Vol. IV, Bulletin No.15.                                                              August 9, 1999 

A Hong Kong Critique of Corporate Codes

Are corporate codes of conduct public relations gimmicks?  Or are they useful instruments for advancing worker rights?  Answer: both.

That's the assessment of four Hong Kong-based non-governmental organizations long active in promoting the human rights of workers. Since the four groups have for years conducted on-site research of working conditions in sweatshops and near-sweatshops  producing for multinationals, they are in a unique position to size up the worth of corporate codes.

In the July issue of Change, a newsletter of the Hong Kong Christian Industrial Committee, they analyze what they call "the dual nature of the codes":

Early this year the four groups--Asia Monitor Resource Center, China Labor Bulletin, Hong Kong Christian Industrial Committee, and Hong Kong Confederation of Trade Unions--formed a coalition, Labor Rights in China, to coordinate their monitoring activities. "In particular," they stated in the Change newsletter, "the expanding initiatives of multinational corporations' codes of conduct demand our active and concerted actions."

For a copy of the coalition's analysis, contact the Hong Kong Christian Industrial Committee by email at hkcic@hknet.com or via its Website at www.cic.org.hk.

She Refused To Be Beaten Into Submission

The police held Dita Sari, chairwoman of the Indonesian Center of Labor Struggles, only briefly the first five times she was arrested. Then, the sixth time, after leading protests in an 11-factory industrial district in mid-1996, she was interrogated at length, beaten, and eventually sentenced to five years in prison on a charge of subverting the state.

From behind bars, Dita managed to smuggle out a letter to supporters in Australia on the occasion of International Women's Day in 1997:

"Belief in the justice of our struggle and our deep love for the mass of workers are two things that keep me going," she wrote. "Of course, there are moments when I experienced the bitter pain of losing everything, a sense of failure, of loneliness. There are times that I must struggle with myself and accept that I will lose the productive years of my youth. And I think: Can I handle this?"
Handle it she did. Twice the government offered to release her on probation--still as a guilty criminal who could be locked up again if she failed to shut up. Dita Sari rejected both offers. She even led a demonstration of inmates against prison corruption.

Finally granted amnesty by Presidential decree on July 2, she walked out of the penitentiary a free human being, warmly greeted by her father and by representatives of worker rights organizations, including the American Center for International Labor Solidarity of the AFL-CIO. It was clear that the trials of prison life had not broken her spirit. To the contrary. She told reporters that she would immediately resume her activities to organize workers into labor unions.

Grateful for the 'Universal Character of Worker Solidarity'

Her freedom, she insisted, was not a gift of the government but the result of strong pressure from people and groups within and outside of Indonesia. In a letter to AFL-CIO President John Sweeney, she thanked the American labor movement for its support. "This," she wrote, "is a sign of the universal character of worker solidarity."

Dita Sari, 26, standing a few inches over 5 feet, symbolizes the growing number of "little people" in the developing world who insist on their share of the bounties of globalization. Today, they enjoy an Internet-linked network of international support stronger than ever before. Those two developments summarize why securing the rights of working men and women in the global economy has come to the forefront as an issue that even the World Trade Organization can no longer properly ignore.

Nailing Trade-Related Worker Rights Violations

In a brochure citing incentives granted to foreign investors, the Bangladesh Export Processing Zones Authority points out that Bangladesh "law forbids formation of any labor union in the zones, [and] strikes within the zones are prohibited."

About 50,000 workers, mostly women, are employed making garments, electronics components, and leather products in Bangladesh's two industrial districts designated as export processing zones (EPZs). All 50,000 are denied the right to organize, to bargain collectively, and to strike because in 1980 the government, to lure foreign investors, passed legislation exempting zone workers from the protection of Bangladesh's own labor laws.

Violating Worker Rights and U.S. Law as Well

Because such repressive legislation violates U.S. congressional conditions for granting the privilege of duty-free exports to the United States, the government of Bangladesh in 1992 made a formal commitment to phase out its discriminatory policies against zone workers. But it has not done so. What's more, the U.S. State Department's latest Country Reports on Human Rights Practices documents that fact.

In a petition filed with the Office of the United States Trade Representative (USTR) on June 16, the AFL-CIO asked that Bangladesh's duty-free privileges be revoked unless it acts "expeditiously" to cancel the statutory exemptions violating the rights of workers in its export processing zones.

Proposal Renewed for Study of Trade-Related Aspects of Worker Rights

Meanwhile, in Geneva, U.S. government officials have recommended that the World Trade Organization (WTO) adopt a future work program that addresses "trade issues relating to labor standards," citing the operation of export processing zones as one specific example. It's not a novel idea.

The WTO already enforces an Agreement on the Trade-Related Aspects of Intellectual Rights, with its own acronym, TRIPS, but for 20 years the WTO and its predecessor agency have rejected or ignored proposals even to discuss the trade-related aspects of worker rights.

The U.S. government has a plethora of recommendations for the next WTO ministerial conference, to be held in Seattle starting in November. (See the text of a statement circulated by the U.S. delegation at the WTO General Council session in Geneva July 29.) Will the labor standards proposal once again get ditched by other trade issues deemed to have higher priority?

In 1996, when the Clinton Administration failed to win support for a similar proposal at the WTO ministerial conference in Singapore, Business Week columnist Robert Kuttner wrote that U.S. officials "might as well have said: 'Treat this as merely a bone we need to throw the AFL-CIO'."

That charge may be unfair, but it does underline the need for the Clinton Administration to take a strong stand--a stand strong enough in public and in private to convince other governments that it is not just going through the motions.

The Global Power of Intra-Firm Trade

About 40% of goods that cross U.S. borders are shipments between units of the same multinational corporation. This particular feature of globalization--called intra-firm trade, or trade between operations of the same multinational in different countries--is little documented except in statistics of the U.S. Commerce Department.

The July issue of Commerce's Survey of Current Business carries the latest data in an article, "U.S. Multinational Companies: Operations in 1997," by Raymond J. Mataloni Jr. In 1997, according to that article:

Those statistics do not take into account other significant forms of intra-firm trade across U.S. borders: for example, the shipments from foreign-owned affiliates in the U.S. to their parent multinationals (example: Volkswagens from Germany to the United States). Nor does the data take into account intra-firm trade of products not shipped to the United States (example: VCRs from a GE plant in Malaysia to an affiliate in Mexico).

Bye-Bye to World Portrayed by Theory of Comparative Advantage

When all varieties of intra-firm trade involving U.S.-owned multinationals and foreign-owned multinationals with U.S. affiliates are taken into account, the volume approximates 40% of total U.S. trade, according to Wolfgang Reinicke, author of "Global Public Policy."  In that book he writes:

"Trade associated with the globalization of companies has displaced the traditional concept of trade as an exchange between two unrelated parties (so-called arm's length-trade). In effect [intra-firm trade] amounts to a substitution of these market-based arm's length transactions by internal, nonmarket transactions within the multinational firm."
That aspect of globalization conflicts with the classical theory of comparative advantage that, according to American economic textbooks, is supposed to govern international trade. The practical implications for global trade policy remain largely unexplored.

The sheer size of intra-firm trade is a measure of the role that multinational corporations play in shaping not only international commerce but global production and thus in setting global labor standards as well, for good or ill.

Human Rights for Workers: Bulletin No. IV-15, August 9, 1999
Robert A. Senser, editor
Copyright 1999
hrfw@senser.com. (Send e-mail)

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