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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'The Chinese Invasion'

 Almost every American-themed trinket sold in the Smithsonian Institute is made in China.
 San Francisco is importing its new bay bridge from China.
 New York City awarded Chinese state-subsidized firms contracts to renovate the city’s subway system, refurbish the Alexander Hamilton Bridge over the Harlem River, and build a new Metro-North train platform near Yankee Stadium.

David Sirota, in an op-ed published in Truthout September 2, cited that spate of “mind-blowing” recent news headlines as evidence of “the Chinese invasion.” To that list, he added a reminder that the Martin Luther King monument in Washington was designed by a Chinese sculptor and assembled by low-wage Chinese workers.

Imagine the contradiction: a memorial for a civil rights leader who deplored “starvation wages” and died supporting a sanitation union’s strike is built by non-union serfs from China! The Chinese invasion, Sirota wrote, is caused by an America “no longer willing or able to invest in its own future.”

He attributed this shocking situation largely to our “golden age of big-money politics,” in which multinational corporations are “buying off our lawmakers.” But you can’t buy what’s already been sold.

Our China policy reflects the way most of our leaders really think, based on what they learned in the best universities about the sanctity of free markets. President Obama’s embrace of free trade and free investment agreements is consistent with what he imbibed at Harvard and Chicago.

That line of thinking has penetrated even some union leaders. At the June International Labor Conference in Geneva, a representative of the All-China Federation of Federation of Trade Unions (ACFTU), a component of China’s state/Party power structure, was elected to the governing body of the ILO, thanks to a decision of a divided Workers’ Group.

The International Union of Food and Hotel Workers (IUF) statement on that development was headed: “ACFTU representing workers’ interests….—that cannot be serious!” Read more!

China’s Labor Organization is ‘evolving,’ says Han Dongfang

Han Dongfang, director of the China Labor Bulletin in Hong Kong, used to think that the official labor organization in China, the All-China Federation of Trade Unions (ACFTU), was so much a part of the Communist Party apparatus that it could never become a union. Now he’s changed his mind.

He expressed his new view publicly in a June 26 commentary published in a leading UK newspaper, The Guardian, and in his own Bulletin.

“Workers are angry,” Han writes, pointing to the wave of strikes last year and a recent riot in Guangdong province. Such activism has forced the ACFTU to review its own role and begin to “look for ways to become an organization that really does represent worker interests.”

Han cites some signs that the ACFTU is already moving in that direction. In March, for example, the union at an auto plant in southern China negotiated a 30%-plus pay increase; a year earlier workers striking for higher pay were beaten up.

But the same old ACFTU lives on, subject as always to the Communist Party, Han acknowledges. But “in today’s market economy [the Party] has to be flexible….If the ACFTU can show it can better serve the Party’s interests (ensuring economic growth and social stability) by standing up for the rights and interests of workers, the Party will certainly take note.”

Han’s commentary is, to a large extent, devoted to arguing that Western trade unions take note. He urges them to intensify contacts with the ACFTU. “Their wealth of experience in genuine collective bargaining can help the ACFTU better serve its members and eventually become a real trade union.”

Although he is exiled in Hong Kong, Han’s phone access to people throughout China keeps him well informed on the political mood in various circles there. Still, his changed perspective on the ACFTU and its evolution may be more a reflection of his hopes than of the grim political realities in China. Read more!

Silencing VOA: why should U.S. aid China's censors?

Ann Noonan, president of the Visual Artists Guild’s New York chapter, gave a speech at the New York City June 4th Tiananmen Square Commemoration held at the UN's Dag Hammarskjold Park. Here is an edited version of her remarks.


Young people throughout the world, like the young people who risked their lives 22 years ago in Tiananmen Square, are risking their lives today for basic human rights, freedom, and the right to participate in governing themselves. They look to the United States for inspiration. Their stories deserved to be shared.

Voice of America (VOA) operates under a Congressional mandate to provide news broadcasts that promote freedom and democracy from the United States to the world. Yet in its budget request for the next fiscal year, the Broadcasting Board of Governors, which oversees VOA, proposes to end its radio and television broadcasts to China. This is not part of a budget cut, but rather a reallocation away from Cantonese and Mandarin language services in a budget that is actually higher than last year’s.

Today as we commemorate the 22nd Anniversary of the Tiananmen Square Massacre, a day in history when the world watched students in China who sought freedom be cut down, killed, jailed and exiled, I’d like to ask each of you to contact Members of Congress about plans that will censor Voice of America’s Chinese services as of October 1st.

This campaign against VOA is insidious. It comes during China’s suppression of stories on dissident artist Ai Weiwei and Nobel Peace Prize Laureate Liu Xiaobo. It comes during a media crackdown in China against any stories about the blind lawyer Chen Guangcheng and other prisoners of conscience. It comes during a time when China’s media has blocked news about uprisings in Egypt and Libya.

Why should a nation as large and vast as China, which already has to endure an oppressive Internet censorship, be made to suffer from U.S. bureaucratic changes that will hide the struggles of the young people in China who seek religious freedom and democracy?

Our Members of Congress need to reject the Broadcasting Board of Governors’ proposal to eliminate VOA’s Chinese language services. We must maintain Voice of America’s broadcasts and continue to transmit our ideals of freedom.

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China moves ahead a bit, Wisconsin back a lot

As Wisconsin is stripping public employees of their collective bargaining rights, months of collective bargaining at a Honda parts plant in Guangdong between management and the local unit of the All-China Federation of Trade Unions won a substantial pay increase for workers on March 1.

According to “China Labor Bulletin,“ published in Hong Kong, the vice chairman of the Guangdong provincial labor federation became personally involved in the plant’s labor relations after a strike broke out there in May last year.

Although the union pressed hard for the worker demands, it left the workers on the sidelines, with 40 of them observing but not participating in the negotiations.

Han Dongfang, CLB director, commented: “Hopefully this will be the first step toward proper collective bargaining and that during the next round of bargaining, democratically-elected worker representatives will be allowed to conduct rather than just observe the negotiations.” Read more!

U.S. advised to reject 'free trade.' but not the policy

Ban the label “free trade” from public discourse – that’s the advice that Pollster Bill McInturff gave Wall Street Journal’s CEO council November 16.

Recent polls, including one conducted jointly by the Journal and NBC News in late September, show that people oppose free trade deals by a margin of two to one, according to McInturff, because of a “growing sense that other countries are taking advantage of us” in free trade deals.

He did not explain why changing the label would change the mercantilism of countries like China. But a language change in U.S. legislation -- from Most Favored Nations (MFN) to Permanent Normal Trade Relations (PNTR) -- did help pave the way for China to join the World Trade Organization (WTO) ten years ago.

Still, renaming “free trade” makes sense. It is easier to do if the policy behind a new label makes sense, and if it also makes sense to U.S. trading partners.

My own formulation of such a policy is this: that it is work and worker friendly. Present trade policy is investor and investment friendly, and unfriendly to work and workers. Just look at the results: our extreme troubled global economy.

America’s bipartisan OK to China’s entry into the WTO “looks especially imprudent” now, writes Richard A. McCormack, editor of “Manufacturing & Technology News.” The results have not turned out to be what was promised by President Clinton, the country’s most ardent booster of opening trade with the People’s Republic.

In the June 25 issue of his publication, McCormack quotes Clinton ar length. At a March 29, 2000, press conference, for example, he said: “This is a hundred-to-nothing deal for America when it comes to the economic consequences,” among other things by increasing U.S. jobs and reducing our trade deficit.

See http://www.manufacturingnews.com/news/10/0615/WTO.html for a sampling of promises not kept.

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Apple, iPad, China, and Me

I was just about to buy Apple’s latest electronic wonder, the iPad. It tempted me most of all because I could use it to replace some newspapers to which I subscribe. They are becoming fatter and fatter and thus heavier and heavier to carry from the curb every day and then back for the weekly pickup.

But I hesitated. Should I also order any accessory beyond the thin case to protect the $499 i-Pad? What else?

Meantime, I read the latest news about Foxconn, the multinational that manufactures gadgets for Apple and other multinationals that outsource their production to China. I wrote a blog item about the news, titled “Silicon sweatshops in China exposed by academics in China.” (See my blog of Tuesday, October 12.)

I tussled with myself.

Deal or no deal? No deal. And no great sacrifice either. I can get electronic versions of those newspapers through other, cleaner sources. I’ll have to write a letter to Apple and another to President Obama. My little protest won’t trouble Apple.

Since free trade in its present form limits our choices, I have compromised my principles many times before, and may do so again. But not this time.

With the mid-term elections looming, I’ve gotten appeals signed by the President telling me, “Robert, I need you.” I emailed back; “Mr. President, we need you.”
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Silicon sweatshops in China exposed by academics in China

The serious labor abuses that this spring led to 11 worker suicides at two Foxconn plants in Shenzhen, China, are continuing at other Foxconn electronic factories in China, according to a study by academics and students at universities in China.

Foxconn, based in Taiwan, is the world’s largest manufacturer of electronics. Its nearly 1,000,000 workers in China alone produce best-selling gadgets for the world’s top multinationals, including Apple, Sony, HP, and Nokia.

The 90-page report was first released October 11 to China’s media and a new commercial Website based in Boston, GlobalPost, http://www.global.post.com. Its correspondent, Kathleen E. McLaughlin, has been following the Foxconn story as part of an on-going Globalpost investigation of the complex supply chains that produce many of our most precious, high-tech gadgets.

The report makes a litany of charges, including treating people as interns and students and hiring them through third-part employment agencies, thus avoiding insurance and other benefits required under Chinese law. In several of the 12 Foxconn facilities visited in a two-month-long study, interns were found to constitute the majority of workers, and expected to work unlimited overtime, contrary to law.

“Under the labor and dormitory conditions, there is great physical, spiritual, and special repression,” the report charged. “A worker can easily be forced to the edge of collapse. Many workers use words like ‘cage’ and ‘prison’ to describe Foxconn.”

In a statement, “Foxconn Technology Group strongly and categorically rejects…alleging worker abuse, illegal practices and unsafe working conditions at our operations in China.” The company insisted that it follows all Chinese laws, including the one on hiring interns through vocational schools. It said that interns numbered 7.8 percent of its Chinese work force.

A question left unanswered: how was it possible for a group to conduct and publicize this study in Communist China?

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People now more ‘soured’ than ever on trade and off-shoring

Almost all managers and professionals believe that outsourcing of production and manufacturing work to foreign countries is a reason the U.S. economy is struggling and few are being hired. That’s a surprising finding of the latest Wall Street Journal/NBC news poll.

The exact percentage of managers and professionals who hold that view is 95%. The lowest figure is 75% for retired people.

Another surprising finding published in the October 4 Journal: 90% of Republicans and 80% of Democrats take the negative position on outsourcing and its stifling effect on the U.S. economy.

The Journal’s page one story, headlined “Americans Sour on Trade,” also dealt with another question: “Do you think free-trade agreements have helped or hurt the U.S.?”

Hurt the U.S., according to more than half (53%) of those surveyed, up from 46% three years ago and 32% in 1999, according to the Journal.

In analyzing the total results of the survey, the Journal added:

“Even Americans most likely to be winners from trade – upper income, well-educated professionals, whose jobs are less likely to go overseas and whose industries are often buoyed by demand from international markets – are increasingly skeptical.”

What if Congress were to pass legislation in response to the U.S. multi-billion dollar trade deficit with China now that public opinion is increasingly “sour”?

In the October 4 issue the Journal did not comment on that possibility, which it would normally denounce as triggering a “trade war.” But in the September 27 Washington Post column, economics writer Robert J. Samuelson deals with a possible trade war were the U.S. to adopt a policy of “Standing up to China,” as his article is titled. His answer, as expressed in its subtitle: “A trade war may be the lesser of two evils.”

The basic problem with China, Samuelson points out, is that it has never genuinely accepted the rules governing the world trading system, Its major victim is the United States, at a crippling cost in American jobs and to U.S.-based companies.

China benefits from a trading system subordinate to its needs, which Samuelson says includes ample export markets to support the jobs necessary to keep the Communist party in power.

“The collision,” he writes, “is between two concepts of the world order…The United States faces a dreadful choice: resist China’s ambitions and risk a trade war in which everyone loses; or do nothing and let China remake the trading system. The first would be dangerous; the second, potentially disastrous.”
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Sssshhh! China is a Communist Country

The greatest innovation of China’s Communist Party is building a hybrid market economy, a pragmatic and profitable blend of capitalism and socialism that keeps the Party’s own dominant role “off the front stage of public life in China and out of sight of the rest of the world.” In his fascinating new book, “The Party: The Secret World of China’s Communist Rulers.” Richard McGregor describes how the Party achieved this remarkable success in organized duplicity.

As a journalist in the People’s Republic for more than a decade, he observes: “Foreigners in China can be forgiven for thinking they are not in a Communist state.” Yet a Communist state it is indeed.

“Like communism in its heyday elsewhere,” he writes, “the Party in China has eradicated or emasculated political rivals; eliminated the autonomy of the courts and press; restricted religion and civil society; denigrated rival versions of nationhood; centralized political power; established extensive networks of security police; and dispatched dissidents to labor camps.”

Nowadays, the Party has deliberately relaxed its hold on the daily lives of ordinary people, the better to keep “a lock hold on the state and three pillars of its survival strategy: control of personnel, propaganda, and the People’s Liberation Army.” Vladimir Lenin, who devised the prototype, would recognize it immediately in the People’s Republic, McGregor shows, because the necessary Leninist institutional and behavior patterns have endured, “generally masked or dressed up in other guises.”

Foreigners have helped. Before, during, and after his historic trip to China in 1972, Richard Nixon made sure that “Communist” did not embarrass him with his base at home. Mao Zedong was simply the Chairman, not the Chairman of the Chinese Communist Party. The State Department’s record of the trip, including the speeches, toasts, and press conferences did not mention the word “Communist” even once.

Although most Westerners are well informed about the growth of China’s economy, they know much less about the Party’s powerful role in that economy. At all major state enterprises, for example. Party meetings are held regularly before board meetings, which leave personnel matters in the hands of the Party.

One day in November 2004 the Central Organization Department announced without warning that the top executives of three big state-owned telecom companies had been reshuffled. McGregor makes this striking comparison: “It was the equivalent of the CEO of AT&T being moved without notice to head its domestic U.S. competitor, Verizon, to run Sprint, at a time when the three companies are locked in a bruising battle on pricing and industry standards….The deliberate element of surprise…serves the Party’s purposes perfectly, by reminding them who’s boss.”

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Viewing the trade deficit with China as a form of subversion

Entitled “Chinese Water Torture: Subversion Through Development,” the Heritage Foundation in 1992 published a lecture on how open trade would open up the Peoples Republic of China and bring the downfall of its Communist regime.

Because the Heritage paper was so certain about how “subversive” trade can be, I saved it. I found it only the other day.

The author, Andrew B. Brick, then Heritage’s Senior Policy Analyst for Chinese studies, first delivered the lecture at Florida State University on January 22, 1992, He described how his strategy would work – using outside influences such as trade to “open up a Communist society” would create “political grievances that undermine the extant regime.”

Eighteen-plus years seems like enough time to assess the consequence of Brick’s formula, especially because the United States followed it in a bipartisan way supported by people who had never read his lecture.

The biggest clue for an assessment is found in the U.S. Commerce Department data on U.S. merchandise trade. All last year the United States

-- Imported $296,373,900,000,000 in goods from China
-- Exported $ 69,496,700,000,000 in goods to China, a deficit of $226,877,300,000,000, compared to $18,309,000,000,000 the year when Brick was delivering his lecture.

The U.S. trade deficit since 2001, when China joined the World Trade Organization, has caused direct pain especially to American workers. Between 2001 and 2008, according to the Economic Policy Institute, the deficit with China caused a loss of 2,400,000 U.S. jobs.

Meanwhile, U.S. officials are putting pressure (i.e., getting down on their knees) for China to stop manipulating its currency in a way that bolsters China’s trade advantage and puts a dent in the U.S. GNP. Moreover, Washington has repeatedly declined to name China a currency manipulator out of fear that China would take retaliatory action.

So who is applying Chinese water torture against whom? Who is subverting whom?

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Blaming us, the victims, for our crippling trade deficit

“Economic growth slowed by trade gap” was a page one headline in the August 27 Washington Post. The article so irked me that I sounded off in a letter to the editor the same day. Here’s what I wrote.

Yes, our nation’s huge trade deficits are continuing to take their toll. I’m delighted that, at long last, the Washington Post is awakened to a grim reality of economic life.

But you repeat an old mistake. Although you put the blame on several factors, the only one you mention is “overconsumption.” You think, for example, that we, the consumers, are the villains for our trade deficit with China. Really.

Have you ever tried to buy anything made in the U.S.A.? If so, you see how we have been deprived of choice – by a trading system credited, wrongly, for increasing consumer choice.

The continuing total merchandise trade deficit – nearly $50,000,000,000 for June alone -- is basically a mechanism to redistribute the wealth and income of the American middle class to further enrich the upper 10 percent of Americans and Asians. Your story failed to mention that the deficit with China was $26,200,000,000 for June alone.

What is really an overlooked “factor” in this tragedy? Take a look at corporations based in the U.S., American and foreign, and examine the volume of their intra-firm trade – that is, trade between two arms of the same company, also called related-party trade. As the Census Bureau reported on May 12, last year related-party trade accounted for $740,500,000,000 in U.S. goods imports – nearly 48 percent.

* * *
As I expected, the free-trade-obsessed Post did not print my letter.

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Soaring job losses, trade deficit: is it time to increase tariffs on China’s imports?

The U.S.-China economic relationship is so greatly unbalanced in China’s favor that the United States needs to initiate a system of tariffs against China’s export machine. So says Steven Pearlstein, business columnist of the Washington Posr.

“Getting this economic relationship back into balance,” Pearlstein writes in his June 30 column, “is the single biggest challenge to the global economy, not just because of its direct effects on China and the United States, but the indirect effects it has on the rest of the world.“

China received a free pass into the World Trade Organization without having in place the fundamentals of a market system, Pearlstein points out. “Its business sector continues to de dominated by state-owned companies financed by state-owned banks within the context of what remains largely a state-planned economy.”

The result, as Pearlstein describes it, is a business sector difficult if not impossible for foreigners to penetrate, and “those outsiders who manage to break through invariably find that they have few protections from a system that is larded with corruption and largely unconstrained by the rule of law.”

Administration after administration in the United States has refused to challenge China’s mercantilism, in the hope that as the relationship deepened China would “make the inevitable transition to democratic capitalism.” But China’s view of business remains thoroughly mercantilist, and “to try to convince [it] otherwise is folly.”

Pearlstein contends it is urgent that the United States take the lead toward a solution by establishing a tariff regime that will increase the cost of imports not just from China, but also from ”other counties that keep their currencies artificially low, restrict the flow of capital or maintain significant barriers to imports of goods and services.”

How would such system work? Would it comply with WTO rules? Pearlstein declined to get into such details. “That’s why God created trade lawyers.”

Nor does he counter the arguments made against increasing tariffs. That would take a book. As it happens, the U.S. Business & Industry Council has just published a volume that buttresses Pearlstein’s position: “Free Trade Doesn’t Work: Why America Needs a Tariff.” Its author, Ian Fletcher, makes a strong case for “a flat tax on all imported good and services.”

Controversies over tariffs go back to the beginning of the nation. In a classic volume, “Opening America’s Market: U.S. Foreign Trade Policy since 1776,” Alfred. E Eckes Jr. describes how, at crucial times, “U.S. officials unilaterally opened the American market without gaining commensurate advantages in foreign markets for the products of American workers and American factories.”

Hence a merchandise trade deficit that this year in a single month, April, totaled $52,500,000,000, reaching $19,300,000,000 for China alone. According to a report earlier this year by the Economic Policy Institute, the growing overall trade deficit with China eliminated or displaced an estimated 2,400,000 U.S. jobs between 2001 and 2008.

A new EPI report illustrates how China’s export-driven policies work. Its paper and paper products industry is now the largest in the world, thanks to WTO-illegal government subsidies of more than $32,100,000,000 since 2002. Paper imports to the United States are now rising faster than those from any other country. According to industry sources, an estimated 400,000 jobs are at risk, even though the U.S. industry is highly competitive.


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China's press is open to labor problems, especially those of foreign firms

Why is China’s Party/government currently allowing so much press coverage of all the labor troubles of foreign business'?

That question nagged at me often in the past few days as I followed the spate of suicides at Foxcomm, mass producer of iPads and other electronic gadgets for export. (See previous article.) Finally, I emailed my query to a friend of mine, Anita Chan, author, editor, and professor at the China Research Center in Sydney.

My email reached Dr. Chan in Guangzhou, China, where she is researching China's auto industry. Here is her reply:

About these media reports on China's labor troubles in foreign factories, I do not see this as particular new. It is just the development of a trend in news reporting that goes back to the 1990s. The press in China has always been much freer in reporting on the dark side of labor issues than the American press on its own problems. You have to recognize the fact that many newspapers today are not "the mouthpiece of the state". Many young reporters go into factories under cover to report on labor conditions.

You may not want to accept it, but the management styles of non-PRC Asian companies (like Taiwanease-owned Foxconn) can be worse than the Chinese's own management style. Indeed, there are more serious violations in such factories that supply the global production chain than exist in Chinese state enterprises or big domestic enterprises. The massive layoffs in the late 1990s were a different matter. Besides layoffs is a different issue from low wages, long work hours, and an abusive shop floor culture. As a result one should not be surprised that there are more reports on the problems of such factories' than on local factories.

Among the workers themselves, if you read the blogs, there are also very strong anti-foreign feelings with nationalistic overtones. This is unfortunate because nationalism overshadows class awareness. Chinese workers, the Chinese reporters, and the Chinese authorities share a very similar nationalistic outlook.

Also in the case of Foxconn, workers are seen as victims. Nothing wrong about exposing them being victims as long as they do not rise up in protest against the government and demand to have an independent trade union, which in reality these Foxconn workers are not asking for anyway.

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Dying young: making gadgets for Apple, Motorola, HP, Dell, Nokia

Suicide can be viewed as the tip of an iceberg, an indicator of the quality of life and of broader problems, according to the OECD Factbook. By that standard, a huge factory in southern China may be the epicenter of broader human problems yet to be exposed.

In the five months before May 25, nine workers – all between 18 and 25 – committed suicide at the Shenzen plant of a Taiwan-owned multinational, Foxconn Technology Inc., a leading supplier of electronic goods with leading brand names.

But even before this May, Foxconn was the scene of repeated tragedy. On June 18, 2007, a 19-year old Hunan worker, was found hung to death in the toilet of her dormitory room. On January 16, 2009, a 25-year old worker jumped to his death from a 14th floor window. On July 16, 2009, a 25-year-old office worker, accused of losing one of 16 prototypes of Apple’s fourth generation iPhone, jumped to death from the 12th floor of his apartment building.

That list of Foxconn’s death toll is from “Dying Young: Suicide & China’s booming economy,” published May 25 by a Hong Kong-based NGO, Students and Scholars against Corporate Misbehavior (SACOM), founded in 2005. From conversations outside Foxconn’s walls, the group found that most of the interviewed workers described the stress of work with examples like these:

-- They were not allowed to talk with others on the same production line, and so did not get to know their colleagues
-- Isolation from each other often extends even to those in the same dormitory, partly because of excessive overtime.
-- Even with overtime exceeding 100 hours a month, they could not afford to buy the products they make.

On the morning of May 25, representatives of SACOM and other NGOs staged a protest outside Foxconn’s headquarters in Hong Kong to express concerns over the suicides and to demand reforms, including payment of a living wage and permitting establishment of genuine worker organizations the factory.

Terry Guo, founder and chairman of Hon Hai, Foxconn’s parent company, rushed to Shenzen for a press conference on May 25. He urged the media not to misrepresent the situation at the factory.

“We are definitely not a sweatshop,” he insisted.

Maybe not in some legal definitions of the term. But it is a sweatshop in the sense experienced by Mr. Guo’s workers (and many millions of other working women and men around the world): a workplace that sweats the utmost out of its workers while giving them the very least in return, monetarily and otherwise. (GlobalPost has called them “silicon sweatshops.”)

SACOM’s Website documents that fact for Foxconn at http://sacom.hk/archives/640. An abbreviated version of “Dying Young” is available there, and contains the link to the full report, which runs 11 pages, including endnotes.

Foxconn is a member of the Electronic Industry Citizenship Coalition (EICC), whose members pledge to uphold high labor and social standards.

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My flawed Apple from China

I ordered an Apple iPod one day last week. It arrived in a neat package three and a half days later. It bore no mark of its geographic origin but Apple’s tracking chart told me it came from Shenzhen, China.

Shenzhen, a booming province near Hong Kong, is the home of a huge factory owned by a Taiwanese multinational, Foxconn Electronics Inc. Its workers, estimated to number 300,000, turn out products for the world’s leading phone and computer companies. Apple is among them.

About the time I was ordering the iPod, a 24-year-old worker surnamed Chu plunged to her death in a fall from a Foxconn dormitory. According to wire service reports, Chu became the seventh worker in the Foxconn Shenzhen plant to die in similar falls within a year. All apparently suicides, all driven by the extreme pressures of six- and seven-day workweeks.

As I get acquainted with my new acquisition, a refurbished Touch iPod, I marvel at its technology, but with a gnawing feeling of guilt for acquiring it.

Its cost, $149, made only a very tiny contribution to the $6,000,000,000 or so in merchandise that China is exporting to the United States every week. But how badly do I really need it? And how hard did the likes of Ms. Chu work to have a stock of refurbished iPods on hand so that I could have one in three and a half days? Read more!

‘Unseemly of me to go to China’: prominent Australian writer

In protesting against a new wave of repression in China. Frank Moorhouse (left), an acclaimed Australian journalist and writer, withdrew from an Australian government-sponsored tour of China

“Because I had been so vocal about freedom of expression in my own country, which involved no risk, and had been publicly recognized for it,” Moorhouse explained, “I felt it would be unseemly of me to go to China, to be feted and to remain silent while Chinese writers were being sent to jail.”

Moorhouse’s decision, made in January, was widely publicized in Australia. In the United States, Jeff Ballinger, noted for his “Press for Change” activism, circulated excerots frin Moorhouse’s letter by email on May 5, under the heading “all-too-rare individual – ‘unseemly of me to go to China’.”
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Emergency care needed for U.S.’ sick trade deficit with China

How much more time will pass before the Obama administration takes action on our toxic trade with the People’s Republic of China?

As a result of our burgeoning trade deficit with China since 2001, when China joined the World Trade Organization:

-- About 2,400,000 jobs have been lost or displaced in the United States.
-- The computer, electronic equipment, and parts industries led, with 627,000 jobs displaced, more than in any other sector of the economy.
-- Every Congressional district, including the District of Columbia and Puerto Rico, has been affected, with California and Texas as the biggest losers among states.

Those are among the facts documented in a new report by the Economic Policy Institute (EPI) issued March 23 in conjunction with the Alliance for American Manufacturing (AAM).

The impact of the China trade deficit – which reached a record high of $270,000,000 in 2008 – is not limited to the hemorrhaging of jobs. Workers still employed are affected too, by decreased wages. A typical full-time, median wage earner lost an estimated $1,400 in 2006.

Currency manipulation is a major cause of the huge trade surplus enjoyed by China, according to the report’s author, Robert E. Scott of EPI. This intervention “makes the yuan artificially cheap and provides an effective subsidy on Chinese exports.”

As a result, China’s goods cost up to 40 percent less, according to the AAM, which brings together a select group of America’s leading manufacturers and the United Steelworkers.

The AAM supports the newly introduced Senate legislation designed to halt the misalignment of currencies by China and other countries. The group also urges the U.S. Treasury Department to list China as a currency manipulator in its semi-annual report on currency exchange, due by April 15.

Extensive background information can be found on the AAM Website at http://manufacturethis.org/

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Economic suicide is not an option

Almost everybody who is anybody seems to be scrambling to figure out how a Nigerian terrorist came so close to blasting a hole in a transatlantic airliner approaching Detroit. The concern is legitimate. But while concentrating on one peril, we are ignoring another – that the United States is blindly on the path to a major economic disaster.

The alarming signs are there aplenty, but policymakers are either not connecting the dots or not telling the public what the signs mean. Either way, it’s way past time to spread an alarm about the danger of national econicide.

Buried in his January 1 New York Times column, Paul Krugman makes this prediction: that China’s policies probably will reduce U.S. employment by 1,400,000 jobs over the next two years. That should be startling, except that it’s nothing new. China has been stealing jobs from American workers for years without causing corrective action by American leaders, Democrat or Republican.

The supposed cure, mindlessly repeated, is to make Americans more “competitive.” But American companies are among the most efficient in the world, Richard McCormack, editor of Manufacturing and Technology News, points out, and in an article published in the January-February issue of The American Prospect adds:

“The nation’s steel industry, for instance, produces one ton of steel using two man-hours. A comparable ton of steel in China is produced with 12 man-hours, and Chinese companies produce three times the amount of carbon emissions per ton of steel. The same kinds of comparisons are true for other industries.”

“China is blatantly protectionist,” Carolyn Bartholomew, chair of the U.S.-China Economic and Security Review, writes in the same magazine. “The Beijing government manipulates its currency, showers subsidies on favored industries, provides low-interest loans from a state-owned banking system, tolerates and even encourages the theft of intellectual property, and ignores WTO rules.”

In his column, Krugman explains that China, now a major financial and trade power, “doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory.”

Among the excuses given for why we can’t retaliate against China’s predatory actions is that protectionism is always a Bad Thing, always, even in response to the persistent protectionism of others. “If that’s what you believe, you learned Econ 101 from the wrong people,” Krugman writes, and goes on to explain that the usual rules don’t apply in times of high employment that are not solved by domestic measures.

For support, Krugman turns to the master, the late Paul Samuelson, to show how mercantilism (such as practiced by China) changes the situation. Here is his quote from a classic Samuelson paper, interspersed with Krugman’s defintion:

“With employment less than full… all the debunked mercantilistic arguments”—that is, claims that nations who subsidize their exports effectively steal jobs from other countries – “turn out to be valid.”

Krugman calls Chinese mercantilism such a serious problem that “the victims have little to lose from a trade confrontation.”

For detailed insights into what the U.S. government should do (“before it’s too late”), don’t miss the special report in The American Prospect at
http://www.prospect.org/cs/special_report.

Will Congress and the administration stand up to predatory China, or are our leaders paralyzed by what they mislearned in Econ 101?

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U.S. Reviewing Urgent Question: Link investor rights with duties?

“We feel this is a critical moment to take a fresh approach to bilateral investment treaties and the investment chapters of trade agreements….We look forward to working with the administration to [establish] a whole new framework for the governance of international investment that protects the public interest in the United States and abroad.”

So says a “collective statement” by representatives of labor, environmental, and economic development groups in a report prepared at the administration’s request for its review of U.S. policy on cross-border investment.

Among the concerns raised in the statement was that current investment rules “provide sweeping protections for U.S. investment abroad, without commensurate investor obligations,” thereby facilitating and accelerating the movement of U.S. jobs, production capacity, and technology.

“Strong labor provisions and a record of effective enforcement of those provisions should be a precondition for any negotiations, [but] they are not enough,” the statement adds. “A whole new framework is needed to reverse the devastating impacts of offshoring on U.S. workers and communities.”

Any such reversal will require detailed revisions of a 2004 document called the “Model BIT,” which serves as the official guide for negotiating bilateral investment treaties and the investment chapters of regular free trade agreements.

The present model is tilted too far in favor of investor rights. Among the recommended changes to restore balance, all opposed by business groups, are these:

-- Favoring cress-border investors with no rights more extensive than those granted investors under the U.S. constitution.
-- Clarifying the meaning of “indirect expropriation” (against which the investor is protected) so as to ensure, for example, that a government will not be restrained from, and penalized for, improving health, safety, environmental, and other legitimate public welfare objectives.
-- Changing the present arbitration system of dispute settlement to one involving only governments (state-to-state), among other reasons because outside arbitrators are not qualified to determine the public interest at stake.

China's Mercantilism a Major Threat

Another important change would try to create “a level playing field” globally between private enterprises and those “state-owned” – meaning particularly those owned by the People’s Republic of China.

That change is urgent for several reasons cited in the statement. For example:

-- “China engages in trade based on mercantilist principles, and has a strategic industrial policy meant to create and expand industrial sectors with the intent of becoming dominant within China and globally. In fact, China has targeted ten sectors or ‘pillars,’ including steel, telecommunications, and aerospace. To achieve dominance, the Chinese government subsidizes home-grown industries (commonly SOEs, or state-owned enterprises), manipulates its currency for export advantage, and insulates its domestic enterprises from foreign competitors in a host of ways.”

-- “As investment flows into the United States continue to grow [by over 70 percent since 2004], it can be anticipated that the U.S. market [for foreign investment in the U.S.] will expand substantially. Consequently, BITs can no longer be viewed solely as a package of rights and obligations to protect outward investment by U.S. investors in less developed nations. BIT obligations apply with equal force to investments within the United States by foreign companies and governments, including SOEs.”

The collective statement quoted above is signed by nine persons, including Linda Andros of the United Steelworkers, Matthew Porterfield of Georgetown University’s Institute of Public Law. and Martin Wagner of Earthjustice.

Their statement is part of a long document that also reflects the views of business interests as formulated by other eight persons. That document in turn is part of a much longer report submitted to the Secretary of State on September 30.

I have highlighted, mostly be direct quotation, those parts of the analysis that most clearly state the major issues impacting workers and their organizations. However important, it is a daunting chore, except to those who want to know what’s at stake behind many thousands of sentences in legalese.

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