The current fight over the Trans-Pacific Partnership (TPP) trade deal has centered mostly on the impact it would have on American workers’ jobs and wages. But a new book flips that, focusing on those in foreign countries who end up doing the outsourced work.
In Out of Sight, Erik Loomis, an assistant professor of history at the University of Rhode Island, details the flight of manufacturing industries to more obscure corners of the globe, where centuries-old abuses continue unfettered but away from the prying eyes of consumers. The main problem, to Loomis, is capital mobility. U.S. corporations suffer virtually no consequences for imposing awful working conditions in overseas factories because the public loses its connection to workers there.
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Capital flight began with textile companies moving from the industrialized north to the non-union south, and then to foreign countries like Mexico or China or Bangladesh, site of the Rana Plaza garment factory collapse in 2013 that killed more than 1,100 workers.
The Rana Plaza disaster shares key similarities with the Triangle Shirtwaist Factory fire in New York City in 1911. Both factories made clothing for a contractor, with a layer of plausible deniability between the workers and the retail brand selling the product. In both cases, workers died because of non-existent safety features to deal with catastrophes. The difference is that in 1911, wealthy Americans witnessed factory workers jump from the blaze to their deaths, and joined the movement for workplace safety. Rana Plaza occurred halfway across the globe, and Americans momentarily turned their attention to it and then looked away.
So corporations get a dual benefit from overseas production: cheap labor and reduced publicity for the hazardous and brutal conditions. In other words, companies derive a substantial chunk of their power and profitability from concealment. “At this point, the economic system has become broadly similar to the Gilded Age,” Loomis said in an interview. “Rapid shifts have thrown workers for a loop and we don't know what to do.”
Loomis, who also writes for the liberal blog Lawyers, Guns and Money, masses an impressive amount of examples of the current appetite among multinational corporations for a race to the bottom, from Haitian wage theft to factory disasters in Thailand to the destruction of subsistence agriculture in Mexico to forced labor on shrimp boats to “sacrifice zones” where corporations deposit their toxic waste around the world. In each case, Loomis challenges the conventional wisdom that workers abroad benefit from making clothes or electronics for multinational corporations by raising their living standards, however meekly. In reality, this is outweighed by the massive environmental and health burdens ravaging their communities, and the awful conditions under which they toil.
His solution has resonance amid the TPP debate. “Workers should have the right to sue their employers or the companies contracting with their employers,” Loomis writes, “regardless of where the site is located.” Without this key feature, corporations will simply gravitate to the lowest-cost site for their factories and continue to abuse workers for profit.
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This is a clever spin on what we see now with modern trade deals. They almost universally feature investor-state dispute settlement (ISDS), where companies can appeal to extra-judicial tribunals, presided over by corporate lawyers who may have worked for that corporation at one point, and sue for “expected future profits,” lost when countries change regulations and violate the terms of international trade agreements. Trade negotiators claim this is critical to protect foreign investments from discrimination by host governments.
Workers don’t have the same privilege. They can’t appeal to some international body when they experience abuse, even if it violates trade deals. Unions and non-governmental organizations must appeal to a government to make claims against other countries, and that process simply hasn’t worked. Loomis’s idea would initiate a worker-state dispute settlement, or WSDS, giving workers direct access to sanctioning unlawful activities, rather than routing them through a third party. “This is not about turning our back on international agreements,” Loomis said. “It’s about making them serve us instead of serving corporate interests.”
A recent twist in the U.S. trade debate shows why workers must be directly empowered. As I wrote last week, the White House attempted a remarkable compromise over language Sen. Robert Menendez (D-NJ) inserted into “fast-track” legislation, which would provide an expedited congressional vote for any trade deals. The Menendez language would have barred the U.S. from making a trade agreement with any country that has a poor record on human trafficking, including Malaysia, a partner to TPP.
A White House-brokered compromise would enable the State Department to simply announce that countries like Malaysia were “taking concrete actions” to improve the slavery situation, exempting them from the ban. But the compromise never got a final vote in the Senate, meaning that the original Menendez language remains.
The U.S. needs Malaysia in TPP because of the strategic importance of the Straits of Malacca, a key oil shipping route. So the administration is working with the House to weaken anti-slavery language, which boggles the mind given the history of this country.
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The Malaysia situation shows that “it is theoretically not that difficult to incorporate standards” into trade agreements, Loomis said. For instance, you could simply ban products at the border if they were produced in substandard ways, as America has done for 40 years for products made with endangered species. We actually have similar restrictions on products produced with slave labor, dating back to the McKinley Tariff Act of 1890. But the Obama administration is still working to cut Malaysia a break on its forced labor problem. Relying on enforcement from the top inevitably reveals the warped priorities around trade, where corporate investments matter more than working people. “Laws are necessary and useful,” Loomis said. “But putting power in the hands of workers themselves is the best way.”
In the book, Loomis raises several examples from history where governments actually protected the human rights of workers, from the Seamen’s Act of 1915 (which improved conditions on merchant ships) to a Clinton-era trade deal with Cambodia, engineered without fast track authority, that increased quotas for Cambodian-made apparel in exchange for better rights for workers, including the right to form a union. But these have been few and far between.
Giving workers direct access to tools to generate their own empowerment could significantly mitigate the harm from capital mobility. But when unions actually suggested a variation on this in TPP, they were dismissed. Shane Larson, legislative director for the Communications Workers of America, recalls a conversation with the U.S. Trade Representative’s (USTR) office. “We said, if Vietnam is not living up to the terms, why not let the AFL-CIO bring up charges?” Larson said. “USTR said you don’t understand how the system works.”
When presented with this, Loomis replied that “it suggests we’re back in a pre-New Deal scenario,” with worker rights outside the conversation.
The way to reverse that is by ensuring that government gatekeepers cannot shield corporations. An internationally aligned labor movement, empowered to legally challenge abusive employers, would build solidarity and create incentives for better conditions worldwide.
While the president has paid lip service to “rigorous trade enforcement,” neither he nor his trade negotiators have taken this step to center power in the workers closest to the abuses. That tells you most of what you need to know about his trade agenda.
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