Houston, we have a problem: Challenging globalization

By Robin Hahnel, Z Magazine, March 2000

The Battle of Seattle was a great victory for the international movement against corporate sponsored globalization. Before Seattle globalization was a non-issue for most Americans, and most who paid attention accepted the view of the leadership of both the Democratic and Republican Parties, backed by the overwhelming majority of the mainstream media and the economics profession, that globalization was the road to economic progress for everyone, and those who objected were crack pots or narrow minded interest groups. After Seattle it was suddenly deemed legitimate to voice concerns about the effects of globalization on the environment, economic inequality and stability, and democratic rule, and the most recent polls show 60 percent of Americans opposed to “free” trade. Before Seattle U.S. groups were the weak link in the anti-globalization movement, and leadership came largely from elsewhere. Seattle proved to anti-globalization groups based in Europe and the third world that even in the U.S., corporate sponsored globalization was no longer meekly accepted. Even in the U.S., home of neoliberalism, the WTO meetings could not be held without resort to tear gas, rubber bullets, arrests, curfews, calling up the National Guard, and declaring a state of emergency. But the international movement against corporate sponsored globalization faces important problems we must resolve soon.

The Thorny Issue of Labor Standards

The View from the Top of the Labor Heap: The lives of workers in the U.S. are significantly improved because unions have the right to organize here, because the National Labor Relations Board can be appealed to when employers tamper with certification elections, because some unsafe working conditions are outlawed, and because OSHA can inspect workplaces and fine employers for violations. U.S. labor rights and standards were won by the courage, sacrifice, and political savvy of millions of labor agitators, union organizers, and rank and file militants over more than a century—many of whom were obliged to pay a heavy personal price for their efforts. Protecting and expanding our labor rights and standards today is a difficult struggle that demands the same kind of courage and sacrifice today as it did a century ago.

Nor is it the fault of U.S. workers that our sisters and brothers in other countries do not enjoy labor rights, standards, and wages as high as ours. Of course, it is not because labor agitators, union organizers, and rank and file militants in those countries did not display as much courage and political savvy, or make even greater personal sacrifices than labor organizers here in the U.S. Third world workers have fewer rights and lower standards, and receive lower wages, because they have less physical, social, and human capital to work with, because their governments are even more hostile and repressive than ours, because their employers have smaller economic rents to share, because there are many more miserable than themselves willing to take their jobs if they object, and because their economies have been severely handicapped by colonialism and imperialism.

This being the case, removing barriers to international investment makes more credible U.S. employer threats to move their production operations to countries where labor standards and wages are lower unless U.S. workers are willing to accept lower labor standards and/or wages. Removing barriers to trade makes it easier to relocate labor intensive production in third world economies leaving only capital intensive production in the U.S., which tends to lower the demand for labor in the U.S. relative to the demand for capital, putting downward pressure on labor standards and wages in the U.S. as well. This aspect of globalization has been accurately labeled “the race to the bottom.” Trade as well as capital liberalization makes it easier for multinational employers to pit workers in countries with higher standards and wages against workers in countries with lower standards and wages in a process whose logic gravitates toward a “lowest common denominator” solution that is as damaging to employees as it is profitable to employers. It is understandable why workers in the U.S. would seek to protect their hard won standards and wages. While organized labor in the first world has not had the chutzpah to demand higher wages for foreign workers as a precondition for trade liberalization, they have demanded universal labor standards as a precondition for further liberalization. The AFL-CIO hastens to point out that their campaign for international labor standards can hardly be considered mendacious or self-serving because they are demanding improvements in the labor standards of other workers, not their own. Moreover, the AFL-CIO lists the support of many third world unions for this campaign, and points out that the new AFL-CIO leadership has completely revamped its relations with foreign unions in the aftermath of the Cold War. How could anyone—other than multinational employers—object?

The View from the Bottom of the Labor Heap: Jaggi Singh, reporting from Bhopal India on January 13 during WTO Director-General Mike Moore's ill-fated trip to India to repair the damage from Seattle, provided the following perspective: “The official Indian government delegation to the Seattle WTO ministerial meetings took a hard-line stand, at least publicly, against linking trade to labour and environmental standards. It was a position supported by all the major parliamentary factions, including the so-called left parties. Indeed, the government's view not only echoes that of other governments in the third world, but is critically supported by the majority of progressive opponents of globalization in India and the rest of South Asia. It's not that activists here are “lsoft”; or relativistic about labour standards, the environment or human rights; nor are they naïve about whom the Indian government really represents. Rather, they see Western governments' apparent discovery of universal human values and standards as a ploy to ensure a competitive advantage for their own multinational companies. This view is widespread in countries like India, with its own historical context of colonialism, and contemporary context of neo-colonialism with which the “holy trinity” of the WTO, IMF, and World Bank are considered synonymous.”

Jaggi Singh quotes Sanjay Mangala Gopal, the co-coordinator of the National Alliance of People's Movements saying: “We will define our own way of development and we are capable of doing it. Who are you to teach us about child labour or anything else?” These are not words spoken by a hypocritical Indian capitalist or government official. This expression of opposition to labor standards comes from the leader of a major coalition of 125 grassroots organizations who have been in the forefront of the leadership of the international resistance to globalization. R. Geetha, a union and women's rights activist based in Madras, comments: “Who are they [the West] to impose conditions on Third World countries? People are starving here! Why the hell should they tell us what kind of economy we should have?” Rejection of reforming the WTO by appending labor standards to further liberalization appears almost universal among the progressive, radical grassroots organizations and coalitions leading the fight against globalization in India. Medha Patkar, a leading organizer of the Narmada Bachao Andolan mass movement against destructive development and displacement in the Narmada River Valley rejects labor standard reforms saying “The ultimate goal is to say no to the WTO. We're against the whole capitalist system.” The Karnataka State Farmer's Movement [KRRS] is a member of the People's Global Action (PGA) movement against “free” trade, which includes the Zapatistas of Mexico and the landless peasants' movement (MST) of Brazil. The KRRS in recent years has dismantled a Cargill seed unit with iron bars, burned Monsanto's field trials of biotech cotton, and trashed a Kentucky Fried Chicken outlet in Bangalore. After Seattle the KRRS expressed concern that “the demands of the big labour unions and environmental groups almost mirrored that of the U.S. government.” This sentiment was seconded by a group of adivasis (indigenous peoples) from the state of Madhay Pradesh, who a week before the demonstrations in Seattle stormed the World Bank offices in Delhi, covered it with posters, graffiti, and cow shit, and left a letter saying: “We fought against the British and we will fight against the new form of colonialism that you represent with all our might.” It seems to me there is a clear message here for those who think the major emphasis of what, up to now, has been an international movement against corporate sponsored globalization, should be to focus on appending labor standards to international treaties: “Houston, we have a problem.”

Up until now the movement against corporate sponsored globalization has been a truly international movement. At this point nothing is more important than preserving the international character of the anti-globalization movement and preventing disagreements from emerging that could drive a wedge between first and third world constituencies—who are all adversely affected by corporate sponsored globalization. In this light, focusing the fight on labor (or environmental) standards is a potentially divisive issue and requires very careful analysis.

One question is simply whether the concessions received will be as great as any concessions given. The Clinton administration is willing to support a working committee on labor standards but only in exchange for further liberalization. But a working committee is a far cry from strong, enforceable standards now. Any further liberalization conceded in exchange accelerates the race to the bottom. A second question is how much good standards would do. Suppose the WTO gave the U.S. the right to ban imports from any country where labor standards were lower than those in the U.S., and the statute was easy to enforce. That is far beyond the wildest dreams of the AFL-CIO leadership, but how much would it diminish the race to the bottom they fear? If employee bargaining power outside the U.S. remained the same as before, the race to the bottom effect on U.S. wages would be just as great as before. Granted, the internationalization of U.S. labor standards would protect U.S. labor standards (for the time being), and would give workers everywhere else the same labor standards as those workers enjoy here. But if the new statute did not change the bargaining strength of employees elsewhere, their employers would pass on whatever the higher standards cost them to their employees in the form of lower wages. Presumably if bargaining strength were not changed the pass through would be 100 percent since what employers and employees bargain over is the wage/standards package. Employees want higher wages and higher standards. Employers want lower wages and lower standards since both are costs to them. So while lower labor standards elsewhere would no longer contribute to the race to the bottom effect in the U.S., the greater wage gap would produce the same size effect as before. The important point to understand is that only to the extent that universal labor standards increased the bargaining strength of workers elsewhere would it diminish the race to the bottom effect for U.S. workers.

Moreover, anything that increased the bargaining strength of third world workers more than universal labor standards would also do more to arrest the race to the bottom effect for first world workers. What if land reform in the third world increased the bargaining strength of third world workers in manufacturing industries more than universal labor standards by raising the reservation wage and decreasing urban migration? In this case third world land reform would be more beneficial to first world workers than universal labor standards. Or what if stopping U.S. military aid to totalitarian regimes in the third world improved the bargaining strength of third world workers more than universal labor standards? In this case stopping U.S. military aid would go farther to arrest the race to the bottom effect for U.S. workers than universal labor standards (not to speak of reducing our taxes.) Or what if stopping bio-piracy of native seeds avoided ruin for third world peasants who may well end up with no alternative to buying seeds they cannot afford? Obviously how much any particular labor standards, land reform, or reduction in military aid affects the bargaining strength of third world workers depends on the actual reform. But the important thing to remember is that the race to the bottom effect depends on how weak labor is elsewhere, period.

Finally, the most important question to consider is whether universal labor standards weakens the bargaining strength of third world countries versus first world countries in the global economy. This is clearly the fear of not only third world governments and elites, but the most active and important third world grassroots organizations involved in the struggle against corporate sponsored globalization. The current trend is to negotiate mutual tariff reductions. What if third world countries lower their tariffs in exchange for lower tariffs in the first world, only to discover down the road that first world countries raise their tariffs again, claiming that third world countries are in violation of labor standards. Third world countries would be powerless to impose retaliatory tariffs under the new rules of the game since it is unlikely first world countries would be found in violation of the labor standards—which were their standards in the first place. Trade liberalization agreements that eliminate other reasons for imposing tariffs as legitimate, leaving violations of labor standards as one of the few legitimate reasons for raising tariffs, certainly tilts the global economic playing field even farther to the advantage of the first world than it already is. It is tantamount to unilateral disarmament by the third world in the event of any future trade wars. Clearly this is a problem any fair minded opponent of corporate sponsored globalization should consider seriously before favoring labor standards as opposed to some other way to increase the bargaining power of third world labor in order to arrest the race to the bottom for first world workers.

China's Entry into the WTO

For the past seven years the Clinton administration has asked Congress to extend China Normal Trading Relations (NTR) status for a year at a time. Opponents have argued that China does not deserve such status because the Chinese government denies its citizens basic democratic political and human rights. The Administration has argued that while partly true, the behavior of the Chinese government is improving, and a policy of “engagement” is more likely to advance the cause of democracy and human rights in China than a hostile policy of trying to isolate China from the civilized world community. After a great deal of demagogic and hypocritical posturing on both sides, Congress has always voted to extend China NTR status for yet another year. This year the Administration is asking Congress to grant China permanent NTR status because unless Congress does so, U.S. businesses will not be able to take advantage of the deal the Clinton administration recently negotiated with the Chinese government for its entry into the WTO, while foreign businesses will.

There are those in the U.S. who oppose China's entry into the WTO because they always oppose anything they deem to be in the interest of “Communist” China and contrary to the interest of the government in Taiwan. They oppose China's entry into the WTO for the same reason right wing Cuban Americans oppose lifting the U.S. blockade against Cuba—they think the more belligerent the U.S. government is toward a government they have always sought to bring down, the sooner that government will fall. These are the people who have made greatest use of the annual debate in the U.S. Congress over whether or not to extend China NTR status. They have used the debate as yet another forum to denounce godless, totalitarian communism. Since these are the same people who supported Pinochet, Mobutu, and Suharto until the bitter ends of their bloody regimes, and who voted not to join the international boycott against the Apartheid regime in South Africa, it is clear they have no sincere interest in democracy or human rights.

There are also those who oppose China's entry into the WTO because they sincerely support democracy and human rights and think U.S. trade policy should be used to punish governments who violate political and human rights. In other words, they believe in “linkage” and denounce the Clinton administration as hypocritical for its failure to reconcile its economic and human rights policies toward China. Some who take this position on China and the WTO are on unimpeachable moral ground. But there are two problems with this position: (1) Who is the U.S. government to sit in judgment of the human rights records of other governments? The U.S. government has a long history of denouncing human rights records only of regimes we deem unfriendly and overlooking the most heinous crimes of regimes provided they support U.S. policies. As a matter of fact, sometimes the same regime, with the same policies, changes overnight from being described as a government in good moral standing to being demonized as a “new Hitler” or drug pusher merely because it opposed a U.S. government foreign policy objective— as happened with Sadam Hussein in Iraq and Manuel Noriega in Panama. (2) Is the Chinese government a worse violator of human rights than many other governments already within the WTO? If so, is someone opposed to admitting China also demanding that other human rights violators be expelled?

I described the lobby pressuring Congress to grant China permanent NTR status in the January issue of Z. It reads like a Who's Who of major U.S. corporations, banks, and insurance companies who have already spent billions of dollars because they know they stand to gain hundreds of billions. This business lobby bought the Clinton administration years ago, which is why the Administration excuses Chinese government human rights violations, pretends the violations are on the wane, and argues illogically that engagement is more effective than isolation in the case of China, while isolation is more effective than engagement in the case of Cuba. Administration critics are completely right to point out that Clinton's China policy is yet another reminder, if one were needed, that his proclaimed devotion to human rights is opportunistic, hollow, and hypocritical.

The annual debates over NTR status for China have been among the political low points for a Congress and Administration with a great many low points to choose from. Which poses a serious dilemma for those of us opposed to corporate sponsored globalization as this year's China debate begins. Mike Dolan of Public Citizen's Global Trade Watch was quoted on the front page of the Wall Street Journal on December 6, 1999 right after the victory in Seattle saying “China. We're coming atcha. There's no question about it. The next issue is China.” Jeff Faux, President of EPI, a liberal economic think-tank, was quoted in the same article to the effect that it would be impossible to get labor and environmental standards included with China in the WTO because China is a dictatorship and too big to push around. Rob Scott, also of EPI, wrote in the last issue of Working USA in 1999 that China should not be allowed in the WTO, among other reasons, because it engages in “market distorting government policies, including requirements for technology transfer to domestic firms, local content and offset requirements.” John Sweeney denounced the Clinton administration China deal as soon as it was announced, and AFL-CIO spokesperson Denise Mitchell announced: “The China vote is going to become a proxy for all of our concerns about globalization.” But Marty Hart-Landsberg, writing in the progressive economists network [PEN_L] is one of many thoughtful left economists who have expressed concerns: “What I worry about is rather than capitalism, or even MNCs, or even the WTO as the enemy, we now suddenly find that China is the enemy and that we need to keep it out of the WTO so that we can preserve the potential for reform [of the WTO]. Very scary.” Alexander Cockburn lashed out at Dolan, Faux, Scott, and the AFL-CIO in his column in the January 3 issue of The Nation saying he does not “feel comfortable at the sight of Western progresives execrating China,” and he does not think “we should be trying to keep China out [of the WTO.]” In the February 14 issue of The Nation Cockburn elaborated: “By all means boycott prison-made commodities from China. But everything? China's credentials for the WTO are just as good as those of the U.S., so the arguments for keeping China out seem pretty rickety and hypocritical to me.”

Like Dolan, Faux, Scott, Sweeney, and others, and unlike Hart-Landsberg and Cockburn, I think the movement against corporate sponsored globalization should oppose China's entry into the WTO. But it is very important to do so for the right, not the wrong reasons. We should not oppose China's entry on grounds of human rights violations. Don't get me wrong. Unlike the Clinton administration, I do not excuse nor make light of Chinese human rights violations. The Chinese government denies its citizens the right of free speech, the right to organize politically, the right to organize independent unions, the right to strike, the right to a fair trial, and the right to privacy. The post-Mao government has routinely resorted to arbitrary arrests to suppress dissent, and has not hesitated to imprison millions and kill tens of thousands to maintain its monopoly on political power. These abuses, along with others, are more than enough reason to give Chinese citizens “the right to rebel,” in Mao's words, and replace totalitarian Communist rule with a system of political democracy that protects human rights and civil liberties. But all these violations of political, labor, and human rights do not distinguish the Chinese government from many of the 135 governments who are presently members of the WTO in good standing. If someone wants to draw up a list of minimal political, labor, and human rights countries must observe to be WTO members; if someone wants to design a fair arbitration process for judging when governments are in violation; if someone wants to review the status of present WTO members according to the same standards applied to all applicants, not just China; I would consider supporting such a reform proposal. But until that is what is proposed, it is hypocritical to oppose China's entry because of violations of political and human rights. Nor should we oppose its entry on grounds that China engages in “market distorting policies.” Some of those so-called market distorting policies are among the best policies of a Chinese government that all too often badly serves the economic interests of its citizens and increasingly fails to promote economic development that is environmentally sustainable and egalitarian. Progressive opponents of corporate sponsored globalization should never permit themselves to be seduced into defending the position that fair trade can only take place between countries whose governments never intervene in the market place. Our position should be support for greater intervention in the marketplace, until such time as markets and the economics of competition and greed they embody can be replaced altogether with a non-market system of equitable cooperation. nstead, U.S. opponents of corporate sponsored globalization should oppose China's entry into the WTO on grounds that it will adversely affect the lives of the great majority of Chinese as well as the lives of a majority of Americans.

In the January Z I evaluated the deal struck by the current leadership of the Chinese Communist Party and the Clinton administration in great detail. It is a deal that serves the interests of important segments of the ruling elite in each country. But it is a deal that sacrifices the interests of the majority of Chinese peasants and workers to the interests of some in the old Party elite and many in the newly educated elite—just as it sacrifices the interests of the majority of Americans to the interests of powerful segments of the U.S. business community. This is not China vs. America. This is a deal that enhances the economic prospects of a small minority who are already better off in both countries while significantly diminishing the economic prospects of the majority in both countries. U.S. opponents of corporate sponsored globalization can oppose China's entry into the WTO in good conscience—as long as we do so for the right reason: China's entry is detrimental to the interests of the vast majority of Chinese as well as the majority of Americans. Only because Chinese peasants and workers are kept less informed and more repressed than U.S. workers and environmentalists do we hear fewer voices from China echoing our own cries for an end to corporate sponsored globalization. It is not the movement against corporate sponsored globalization that usurps the sovereign right of the Chinese citizenry to determine their own destiny when we oppose China's entry into the WTO on the terms negotiated by the Chinese government. An undemocratic, self-serving Chinese government did that when they negotiated the deal, just as the corporate globalizers with the help of their political and intellectual handmaidens have usurped the right of economic self-management of the global majority over the past two decades. There is no reason not to extend our shout “Ya Basta!” to ensnaring the Chinese masses into a corporate dominated global system that enriches a wealthy few particularly at the expense of the most wretched of the earth, which is where the vast majority of Chinese will sink if the deal goes through.