Behind the Lines

The $5,000 Flashlight

Remember the $450 hammer and the $600 toilet seat? That was the Reagan era. Now there’s the $5,600 toothbrush and the $5,000 flashlight.

A report released in November by Senator Byron Dorgan, D-North Dakota, reveals that multinationals operating in the United States may have avoided up to $45 billion in federal income taxes last year by using phony pricing schemes in order to move profits earned in the United States to other countries where they are not subject to taxation.

The study, conducted by the Center for Banking and Financial Institutions at Florida International University in Miami, Florida, calculated the cost to the U.S. Treasury of overpriced imports and underpriced exports. Simon J. Pak, and John S. Zdanowicz, the authors of the study, estimate that the pricing schemes cost U.S. taxpayers $35.7 billion in 1998 and $42.7 billion in 1999.

Pak and Zdanowicz say multinationals are able to move profits out of the United States and into other countries by frequently and significantly under-pricing goods purchased by their foreign affiliates, and by over-charging for goods sold to their U.S. operations by foreign affiliates.

Abnormally low-priced U.S. exports documented in the study include $3 non-industrial diamonds, $40 rocket launchers and $528 bulldozers. High-priced imports include $5,600 toothbrushes and $5,000 flashlights.

“Every individual taxpayer and company is forced to make up the differences with income taxes that are higher than they would need to be if the international corporations who are avoiding their tax responsibility were paying their fair share,” Dorgan says.

Franken-Free Food

Specialty retail grocer Trader Joe’s announced in November that it would no longer use any genetically engineered ingredients in its store brand products.

The announcement marks the first time that a major U.S. grocery chain has dropped genetically engineered ingredients in response to a sustained consumer campaign. Natural food chains Whole Foods and Wild Oats dropped genetically engineered ingredients from their house brands two years ago.

“Our goal for existing private label products is to have all such products reformulated, if necessary, and certified within one year,” the company said in a prepared statement.

“With Trader Joe’s getting rid of gene-altered ingredients, grocery chains in the U.S. can no longer say, ‘We can’t do it in this country,’” says Heather Whitehead of the Greenpeace Genetic Engineering (GE) Campaign, which was joined in a year-long campaign to get Trader Joe’s to make the GE-free commitment by the Organic Consumers Association, Gene Wise and several other grassroots groups.

Trader Joe’s warned its customers that while it intends to develop a system of random testing to verify their vendors’ assertions that their products are GE-free, “there is no system in the United States to completely guard against ‘adventitious contamination’ from the genetic drift by genetically engineered crops to non-genetically engineered crops. Therefore, it is not possible for any supplier or retailer to realistically offer any guarantee that their products are ‘GMO-free.’” (GMO stands for genetically modified organisms.)

Various European countries require the labeling of genetically engineered food, but the United States has no labeling laws. Trader Joe’s is urging its customers to pressure Congress and the Food and Drug Association to require GE products to be labeled.

“While there is a great deal of passion regarding this matter among customers and the public at large, it is clear to us that if given the opportunity, the majority of our customers would prefer to have products made without genetically engineered ingredients,” the company said in its statement.

Dirty Clothes Line

The Global Textile Workers’ confederation says it plans to drive the dirtiest companies out of the textile, garment and leather industry.

The Brussels-based International Textile, Garment and Leather Workers’ Federation (ITGLWF), which has 225 affiliated organizations in 110 countries with a combined membership of 10 million workers, says it will target companies that repeatedly violate fundamental worker rights.

ITGLWF officials say they will create a “dirty companies” registry, out of frustration with governments’ failure to enforce labor laws and refusal to consider international labor standards as an element in trade regulation, particularly at the World Trade Organization.

“Production of textiles, clothing and leather goods is now carried out in 160 countries primarily for export into only about 30 national markets,” says ITGLWF General Secretary Neil Kearney.

“Workers in these industries face appalling exploitation, often being forced to work 17-hour workdays, seven days a week. When they attempt to organize to improve their working conditions they face violence from management, security guards and hired thugs. Death threats, plant closures and the prospect of being blacklisted and denied future employment are common.”

The labor confederation says that only when all else fails will it place companies on the blacklist. “The continuing refusal of governments to address the social dimension of trade and globalization leaves workers no choice but to try to construct their own mechanisms to combat corporate criminality towards those they employ,” says Kearney.

— Charlie Cray