Vol. X, Bulletin No. 7                                                     June 28, 2005

Chinese Government-Owned Corporation Plans Takeover of Unocal

China's Goal: Nationalize U.S. Oil Firm

It's strange that Washington should be so startled by China's planned takeover of a large U.S. oil multinational, Unocal.  As the June 24 headline over a New York Times article put it: "Capital Nearly Speechless on Big China Bid."

But maybe it's not so strange after all. 

The Washington elite's thinking on China holds that the massive infusion of U.S. trade and investment wealth into the People's Republic of China fosters democracy and American values in the Communist dictatorship.  Instead, however, its most important effect  has been to build up the regime's military power and strengthened Beijing's grip on the Chinese people.  It has even built up the regime's technological prowess so far that it can censor ideas and words like democracy, freedom, capital, and human rights on the Internet. 

Bid To Buy Unocal with 18,500,000,000 American Dollars

Now Washington hesitates because it must face up to a dilemma that is a direct result of its own deluded thinking and policies.  Here is a Chinese government-owned company, the China National Offshore Oil Corporation, trying to acquire a private U.S. corporation, Unocal, for $18,500,000,000 in cash, topping an earlier offer from a U.S. corporation, Chevron, by $1,900,000,000, thanks in large part to China's large U.S. dollar reserves and financial pledges from Wall Street. 

Note that such a transaction is in accord with U.S. free trade and investment principles, as institutionalized in the myriad regulations of the World Trade Organization, which are supposed to have a binding effect on the United States, especially since our own officials wrote most of those regulations.

Those very principles now put the U.S. government in an agonizing quandary.  Should it permit the nationalization of an important private American company, and thus permit the expansion of state socialism?  How does an affirmative decision conform with our national interest and our American values?.

No wonder so many of Washington's fork-tongued elite have been tongue tied.

CAFTA: a Violation of 'Culture of Life'

Catholics for Faithful Citizenship, an Ohio-based initiative to promote political moral responsibility in accordance with a 2003 Bishops' statement, warned Congress on June 22 that the administration's latest trade proposal fails to respect "a culture of life and the moral issues" involved.

The group's statement, signed by president Eric McFadden, sharply criticizes the Central-American Free Trade Agreement (CAFTA), now under consideration by Congress under an expedited procedure that prohibits amendments and curtails time for debate.  Among his other targets, McFadden takes aim at a little publicized feature of CAFTA -- its gift to U.S. pharmaceutical manufacturers, enabling them to expand and institutionalize their patent monopolies to sell costly products in five Central American countries and the Dominican Republic.

"CAFTA's extension of protections for intellectual property rights will limit the access of poor people to affordable medicines, thus making it difficult for the 275,000 HIV infected people in the region to survive," McFadden writes, and adds, "CAFTA again works against a culture of life, as it affects the livelihoods of poor farmers in Central America who are unable to compete against highly subsidized U.S. agriculture."

McFadden asks members of Congress to evaluate CAFTA for "its failures regarding a culture of life and the moral issues it ignores."  If they make that evaluation, he concludes, "the answer will be a resounding NO" to CAFTA.

Calling This a 'Free Trade Agreement' Is a Misnomer

As an article in the May issue of Human Rights for Workers pointed out, CAFTA's fundamental flaw is that it is not truly a free trade agreement because, among other things, it fails to open some important market and even tightly regulates the market in pharmaceuticals, going further even than the global controls imposed by the World Trade Organization.  

Although it doesn't deal with CAFTA, an article in the current issue of Foreign Affairs, a conservative monthly that supports free markets, calls for halting the "sins of commission" in international trade policy.  The authors, Nancy Birdsall, president of the Center of Global Development, Dan Rodrik, professor of political economy at Harvard, and Arvind Subramanian of the International Monetary Fund, write:

"Wealthy nations must begin to lift the burdens they impose on the poor.  Currently, the developed world uses international trade agreements to impose costly and onerous obligations on poor countries.  The most egregious example has been the WTO's intellectual property agreement, the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

"Despite recent efforts to cushion its impact on the poorest countries, TRIPS will make the prices of essential medicines significantly greater, and this at a time when poor countries are being ravaged by one of the worst health epidemics ever known -- HIV/AIDS.  The price increase means that money from the citizens of poor countries will be transferred directly to wealthy pharmaceutical companies."

How Pharmaceutical Firms and Their Corporate Allies Captured Trade Policy

CAFTA continues and reinforces this "egregious" policy.  If it were legitimate free trade policy, it would have the firm support of economist Jagdish Bhagwati, whose free trade credentials are undisputed.  But take a look a look at Bhagwati's latest book, In Defense of Globalization.  There, on page 182, he writes: "Pharmaceutical and software companies muscled their way into the WTO and turned it to a royalty collection agency simply because the WTO can apply trade sanctions" against those who violate its regulations.

TRIPS, in Bhagwati's apt metaphor, introduced "cancer cells into a healthy body" (page 183) -- "the corporate lobbies in pharmaceuticals and software had distorted and deformed an important multilateral institution [the WTO], turning it away from its trade mission and rationale and transforming it into a royalty collection agency."

Why do U.S. trade negotiators continue to introduce such "cancer cells" into free trade agreements like CAFTA?  Because that's their job, under orders from top policy makers (not all Republican) indebted to the monstrous political contributions of the pharmaceutical companies and their powerful corporate allies grouped together in the U.S. Chamber of Commerce.

Why the U.S. media's near-universal support for CAFTA?  The kindest explanation: they're so devoted to free trade dogma that seeing the label "free trade" on any idea sets off a pavlovian genuflection.

The New Abolitionist Movement

Up to 800,000 people, most of them women and children, are victims of international human trafficking -- coerced into crossing borders to toil under inhuman conditions in brothels, sweatshops, households, work camps, and on farms.  Millions more are "trafficked" within countries.

Secretary of State Condoleezza Rice cited those estimates on June 3 in releasing the State Department's annual Trafficking in Persons report. "Trafficking in human beings is nothing less than a modern form of slavery," she said. "Wherever the trafficking trade flourishes, the rule of law erodes,  corruption thrives, public health suffers, and organized crime threatens the security of entire communities."

The State Department report on trafficking, and the government's focus on its elimination, stems from the Trafficking Victims Protection Act, which Congress passed in 2000 over the objections of the State Department.  That law in turn grew out of intense lobbying by citizens' organizations.  Rice paid tribute to that involvement in her statement:

"A modern abolitionist movement has emerged. Concerned citizens, students, faith-based organizations, feminists, and other nongovernmental groups are doing courageous and compassionate work to end this trade in human degradation."

She called on governments around the world to step in and work together "to close down trafficking routes, prosecute and convict traffickers, and protect and reintegrate victims into society."

Corporate Responsibility on Roller-Coaster

One day this spring the Financial Times hailed the dawn of a "new age of corporate responsibility."  Then, a few days later, it exposed a shocking  business scandal: how factories in China working for multinational corporations cook the books to cover up sweatshop abuses in those factories. 

What prompted the initial outburst of exuberance, first
in a Times' April 13 news report and then in a April 20 editorial, was a new corporate responsibility report that Nike Inc. issued about the Nike-branded clothing and footwear made under contract in overseas factories.  The UK Independent chimed in with praise for "the ethical revolution sweeping through the world's sweatshops."

Sweatshops in China Very Skilled at Falsifying Time Cards and Pay Records

A reality check soon followed. Focusing on China, the world's largest exporter of sweatshop goods, a lengthy news report in the April 22 Times opened with this sentence: "Factory managers in China are becoming increasingly sophisticated at falsifying worker time cards and payroll documents to disguise irregularities including underpayment [of wages], excessive hours, and inadequate health and safety provision."   The Times decried the fraud in a April 25 editorial titled "Cooking the books in sweatshop China."

Neither the article nor the editorial mentioned any cooking the books at Nike factories, but Nike itself did, in these two sentences in its recent 108-page corporate responsibility report: "Falsification of information by factories [in China] often related to wages and hours of work is common.  This extends to the practice of coaching of workers by factory managers trying to deceive compliance auditors."

The Financial Times article noted that, according to executives responsible for code compliance, similar problems exist in other countries, such as India, but that the deception is the most sophisticated in China.

Religious Investors Hail UN Global Norms

In a public letter to UN General Secretary General Kofi Annan, the Interfaith Center on Corporate Responsibility, a coalition of Catholic, Jewish, and Protestant investment groups with a combined investment total of over $100,000,000,000, praises the UN Human Rights Commission's recommendation that Annan appoint a UN special representative in the area of business and human rights. (See "Special" Treatment for UN Global Norms in the May 5 issue of Human Rights for Workers.)

"As institutional investors who work with corporations on an ongoing basis," the June 13 letter says, "we welcome this development and believe that the mandate creating the position of special representative for a two-year period should build on the work already begun by the subcommission on the promotion and protection of human rights and other United Nations initiatives." 

Controversial Norms Document Called 'Key Framework' for Progress

The letter, signed by 44 representatives of the investment groups, specifically endorses the subcommission report titled "Norms on the Responsibilities of Transnational Corporations and other Business Enterprises" as the key framework to advance human rights standards and implementation mechanisms that can benefit both the business and the communities in which they operate."

Among the qualifications of candidates for the special representative post must be a commitment to "developing clear standards and implementation measures" in the area of business and human rights, the coalition letter stresses.

The U.S. Council for International Business, which lobbied vigorously against the proposed global norms, will work with the International Chamber of Commerce and the International Organization of Employers, "on the selection of the special representative and other matters related to the work of the UN Commission on Human Rights," according to a council
statement.  The statement does not list the council's criteria for the position.

Hunting Elephants with Popguns

Over on Mill Row, the rice mills stand like silver castles against the black sky.  In a small frame hall a few blocks away, Rice Workers Local 321 is meeting as it has monthly for two years, not to assault the castles but to rebuild them.

The secretary says a brief opening prayer: “Lord. . .bless us through this meeting.  We know that without you we cannot do nothing.”  A few among the 35 members there – 25 whites and 10 Negroes – add a low Amen.  Local 321 of the National Agricultural Workers Union (AFL) is ready to get down to business.  The business before it is a crisis, the latest of many for a struggling local of 300 members in the non-union community of Crowley, La. (pop. 14,000).

Thus began an article that I wrote 50 years ago after a visit to southwestern Louisiana. Published in the December 5, 1955, issue of the New Republic, just before the AFL-CIO merger convention in New York City, it lives on today because the New Republic has just launched TNR Archives, "a complete library of the first-rate reportage, editorials, and criticism that has graced our pages from our founding in 1914 through 2000."

"Hunting Elephants with Popguns" by Bob Senser described the fears and frustrations of several hundred rice mill workers as they struggled to organize a union and to win a contract to back it up.  In the article's last paragraph, I quote the plaintive words of Joe Guidry, the national union's only full-time organizer: "It's like hunting an elephant with a popgun." 

In an introductory note, the editors explained: "Mr. Senser's story illustrates what organizing with scant resources and staff is like today."

A half century later, Local 321 no longer exists, nor does the AFL National Agricultural Workers Union. In California, the AFL-CIO United Farm Workers is a shell of its glory days 30 years ago, when it could claim a membership of 80,000.  Now it carries on as a lobbying and fund-raising organization to defend the interests of agricultural workers.  Elsewhere, only after a five-year-long boycott did the AFL-CIO Farm Labor Organizing Committee last year win agreements with the Mt. Olive Pickle Committee and the North Carolina Growers' Association covering the wages and job conditions of migrant farm workers.

Like a half century ago, workers are still trying to tame elephants with popguns, but today it's on a global scale.

Cobbling with Human Rights for Workers

Thanks to a flaw uncovered in the archives section of my Website, I now know that Human Rights for Workers has some readers in northeastern Florida. Last month Professor Jim Bowman, professor at Florida State University, sent me this email:

"I have enjoyed and relied upon Human Rights for Workers for my Labor and International Human Rights course. However, for the past week I have not been able to get inside the previous Bulletins. The list of past Bulletins can be seen, but clicking on the underlined volume/date of an issue does not bring it up on the screen."

Sure enough, I had a problem. After correcting it and thanking Bowman for the tip, I learned that his course, offered currently and again this coming fall, covers some fascinating topics, such as Miami sweatshops, Florida's migrant workers, cruise liner "sweatships," Wal-Mart, Nike, diamond and gold mining, slavery, and the meaning of work in a global economy.

"Unfortunately," Bowman wrote, "it has to be something of a survey class, because there does not appear to be a basic textbook on the subject of labor and human rights. There are, however, lots of good resources that can be cobbled together -- including your fine newsletter."  


Human Rights for Workers: Bulletin No. X-7      June 28, 2005
Robert A. Senser, editor
Copyright 2005
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