SEPTEMBER 1991 - VOLUME 12 - NUMBER 9
T H E F R O N T
Labor Rights Hoax
The Bush Administration has failed to consider labor rights standards when granting certain trade benefits to developing countries, charges a suit filed by a number of labor and human rights organizations. The International Labor Rights Education and Research Fund (ILRERF), along with the AFL-CIO, several unions, human rights organizations and other labor groups, is seeking judicial review of what it claims is a systematic failure of the U.S. Trade Representative (USTR) to fulfil its legal obligation to enforce international labor rights in its administration of the Generalized System of Preferences (GSP).
The GSP program, established under the 1974 Trade and Tariff Act, grants developing countries the right to export goods duty- free to the United States. A 1984 amendment to the Act requires that countries receiving GSP benefits respect international labor standards, including the right to association, the right to organize and bargain collectively, a prohibition against compulsory labor, a minimum age for the employment of children and regulations governing minimum wages, hours of work and occupational safety and health.
While ultimate authority for all GSP determinations rests with the president, the program is administered by the GSP Committee of the USTR, which is made up of the secretaries of several executive departments. Under the GSP regulation, any interested party may petition the Committee to review the eligibility status of any country designated for benefits. If a country is selected for review, the Committee then conducts its own investigation of labor conditions and decides whether or not the country will continue to receive GSP benefits. Interested parties may also submit testimony during the review process. In the past, the Central African Republic, Chile, Nicaragua, Paraguay and Romania have been suspended from the program.
Petitioners voice several complaints with the way the GSP review process has been administered. The first is that, in enforcing the labor rights provision, the GSP subcommittee has relied exclusively on petitions filed by interested parties in making the decision to review a country. If no petition is filed, the Committee appears to assume that the government is respecting the international standard. Terry Collingsworth, the lawyer who is filing suit under the Administrative Procedures Act against President Bush and the GSP Committee on behalf of the ILRERF and other organizations, says that the Committee has failed to take any action on its own initiative "even when it has independent information" that the country is failing to meet the standard. Many organizations have questioned, for example, why the president has failed to remove El Salvador from the program when State Department officials have reported extreme violations of basic labor and human rights there.
The second complaint applies to the application of the worker rights standard itself. The worker rights provision states that a country must be denied GSP benefits if it fails to "take steps" to comply with the standard. The USTR has interpreted this to mean that if a government is taking steps to comply with any one of the standards, then its failure to comply with the other four will not preclude its inclusion in the program. As a result, Collingsworth explains, a country like El Salvador, where the murder and disappearances of labor organizers have been well-documented, will continue to benefit from the GSP program if it "takes steps" to establish a minimum wage. Furthermore, in several instances, the subcommittee has failed even to review cases in which petitions document the murder or torture of labor activists, claiming that these offenses constitute "human rights" and not "labor rights" violations.
The GSP Committee has also implemented procedural regulations "which make it more difficult to have a country reviewed," says Collingsworth. A regulatory requirement that all petitions must contain "new information" has been interpreted by the Committee to mean that once a country has been reviewed, any new petitions about that country must provide information about another type of violation. If a country has been reviewed in the past on the basis of violating its workers' right to associate, new petitioners may only submit evidence of a different kind of violation--the employment of children, for example--even if violations of the right to associate continue.
The case against the president and the USTR was filed in March 1990 in the District of Columbia U.S. District Court. The court decided that the case would not be heard, ruling that the president has absolute discretion in applying the GSP statute because the worker rights provision is sufficiently vague that there are no justiciable standards that could be applied by a court.
Collingsworth is appealing the decision, however. In a brief submitted to the D.C. Circuit U.S. Court of Appeals he argues that "all indications are that Congress emphatically intended to create a mandatory worker rights standard and preserve the right of judicial review." If the ILRERF wins the appeal, which will be heard on October 3, the case will be tried on its merits. Collingsworth says that if the case goes to trial, the ILRERF and the other petitioners will be able to provide "reams of evidence" that the administration is failing to meet the requirements of the worker rights provision. Bush administration officials declined to comment on the case.
- Holley Knaus
Tying Up the South
In a move which may increase foreign aid recipients' dependence on the United States, the U.S. Senate passed an "Aid for Trade" amendment to the 1991 Foreign Aid Authorization Bill by a 99-0 vote in July 1991. The amendment, now under consideration in the House of Representatives, mandates a phase-out of direct cash payments to aid recipients, replacing them with credits which can only be used to purchase U.S. goods and services (known as "tied aid").
Implementation of the amendment would call into question the entire purpose of the U.S. aid program, charges a position paper prepared by a coalition of U.S. private voluntary organizations, cooperatives and religious agencies called the Foreign Assistance Working Group. "To place commercial interests front and center in the U.S. foreign aid program would open [it] to increasing pressure to put U.S. commercial advantage before poverty alleviation and human resource development," it states.
Critics say that tied aid perpetuates dependence on the donor country and hinders sustainable local development based on technology appropriate to the recipient nation's people and environment. Stephen Hellinger of the Washington, D.C.-based Development Group for Alternative Policies, argues, "By increasing the import of external technologies that are unadapted to local conditions and experience, one perpetuates the creation of two societies: one in the modern sector and one still very much in the traditional sector." Critics also argue that the technologies introduced under tied aid provisions are usually highly capital intensive, thereby minimizing job creation. The Foreign Assistance Working Group states that "promoting capital-intensive development in the wrong approach for low-income countries. One of the principal ... factors contributing to the low standards of living in those countries is the inadequate or inefficient utilization of labor."
Existing tied aid provisions in U.S. law have interfered with foreign aid programs achieving their development aims, according to two U.S. government reports. A 1986 Office of Technology Assessment report stated that "congressionally mandated [Agency for International Development] requirements to use American equipment ... have complicated and even hindered project operations" because using U.S. equipment means depending on U.S. spare parts and technical skills, which are often in short supply. And a recent Department of Commerce report says that "tied aid can lead to inefficient and wasteful procurement practices, sometime with relatively low development impact."
Much of the impetus for the tied aid amendment came from increasing Congressional awareness of the far-reaching tied aid programs of other countries, particularly Japan and Germany. In arguing for the amendment, Senator Robert Dole, R-Kansas, said, "Our major competitors use their foreign aid to help themselves, especially their exporters, as well as the recipient nation. We should, too."
Ironically, Senate sponsors of the amendment drew attention to the harmful effect of other donor countries' tied aid provisions on recipient countries. For example, Senator David Boren, D- Oklahoma, asked that a Washington Post article--which quoted a western official as stating that Japan's tied aid "is skewed in a manner to promote Japanese interests to the great detriment of the development needs of the recipient country"--be reprinted in the Congressional Record.
Despite the overwhelming Senate support for the amendment, the Bush administration opposes it. The administration's approach has been to negotiate with other industrial countries to reduce their levels of tied aid.
Senate sponsors of the amendment responded to the administration by arguing that the negotiations have failed to accomplish anything. Boren says, "We have waited and we have waited and we have not seen one single change by other countries in our direction." He concludes that it is time to change U.S. policy to "help ourselves while we are helping others."
The value of tied aid to the donor country is questionable, however. The 1986 OTA report stated that tied aid provisions "have proven ineffective in stimulating new markets for U.S. goods." And Senator Paul Sarbanes, D-Maryland, pointed out that "it is estimated that about 65 to 70 percent of the total foreign assistance budget is [already] spent in the United States."
No studies of the impact of tied aid on the U.S. economy have been undertaken by supporters of the amendment. The amount of money in question may be negligible compared to the total U.S. economy. The amendment would raise the amount of Economic Support Funds which are tied to purchases of U.S. goods from the current $573 million to $1 billion by 1993. Though it is a significant amount for recipient countries, the value of this additional tied aid is approximately eight one-thousandths of a percent of the U.S. gross national product.
Finally, according to an Export-Import Bank official, tied aid provisions do not mandate that recipients purchase goods made in the United States by U.S. workers, only that goods purchased are made by U.S. corporations, which may employ less expensive labor anywhere in the world. Thus, the claim by Boren that the Aid for Trade amendment will directly translate into "more jobs for Americans" may be misleading.
- Jennifer Kassan