The Multinational Monitor

February 1984 - VOLUME 5 - NUMBER 2


N E W S   R O U N D U P

Nestle boycott suspended

The international consumer movement won a tremendous victory when Nestle Corporation and organizers of a boycott of Nestle products called a truce in their long battle over the company's sales of infant formula in the Third World.

In a January 26 press conference in Washington, D.C., a smiling panel of Nestle executives and boycott activists announced that they had reached substantial agreement on the remaining issues separating both sides, and that the boycott of Nestle products would be "suspended" pending a six-month period of "monitoring.'

Sister Regina Murphy, Chairperson of the International Nestle Boycott Committee, said, "Not every `i' has been dotted, nor every `t' been crossed ...but our present degree of unity overshadows our differences and emphasizes our commitment to seek further clarification and agreement." Doug Johnson, National Chair of INFACT (Infant Formula Action Coalition), the principal organizer of the boycott, said all of INFACT's boycott activities would cease. The new agreement was cemented when Doug Johnson graciously accepted a Nestle chocolate bar from Nestle executive Niels Christenson.

The negotiations for an end to the six and a half year old boycott were mediated by UNICEF, which will continue to work with both sides in indentifying and clarifying the few remaining areas in need of study and definition. Nestle has agreed to abide by UNICEF's judgment in these matters.

Last December, INFACT outlined four actions that Nestle would have to take to stop the boycott: limiting free supplies of formula to hospitals for infant who cannot be breastfed; stopping all personal gifts to health workers; revising misleading literature for mother and health workers; and including clear warnings on labels about the hazards of bottle feeding and the benefits of breastfeeding. The issue of ending free supplies to hospitals was by far the most controversial demand, and certainly Nestle's most significant concession.

The agreement gives momentum to efforts to force the rest of the formula industry to meet Nestle's standards. Announcement of the campaign's next corporate target is expected in a few weeks after a February activists' meeting in Mexico City.

- Fred Clarkson

Litton extends hand to labor

Litton Industries, the California-based conglomerate notorious for its anti-labor practices, has proposed the formation of a joint management-union committee to investigate charges of labor violations against the company. Litton chairman Fred O'Green announced the plan at the company's annual meeting in December.

The proposed committee will include two representatives to be chosen by the unions, two management representatives, and a "neutral chairman." It will convene once selections have been made.

Litton's conciliatory stance drew praise at the annual meeting from AFL-CIO official Howard Samuel, who immediately put aside planned remarks about Litton. It also brought a temporary halt to a year-old multiunion campaign against Litton's anti-labor practices (see MM, May 1983). Lance Compa, one of the campaign's organizers, regards the move as a direct result of the campaign, and says he is "cautiously optimistic" that it will result in a strengthened bargaining position for the unions. The Litton campaign has been administered by the Industrial Union Department of the AFL-CIO since being officially endorsed by the labor federation.

Litton spokespersons declined to comment on the reasons for the initiative, but observers believe that two recent developments may have pressured the company to begin direct talks with labor. Last November, the National Labor Relations Board decided to regard labor law charges against Litton on a companywide rather than a plantby-plant basis; the new approach could lead to stiffer penalties for Litton. Around the same time, a House subcommittee approved a bill that would bar government contracts to repeat labor law violators. Passage of the bill could seriously affect Litton, which earns more than onequarter of its $4.7 billion yearly revenues from government defense contracts. Labor unions had lobbied -heavily in favor of both measures.

According to one labor source, several unions in the AFL-CIO balked at linking their campaign with peace groups around the issue of Litton's military contracting.

- Jackie Corbett

Eximbank vetoes Korea steel loan

The U.S. Export-Import Bank (Eximbank) backed away from granting a subsidized loan from its funds to a new South Korean steel mill after an unprecedented intervention in its affairs by the Commerce Department and strong objections from the AFL-CIO. Instead, the government bank, established in 1934 to support American exports, agreed to guarantee credits from U.S. commercial banks for the purchase of American• equipment by the Korean project. The compromise agreement was announced on January 4.

The dispute over the subsidies illustrates growing tensions within the Reagan Administration over Third World imports, as well as its sensitivity to labor issues during an election year.

Eximbank will guarantee a $30 million loan to the government-owned Pohang Iron and Steel Company, which is constructing a $2.5 billion steel mill and port complex on the Southern Korean coast that will eventually double the country's steel capacity. The American equipment contracts are only a minor part of the project; the major contracts for the mill's heavy equipment have gone to four corporations from Western Europe and Japan.

The AFL-CIO, normally supportive of the Eximbank, opposed all aid to the steel project. In a December 12 letter to Eximbank president William Draper III, AFL-CIO research director Rudy Oswald «rote, "U.S. government support for the expansion of South Korean steelmaking capacity is very troubling in light of the problems facing the U.S. steel industry," and charged that Eximbank support violated U.S. laws prohibiting aid to foreign industries that might "cause injury to U.S. production of that commodity."

The labor letter was followed by a letter from Lionel Olmer, U.S. Undersecretary of Commerce, who wrote Draper that because "increased Korean steel exports would be aimed primarily at the U.S.," U.S. aid should be minimized.

"The Olmer letter had a strong political impact," says Eximbank Korean loan officer Robert Kaiser. "To have an organization that is normally so supportive to come on so hard about the steel thing gave us pause for thought." Besides vetoing direct subsidies to the Korean steel project, Kaiser says that Eximbank is also urging U.S. trade partners to curtail all lending to Third World steel producers.

Both Kaiser and the Commerce Department emphasize that the U.S. is not backing away from its commitment to the Korean government, however. Seoul is the largest recipient of Eximbank loans.


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