Corporations "Love Bomb" Civil Society
to Promote Globalization

Trading With the Enemy
William Greider, The Nation
April 17, 2001

A new season of trade politics is under way among Washington insiders, with
an astonishing twist: America's major multinational corporations are
love-bombing labor and environmentalists. Leading business interests, it
turns out, are not opposed to incorporating labor and environmental rights
into new trade agreements after all. "These are important issues that cannot
be ignored," the Business Roundtable announced, in a report speaking for
about 200 of the best and biggest corporate logos, from General Motors to
General Electric. The Emergency Committee for American Trade and the
National Association of Manufacturers have been shopping a list of various
labor-enviro measures they might support in upcoming trade negotiations. The
Economic Strategy Institute, a think tank financed by steel, aviation,
semiconductors, autos and other manufacturers, went much further. ESI
published a scholarly study that argues labor-rights enforcement will
actually generate greater economic efficiency in the global system and
healthier development for poor countries.

This abrupt friendliness toward reform from its most stalwart industrial
opponents represents meaningful progress for the popular forces that made
their anticorporate coalition visible in Seattle. Alas, it is not the
millennial consensus the corporates to depict. "The only whiff of
sincerity," said Daniel Seligman of the Sierra Club, "is they sincerely want
fast track legislation with minimum cost to their bottom lines." Lori
Wallach, director of Global Trade Watch, described the business offensive as
"a splash of green and blue paint" intended to get out of the political
stalemate threatening further trade liberalization. "They've hit the
political reality," she said. "It's slaying them."

The business motives clearly involve tactical politics, not some sort of
ideological conversion, but we may at least pause to savor the new music. A
year ago, all right-thinking experts discounted and ridiculed the new social
movement as self-indulgent and destructive. "Luddite whackos," in the Wall
Street Journal's memorable phrase. Economists and free-trade cheerleaders in
the media condescendingly lectured the activists on how impossible it would
be to incorporate "social" values into international agreements without
wrecking the global economy. Besides, they scolded, don't you know such
measures do the gravest harm to the struggling poor of the world? Now that
global corporations are shifting to a more sympathetic line, one awaits a
similar revisionism among their media camp followers. Or will the pundit
class turn its fire on Boeing, Microsoft and others for caving to the
Seattle rabble? More likely, the opinion-makers will blame the
bleeding-heart agitators for again mucking up progress.

The important point is that, tactical insincerity aside, many US
multinationals are implicitly retreating from an untenable intellectual
position, as some business reps privately confirm. A central question raised
by labor and others is, How can the trading system invoke penalties like
tariffs to protect intellectual property rights or capital investors but
insist this device would be illegitimate for labor rights and other human
concerns? "There's no answer to that on intellectual grounds," one
business-friendly thinker confided. "Business people realize the debate has
shifted, but they're trying to figure out how they can still preserve their
position."

The intellectual concession is expressed most directly in the ESI's report
Labor Standards in the Global Trading System, by Peter Morici, a
neoclassical economist from the University of Maryland and former economics
director at the US International Trade Commission. Arguing that poor labor
conditions hamper long-term growth even though they may appear to have
short-term advantages, Morici wrote that exploited labor in developing
economies, including child labor and discrimination against women, "may be
expected to reduce wages for less skilled workers in [their] domestic
markets, increase exports and place downward pressure on the wages for
competing workers in foreign economies." When freedom of association, the
right to organize and other labor rights aren't protected, the annual
savings in labor costs average more than $6,000 per worker, Morici
estimated. These practices may attract low-end investments to a country's
export zones but won't have much positive effect on economywide development,
he wrote. "Lax enforcement of workers' rights encourages prolonged reliance
on less-skilled, labor-intensive activities and does little to encourage
economy-wide capital formation, the development of more advanced industries
and long-term growth," Morici reported.

This analysis is a pretty good fit with what AFL-CIO president John Sweeney
has been saying when he promotes "fairness" and new rules for the global
system, though Morici is deriving his conclusions from standard economic
theory as well as the accumulated evidence. The ability of some countries to
gain advantage against foreign competitors by exploiting their workforces
ultimately distorts the allocation of investment capital for everyone in the
system and thus is inefficient, he explained. Thus, he said, the economic
logic for enforcing labor rights through trade rules is identical to the
World Trade Organization's justification for invoking penalties against,
say, a government subsidizing its auto industry to gain illegitimate
advantage over others. In both cases the consequences distort trade, for the
same theoretical reasons.

"An international regime that permitted importing countries to embargo or
impose tariffs on goods made with exploited labor would increase wages,speed
development and increase growth in countries where labor is exploited,"
Morici concluded, " if these measures caused governments or producersto take
corrective actions." If the offending nation refuses to take action on labor
rights, that could make conditions worse for the exploited workers,
heacknowledged, but the country would also lose markets for its exports.
Thus, the downward wage pressures on competing workers in foreign
countrieswould be reduced and the system as a whole would benefit by
encouraging rising wages and maturing levels of development everywhere. This
objective,of course, is precisely what motivates organized labor to seek
enforceable labor standards worldwide -- a position the press describes as
"protectionist"when promoted by workers, but a "breakthrough agreement" for
free trade when it is achieved by the corporations.

Most of the multinationals, one hastens to add, are not so enlightened as
the ESI study and certainly not ready to consider enforceable sanctions.
With the usual measure of cynicism, the corporations are angling for the
right set of rhetorical concessions that will allow nervous politicians to
vote for another open-ended round of trade negotiations while claiming they
stood up for the virtues of labor and enviro rights. The vigorous new
popular movement hasat least made it more difficult to talk nice while
caving in. Indeed, the vigilance of an energized grassroots can cut through
the cynical ploys by educating people on the real content of what's
occurring. In this case, the business orchestration seems to have been
tripped up by its own allies. When business lobbyists took their list of
innocuous proposals around Capitol Hill, they encountered intense objections
from key Republicans, who evidently fear thateven sounding friendly to labor
rights and other human concerns is a slippery slope for business. If you say
you support environmental rights in global trade, next thing you know,
people might expect you to do something real. The business groups backed
off.

"At least some parts of the business interests," Lori Wallach of Global
Trade Watch explained, "have concluded that to get out of the rut, the
standstill onfurther liberalization, they will need a fig leaf on labor and
the environment. But there's still enough resistance among other business
guys who say, hey,we don't even need a fig leaf." In any case, she added,
the proffered list of possible compromises is ludicrous, since it mostly
involves unenforceable provisions from old trade measures, like the NAFTA
side agreements, that utterly failed to bring about any real progress, and
so are unthreatening to business as usual.

US multinationals have two large targets of opportunity on this year's
agenda: the so-called Free Trade Area of the Americas (FTAA), which
wouldessentially expand NAFTA to cover the entire hemisphere; and the
long-sought startup of a new negotiating round to expand the WTO agreement
(anobjective stymied at Seattle). In late April, Bush travels to Quebec to
meet with other heads of state and presumably launch the FTAA negotiations
(hissecond trip abroad, though still not overseas). The WTO's November
meeting in Qatar is intended to launch its new round, though nations do not
yetagree on the terms. Movement activists intend to stage their own, more
colorful reunions in Quebec and Qatar.

Both corporate trade objectives face dicey prospects at best, given the
divisions in Congress and opinion polls demonstrating the public's
strongskepticism--the majority's fear that trade expansion deepens the
inequalities between rich and poor and that the agreements have neglected
concern for US workers, global labor standards and the environment. The first
legislative hurdle for the Bush Administration is securing the fast track
authority from Congress that would enable the United States to negotiate
with a blank check -- whatever agreement the Administration produces would
come back toCongress for a simple up-or-down vote, no amendments or
deletions allowed. Back in 1998 the labor, enviro and human rights coalition
defeated Bill Clinton in the House on fast track, and it can prevail again
this year if House Democrats maintain unified resistance. It's another big
test for the Democratic Party but also for the new President, because both
trade issues would consume a lot of his political capital.

The insider action now under way amounts to essential foreplay -- turtles
and Teamsters versus the Business Roundtable. Both sides are attempting to
lockin the swing votes in Congress and thereby persuade the White House
either to plunge ahead confidently with fast track or to back off and
postpone, rather than damage the domestic issues that are higher priorities.
Bush could theoretically skip the fast track authority and proceed to
negotiate without it,hoping to build sector-by-sector support for the final
terms. That approach would be a blow to corporate manhood likely to enrage
business and finance constituencies. Either way, these trade issues pose real
risks for Bush. The negotiations with Latin America will be especially
tricky for him since the US side seeks concessions for the financial sector
and other business interests, and to get them, it may have to toss American
agriculture over the side. Developing countries are demanding greater US
market access for their agricultural production, from grain and beef to
citrus fruits and flowers.

If Bush goes ahead with fast track this year, it should provide a prime
political test for the Seattle movement and a splendid mobilizing
opportunity, since at this point neither side can count on the votes to
prevail. In the House, there are always at least forty or more Republicans
voting against trade measures, so Bush needs to round up a lot of Dems (the
Senate is more disposed to support trade measures, though with the 50-50 tie
the Democrats could certainly block fast track if they have the will to do
so). Wallach and other head-counters for the green-blue coalition think
their side may bemarginally stronger this year, partly because Democrats
won't have a Democratic White House squeezing them for pro-trade votes, but
no one really knows.

Fig leaves do matter. Congressional members use them as convenient
justification, even if they know the content is meaningless. Last year
twenty-eight House Democrats who had opposed fast track voted with the
corporate globalists for China's admission to the WTO. Their fig leaf was an
amendment creating a special commission to monitor China's behavior on human
rights and presumably to criticize its abuses. Yet after the China vote, the
money for the commission was never appropriated. The much-touted commission
still doesn't exist. This year, the business guys will have to come up with
new and better fig leaves.

The Seattle movement, in other words, is gaining traction inside Washington
politics, but does it have the power to go on the offensive and actually
legislate its own agenda? Not yet and obviously not easily with a Republican
President. But initial moves are under way to develop that capacity. A
broadcoalition is supporting a newly drafted "right to know" legislative
proposal that would require US multinationals to collect and disclose vital
data on environmental damage and workplace conditions in their overseas
production--including the subcontractors and suppliers where the most
abusivepractices typically occur. The information would flow not just to
Americans but to the workers and communities in foreign countries where the
damage is done. Citizens and civic organizations would be empowered to sue
violators and collect damages [see Greider, "Global Agenda," January 31,
2000].

The proposal is deliberately modest, a first step that sets no standards or
trade penalties but is designed to demonstrate that Congress can (and
regularly does) legislate terms for the behavior of US multinationals
elsewhere in the world. Most of the reporting requirements are parallel to
what US companiesalready must do at home--the toxic-release reports to
communities required by the EPA, the workplace injuries and deaths reported
to OSHA, the status of workers' rights and core labor standards in their
factories. On human rights, corporations would be required to report their
security arrangements withstate police and the military, as well as the
complaints of abuse from local communities. Collectively, the information
would provide a new window onthe nature of globalization and also greater
capacity for international activists to confront the conditions, company by
company.

Some 180 civil organizations have endorsed the proposal and are shopping for
co-sponsors in Congress. Support includes the AFL-CIO, the Natural Resources
Defense Council, Amnesty International, Oxfam America, Global Exchange, the
International Labor Rights Fund, the Lawyers Committee for Human Rights and
many other leading advocates of reform. David Waskow, the international
policy analyst at Friends of the Earth, said, "People are very excited about
having some kind of proactive opportunity. People are still ready to fight
it out on the trade stuff, but they also want something where they can say
yes." Getting to yes--the constructive and thorough reformation of the
global system -- is a long way off, of course. But it does help to know
there's forward movement.