participatory culture where the union contributes to continual improvement of processes and shared responsibility for quality, innovation, flexibility and value.”

Other principles, dealing largely with correcting problems in the present representational election procedures, are listed under these headings:

-- No coercion, intimidation or threats
-- No repercussions from management or the union
-- No wage or benefit promises from management or the union
-- Equal access to the electorate
-- Disavow any threats from community allie
-- No disparaging the other party
-- Immediate Resolution [of certain disagreements]

Secret ballot elections and collective bargaining are covered in some detail:

"9. The democratic right of workers to freely and collectively choose if they want to form their UAW local union is the workers’ First Amendment right. A secret ballot election incorporating these principles is an acceptable method of determining union representation if principles two through six have been adhered to, and if there is no history of anti-union activities. The parties may select an alternative method on a case-by-case basis that reflects the best process for demonstrating employee wishes. If the parties cannot agree on specifics of the procedure, an arbitrator may decide.


“10. If employees choose to unionize, the employer and union will engage in collective bargaining to achieve an agreement as soon as possible. The goal will be an agreement that takes into account the employer’s need to remain competitive; the dignity, respect, and value of every employee; the importance and value of full employee engagement and creative problem solving; and that provides a fair compensation system. The employer and the UAW commit to full information sharing and joint creative problem solving. The employees will vote on whether to accept the agreement. Disagreements between the union and company will be discussed in a respectful manner. If no agreement is reached within six months of recognition, the parties may mutually agree to mediation and/or interest arbitration to resolve any outstanding issues. “

The full text can be found at http://www.uaw.org/articles/uaw-principles-fair-union-elections, Read more!

Taiwan profs shame Taiwanese corporation for suicides in China

A Taiwan-owned multinational’s behavior in China has sparked unexpected controversy in Taiwan, thanks in part to the protests of 150 Taiwanese academicians.

The controversy, headline news on TV last Sunday, June 13, and front page headlines in most newspapers on Monday, pits the academicians and other critics against the mighty Foxconn Technology Inc., key assembler of Apple i-Phones, whose Shenzen plant suffered a series of worker suicides this year.

After a suicide in April. two young sociologists drafted a letter calling attention to the intense pressures faced by the Foxconn workers to work illegally excessive overtime, and asked the company to stop blaming the latest victims as copycats. Widely circulated in the academic community, the letter gradually gained the signatures of 150 professors of sociology, psychology, public health, gender studies, and law, among others.

The day after the letter was publicized at a press conference, the universities of the academic signers were flooded with phone calls and emails: the academics knew nothing about work and were overpaid fat cats that Taiwan can do without.

More important, the prime minister, Wul Den-Yih, called the academics unfair and politically motivated. Public sentiment generally had a nationalist reaction, as though any criticism of Foxconn and Terry Guo, president of its parent company, were an attack on Taiwan.

Nor did the 150 academics gain popularity with one of their key demands, as described by Hsin-Hsing Chen, associate professor of the Graduate Institute for Social Transformation Studies: that “the public pension funds divest themselves of any Foxconn stocks until the company shows substantial improvement in its compliance with China’s labor laws.”

This week, China Times, one of the biggest newspapers in Taiwan, chimed in with a different note for the media. It editorially criticized Guo’s attitude toward the 150 professors, and had the following analysis of a widely publicized pay raise that Foxconn granted at the Shenzhen plant:

“Just as Foxconn announced the enormous pay raise in his [Guo’s] Shenzhen plants, they also announced massive relocation of production out of Shenzhen into the low-wage inland provinces. They can do that because their products like iPods are less bulky and the transportation costs are low. But other foreign-owned manufacturers in the high-wage coastal areas in China with bulkier products such as food or cars cannot do that. Guo is scheming against his competitors while trying to win his PR campaign.”

Meantime, some other foreign-invested plants in China, faced with strikes or a labor shortage, were boosting wages. These management concessions may test whether money alone will satisfy the workers, or whether their discontent runs much deeper. Might the workers even be seeking some form of social transformation?

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A crime wave: stealing worker pay

Mark your calendar: Thursday, November 19. It’s the National Day of Action to Stop Wage Theft, organized by Interfaith Worker Justice and its 22 affiliates throughout the country.

“Wage theft is a crime wave that nobody talks about,” says Kim Bobo, executive director of Interfaith Worker Justice and author of “Wage Theft in America.”

The theft takes various forms – failure to pay the legal minimum wage, failure to pay overtime at time and a half, failure to pay for anything at all for overtime hours, failure to allow a meal break, and even prohibiting injured workers from filing worker compensation claims.

The victims are concentrated in apparel manufacturing, discount retailing, child care, hotel staffing, and other low-wage industries. And the thieves are not all isolated rogue employers.

When three Hyatt Hotels in the Boston area fired 98 housekeepers this August, it was discovered that the company hired to do the work, the Atlanta-based Hospitality Staffing Solutions. has a record of wage- law complaints filed in Florida, Georgia, Massachusetts, and Pennsylvania. The firm’s president, Rick Holliday, president of the firm, with employees in 450 hotels around the country, blamed “administrative mistakes.”

A comprehensive study of wage-law violations conducted early this year in three large cities – Chicago, Los Angeles, and New York – concluded: “The framework of worker protections that was established over the last 75 years is not working.” The study, “Broken Laws, Unprotected Workers,” found that among the 4,387 workers interviewed, the amount lost because of wage law violations averaged $51 a week.

Of course, such practices plague workers outside the United States too. The latest publicized evidence of that comes from Father Christopher Hartley, who has lived and worked for 10 years among Haitian sugar cane workers in the Dominican Republic.

In a report dated August 31, Father Hartley describes how the exploitation of the plantation workers has continued despite years of documentation by the U.S. State Department, Amnesty International, and other human rights groups. “Not much has changed,” he writes, “except the manner in which the human rights violations occur.” For example, in some plantations the harvested cane now gets weighed at night without any witnesses. Weight fraud results in pay fraud.

Hartley has written to the Commission of the European Union (EU) to intervene under terms of the new Economic Partnership Agreement between the EU and the African-Caribbean-Pacific nations.

What can you do? For starters, you ought to get involved in the activities of Interfaith Worker Justice.


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USTR's initiative on worker rights

The U.S. government’s top official on trade, Ambassador Ron Kirk, has committed his White House agency to a rather ambitious goal: “a proactive enforcement strategy to save American jobs, by helping to ensure that American workers compete on a level playing field.”

Henceforth, Kirk said in a policy announced July 23, the Office of the U.S. Trade Representative (USTR) will be proactive in monitoring and enforcing the labor obligations contained in the country’s free trade agreements.

Previously, USTR’s involvement in labor violations has been largely “complaint driven.” That is, USTR usually would not get involved unless a person or a group filed a formal complaint backed with evidence persuasive enough to trigger an investigation by USTR and an inter-agency committee.

Under the new procedure, USTR, together with other agencies, principally State and Labor, will “regularly” monitor violations of worker rights and will try informally to obtain compliance. When these efforts fail, Kirk added, “USTR will not hesitate, as in other areas of trade agreement enforcement, to invoke formal dispute settlement.”

USTR and other agencies also are to undertake a positive role in promoting respect for international labor norms. Kirk mentioned China specifically as a country with which the administration “is seeking to enhance engagement” on labor issues.

Other Opportunities for Human Rights Initiatives

The USTR announcement illustrates that government officials, under their existing legal authority, and without any new legislation, have a good deal of leeway to take initiatives to enhance human rights. Opportunities abound.

Take the State Department. Among its little known responsibilities is to house the “national contact point” for the Guidelines on Multinational Corporations of the 30-nation Organization for Economic Cooperation and Development (OECD). That national contact point (NCP) handles grievances that individuals or unions have against a corporation for alleged violations of the Multinational Guidelines.

Says a report of John G. Ruggie, the UN Special Representative for Business and Human Rights: Housing the NCP within a government office that is “tasked with promoting business, trade, and investment raises questions about conflicts of interest.” In State the NCP is housed in the Office of Investment Affairs of the Economic Bureau.

In the same report, approved by the UN Council on Human Rights, Ruggie pointed out that the OECD guidelines were last updated in 2000, and suggested they could stand revision. “We’ve learned a lot about business and human rights since 2000,” he told the 2008 meeting of NCPs in Paris. State: hint, hint.

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‘Globalization and Us’ in Blueprint

“Globalization and Us,” the concluding chapter of my book, Justice at Work, is featured in the current issue of Blueprint for Social Justice, published by the Twomey Center for Peace Through Justice at Loyola University in New Orleans.

The chapter includes 15 propositions that form a proposed paradigm for dealing with globalization issues confronting us. Blueprint highlights one of the 15 in large type:

“The heart of the [globalization] reform movement should be to make the Universal Declaration of Human Rights more universal in international business, with close attention to the rights of workers, particularly women workers, who are more vulnerable to exploitation than are men.”

An article of mine, “Human Rights: Ten Objections Answered,” appeared in the December 1993 Blueprint. I wrote it to respond to major criticisms of human rights, especially worker rights. At the time I was working at the AFL-CIO’s Asian-American Free Labor Institute, which is now part of the federation’s Solidarity Center.

Loyola’s Twomey Center is named after the late Rev. Louis J. Twomey, S.J., a battle-scarred Southern champion of human rights for all.

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Stop squelching real unions, Vietnam

As part of a campaign to suppress any labor union independent of the Communist Party, the Socialist Republic of Vietnam has imprisoned at least eight trade unionists, two of them women, on “national security” charges in the past three years.

In a report released May 4, Human Rights Watch publicized the wide scope of the government crackdown, denounced it, and urged the United States to pressure Vietnam to end suppression immediately.

The government campaign of harassing, detaining, and imprisoning union activists is aimed particularly at two worker organizations: the United Worker-Farmers Organization of Vietnam and the Independent Workers Union of Vietnam, whose launching was announced in late 2006 during a brief period when authorities seemed to tolerate a budding civil society.

It was a temporary public posture prior to Vietnam’s joining the World Trade Organization and getting U.S. approval for that accession.

Of the eight trade unionists imprisoned since then, five have been released. One who is still behind bars, Le Thi Cong Nhan, in her early 30s, wrote a comprehensive essay in 2006 titled “Legislative Aspects of Industrial Actions and the Need for Independent Unions in Vietman.” For this and other human rights activities, the Hanoi People’s Court in May 2007 imposed a four-year prison sentence, later reduced to three years (plus three years of house arrest), on charges of “disseminating propaganda against the government.”

The Human Rights Watch report, “Not Yet a Workers’ Paradise: Vietnam’s Suppression of the Independent Workers’ Movement,” 32 pages long, is available on the HRW Website at
http://www.hrw.org/en/reports/2009/05/03/not-yet-workers-paradise.

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Pioneering worker rights as human rights

Yes, the Universal Declaration of Human Rights treats the basic rights of workers as human rights, but who takes that seriously? Roy J. Adams, a prominent Canadian teacher and author, does. And he did so long before even human rights organizations did.

In August Adams will pull up stakes from his home base at McMaster University in Hamilton, Ontario, and move 1,400 miles west to the University of Saskatchewan in Saskatoon. There, at the College of Law, he will hold the Ariel F. Sallows chair of human rights -- a milestone in academic history, since he is apparently the first teacher of labor law to be appointed to teach human rights law.

“One more indication that labor rights are being acknowledged as human rights,” as Adams puts it.

Another sign of that trend is his book, “Labour Left Out: Canada’s failure to protect and promote collective bargaining as a human right,” published by the Canadian Center for Policy Alternatives two years ago. A past president of the Canadian Industrial Relations Association, Adams has been a visiting professor or lecturer at universities and schools in 12 countries across the globe.

For more on Adams’ career as industrial relations teacher and human rights advocate, check his home page at http://www.business.mcmaster.ca/hrlr/profs/adamsr/.

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Rooting out worker rights abuses abroad

Is there anything that the governments of rich countries can do to integrate human rights into the overseas operations of their multinational corporations? Yes, the government of Norway says, and shows how in a recent statement on corporate social responsibility.

That responsibility does not stop at the Norwegian border, Foreign Minister Jonas Gahr Store said in releasing the policy statement, or white paper.

A key element of that policy urges all Norwegian multinationals – about 100 in number – to enter into “global framework agreements” with global unions to safeguard the rights of workers in foreign countries in conformance with core conventions of the UN International Labor Organization.

Among the Norwegian companies that have already taken that step are StatoilHydro, with an agreement covering 29,500 workers in 40 countries, and Norske Skog, a newsprint producer with 11,000 workers worldwide, both with Norwegian unions and their global union, the International Federation of Chemical, Energy, Mine, and General Workers Unions. (ICEM).

The white paper states that; in countries that do not respect the right to organize and to bargain, multinationals should seek ways to establish some sort of system that permits the voice of workers to be heard in workplaces.

In addition, the white paper provides guidance on corporate responsibility with regard to decent working conditions, the environment, and anti-corruption among other human rights issues.

The government also intends:

-- to address by legislation, through Accounting Act amendments, the duties of corporations to provide information on their actions to implement ethical guidelines, and

-- to strengthen the Norwegian government's “national contact point” for dealing with worker rights complaints alleging violations of the multinational guidelines of the Organization for Economic Cooperation and Development (OECD).

In short, supplementing its efforts to root out worker rights violations through trade negotiations and ILO programs, the Norwegian government intends to use its own powers to regulate corporate behavior beyond its national boundaries.

So far, that’s only an intention, but it’s an intention that the U.S. government would be wise to adopt as its own.
* * *

The government of Australia is considering a similar initiative. See To Embed Huuman Rights in Multinationals.



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A Transnational Cultural Lag

The number of people working for foreign subsidiaries of multinational corporations headquartered in the United States and other industrialized countries has nearly quadrupled in the past quarter century. The increase—from 21,524,000 to 81,615,000 workers—includes only people on payrolls, not the uncounted hundreds of millions more employed by the contractors and subcontractors of the multinationals.

Those figures are reported in the latest annual report of the United Nations Conference on Trade and Development (UNCTAD), titled “World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge.” As is common outside the United States, UNCTAD prefers the term transnational corporations to multinational corporations.

It’s not just a semantic quibble. Transnational expresses the realities more fully.

Take General Electric, the world’s top non-financial corporation (ranked by assets). It has 765 foreign subsidiaries or affiliates that have 164,000 employees and a total of $442,278,000,000 in assets. Thus, GE is more than a company with separate branches located in a multitude of countries (160 in all). GE is a cross-border production, marketing, and distribution system whose global presence and activities are better captured by being called a transnational. (For most of the data, click here, and scroll to table 3.)

Ditto for the estimated 79,000 transnationals in the world and the 790,000 foreign affiliates they control. Each contributes to an assortment of global production, marketing, and distribution chains, in which the foreign affiliates hold at least $68,716,000,000 in assets—33 times more than they held 25 years ago.

Those foreign affiliates also exported $5,714,000,000 in goods last year—eight times more than in 1982. The UNCTAD report does not include how much of this was intra-firm trade, or cross-border trade between two units of the same transnational corporation. Government agencies in the past have estimated that intra-firm trade accounts for 40 percent of international trade. (It follows that cross-border trade within GE and other U.S. based transnationals accounts for a large chunk of the U.S. trade deficit—a fact ignored in official U.S. news releases on trade imbalances.)

UNCTAD reports are rich in significant data that are seldom mined by the media. Very little of the above information and analysis is contained even in UNCTAD’s own news releases on the new 411-page report, which was issued on September 29.

The trends outlined in the report are examples of the magnitude of global changes in the past quarter century, changes that, together, make the 21st century global economy different in kind, and not just in degree, from the 20th century international economy.

Have the rules of this new world been adapted to that great change? That’s a fundamental question. It is not addressed in this report.

Human Rights for Workers has addressed the question before, and will again. Briefly: Yes, global rules have been improved to protect the rights of businesses and their organizations. No, they still do not cover the rights of working men and women and their organizations. The international labor market, for most of the world’s working men and women, is still a lawless jungle.

A University of Chicago sociologist, the late William Ogburn, had a term for this sort of situation: cultural lag, meaning the tendency whereby a society’s values and habits fail to keep pace with technological and other forms of significant material change. He held that cultural lag often caused social “disequilibrium” until society adjusted to the changes of modernization. That failure to adapt explains why globalization has fueled so much distrust and so many protests.

Congress will soon hold hearings on the financial debacle and the $700,000,000,000 in public money allotted to rescue Wall Street. Those hearings—and the needed curative legislation—must not ignore the transnational cultural lag and the disequilibrium it causes.


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