U.S. delegates led a vain and lonely struggle for a long-sought goal: to get the WTO at least to set up a committee to discuss how today's global trade affects international labor standards. Trade ministers inclined to stiff-arm labor standards in their own countries weren't about to embrace them as an agenda item for their cozy global club.
In a last-minute compromise, the meeting's declaration said that the WTO "renewed our commitment to the observance of internationally recognized core labor standards" but quickly added that the ILO is "the competent body to set and deal with these standards." The full 150- word paragraph on the issue contained enough ambiguities that the International Confederation of Free Trade Unions could call it "a small but significant step forward in our drive to bring a human face to the process of globalization." At the same time, however, the Singapore chairman of the meeting could also conclude the meeting by assuring worried Asian delegations (such as one from India) that the Ministerial conference, as "the supreme executive body of the WTO," had succeeded in keeping international labor standards off the WTO agenda.
In truth, the issue remains very much alive. Much as they would like to bury it, the stand-pat trade ministers of the WTO cannot do so.
To its discredit, the U.S. media paid almost no attention to the meeting in Singapore. For the public record of what happened there, check the WTO's Web page at www.wto.org.
A trader of Malaysian stocks in Hong Kong told a Dow Jones reporter: "There was blood on the streets in our markets." The blood-letting stopped after the U.S. announced an increase in the U.S. unemployment rate.
Why such repercussions from a few sentences uttered in Washington, D.C.? It's just one indicator of how much the rest of the world relies on signals from the United States and how much it depends on the U.S. economy and its consumer market, largest and most open in the world. That dependence has been well described by Lester Thurow, a professor of economics at the Massachusetts Institute of Technology.
"The growth in this region [East Asia]," Thurow said in a speech in Singapore two years ago, "is skating on a very thin sheet of ice. If it wasn't for America, trade in Asia would collapse. Nobody in Asia would be able to pay their bills, and nobody in Asia is creditworthy without the American market."Another famous economist, Paul Krugman of Stanford, has also been highly skeptical about "the myth of Asia's miracle," to quote the title of a Foreign Affairs article by him. Krugman's reasons are somewhat different from Thurow's, but what both professors avoid is this fact: that the miracle is built on the backs of exploited working men, women, and children. No wonder elitist trade ministers don't want to hear about it.
Not quite. Low pay is the most measurable part of exploitation, but it isn't the biggest part, and often not the most important part.
Take the women workers exploited by Nike in Vietnam, whose situation we described in these pages last month (see Warning to Nike Workers: Do It--Or Else). Yes, the women making Nike shoes earned only 20 cents a hour, and some of them complained, on camera, that they needed an increase.
But the low pay of those workers makes up only about 3%--three percent--of the retail cost of the average Nike shoe. And for at least 15 of those workers, the complaint was less about poor pay than about the pain and humiliation of being beaten on the head with a Nike shoe for mistakes in sewing. The CBS documentary on Nike in Vietnam exposed other abuses, such the disciplining of 45 women by forcing them to kneel down and hold their hands over their heads for 25 minutes.
In fact, the brief CBS report underplayed the scandals at that plant, according to a young Vietnamese woman I met who recently was employed at the same Nike establishment in Vietnam. The situation was "worse" than CBS revealed, she said: for example, the factory managers seldom if ever paid compensation for injuries sustained on the job.
As the Nike story illustrates, the impetus to shift production to places like Vietnam and China is not just low wages. More accurately, the attraction is low costs. The high death and injury rates in China's factories are no accident. Why invest in safety equipment, why stop using poisonous glue in assembling shoes? After all, you lower costs if you don't.
So, far more accurately, the attraction that much of Asia has is that you can make lots of money there without being held responsible for the fate of workers who produce your merchandise. Women workers assembling (say) electronic equipment are repeatedly subjected to sexual harassment. Not to worry. There are no opportunities for law suits, such as the one that has cost Texaco $176 million and exposure to unquantifiable public shame. Moreover, if a newspaper in one of Asia's autocratic countries occasionally prints a story about the abuse of workers in your factory, it will carefully omit your company's name. That's just one of the "comparative advantages" over the United States that Asian autocrats fight to safeguard for foreign businesses.
Of course, even when bad publicity about a corporation's operations spreads to the United States, as in the case of Nike, it has little effect. The press prints management's denials of the facts, and stockholders laugh all the way to the bank.
"What really bothered me was seeing them use Motorola cellular phones. The United States apparently sells modern phones to help Chinese detain U.S. citizens at the border."Early in December 1996, Motorola Inc. issued a press release about part of its expanding operations in China. Excerpt from a Dow-Jones news report dated December 11:
"Motorola Inc. received three contracts, with a combined value of $108 million, from Fujian Posts and Telecommunications Administration for Motorola cellular infrastructure equipment to expand its analog and digital mobile telephone systems in China's Fujian province."Another excerpt from "Troublemaker," the book Wu co-authored with George Vecsey:
"We need real teeth in U.S. policy [toward China]. If we're going to share goods and secrets with the Chinese, let's make sure they don't use them against their own people. Stop exchanging high-tech goods with them. I'm still angry about being detained at the border and then escorted by guards who were using Motorola cellular phones."
Free trade today carries the same amoral baggage as free love. Its widespread acceptance is a measure of the licentious economic values of our age.
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Bulletin No. 12: December 18, 1996