HOORAY! A Little Step Forward

At long last, cross-border investing is in the spotlight for something other than money-making. It is starting to get attention for its effect on people other than the investors themselves.

Here’s what’s happening. Over the years international agreements – numbering at least 2,500 - to protect the rights of international investors have proliferated to the point that they cover most of the globe. Now, there is growing challenge to the ubiquity of those agreements and increasing pressure to have the protected investment rights balanced with corresponding responsibilities. Or (from another perspective) to balance investor rights with corresponding rights of host governments and their citizens.

Last November, the 19 governments that are member states of the Common Market for Eastern and Southern Africa, Comesa for short, took a pioneering step by adopting an area agreement that will, when put in effect, cover private investment flows into and within Comesa. Its terms will include minimum requirements on labor standards and respect for human rights.

Another sign of the way the breeze is blowing: a two-day meeting in Singapore last October brought together more than 30 government officials who negotiate international investment agreements for over 25 countries. Briefings by experts served to strengthen the negotiating capacity of developing countries in light of three circumstances:

-- The increasing complexity of the model agreements proposed by the United States, Canada, and other major countries.
-- The stark disadvantage faced by developing countries when dealing with wealthier nations, which throw greater resources into the negotiating process.
-- The uncertainties of investor-state arbitration in settling disputes.

The meeting enabled the developing country negotiators to network and to share ideas on how to achieve an appropriate balance between the need to attract more foreign direct investment and the need to serve the country’s own public policy directives.

Developing countries don’t have the help that rich countries get from their Paris-based Organization for Economic Cooperation and Development (OECD). But the Singapore meeting was only the beginning, as indicated by its formal name: the First Annual Forum of Developing Country Negotiators.

The forum’s co-sponsor, the International Institute for Sustainable Development, has just made another contribution toward highlighting the significance of “International Investment Agreements, Business and Human Rights: Key Issues and Opportunities.” That’s the title of a 43-page report that the Institute’s Howard Mann prepared at the request of John Ruggie, the UN Special Representative on Business and Human Rights.

The report addresses this basic question: Does the present international investment agreement (IIA) regime play a positive role in embedding human rights principles into the values and institutional practices of global capital markets?

Answer: No, it does not, and it often plays a negative role by preventing a government from requiring a foreign investor to respect the country’s own labor and environment regulations. ”IIAs limit the right of states to regulate, and these limits may extend to the state duty to protect and promote human rights,” the report states.

Investment agreements go into great detail on the rights of foreign investors and how those rights can be enforced. But “there is no enforcement mechanism against [foreign] corporations, as there are no obligations falling upon them.”

The Institute’s report received no attention from the media. Hopefully, its message will live on, however, since Ruggie will draw on it for a report to the Human Rights Council later this year.

Why do I keep harping on this subject? Because:

1. International investments are a major force in shaping globalization.
2. Investment policy, as written and enforced, now takes priority over the labor policies of governments in the developing world.
3. This absence of pro-worker policies facilitates the job outflow from the United States and other industrial countries.
4. Reform of investment agreements is absolutely necessary, and future trade negotiations must insure that investment agreements balance the rights of foreign investment with corresponding responsibilities, including the responsibility to respect the human rights of workers.
5. Current demands to reform trade and investment policy fall short in that they neglect to cover the practices discussed in the IISD report.

Print Page Read more!

Students Still Teaching Elders about Ethics

“Stop using sweatshop labor!” That’s the rallying cry of a group of students at the University of Houston in their campaign to persuade the school’s administrators to stop doing business with sweatshops that produce sweaters, T-shirts, caps, and other athletic items bearing the University’s logo.

On Monday (3/31) dozens of students will participate in a dramatic protest starting at noon in front of the campus library. It will feature a mock funeral ceremony , complete with a coffin, symbolizing the death of worker rights at UH. A “funeral”procession will follow, wending its way through the campus and ending at the office of President Renu Khator, who just took office two months ago.

One of her first acts was to appoint a committee to study the sweatshop issues that an activist group, the UH Students against Sweatshops, has been raising since June last year. Tim O’Brien, a graduate student in history and head of SAS at UH, sees the committee as “nothing more than a publicity stunt,” and said so in an interview with the Houston Chronicle.

His frustration is that Khator, like her predecessors, is not calling on SAS to help in solving the problem. Her new committee, headed by an economics prof, has six other members, including one student representative, who is not O’Brien or a SAS member.

SAS has the support of the UH student government association, which in January passed a resolution in favor of SAS’ twin goals: that UH join the Worker Rights’ Consortium, an independent monitoring organization, and endorse its Designated Suppliers Program, a plan for a new source system of sweatshop-free factories.

In a March 3 letter to O’Brien, President Rhator, after scolding SAS for an “antagonistic manner,” defended the university’s position as follows:

-- Although not a member of the Worker Rights Consortium, “our current practices embody the same spirit and commitment to worker rights.”
-- Adidas, one of the three largest vendors of apparel at UH, is a member of the Fair Labor Organization (FLA), “an organization created to promote a uniform international labor standard and to improve working conditions worldwide.”
-- The other two UH vendors, Collegiate Licensing Corporation and Barnes & Noble, “have adopted a code of conduct consistent with that of the FLA.”

Pointedly, Rhator mentioned that, as a newcomer, she depended on a cabinet briefing for her knowledge of the UH’s “spirit and commitment to worker rights.” The cabinet’s perspective is predictable. She would be wise to supplement it with a briefing from SAS. So far she has declined to meet with SAS.

“It is absolutely clear,” she writes, “that the University of Houston is committed to fair labor practices.” SAS is not impressed by her assurances about UH’s commitment, however. I can understand why.

How does a university carry out that commitment when the university routinely buys goods from countries where sweatshops thrive? The question is important to anyone proud of the UH logo displayed on those goods. To answer it truthfully, madam, some of your students are very much better informed than your cabinet.

The University of Houston is not the first university to face this crisis. It is not a crisis of “disruptive behavior,” as the university states, but a crisis of conscience. In the late 1990s some of the country’s leading universities – Duke, Georgetown, and the University of Wisconsin – underwent similar crises, and came to understand that their students knew how to make a genuine commitment to worker rights. I urge you and your committee to look into the experience of these “peer institutions” too.

Because of the victories achieved by those campaigns to end university complicity with sweatshops, I wrote in February 1999: “Thank the Lord for the college students, many of them just freshmen and sophomores, who are teaching their elders powerful lessons in global ethics.”

In the past decade, many universities have recognized the wisdom of listening to their students, even to students who have engaged in sit-ins and other disruptive behavior. Later, those universities wondered why they didn’t start listening much earlier. When will the elders of the University of Houston start listening?



Print Page Read more!

The Dishonesty of Economists about Trade

Trade policy is likely to grow into a larger issue in the course of the Presidential campaign. A good thing, I used to think. But is it?

A lot depends on how economists succeed in framing the issues as advisors to the candidates and as commentators in the media. Sadly, most economists cannot be trusted to portray the issues honestly.

That’s my view. Dean Baker, an economist who is co-director at the Center for Economic and Policy Research in Washington, D.C., has a similar view. He holds that “economists have been extraordinarily dishonest in their interventions in public debates over trade policy.”

He develops his case at length in an article, “Trade and Inequality: The role of economists,” in the March 15 issue of the Real World Economics Review. Leading his indictment is this charge: economists “have acted to conceal the fact that a substantial group of workers, quite likely the majority of the workforce, can expect to be losers from the recent path of trade liberalization.”

Baker’s analysis of economic theory applied to current trade patterns leads to this conclusion: “The winners are likely to be owners of capital and highly educated workers, with the rest of the populations ending up as losers.” This outcome isn’t accidental, he explains; “it is literally the mechanism through which the economy experiences gains from trade.”

Baker blasts the major media outlets for the “enormous respect” they show for the trade policy ideas of mainstream economists and for the ridicule poured on those who disagree.

As it happens, the March 16 New York Times has an example of that. It features a discourse “Beyond the Noise on Free Trade” by N. Gregory Mankiw, professor of economics at Harvard and onetime advisor to President Bush and to Mitt Romney in his Presidential campaign.

In his first paragraph, Mankiw writes: “No issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood.”

Unfortunately in his view, the Muggles and Joe Sixpack don’t benefit from economic courses such as his at Harvard, and doesn’t understand that “trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.” As a result, the general public is “less likely to take its cue from Adam Smith than from Lou Dobbs.”


For Mankiw, Senators Clinton and Obama have erred in making Nafta the “latest whipping boy of the ant-globalization crowd.” What consoles him is that their “populist rhetoric” will disappear after the election, and like President Bill Clinton, will rely on the advice of economic moderates like Robert E. Rubin, former Treasury Secretary.

Harvard economist Dani Rodrik on March 16 posted a short item on his weblog titled “Why doesn’t the public buy the economists’ advocacy of free trade?” The posting in full:

“Greg Mankiw bemoans the huge gap between the economics profession and the common people on free trade. Unlike him, I tend to think the fault with economists, who have traditionally proselytized free trade rather than communicated what economics really teaches on trade. Dean Baker offers a sensible guide.”

Rodrik’s words, really teaches, link to an earlier (September 22, 2007) posting praising an analytical paper by Robert Driskill, professor of economics at Vanderbilt, who Rodrik says “knows the theory of comparative advantage as well as anyone else.” Here is a quote from that Driskill paper:

“Unfortunately, most economic writing on the welfare implications of trade is not a balanced weighing of the evidence, or a critical evaluation of the pros and cons of arguments, but rather more akin to a zealous prosecutor’s advocacy of a point of view. As such, this writing is designed to persuade rather than to give the reader the information needed to form an educated point of view.”

To a Driskill passage on how poorly supported positions on trade can confuse people “into false positions about what economics really says about the effects of international trade,” Rodrik added the comment: “A pervasive such false belief, for example, is that trade necessarily benefits more people than it hurts.”

That such a false belief is regularly promulgated by the New York Times is bad enough. Far more troubling is that many economists are teaching this falsehood (and others) about trade in the nation’s colleges and universities.



Print Page Read more!

How Not to Win Bipartisan Support

President Bush objects strenuously to Senator Hillary Clinton’s support for a Congressional “time out” on deciding any more trade agreements this year. He certainly has a right to speak up in support of his trade program. But he has no right to distort Senator Clinton’s position.

He did so on March 12 in a long speech to the U.S. Hispanic Chamber of Commerce. Without mentioning her name, he claimed that she supports “a timeout from trade,…a timeout from growth, a timeout from jobs, and a timeout from good results.”

Mrs. Clinton’s position is a bit less sweeping. For one thing, she knows that, even without new trade deals, trade will continue to flow. Last October she included her call for a time-out in a speech in Iowa, and she later explained her reasons in a USA Today interview. She said, in part:

“I think that on balance, trade was a net positive for America and American workers during the 20th century….We have to consider carefully, What’s the role of trade going forward? How do we best position the United States to take advantage of the global economy?’ And I don’t think we’ve had serious conversation about that.”

Bush no doubt thinks all that is already settled. But that’s not enough reason for his fear-mongering about “isolationist policies and protectionist policies” that would “stop trade, erect barriers, try to wall ourselves off from the world” – positions that nobody in Congress holds. It also wasn’t the best way to win friends and influence people on the Hill.

Yet Bush used that high-visibility event, attended by six Cabinet members, to threaten to force a vote on a trade agreement with Colombia after it returns from its Easter recess. He was technically able to do that under the power he still holds under the President’s Trade Promotion Act, which expired last July when Congress refused to extend it. Wielding that club of executive power now, however, no longer strikes cringing obeisance.


The most forceful response that I’ve seen came from Change to Win, the partnership of seven unions that broke off from the AFL-CIO in 2005. Recalling that Colombia remains the most dangerous country in the world for unionists, a Change to Win press release urged Congress to reject the deal with Colombia because (as its new ad says)“Americans don’t trade with death squads.”

James P. Hoffa, head of the Teamsters and a Change to Win leader, added: “Workers need trade policies that create jobs. They don’t need more deals that destroy jobs. Voters across the country are making the point increasingly clear every time they go to the polls. America is hemorrhaging jobs because of the so-called free trade agreements. That must be stopped.”

Back to President Bush and his support for choice in the supermarket.

I couldn’t help getting a kick about one additional reason he gave for wanting Congress to hurry up and approve more free trade agreements. “We want our consumers to have choices when they walk into markets,” he said. “The more choices available, the better it is for a consumer.” But this traditional argument is somewhat outmoded.

Have you walked into a store recently to buy a product made in the United States? If so, you know how restricted your choices are. Globalization, whatever its wonders, has in too many cases narrowed our choices to goods made in China. This is especially troubling to anyone (like me) anxious to avoid buying anything from a country that is the sweatshop for the world, the home of forced labor camps, the jailer of dissidents, and the persecutors of religion.

In their 1980 book, “Free to Choose,” Milton and Rose Friedman portrayed the act of making a purchase in a store to casting a ballot in a voting booth – an essential part of economic freedom. President Bush did not use that comparison in his speech, but the Friedman point does make some sense as one way to measure the impact of trade.

Last year the United States imported a record volume of goods from China: $321,507,800,000 worth in all, according to the Commerce Department. Personally, I see it as 321,507,800,000 votes for China’s human rights policy. Yes, all too often, I voted the same way. I really tried not to, even by doing without, but usually I had no choice.


Print Page Read more!

Yahoo Sued for Aiding China’s Repression

Yahoo Inc. is in trouble again for its forced cooperation with authorities in Communist China. On February 29 three Chinese citizens filed a lawsuit in federal court in Northern California charging they had to endure torture, imprisonment, and other suffering after Yahoo handed over emails and other Internet information to Chinese authorities.

One of the plaintiffs, Li Zhi, 37, a civil servant, is still in prison, with more than three years left on an eight-year sentence for “inciting subversion of the state authority.” He claims that he was tortured and imprisoned after Yahoo gave the government Internet information about his work for a banned political group, the China Democratic Party.

An earlier lawsuit, also filed against Yahoo for allegedly aiding China’s Internet police, ended in November when Yahoo settled with the plaintiffs out of court for an undisclosed amount of money.

Both that lawsuit and the current one were filed under the Alien Tort Claims Act, which enables foreign citizens to sue for gross violations of human rights committed abroad by U.S. entities.

In a section on “Internet Giants Work With the Dictatorships” in its 2007 Annual Report, Reporters Without Border says this about “the predators of free expression”:

“China keeps a tight grip on what is written and downloaded by users, and spends an enormous amount on Internet surveillance equipment and hires armies of informants and cyber-police. It also has the political weight to force the companies in the sector – such as Yahoo, Google, Microsoft, and Cisco Systems – to do what it wants them to, and all have agreed to censor their search-engines to filter out websites overcritical of the authorities.

“This makes the regime’s job very much easier because these firms are the main entry-points to the Internet. If a website is not listed by these search engines, material posted on them has about much chance of being found as a message in a bottle thrown into the sea.”

Google is trying to get out of its awkward contradictory position as an information service complicit in suppressing information. It is urging the U.S. government to “make censorship a central element of our bilateral and multilateral [trade] agendas” and to “treat censorship as a barrier to trade,” as its vice president for global communications, Elliott Schrage, said in his testimony to the House committee on international relations two years ago.

In June last year, after AP ran a story on Google’s quiet lobbying at various cabinet agencies, Andrew McLaughlin, Google’s director of public policy and government affairs, posted a long statement on “Censorship as trade barrier” on its public policy blog.

There, he wrote, for example: “Just as the U.S. government has, in decades past, utilized its trade negotiation powers to advance the interests of other U.S. industries, we would like to see the federal government take to heart the interest of the information industries and treat the elimination of unwarranted censorship as a central object of our bilateral and multilateral trade agencies in the years to come.”

In the first part of that paragraph, McLaughlin was referring to the mercantillistic advantage won by some industries (pharmaceuticals come to my mind), but in truth Google has a stronger case for its position than old-fashioned protectionism, and McLaughlin had that in mind in another part of his statement:

“To industries that depend upon free flows of information to deliver their services across borders, censorship is a fundamental barrier to trade. For Google, it is fair to say that censorship constitutes the single greatest trade barrier we currently face.”

Google has support for its position from a scholar on telecommunications and trade law, Timothy Wu, associate professor of law at Columbia University. In a paper on “The World Trade Law of Internet Filtering,” he emphasized the cross-border nature of internet services: “Much internet can be reached from anywhere, making nearly everyone on the internet a potential importer or exporter of services (and sometimes goods). Hence, almost by accident the WTO has put itself in an oversight position for most of the national laws and practices that regulate the internet.”

Moreover: "As a condition to accession to the WTO, [China] agreed to what has been called a 'radical' reform of its service practices. Yet at the same time China is among the world's more active filterers of Internet services....These two positions are in tension, and while WTO law leaves much room for exceptions, some of China's restrictions may not be easily justifiable under the GATS [General Agreement on Trade in Services]."

Yet those restrictions keep expanding without WTO intervention. Dr. Wu points out: "Internet services have leapt beyond what was contemplated in GATS or subsequent telecommunications agreements," he noted in his paper. "The universalization of a network that is a platform for any type of service requires new thinking about how barriers may come about, and how sectoral commitments are interpreted."

New thinking. That is desperately needed about many of the international trade and investment policies patched together since the end of World War II. Those policies should be updated to the globalized 21st century. Blocking modernization are the vested interests of industries protecting the privileged status they acquired under 20th century rules.


Print Page Read more!

The 'Opting Out' NAFTA Distraction

Now that the Democratic debate over NAFTA has burst into an international incident, it is instructive to read how relentlessly NBC Moderator Tim Russert pressed Hillary Clinton and Barrack Obama to take a position on “opting out” of NAFTA.

Neither Clinton nor Obama brought up the “opting out” idea. It was Russert who introduced it by quoting this statement that he said Al Gore made to Ross Perot in their 1993 debate: “If you don’t like NAFTA and what’s done, we can get out of it in six months.” Then, given that both candidates had sharply criticized NAFTA in the Ohio campaign, Russert asked: “Will the [next] U.S. President say we are out of NAFTA in six months?”

Senator Clinton quickly responded: “I have said that I will renegotiate NAFTA, so obviously, you’d have to say to Canada and Mexico that that’s what we’re going to do. But you know, in fairness – “

Russert pressed on, in different words: “You will get out? You will notify Mexico and Canada, NAFTA is gone in six months?”

Clinton: “No, I will say we will opt out of NAFTA unless we renegotiate it, and we renegotiate on terms that are favorable to all of America.” She later repeated the same point while renewing her criticism of the absence of labor and environment in NAFTA’s core agreement.

Russert wouldn’t let go. “But let me button this up. Absent the change you’re suggesting, you are willing to opt out of NAFTA in six months?”

Clinton: "I'm confident that as president, when I say we will opt out unless we renegotiate, we will renegotiate."

Then Russert turned to Obama, and after mentioning an AP story about Obama’s supposed ambivalence toward NAFTA, asked: “Simple question: Will you, as president, say to Canada and Mexico, ‘This has not worked for us; we are out?’”

Obama: “I will make sure that we renegotiate, in the same way that Senator Clinton talked about. And I think actually, Senator Clinton’s answer on this one is right. I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced. And that is not what has been happening so far.”

So Tim Russert had his point buttoned up to his satisfaction. But were Obama and Clinton really serious?

Gripped with the same question, diplomats at the Canadian consulate in Chicago thought they would get a candid answer about Obama from someone right there at the University of Chicago: Austan D. Goolsbee, professor of economics and also an advisor to the Obama campaign.

Goolsbee obligingly accepted the invitation to brief the consulate on Obama’s views. Like good diplomats, the Canadian officers took notes, wrote a report, and sent the report to Ottawa. Somehow, it leaked, and its message hit the fan: it soft-pedaled Obama’s tough talk on the campaign trail, specifically claiming that his language was “more reflective of political maneuvering than policy.”

At first, Obama denied that the meeting had taken place (Goolsbee did not report it to the campaign, in the naive belief that he was acting only in his role as a professor). But after the Canadian memo made headlines in Canada and the United States, an Obama spokesperson insisted that Obama’s public position on NAFTA is also his private position. Hillary Clinton insisted he was hypocritical and untrustworthy. And by Wednesday this week Canada’s Prime Minister, Stephen Harper himself, spoke up publicly, saying that the consulate report was “blatantly unfair” to Obama and his campaign.

That doesn’t end the debate over NAFTA, and shouldn’t. Both Clinton and Obama need intensive briefings to be able to explain their fair trade positions more convincingly.

Especially unimpressive, in my view, was how they both buckled under Tim Russert’s pressure, and embraced the tactic of Presidential wielding the “opting out” threat to quickstart negotiations. That’s a dumb way for a government to deal with neighboring governments, so dumb that it doesn’t happen in real life, much as it may be favored by pundits and reporters keen about “gotcha” questions based on fanciful scenarios.

Final point. Obviously, Clinton and Obama are far from isolationists, opposed to trade. They know that the economic and other interests of the three nations are such that, with or without a renegotiated NAFTA, the United States, Canada, and Mexico absolutely need some kind of a formal trade agreement among them and that the dispute is only about its contents. This fact is so obvious, I guess, that nobody at the Cleveland debate thought to mention it.

Print Page Read more!

Review NAFTA? Do We Hafta?

The three NAFTA partners, the United States, Canada, and Mexico, have now lived under the North American Free Trade Agreement for 15 years. It would seem to be a good time to review our experience under it, and possibly make some changes.

What is so shocking about that? The Wall Street Journal’s editorial board makes it seem as though the North American sky is falling

What is frightening to some is that more than NAFTA is at stake. A review of NAFTA would almost certainly open up a review of the entire U.S. trade policy, and that would upset vested interests that need upsetting.

NAFTA is the U.S. government-devised model for dozens of trade and investment agreements in the past 15 years and also for agreements the Bush administration is still pursuing. That model, vigorously defended by the trade elite who wrote it, has many flaws. The most fundamental among them can be boiled down to this indictment: it creates and enforces a large set of cross-border rights and privileges for multinational corporations and investors without any corresponding duties.

You will seldom hear a criticism of NAFTA put that way. Instead, critics usually fault it for a lack of enforceable labor and environmental standards. The solution offered is to tack on those standards. But that won’t suffice, because NAFTA as a whole is unbalanced, so much so that it should be called the North American property rights and investment rights agreement.

Calling it a free trade agreement is a misnomer, because it actually restricts free trade in crucial areas. It favors intellectual property owners over intellectual property users, pharmaceutical companies over pharmaceutical users, Wall Street over Main Street, foreign investors over everyone else. Its tilt, spread ovcr most of the continent, skews income and increases the power of the superpowerful.

In a 1993 syndicated column, Henry Kissinger, a vigorous advocate of NAFTA, hailed it as “not a conventional trade agreement, but the architecture of a new international system…a first step toward the New World Order.” Though no longer expressed in such lofty terms, that vision seems to survive among NAFTA defenders who deem it sacrosanct and so beyond review.

For a dose of reality, read a book written by a noted economist who was a party to NAFTA’s adoption 15 years ago: “Fair Trade for All,” by Joseph E. Stiglitz. It makes a strong case for why all current trade and development policy, including NAFTA, urgently needs a review.


Print Page Read more!

New U.S. Export: Union-Busting

In the United States we do not bump off union leaders. No, we are somewhat more humane. We let professional teams of lawyers, management consultants, psychologists, and others subvert union leaders and their organizations through sophisticated techniques of union-busting.

Pardon me. They call it union avoidance. Either way, its practitioners collect an estimated $4,000,000,000 a year from employers to keep unions out of work places and to remove those already there, all by using activities that are legal, quasi-legal, and extra-legal, as well as illegal. They can resort to illegal practices because the penalties are so minimal.

So great is their success in the United States that the union busters are expanding their operations off shore, particularly to the United Kingdom. That troubles the British Trades Union Congress (TUC), the national labor union center that partners with the AFL-CIO. On February 12 leaders of the two national centers formalized an agreement to work together to counter this transatlantic anti-union offensive.

Brendan Barber, TUC general secretary, explains: “The underhanded tactics employed in the shadowy world of the union-busting consultant are improving increasingly attractive to a handful employers in the UK.”

“Union Avoidance Consultants: a Threat to the Rights of British Workers,” a study by John Logan, of the London School of Management, was released to coincide with the new cooperation. Logan writes that the overwhelming majority of employers in the United States hire outside consultants when they are faced with an employee move to organize.

Among their techniques, these outsiders:

• Caution workers not to trust unions: unions "get between” management and its employees.
• Concentrate on spreading fear in employee ranks, charging that unions are corrupt and interested only in dues, that jobs aren’t safe under a union, that unions can’t require the boss to give a pay increase, that benefits including vacations and insurance are in peril, and so on and on, in every possible variation.
• Take full advantage of the legalized monopoly that they and the employer have in workplace communication with employees, including compulsory meetings and one-on-one interviews designed to put full pressure on individuals.

At present, such activity in the UK is much smaller in scale and intensity than in the United States. Yet, as Logan says, the new export development should still be worrisome to “anyone who believes in the workers’ right to organize and bargain collectively.”

Let me expand on that point. Such activity should worry anyone anywhere who believes in a free society. Unions in the United States, Europe, Japan, and elsewhere have proven their value in acting as a cushion between the individual and the state. Along with other private organizations, including business firms, labor unions build and maintain a living social structure – a vigorous civil society – that creates limits on the power of government and performs many necessary economic and social functions more closely to the people than the government can.

If more Americans understood the need for a flourishing civil society, union-busters would drastically lose their effectiveness. As things are, exterminating unions is an occupation widely seen by professional peers and many others as legitimate, not one to be shunned, scorned, and shamed.

Chances are not great that the new U.S.-UK initiative will bring an end to what Business Week has called “one of the most successful anti-union wars ever.” But it must be tried, in hopes that other groups of this democratic nation, including at least a few leading employers, will join it.

* * *

But -- do workers still want unions?

If you’re wondering, read the report, “Do Workers Still Want Unions? More Than Ever,” published by the Economic Policy Institute. The author, economist Richard B. Freeman, compiles 16 pages of evidence that they do.

Read more!

Reform Global Investment Rules!

That slogan, or a zippy version of it, may well pop up in the speeches of Democratic candidates for President. Here’s why.

A big reason for the public’s suspicion of globalization is that its governing rules and procedures are mysterious to almost everyone, except for a select group of insiders. Few of those rules and procedures are more mysterious than the ones governing cross-border investments, even as international agreements protecting them have multiplied at a pace almost as rapid as foreign investments themselves.

Now some countries and international NGOs are demanding a simple reform to help demystify the process of protecting foreign investment. They want transparency in how international tribunals make decisions in disputes between foreign investors and the countries in which they invest. The issue is highly sensitive because current intergovernmental agreements on investments are generally one-sided -– they contain a series of rights for inward capital, but they lack any counter-balancing investor responsibilities.

This imbalance is a serious flaw in the 15-year-old North American Free Trade Agreement (NAFTA), and is at the root of some U.S. labor and NGO attacks on its Chapter 11, which grants U.S. and other foreign investors rights in Mexico without commensurate responsibilities. This lop-sided protection, which the U.S. has duplicated in other free trade agreements, has not surfaced as an issue in the U.S. Presidential contest, but may if Hillary Clinton and Barrack Obama are asked for details explaining why they say NAFTA needs to be reformed.

Meantime, some developing countries, joined by two international NGOs and some developing countries that have been bitten by expensive lawsuits under Chapter 11, are seeking change in one contentious area of the larger problem. They are pressing for a partial reform in rules to make transparency a requirement in all arbitrations filed by private foreign investors against states. In early February, however, this initiative was rebuffed by a UN Working Group charged with revising a key set of international arbitration rules.

If you have gotten this far, bravo. There’s more.

This is not a riveting issue. No wonder, then, that you haven’t seen or heard anything in the media about it, not even about the February 15 joint press statement released by the two international NGOs, the Center for International Environmental Law and the International Institute for Sustainable Development. But bear with me, please.

John Ruggie, UN Special Representative to the Secretary General, recently summarized what is at stake: “Adequate transparency where human rights and other state responsibilities are concerned is essential if publics are to be aware of proceedings that may affect public interest. Indeed, transparency lies at the very foundation of what the United Nations and other authoritative entities have been promulgating on the precepts of good governance.”

The joint press release, besides quoting Ruggie’s words, has a lengthy explanation of the issues involved and how a transparency reform, though delayed, might still be adopted:

Under regulations laid down in free trade and investment pacts, foreign investors have the right to bypass local courts and bring disputes with the host state to international arbitration. Even when these disputes raise crucial public interest issues -- impacts of failed water privatizations, financial crises in developing countries, and environmental and health regulations, for example -- arbitrators are able to hide their work behind a veil of secrecy. Thus, interested citizens, NGOs, and other governments are kept ignorant about decisions affecting them.

A Working Group of the UN Commission on International Trade Law (UNCITRAL), which is responsible for a key set of rules governing these arbitrations and is currently revising them, has so far blocked inclusion of transparency provisions in the revision. But the question has now moved from the Working Group to the UNCITRAL Commission itself, which meets in June at the UN headquarters in New York

By airing the issues publicly now, the two NGOs, IISD, headquartered in Canada, and CIEL, headquartered in Washington, are hoping that their arguments will persuade the UN Commission on International Trade Law to decide in favor of sunshine.
* * *

Is there any likelihood of awakening public interest in this issue? Read on.

The present UN arbitration rules, dating since 1976, do not distinguish between private commercial arbitrations and those between a state and foreign investors and thereby apply the same secrecy rules to both. But the public interest element in investor-state disputes requires transparency, as argued in a 17-page study by IISD and CIEL.

Also enlightening, and on a wide range of foreign investment issues, is an IISD publication on “Why Elected Officials Need To Pay Attention to International Investment Agreements.” Trade union leaders and their staffs also need to pay attention.

Read more!

Personal Reflections on the Holocaust

I try to read something on the Holocaust each year during Lent. Two books I read in past years were “Hitler’s Willing Executioners: Ordinary Germans and the Holocaust” by Daniel Jonah Goldenhagen and “Nazi Terror: The Gestapo, Jews, and Ordinary Germans.” This year I re-read a long magazine article by Dr. Sherwin B. Nuland about his two-day visit in 2004 to the U.S. Holocaust Memorial Museum in Washington, D.C.

Nuland, professor of clinical surgery at Yale School of Medicine, found the Museum “a place to learn, to look within oneself, and to ponder the nature of our shared humanity.” In addition, because he was there during an extraordinary exhibition on ”Deadly Medicine: Creating the Master Race,” he reflected much about his personal responsibilities as a doctor, and especially about how he might have acted had he been practicing in Germany during the Nazi years:

“It had always seemed obvious to me, and to the several colleagues with whom I discussed it over the years, that none of us would ever have fallen prey to such delusions as the justification of euthanasia and genocide.”

After “Deadly Medicine’ he was no longer so sure. He now feared he may have been swept along by each of the eugenics movement’s “small steps” that, at least in the early stages, did not appear dangerous, and were supported by “highly regarded scientists.”

Nuland’s self-examination shook him deeply. In The New Republic of September 13/20, 2004, he wrote: “To my startled dismay, I found myself understanding why much of the German medical establishment acted as it did. I realized that, given the circumstances, I might have done the same.”

The “Deadly Medicine” exhibit, and Nuland’s eight-page review, traced how the international eugenics movement – its dedication to improving the “purity of the human race by better breeding” – led to Hitler’s program of “ridding Germany and eventually Europe of the pestilential disease of Judaism.” Under medical science’s stamp of approval, “who but a few visionaries would see any danger in the promotion of purity?”

Nuland’s own profession cooperated widely and willingly with the Holocaust: “No association or guild was more complicit in the rise of Nazism and the desecrations committed by its leaders and followers than the profession of medicine, in the form both of its organizations and its members.”

How could this happen to members of such a noble profession? Among other reasons: “their failure to recognize a basic fact about the scientific enterprise...Neither medicine nor science itself derives its ‘truths’ in the thoroughly detached atmosphere in which its practitioners would like to believe they work…There is no such thing as a thoroughly detached scientific undertaking.”

Reflecting on the Holocaust is for me, too, a moving experience. If my father, an ethnic German, had not migrated to the United States, I might have lived through the days of Nazi rule.

• Would I have been among the multitudes of Germans, young and old, who (as you can see in TV documentaries) marched in Nazi parades and saluted in Nazi rallies? No, I tell myself.
  
• Would I have played a role in the extermination of Jews? No. No, I would not betrayed my Jewish neighbors or taken any action against them.
  
• But would I have raised my voice in protest? Would I have done anything, anything at all, to stop the carnage? On that I am...not sure.
  

That thought disturbs me. It stems from an honest self-appraisal of the kind that Lent calls for. And it leads to a prayerful reaffirmation to dedicating myself to the cause of human rights for all.
Read more!

Corporate Social Irresponsibility

Corporate Social Responsibility passed a milepost of sorts three years ago. That was when the Economist found that CSR had gained enough support to qualify as a movement, though one without much depth beyond the level of ideas. As the news weekly wrote in its January 22, 2005, issue, for most companies “CSR is little more than a cosmetic treatment…[which] goes on each morning, gets increasingly smeared by day and washes off at night.”

Its judgment in 18 pages on ”The Good Company” was clear: “Better that CSR be undertaken as a cosmetic exercise than as a serious surgery to fix what doesn’t need fixing….It is important to resist the success of the CSR.”

Well, the Economist has just taken a new look at that movement, and finds not only that “CSR is booming” but that it “is now seen as mainstream.” On balance, the 13-page analysis in this year’s January 19 issue is more positive than negative about CSR. Indeed, some sections of the report amount to rationales for CSR, often under other labels, such as “risk management,” “enlightened self-interest,” and “just good business.”

Perhaps the most significant finding of the report is the fact that “the biggest problem that many companies have to deal with is something that has sprung from globalization”: specifically, the risks connected with managing the global production and distribution chain that stretches across the world. Nike, with some 800,000 workers in its contractor and subcontractor network, is among the firms with “a challenge on a grand scale.”

Why? Because:

“Firms can set standards of behavior for suppliers, but they do not find it easy to enforce them. Unscrupulous suppliers may cheat, keeping two sets of records, one for show, one for real. Others, under intense pressure to keep costs low, may cut corners – allowing unpaid overtime, for example, subcontracting work to other firms that escape scrutiny….

“Basic as it sounds, even many big companies fail to [monitor risk across the supply chain]: 60 percent of the 2,000 large companies surveyed recently…said they did not require suppliers to enforce a code of conduct.”

A point that follows from such facts – a point that the Economist does not make -- is that the biggest problem for global companies is also the biggest failure of CSR and its codes of conduct.

The Economist notes and applauds an attitudinal change a growing number of firms and NGOs: it leads them to work together in formal or informal partnerships. “Both sides now see CSR as offering…benefits for both business and society.” But does it, really? The supporting evidence is mighty skimpy.

Consider the vast resources poured into CSR activities in the past two decades, from the UN Global Compact on down. Where are the results? Results, that is, measured in changes where people work and live, rather than in the huge increase in CSR professionals on payrolls and in training. This report has amazingly little to say about problems that CSR has solved.

Could it be that CSR has actually slowed down progress toward solving the burgeoning problems of globalization?

After all, CSR tools such as seminars and codes of conduct can, and do, lull people into complacency by creating a false impression that something real is happening – that global sweatshops are under control, that NGOs need no longer run campaigns to expose them, that the media need no longer publicize them, that public protests against them have become unnecessary. Isn’t CSR catching on even in China? Only a few months ago 13 foreign and domestic companies met in Shanghai to launch the Chinese Federation for Corporate Social Responsibility.

The truth is that human progress often requires measured militancy. The civil rights movement required it. So did the women’s rights movement. And so does the corporate social responsibility movement.

From my own limited contact with the corporate world, even in pre-CSR days, I know that there are some executives who want to do what is right and just but are, or think they are, hemmed in by the culture of their firm or industry. They themselves don’t sign petitions or carry placards in demonstrations, but they need those who do. Students, ministers, workers, and others who agitate for change are the allies of a genuine movement for corporate social responsibility. Without them, CSR is an occupation expanded into a bureaucracy.

* * *

An article of mine, “Corporate Social Responsibility: A Fledgling Movement Faces a Crucial Test,” appeared in the Winter 2007 issue of Dissent. The “crucial test” for CSR was – and is -- whether it would support a redirection of U.S trade and investment policy to make it worker-friendly.
Read more!

Bangladesh 's Anti-Labor Crackdown

The government of Bangladesh, never friendly to worker organizations and their supporters, on January 24 arrested Mehedi Hasan, a field investigator of the Worker Rights Consortium, and kept him in shackles when a lawyer and family members were allowed brief visits.

Hasan, a Bangladeshi national, was in the midst of checking worker rights violations in the garment industry in Dhaka. His organization monitors labor rights compliance on behalf of 178 universities and colleges that market apparel and other products made in Bangladesh and other countries.

Security forces seized Hasan's computer, which contained information from interviews held with workers away from factories. This leads to concerns for the workers' safety.

Hasan's arrest is part of wave of government harassment of unions and their advocates. A Bangladeshi staff person of the AFL-CIO Solidarity Center's Dhaka office was also recently arrested while participating in a worker rights clinic.


In June last year the AFL-CIO filed a petition with the U.S. Trade Representative to withdraw some of Bangladesh's trade benefits unless it ends its most glaring abuses of labor rights. (Scroll down to "Bangladesh's Workers on a 17-Year Treadmill" at http://www.senser.com/008-01.htm.)

For at least 17 years now, the AFL-CIO and other organizations have been pressing USTR to invoke U.S. trade law sanctions because of Bangladesh's non-compliance with that law. USTR has rejected each petition. The current AFL-CIO petition is still pending.
Read more!

How Globalization Can Serve Us

Globalization is in trouble, as even many of its ardent supporters agree. But why?

To answer that basic question, I have over time made lists of some basic truths about our rapidly integrating global economy. I tried formulating propositions, short and not too complicated, that make sense, separately and as a whole. My first effort in this direction saw daylight in the May 2007 issue of my Website, Human Rights for Workers, under the title “5 Points on the Sorry State of Globalization.” After reflection, I added more ideas, especially on how globalization can serve us, instead of the other way around.

Here is the latest version, obviously with no assumption that it is writ in stone:

1. Globalization has created a new dimension ‑‑ a vast open space of human activity, an international marketplace ‑‑ outside the traditional jurisdiction of nations and their laws.
2. To establish the rule of law in that open space, governments have created – and are still expanding – a global network of bilateral, regional, subregional, plurilateral, and multilateral agreements laying down cross-border rules on trade, services, investment, intellectual property, and other issues, and have delegated enforcement powers to intergovernmental agencies, with the World Trade Organization at the pinnacle.
3. That global rule of law, however, is partial, in two senses ‑‑ partial as in incomplete and partial as in favoring the rights and interests of one group over others.

4. In its present partial form, globalization protects and promotes the rights and privileges of commerce and capital (particularly multinationals headquartered in the United States, Western Europe, and Japan), to the neglect of labor (the men, women, and children in the international labor market).
5. Those pro‑capital rights and privileges, as written, interpreted, and enforced, are balanced by no ‑‑ or by very ineffective ‑‑ matching responsibilities or accountability, thereby creating a huge global imbalance.
6. That imbalance leads to an imbalance of power that advances the interests and multiplies the wealth of multinational corporations and allied elites, to the disadvantage of other "stakeholders" in all countries, particularly the many millions of vulnerable men, women, and children, as well as the poor communities, deprived of the means to protect their own rights and interests.
7. The imbalance is wrong, grievously and glaringly so, and is increasingly understood as wrong, thanks to improved global communications and the proliferating nongovernmental groups committed to correcting inequities ‑‑ twin developments that are the happy products of globalization.
8. Since globalization itself demonstrates that the well‑being of people can be improved, those now left out are less and less willing to accept their deprived status, and often see themselves as sacrificial lambs to further enrich those already fabulously rich.
9. Explosive consequences are more and more likely if the rightful demands for justice continue to be ignored.
10. Risks have multiplied for the most visible manifestation of globalization – multinational corporations, which at latest count number about 70,000 firms, plus 770,000 subsidiaries, as well as uncounted millions of suppliers in almost every corner of the globe.
11. There is a serious misalignment, or gap, between the scope and impact of multinationals, on the one hand, and the capacity of less developed countries to deal with the behavior and misbehavior of foreign firms.
12. Since the U.S. government, under both Democratic and Republican Administrations, took the lead in determining the unbalanced rules of globalization and in creating the institutions of globalization, it has the responsibility to review those rules and to initiate reforms, but with a strengthened role for Congress, which has the constitutional authority and responsibility to regulate trade.
13. That process of review and reform needs to cover the full range of international policies now grouped together under "trade," including the two significant areas which are not really trade issues ‑‑ the protection of investment/investor rights and the protection of intellectual property rights ‑‑ but may well contribute more to global inequities than ordinary trade does.
14. Given the central role of multinational corporations in globalization, the corporate social responsibility movement, if motivated by more than PR, could help make the global environment conducive to serious reform, but action by governments and intergovernmental agencies is required to produce real and lasting change
15. Integrating socially responsibility into trade rules, and into intergovernmental agencies, is no cure‑all; many other types of private and governmental initiatives are also necessary, especially to insure worker‑friendly practices where people actually work.
* * *
The list introduces you to the scope of this blog. I hope it stimulates you to comment on individual propositions and/or on how they add up as a whole. Take your pick.
Read more!

China's Censorship as a Restraint of Trade

The greatest free speech case in history – that’s what Peter Scheer, executive director of the California First Amendment Coalition, calls his group’s initiative against Communist China, the biggest suppresser of free speech in the world.

Scheer’s coalition is urging the U.S. government to file a complaint against China for erecting barriers that deny U.S. Internet companies free access to China's market and thereby grossly violating the free trade rules of the World Trade Organization. The potential beneficiaries of a successful complaint would be 1,200,000,000 citizens of China and dozens of foreign multinational corporations trying to sell goods and services in China’s huge market.

The California Coalition made a formal presentation of its case to the staff of the U.S. Trade Representative (USTR) in Washington on November 15. Its briefing paper developed in detail how China’s repression of freedom of information violated key multilateral trade agreements, including the General Agreement on Tariffs and Trade (GATT), which covers trade in goods, and the General Agreement on Trade in Services (GATS).

More Comprehensive Information Still To Come

“We will be submitting further, more comprehensive briefing materials in early January,” Scheer noted in an email to me.

The 1,700-word paper he submitted in November already seems to make a powerful case, especially since China patently violates one of the WTO’s cardinal principles – .the “national treatment” principle, which requires that imported goods and services be treated the same as those produced locally. “The government of China is actively preventing U.S. internet companies from doing business in China, while at the same time promoting Chinese Internet companies in the same or similar activities,” the briefing paper points out. It cites several among the “a wide range of laws and regulations that result in de jure or defacto” discriminatory treatment of U.S. Internet companies.

Earlier in 2007, a leading search engine operating in China, Google Inc., made its own overture to USTR suggesting use of the trade lever to combat Internet censorship. Andrew McClaughlin, Google’s director of public policy, then called censorship “the No. 1 barrier to trade that we face.” (See “Rethinking Censorship, Google, and Free Trade.”) At that time an AP article quoted a USTR spokesperson as saying that a human rights issue such as censorship typically belongs over in the State Department.

The biggest immediate barrier faced by the First Amendment Coalition is the conventional thinking of trade bureaucrats, who can’t quite wrap their minds around a modern development like the Internet. Another huge barrier is the political and economic power that China and other censorship-infected countries have to prevent changes in global trade rules.

When the multilateral trading system was launched 60 years ago, its 23 founding countries unwisely gave dictatorial countries equal status with democratic ones. Why must that equal treatment continue when clearly undeserved, notoriously so in the case of Communist China?
* * *

Yahoo Stockholders: No Free Speech Activists They

At Yahoo's annual general meeting last May, stockholders turned down proposals to put the company firmly on record as opposed to censorship of the Internet. About 85 percent opposed a company anti-censorship policy, and all but 4 percent turned thumbs down on a proposed committee to examine the company's human rights policy in China and elsewhere.
Read more!

Economics Prof Instructs NY Times

The editorial writers of the New York Times should arrange to take a refresher course on trade from Dani Rodrik, economics professor at Harvard University's Kennedy School. In the meantime, they can make do with a stern lecture from Rodrik about the flaws in a December 23 Times editorial titled "Trade and Prosperity."

"With most polls showing that voters believe trade with other countries is hurting the American economy, there has been a lot of posturing about the perils of trade on the campaign trail," the Times wrote. It then went on to express concern that Senator Hillary Clinton, rather than posturing, might actually be serious about a "time-out" to review all trade agreements, including the North American Free Trade Agreement, or NAFTA, her husband's prize trade package.

Newspaper Quick To Level 'Protectionist' Charge

Rodrik, author of the new book, "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth" (Princeton), titles his December 23 blog entry "The NYT doesn't get it on trade." Here are the five points he finds wrong with the Times argument:

1. It automatically equates any desire to reconsider trade agreements and take a breather on new agreements as "protectionist."

2. It fails to recognize the ways in which technology and globalization interact to contribute to unequalizing trends in incomes, taking refuge in the defensive statement that "There is scant evidence that trade has played a big role in holding down typical workers’ wages."

3. It follows up this statement with "There is abundant evidence that it has contributed substantially to America’s overall economic growth," ignoring what every student of trade learns, which is that large gains from trade are possible only if there are also large amounts of income redistribution.

4. In portraying the conflict as purely one over incomes, it overlooks what is the greatest strain in the present regime of globalization -- namely, the incompatibility between the scope of markets (straining to become global) and the scope of regulatory institutions (still national).

5. And as a consequence, rather than accept the need to rethink the existing rules of the game, the editorial takes refuge in the same stale recommendations that every trade liberalizer has been offering for the last quarter century at least -- more safety nets, better training, and more progressive income taxation.
Rodrik adds that those ideas about the need for improving social insurance, while not new, need to be revitalized, as he himself urged in his 1997 book, "Has Globalization Gone Too Far?" (Institute for International Economics), and then continues on his blog.

But it is also time to recognize that the WTO rules need to become much more flexible to provide a better balance between international trade and domestic regulatory and other policy priorities -- in other words, to assure domestic electorates that their values and preferences are not being sacrificed to the demands of some globalization agenda constructed, in any case, by a narrow elite.

Rodrik posted the above entry. December 23, with two links referring to previous blog entries.
Read more!