Posted on 07/21/2005 10:30:40 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
Was it Divine Providence or dumb luck? The details of U.S. Trade Representative Rob Portman's plans to fund worker rights improvements in Central America came my way just when the National Labor Committee's latest reports on the Central American labor situation arrived.
Whatever the explanation, the NLC studies powerfully reenforce what every thinking person – and especially Congressional Democrats seeking pretexts to vote for the Central America Free Trade Agreement should already know: Third world workers' lives won't be bettered significantly, and U.S. trade policy initiatives like CAFTA can't become win-wins for Americans and their trade partners, without radical fixes to U.S. trade policy.
Tokenism like Portman's offering mocks the problem. But so does the longstanding mantra to include tough, enforceable worker rights provisions in the text of trade agreements. The labor surpluses in Central America and the rest of the third world are simply too big.
Desperately needing pro-CAFTA Democratic votes to prevent a humiliating defeat for the administration and its outsourcing multinational-company allies, Portman elaborated on the administration's plans to spend $20 million already appropriated to strengthen the protection of worker rights in Central America and the Dominican Republic.
That comes out to a grand total of $1.34 for every one of the DR-CAFTA region's nearly 15 million workers, and speaks volumes about Portman's sincerity (even if he did sucker New Mexico Democratic Senator Jeff Bingaman into switching to a pro-CAFTA vote last month with these monies plus a promise of $40 million more annually through fiscal year 2009).
But the National Labor Committee reports show the shortcomings of such worker rights approaches much more powerfully. The most important case study published by the NLC concerns Alcoa's auto parts factories in Mexico and Honduras. It's hard to imagine a more vivid illustration of how today's trade policies keep sustaining a worldwide race to the bottom in living standards.
Although all these facilities, which produce mainly wire harnesses for export to Ford, GM, and Subaru factories in the United States, are filled with advanced machinery, pay is rock bottom and working conditions are disgraceful. The median wage in Alcoa's Mexican plants is $1.22 per hour – and that includes bonuses handed out for punctuality and extra food. Since prices for basics are relatively high along the U.S.-Mexico border where these factories are located, more than a fifth of the workers need to supplement their incomes by selling blood in U.S. border towns. Nor have Alcoa's workers been making progress over the years: their wages have long lagged inflation.
In addition, Alcoa has run its factories like prisons, according to the NLC. Employees have faced arbitrary speed-ups in production lines and mandatory overtime, as well as limited lavatory visits, and, of course, have lacked meaningful rights to organize.
Given Mexico's un- and underemployment rates of nearly 30 percent, it's easy to see why Alcoa and other employers in the country have held the whip hand over workers. With CAFTA's approach, however, Alcoa evidently realized that even this degree of exploitation was far too generous to its Mexican workers.
Only a few months after CAFTA was signed (in May, 2004 – the Dominican Republic was added in August), Alcoa lowered the boom on its Mexican workers. In February, 2005, after having frozen wages for more than a year, Alcoa announced a four percent wage increase. It was bad enough that this hike didn't even come close to matching inflation, but Alcoa also reduced or simply eliminated a series of modest but important benefits, such as matching payments to workers' savings accounts, free transportation to and from work, the attendance and punctuality bonuses, and stipends for school supplies for workers' children. To add insult to injury, Alcoa announced that the new wages would remain in place for 18 months.
The employees responded with peaceful work actions and a one-hour stoppage at one pair of factories. Alcoa's retaliation was swift: Dozens of workers were arbitrarily fired or threatened with firings if they participated in further work actions. Even more important, from the standpoint of U.S. trade policymaking, Alcoa began taking full advantage of today's version of globalization, and specifically, the opportunities that CAFTA would provide to set up export production in Central America.
According to the NLC, Alcoa manager Luis Trevino made the CAFTA card plain as day. If the workers rejected the overall pay and benefit cuts, "Alcoa could pick up and leave, and go to Honduras, like Levi Strauss did." Other managers explained why: "We can hire three Hondurans for every one of you Mexicans" became a consistent management refrain.
Actually, Alcoa had been moving production from Mexico to Honduras for three years, and set up even lower-wage automotive sweatshops. Thus its threats to continue picking up stakes and cut its labor costs further were eminently credible. In other words, the company was already living in an employers' dream world, in which it could keep playing penny-wage Mexican workers off against penny-wage Hondurans and keep driving its labor costs lower and lower. Yet by guaranteeing that its Central American output would have access to the supremely important U.S. market, Alcoa's position was strengthened considerably with the force of domestic and international law.
For years, left-of-center American trade policy critics have urged linking the access of these Alcoa and other U.S.-owned or related third world factories to the U.S. market to decent worker rights standards written into trade agreements. In fact, the House Democrats' opposition to CAFTA is based almost entirely on this position. Yet as appealing as such measures are in principle, their effects would simply pale before the labor force dynamics that are the real drivers of wages in Central America, Mexico, and other third world countries.
Remember – Mexico's un- and underemployment rates are nearly 30 percent. According to the CIA's latest annual World Factbook, the situation in Central America and the Dominican Republic is nearly as bad. Honduras, for example, has a 28.5 percent unemployment rate. The Dominican Republic's is 17 percent. The other DR-CAFTA countries come in considerably lower – between 6.3 and 7.5 percent. But these figures don't count underemployment (specified as 46.5 percent in Nicaragua, for example).
Poverty rates in the region are appalling, too – ranging from 18 percent in Costa Rica to 75 percent in Guatemala. With this many desperately poor and/or out-of-work people all seeking jobs, and with globalization meaning that they in turn need to compete with literally billions of even poorer Asians and Africans, how in the world can fiats from the U.S. government meaningfully affect the region's wage levels? Even if productivity in Central America shot up – which in theory would justify much higher wages – employers still would have precious little incentive to budge. The race to the bottom would be almost completely unaffected.
Thus although CAFTA will turn out to be a great recipe for deepening the economic misery of both Central America and Mexico, simply including even the strongest worker rights provisions to these or other trade agreements won't leave Latin American and other third world workers much better off.
Unless the plan is to use America's market power to force the global economy to adopt a fairly generous minimum wage – and almost no one is talking about that – trade policy critics need to realize that the only way to help at least some of the third world out of this bind without forcing U.S. wages even lower is to set genuine priorities in U.S. trade policy. Not all low-income countries would be permitted full access to the U.S. market. Some would have to be excluded largely or entirely, so that others might gain real opportunities. Alternatively, the United States could bring back a unilateral version of the old Multifiber Arrangement, which set global textile and apparel quotas and permitted steady, manageable export growth. Tragically, it expired, as previously agreed, last January 1 – a triumph for unthinking economic dogmatism.
Other industries could easily be brought into this regime. And European and Japanese participation could be sought as well. Quota schemes might be skipped altogether if Europe and Japan would simply boost their own imports of third world manufactured goods from current levels, which are not only meager by any realistic standard, but much lower than U.S. levels. Unfortunately, such voluntary market opening isn't on the agenda in Brussels or Tokyo.
Whatever its form, a new U.S. trade policy based on these more realistic assumptions would admittedly send a discouraging message to many third world countries, which have been promised over and over again that they could develop rapidly if only they adopted free market economic policies at home, disciplined their domestic spending, suppressed imports, and focused tightly on exporting. But at least this message would be honest and might provoke a needed rethinking of the dominant, growth-through-exports-to-the-US development model – a model that cannot work for all the world's countries.
And once the CAFTA debate is over, and left-of-center trade policy critics can resume some long-range thinking, it would be most welcome if some of them could start formulating alternative developmental models rather than tinkering at the margins of one that is clearly unworkable for most of the developing world.
ping
If, to you, the planned destruction of this republic is not news worthy, you must not be American.
Your opinion on the subject is therefore worthless.
I agree, todays reality is quite insulting to all but the self appointed elite.
That has to be the most ignorant or purposefully convoluted conclusion you have ever drawn.
Due to the high quality of their essays, I try to post all the "opinion" articles that they author.
Those average about 4~5 posts per month, but don't seem to follow any set schedule.
I post from their Globalization Follies less frequently, usually skipping the short quips, and posting those with more substance.
I also scan their daily trade news for links to articles in other publications. Along with my own Google news search, this is where I locate many of the articles that I post, but certainly not all of them.
I'm sure that the landed gentry have less descriptive euphemisms with which they refer to their servants. But alas, I am not privy to the current code. Perhaps you can provide a discreet URL so we can learn what terminology is presently fashionable.
ROFLMAO
It becomes a "devious plot" when transnational business interests influence government policies for their own benefit, and to the detriment of the nation's citizenry.
"I'm sure that the landed gentry have less descriptive euphemisms with which they refer to their servants."
You used the word "peon" -- that's why I called attention to it. It seems out of character for you to use such terminology -- that's all.
But "peon" is the one that most people recognize as associable with Latin America.
I understand that it makes some people uncomfortable, but it is a legitimate word that is used in its proper context.
Yes, you do.
"Peons" is the word King George has chosen for your grandchildren.
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