Trading in Workers' Rights

As the U.S. trade deficit swells beyond the $150 billion mark and much of the Third World teeters dangerously lose to the brink of bankruptcy, the debate on U.S. trade policy has gained greater importance and urgency.

Simple quota and tariff arrangements of the past are no longer deemed acceptable and protectionist measures have long been criticized as a short-sighted solution to a long-term problem. Keeping competitors out may recapture U.S. jobs and temporarily alleviate the trade deficit in the Unit; d States, but such policies will also starve developing countries of much needed revenue, causing massive loan default throughout the Third World. And in the long run, protectionist measures may encourage inefficient industries and expensive products at home.

The statistics bandied about are startling. When imports rose 26 percent, from $269 billion to $341 billion, over the course of 1984, American Express gauged that 1.8 million U.S. jobs were lost. A proposed 15 percent import quota on steel in 1984 would have saved 26,000 U.S. steel jobs but cost 93,000 U.S. jobs in those industries using steel products.

Although the current U.S. trade debate appears to pit U.S. workers against their foreign counterparts, innovative U.S. policy-makers are restructuring the debate by supporting legislation linking billions of dollars in trade benefits targeted for the developing world to internationally recognized labor rights.

Instead of supporting governments that keep wages low by repressing popular demand, thereby encouraging the export of U.S. jobs to low-wage havens, U.S. legislative proposals on trade are being structured to encourage better standards and wages for all workers.

"Workers are being [pitted] against one another," said ' William Goold, chief administrative assistant to Rep. Don Pease, D-Ohio. "Capital is moving faster and faster, but workers stay in the same place. It can become a dog-eat-dog situation, or the working people can achieve a common interest. That is the only alternative."

Without laws to "protect international labor rights, all the pressure will be to lower wages, forcing them down in a sinking spiral," he said.

Labor rights amendments are increasingly finding their way into major pieces of government trade legislation. In 1984, working rights language was added to the Generalized System of Preference (GSP) reauthorization bill. These amendments were advocated by a coalition of unions, policy makers and human rights organizations called the International Labor Rights Working Group (ILRWG) and introduced by Representatives Pease and Howard Berman, D-Calif., and supported by Sen. Paul Sarbanes, D-Mary.

A second set of labor rights amendments were enacted into law in December, 1985. These amendments, added to the Overseas Private Investment Corporation (OPIC) reauthorization bill, were also prompted by ILRWG and introduced by Rep. Berman.

Most recently, labor language was incorporated into the House version of the 1986 Omnibus Trade Act. If similar legislation makes it through this year, and then is not vetoed by President Reagan, as he has threatened, the trade act could be one of the most important pieces of legislation for labor.

Supporters of the new legislation argue that by increasing industrialization and at the same time recognizing basic labor rights, workers in developing countries will increase their standard of living. Not only will they purchase more domestic goods, but more U.S.-made products, as well. Thus, by encouraging economic growth and more consistently distributed wealth in developing countries the United States is also helping itself.

In 1983, Lesser Developed Countries (LDCs) were the fastest growing market for U.S. goods, increasing at a rate of 12.5 percent per year, and representing 40 percent of all U.S. exports, more than Japan and the European Community imports combined. According to predictions made in the House Report on the Trade Act of 1986, developing countries "remain the largest potential market for United States exports." Yet, if wages and currencies in developing and newly industrialized countries continue to plummet, these statistics will become only historically interesting. According to the U.S. Bureau of Labor Statistics, in 1984 the hourly wages for workers in the countries who benefit most greatly from U.S. trade programs - South Korea and Taiwan - were 11 percent and 13 percent of their American counterparts, respectively.

In 1984 the GSP reauthorization became the first supply-side trade development program to make the recognition of labor rights a requisite for benefits eligibility. Although the Reagan administration strongly opposed the provision, once it was added to the GSP reauthorization bill, Reagan was unwilling to veto the whole package.

Through "special" grants, the GSP allows duty-free treatment of over 3,000 exported goods from eligible LDCs and Newly Industrialized Countries (NICS) as diverse as Taiwan, Haiti and Guatemala. The waiver of import taxes lowers the net cost of goods, making the final price more competitive on the U.S. market.

Under the GSP reauthorization bill, countries that export goods to the United States duty free must guarantee workers: the right to association; the right to organize and bargain collectively; a minimum age for the employment of small children; and acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health. Compulsory or forced labor is also prohibited.

Labor rights amendments were added to the GSP after it became apparent that, "some countries had, in fact, made real progress toward industrialization, only to find more and more of their people trapped in hunger and poverty," wrote Rep. Pease in defense of the GSP reauthorization bill.

South Korea, the second largest GSP beneficiary is a case in point. With the adoption of the GSP program, South Korea rose from 18th to 7th place in the amount of goods it sold to the United States, surpassing both Italy and France. Its per capita GNP rose from $591 in 1975 to $1,998 in 1984. Yet, according to a coalition of South Korean social, religious, and economic groups, "workers have experienced a steady deterioration in protection of their rights, almost in inverse proportion to the growth in the country's prosperity."

Since the 1979 coup of General Chun Doo Hwan, labor unions have systematically been repressed. Before the dictator came into power, the Federation of Korean Trade Unions (FKTU) had 1,100,000 rank-and-file members, but following the implementation of anti-labor laws, FKTU membership dwindled to under 834,000.

The Chun government's most effective method of undermining labor organizations has been to allow unions to organize only at individual work sites where more than 30 people are employed. However, only 20 percent of all South Korean factories employ more than 30 people. Thus, without declaring a ban on union activity, Chun made unions inaccessible for the vast majority of South Koreans.

South Koreans have no minimum wage, despite annually distributed proclamations stating the government's intent to ' establish one. It is estimated that the cost of living for a family of five in South Korea is 450,000 won per month (based on 1984 figures). However, in recent labor conflicts, workers have been protesting daily wages of 2,100 to 3,400 won. Even earning the higher rate, a family of five would have to have six salaries to reach the poverty line.

In Taiwan, the country which reaps the greatest benefits from the GSP, labor rights violations are also commonplace. Since its formation, the country has been under a perpetual state of martial law. Striking is punishable by death.

An understated U.S. State Department publication reports, "Collective bargaining does not take place," and for the most part, "labor unions do not exercise significant influence in the economic or political spheres."

Encouraged by the passage of the GSP reauthorization bill, the ILRWG successfully pursued the insertion of labor language similar to that of the GSP into the OPIC Renewal Act of 1985. OPIC, as its name implies, is a quasi-private government organization which insures overseas investments. The amendments, sponsored by Rep. Berman, banned OPIC from granting insurance coverage to multinational corporations investing in countries that do not have basic laws to protect workers' rights.

"This bill brings a fundamental change to the way OPIC does business," said Rep. Berman. "We're not asking for a set of labor laws equivalent to those in the U.S., but the countries must be moving in that direction."

OPIC is authorized to have up to $7.5 billion in political risk insurance outstanding at one time, and has provided well over $13 billion in coverage since its formation in 1974.

OPIC's insurance programs are attractive, according to Frank Howard, Senior Research Fellow at the Council of Hemispheric Affairs, "because they can offer 20-year policy terms - private political risk insurers usually offer three year periods of coverage." OPIC also provides direct loans and guarantees loans made by U.S. banks to countries in high-risk areas. Its clients include U.S. corporate interests in countries with some of the poorest labor records, such as Guatemala, Turkey, and Chile.

Although the U.S. Trade Representative is ultimately responsible for deciding which countries meet the basic laborlaw criteria, mandatory annual public hearings will allow concerned organizations to testify on labor conditions in countries they have monitored. Already, members of the ILRWG, the AFL-CIO, the UAW and others have given testimony describing unfair labor practices in Haiti, Taiwan, South Korea, Zaire and other beneficiary countries. Says Goold, "the labor rights legislation has a lot of potential to help foreign workers and their United States counterparts. Now that the amendments are law, the burden of making them work has shifted from Congress to human rights organizations, labor unions, and the administration."

Although support in Congress for the legislation has been strong and bipartisan, few onlookers expect the Reagan administration to willingly champion the cause of labor rights in the developing world. The first GSP review of labor rights by the administration confirmed this perception.

Despite hundreds of pages of testimony and documentation from labor, human rights and church groups on the abuse of labor rights in countries such as South Korea, Chile and Taiwan, the administration revoked only Nicaragua and Romania's GSP benefits, while Paraguay was suspended from the program.

"Chile, South Korea, Taiwan and Haiti all have terrible worker rights records," said Pease, "but the Reagan administration has overlooked those records and is extending duty-free status to imports worth $2 billion and $3 billion each year."

"Union leaders in Chile and South Korea have been jailed, tortured and killed. Genuine unions have been forcibly disbanded. Workers are systematically kept from organizing to improve their working conditions. Foreign sweatshops thrive; child labor is common; starvation wages continue. Yet we continue to underwrite the goods they send here, often at the cost of American jobs," he said.

ILRWG members are considering taking the Reagan administration to court for refusing to pull GSP benefits from countries which most flagrantly violate the law's labor provisions.

"We don't feel the U.S. Trade Representative is following the letter or the spirit of the law," said Allan Ebert, a member of the ILRWG and program associate at the Washington Office on Haiti. "We're totally dissatisfied with their determination."

But whether or not the laws are fully implemented, a milestone in trade ideology has been achieved: international commerce is now promoting economic justice along with free trade. GSP, OPIC and the Trade Act have the potential to transform labor conditions in the developing world. All that is lacking now is the will to enforce these provisions.

Nicholas Targ is a freelance writer based in Portola Valley, California.

Beneficiary Countries of the GSP Rank Country Benefit ($ millions) $ Per Capita GNP (1980) $ Per Capita GNP (1983) 1 Taiwan 3,200 2,405 2,600 2 South Korea 1,600 1,594 1,746 3 Brazil 1,300 2,268 1,987 4 Mexico 1,200 2,215 1,997 5 Hong Kong 1,200 4,157 4,290* 6 Israel 750 5,580 5,928** 7 Singapore 774 -- -- 8 India 286 227 248 9 Yugoslavia 273 2,699 2,594 10 Thailand 233 688 746 11 Argentina 227 2,330 1,824 12 Philippines 219 752 734 13 Malaysia 190 1,594 1,746 14 Portugal 186 2,205 2,208 15 Peru N/A 1,142 984 25 Chile 44 2,331 1,886 -------------- * 1983, '85 ** 1984