Vol. V, Bulletin No. 4.                                                                     February 14, 2000 

This Deal Hurts China's Working Women and Men

Why Congress Should Say No to China

Free trade with unfree countries is not popular with the American people. That's long been so for China, and especially after the Tiananmen Square killings in 1989. Still, year after year the President and Congress continued to approve China's "Most Favored Nation" (or MFN) trade status with the United States, even though the mid-year Congressional hearings exposed the unfavorable human rights climate in China.

Hoping to make MFN for China more palatable to the American public, the government decided to switch labels. "Most Favored Nation," a standard term in trade jargon, was out. "Normal Trade Relations" was in, along with a new acronym, NTR.

This year China, the U.S. administration, and U.S. business all want a much more fundamental change. They are asking Congress to legislate permanence for NTR, replacing the present annual review. In return, China has promised to make its tariffs less discriminatory and its markets more open over the next few years--but only if Congress approves permanent NTR.

It's a good deal for the United States, China, Asia, and the world, argues the U.S. executive branch, from the President on down. Business interests are also pressuring Congress to say yes. Well, why not?

Here are some--and only some--of the reasons why Congress should not approve permanent normal trade relations with China.

1. The People's Republic of China is not a normal country.

Would the United States have established "normal trade relations" with the Federal Republic of Germany if it had not fully purged itself of its Nazi past?  What if the new coalition government in today's Austria were to turn its native son, Adolph Hitler, into a national hero--by hanging a huge portrait of him in the heart of Vienna, for example, and having Austrian school children sing jingles honoring him--while creating forced labor camps where protesters could be locked up for two years without a trial? Would the United States maintain normal trade relations with a re-Nazified Austria?

No, because neither Germany nor Austria would deserve recognition as a normal country.

But today Mao Zedong, who caused the deaths of at least 23 million of his own people--more than any other leader in history--still has a commanding presence in China's capital and in China's hearts.  His remains are still on display in his mausoleum on Tiananmen Square, and his huge portrait hangs on Tiananmen Gate. Many taxis display his image. School children across the land sing a Communist Party-sanctioned jingle expressing hope that "our great leader Chairman Mao Zedong will guide us in the future."

Although China has changed in some ways since Mao's death, it is still plagued with his worst legacy--the monopoly of repressive power exercised by the Communist Party.  People who practice their religion or otherwise deviate from the Party's norms suffer beatings, loss of employment, arrest, and being shipped off to forced labor camps without a trial.  Like both Mao and Deng Xiaoping, China's rulers still follow the dictum "take the best from East and West," and so, to maintain and increase the Party's power, as well as the regime's military power, they are more than pleased to take the best of the West in goods, technology, foreign currency, capital investment, and military hardware as facilitated by MFN on an annual basis and now, they hope, by permanent NTR.

2. 'NTR' harms the ordinary workers of China.

Already largely left behind in the "reform" era, China's working men and women in both rural and urban areas will lose out further as sweatshops expand and other forms of labor abuses flourish in the new 'NTR' era.

The NTR package deal with China's government says nothing about protecting the rights of China's workers. Nor, of course, does the World Trade Organization, despite last fall's efforts by the Clinton Administration and others. And China's own labor legislation is thin and weakly enforced. Exploiters have carte blanche. Therefore, as business activity increases under NTR-stimulated trade and investment, so will the exposure of China's workers, particularly women in coastal industries, to abusive exploitation.

"For the Chinese working class the situation looks grim." That was the conclusion of the editors of China Labor Bulletin in Hong Kong after they assessed the U.S.-China agreement on China's entry into the WTO. For example, in opening up China to the competition of cheaper U.S. agricultural products, the agreement "will provoke a new mass exodus of peasants from their land...into even more deplorable conditions either in Special Economic Zones or on the outskirts of large cities," without jobs or housing. (See "China and the WTO" in China Labor Bulletin, published in Hong Kong.)

Most reports on improvements in the income of ordinary workers are false. They exclude the meager pay of the many millions who are the laborers in coastal factories. These working men and women, "migrants" from rural areas, are denied registration as urban citizens, and thus are not counted in economic data. Hence average income statistics skip the poorest part of the working population, and the averages become impressive. Footnotes to official statistical data mention that exclusion, but the glowing accounts about income growth do not.

3. 'NTR' hurts democratic countries--such as Bangladesh, South Korea, and Thailand--and aids undemocratic China.

"The losers will be exporters in countries such as Bangladesh, South Korea, and Thailand," says C. Fred Bergsten, director of the Institute for International Economics. In the January 2000 issue of the Institute's International Economics Policy Briefs, Bergsten writes: "Objective research shows that the great bulk of our [U.S.] purchases from China displace purchases from other developing countries...." Bergsten cited the clothing industry in particular, but the same shift to China is bound to affect other industries.  (See "The Next Trade Battle" by Bergsten for his full analysis.)

China has already benefited greatly from this shift, to the detriment of fragile democracies. Between 1980 and 1998, China's market share of goods imported into the United States from all developing countries doubled (10.5% in 1989; 21/5% in 1998), according to the study of  the New Economic Information Service titled "Dollars and Democracy." (See the
November 19 HRFW Bulletin, "Dollars for Dictators--Billions Now, More to Come.")

4. 'NTR' blots out Congressional hearings that expose China to sunlight.

China's government and its Communist Party don't like the present annual hearings. Organized business doesn't either. The public hearings expose China's sinful Leninist system to bright sunlight, brighter than the print of (say) the State Department's annual human rights report, because some victims of the system, like Harry Wu, can testify about the scandal in person. Often the media pays attention, which is embarrassing.

Even under permanent NTR, Congress would still be free to hold hearings, of course, but interest in them would die if Congress were to surrender the option of withholding MFN/NTR. Congress would then be in the position of a police officer with the right to study traffic violations but not to issue tickets.

The last half of this article will appear in the early March isssue of Human Rights for Workers.

(For background information, see the Websites of Global Trade Watch and the U.S.-China Business Council.)

UN's Cyberspace Promotion of Worker Rights

The human rights challenge that UN Secretary-General Kofi Annan issued to world business a year ago has been elevated to a new level. In early 1999 he had urged business leaders to lend their support to a new "global compact" covering human rights, including worker rights. Now the UN has launched a Website dedicated to that campaign with the cooperation of both business and labor organizations.

The worker rights dimension of the compact covers the core labor standards promulgated by the UN's International Labor Organization. These include, in the compact's words, "freedom of association and the effective recognition of the right to collective bargaining."

Besides listing "9 Principles...for the New Century," the site features links to the International Chamber of Commerce and the International Confederation of Free Trade Unions. "This Website," the ICFTU commented, "shows how to use the tools of globalization to bring globalization under control." The International Chamber of Commerce used the occasion to emphasize that the UN and its agencies, rather than the World Trade Organization, are the appropriate vehicles for promoting human rights and worker rights, as well environmental standards.

A UN spokesman noted that the Website contains "partly conflicting views, which is the basis of dialogue."

Getting Facts, Instead of Spinning Theories

The IRRA and ESI projects are just two examples of new policy-oriented research into international worker rights. The challenge is to do meaningful research and analysis, instead of merely rehashing what is already widely known and theorizing about what is not known.

There's a desperate need for careful empirical research into conditions of employment in the low-skill industries of poor countries exporting to rich countries. (See "Falsehoods about the Cost of Ending Sweatshops.") In its field investigations in the Caribbean and elsewhere, the New York-based National Labor Committee has gathered some evidence of how low the direct labor cost of assembling garments and sneaker are as a percentage of the retail price. For example, the wages of women in one Nike factory accounted for only 1.3% of the retail price of each pair of sneakers they made.

Many economists, however, arguing that poor countries rely on low wages as their only "comparative advantage," are not impressed by the NLC's fragmentary research. So where's the research that is not fragmentary?

In his thoughtful chapter in "The World Trading System: Challenges Ahead," published by the Institute for International Economics, Richard B. Freeman, labor market economist at Harvard, argues strongly for empirical research into actual labor costs.

"The effect of labor standards on comparative advantage and trade is one of empirical magnitude, which further research should be able to clarify. We need studies with alternative measures of standards, models, and samples of countries.  We also need complementary microeconomic evidence from firms operating in developing countries about the cost of enforcing standards at their workplaces."
Those words were published in late 1996. Nobody has yet done the systematic empirical research that Freeman said is needed. Meanwhile, the economists who still rely on the "comparative advantage" rationale to justify sweatshops are the victims of an occupational hazard: they are airing views based on theoretical models, not on solid research.

Mailbox: 'Gap and Nike Keep People Alive'

Dear HRFW:  In an English class in college this quarter, we have been discussing sweatshops. I am a proud owner of an entire wardrobe from the Gap.  I do not systematically think, "Oh, let's see what $48 sweater I can buy to make some else's life miserable."  I buy the Gap clothing because it is what makes me feel good.

I have a question though.  If companies like the Gap, Inc. and Nike weren't in Third World countries, would the workers be better off?  Are the living conditions in these countries so good that the people have decided to lower their standards and work for the Gap or Nike?  Or is this type of work actually better for these people?  As inhumane and cruel as it sounds, I don't think these people (or their countries) would be able to economically survive without the Gap or Nike. They are in a way keeping the people alive and providing them with some sort of income, albeit a very low income.

This is the one part of the argument I seem to not understand and anyone arguing against sweatshops never can answer the question.

--Daniel Laurence Michalek, San Jose, California

 Dear Daniel Laurence Michalek:  Your question implies that there's only one choice:  sweatshop conditions must be accepted as they are, on the assumption that they cannot change.  But they can change, and they are changing, although very slowly. Remember, low wages form only one indicator of a sweatshop. There are many others.  Take physical abuse.  According to a report I just received, a young woman in Bangladesh garment factory had the courage to demand that her supervisors stop beating people, and they soon stopped doing so.  She had been emboldened to speak up because she and other women in the factory were members of a union.

Throughout the Third World more and more sweatshop workers are speaking up for their rights, rights that are often written into their own country's laws. Why should Third World factories that supply rich countries like the United States deprive their workers of such rights?

And consumers in rich countries are speaking out too. Take a look at a January 26 New York Times article headlined "Anti-Sweatshop Movement Is Achieving Gains Overseas."  There you'll find examples of how companies like Nike and Reebok, under consumer pressure, now accept responsibility for what happens to working women and men who produce their shoes, garments, and toys in overseas factories. For example, they are requiring shoe factories to stop using petroleum-based adhesives that are poisonous.

Enjoy your English class, and your wardrobe. -- Bob Senser

Human Rights for Workers: Bulletin No. V-4, February 14, 2000
Robert A. Senser, editor
Copyright 2000
hrfw@senser.com. (Send e-mail)

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