Vol. XII, Bulletin No. 10                                                     October 2007
Domestic Efforts Alone Can't Handle Global Challenge

Protecting People from Dangerous Imports

Shaken by continuing revelations of contaminated food and other unsafe products from China, the New York Times last month issued a strong call for protection of American consumers against dangerous imports.  In a two-part editorial on September 16, the Times went to great lengths to explain "The Need for Regulation For All of the Nation's Imports...And Especially Our Children's Toys." 

The Times assessment of the need is correct.  Unfortunately, its recommendations for addressing the need leave a big hole.

Reforms are needed all along today's vast global production and distribution chain -- by all the numerous parties responsible for its operation.  The Times lists some of these global parties, including the original manufacturers, importers, wholesalers, retailers, the respective governments, and their inspection agencies, and it identifies those that especially need to improve consumer protection.

One is the U.S. government and its newly created interagency working group on import safety. It has issued a 22-page brochure on a "strategic framework" for improving import safety, but is it mostly a PR exercise?

Government's Voluntary Approach Hasn't Worked

"The administration's record provides grounds for skepticism," the editorial answers.  The administration's approach -- of relying almost entirely on businesses to regulate themselves -- "has not worked," the Times says.  Instead, "American toy makers must be truly regulated by a well-financed, powerful [U.S. Consumer Product Safety Commission]."

Important as such a reform would be, it would not be up to a problem that is global in dimension.  Mattel, for example, has had to recall products not only in the United States but also in Europe and some Latin American countries.  Parents in Italy and Chile are just as troubled as those in America.

As a result, the European Union's consumer protection commissioner is considering an import ban on toys and some other products made in China. The EU is also exchanging views with the U.S. Consumer Product Safety Commission on how to "ensure that our messages to China are mutually reinforced."

But bilateral -- or trilateral -- measures are inadequate for addressing the global challenge. The Times, long an advocate of multilateralism for coping with global challenges, should realize that.

Needed: a Plan for the 21st Century, Not the 20th

A letter of mine to the Times editor on September 16 developed that point briefly: 

"Your recommendation for improving U.S. domestic regulation of imports is designed for the past, not for a world economy transformed by a vast expansion in world trade.  In 1960 the United States imported goods worth $14.8 million for the whole year.  Last year our imports of goods totaled $1,861.4 million -- a 125-fold expansion.  During each month this year our imports of products from China alone are far exceeding our imports from the whole world in 12 months of 1960.

"Yes, the present system of domestic regulation of imports desperately needs improvement, but that system alone doesn't suffice for the transformed world economy of the 21st century.  Domestic regulation needs to complemented by international regulation that, at the very minimum, protects our children against dangerous toys, contaminated food, and other unsafe products.

"The international trade and investment system -- through a huge network of multilateral, regional, bilateral, and plurilateral agreements -- is designed to advance and protect the interests of international commerce. 

"How long will it take to recognize that enforceable international safeguards of product safety are harmonious with the interests of commerce?"

(For trade data, check http://www.census.gov/foreign-trade/statistics/historical/gands.pdf.)
As of September 27, the Times had not printed any letter commenting on its editorial.  That's too bad, because the issues it raised deserve wide debate. The  Times, like the media generally, seems allergic to fostering a serious debate about globalization.

For Smaller Nations and Companies Too

"The need for clearer and more effective rules becomes more critical.  In this century, the quality of what is traded will be as important as the need to lower tariffs was in the last.  The recent cases of deadly dog food and toxic toothpaste coming out of China prove as much...No country acting alone sands as good a chance of monitoring and curtailing such lethal goods as does the WTO working in concert with governments across the globe. Moreover, a rules-based system accepted by a majority of nations can protect smaller countries and companies from the abusive practices of bigger nations or large conglomerates."
 -- Moises Naim, editor in chief, Foreign Policy, in September/October issue of that magazine.

Policy Contrast: Lead Paint vs. Child Labor

"The discovery of lead paint in a wide range of Chinese goods exported to the U.S. (from toys to jewelry) raises difficult public policy questions," Economist Dani Rodrik writes in the September 11 entry on his blog.  He goes on to think about the policy positions taken toward two different issues: unsafe imports vs. imports made in sweatshops --"issues which seem quite distinct, but are actually quite analogous in many respects."  Among the similarities in characteristics shared by the two kinds of imports:: 
  • In both cases, exporting countries have domestic regulations and standards which on paper are sometimes stronger than those in the U.S., but enforcement is weak. 
  • Both types of substandard production make goods cheaper and create a competitive advantage.
  • The final consumer in the U.S. cannot tell whether the toy contains lead paint or has been manufactured using, say, child labor under exploitative conditions.
  • We are less likely to buy the product, all else being equal, if we know it contains lead paint or has been made by children.

In view of such parallels, "we might think that the policy response to the problems in these two areas would be similar," Rodrik speculates. But it is not:

Why the Different Responses to the Two Issues?

"In the area of consumer safety and lead paint, the general tendency has been to push for more regulation and better enforcement of existing standards.  The U.S. toy industry itself has gone so far as to ask the federal government to impose mandatory safety-testing standards for all toys sold in the U.S.  Free-trade economists would find it perfectly appropriate for the U.S. to pressure the Chinese government to enforce its own lead standards, and if not, to impose testing and other restrictions at the [U.S.] border.  As far as I know, not even libertarian economists have proposed that the best way to deal with the problem is to simply label Chinese-made toys as having uncertain lead content and letting U.S. consumers sort themselves out according to their own preferences and health-hazard/price trade-offs. 

"But in labor standards, we have a totally different approach.  Most of my economics colleagues think it is inappropriate for the U.S. to ask foreign governments to enforce standards that they have already signed into law or ratified in international agreements.  They would be horrified at the thought that the U.S. should impose restrictions at the border for goods that do not satisfy core international labor standards. And they would generally favor so-called market-based solutions, and labeling in particular, so that consumers who really care about labor standards can channel their buying power appropriately.

"So what gives? Why do we accept regulation in one sphere so easily, yet reject it in the other so fiercely?"  

In an update, Rodrik adds: "There is by now a growing literature that shows that consumers (or major segments thereof) are willing to pay substantial premiums for goods made under fair labor standards.  See here and here.  So it is not correct to say that consumers care about the (tiny) probability that their children will be harmed by lead paint, but not about labor practices abroad."

A Basic Tenet of Economics: Consumer Primacy

One of the comments that followed came from Marcos Ancelovici:

"I think that each regulation addresses a different issue: safety-testing standards address the quality of the product regardless of how it was produced whereas labor standards address the conditions under which the product was produced. The quality of the product necessarily concerns consumers, but not necessarily the conditions of its production."

"Marcos --You are violating one of the most important tenets of economics, which is that consumers themselves are better judges of what they value than outsiders. And as I mention in my update, consumers obviously do value higher labor standards abroad." 

Why Trade Pacts Ignore Consumer Safety

Thanks to trade agreements signed by the United States, Congress faces international constraints on adopting laws protecting consumers against unsafe imports. In Congressional testimony at a September 20 hearing on Lori Wallach, director of Public Citizen's Global Trade Watch, charged that provisions of various trade agreements "conflict with Congress' stated goal of ensuring that some of our most vulnerable citizens -- children -- are not exposed to avoidable risk of injury or death from their playthings."

The reason, she said, is that these agreements, especially the North American Free Trade Act (NAFTA) and those administered by the World Trade Organization (WTO), assign the highest priority to "ensuring a favorable investment climate for U.S. firms seeking to relocate production overseas, and facilitating imports from those facilities," putting consumer safety lower on the trade agenda.

As a result, an improved product safety policy, Wallach pointed out, could be challenged by China as a "technical" barrier to trade under the WTO's Technical Barriers to Trade agreement, and if approved by an international tribunal made up of trade lawyers, China could impose trade sanctions on the U.S. or collect a fine. "The United States," she added, "has lost an array of WTO attacks against domestic public interest laws" -- 43 of the 50 complaints brought against it.

China Near Top in Poor-Rich Income Gap

Income inequalities have increased almost everywhere in Asia between the 1990s and 2000s, the Asian Development Bank reveals in Key Indicators 2007, its annual statistical report.  China's gap between the rich and poor has grown more sharply than in any another country, except for politically torn Nepal.

This income disparity, said the ADB's chief economist, Ifzal Ali, reflects a weakness in the region's booming economy because it can weaken social cohesion. 

Anita Roddick, CEO and Rights Activist

The two happened to be at the University of California-Santa Barbara as guest lecturers at the same time in 1997.  Anita Roddick, the British businesswoman who founded the Body Shop, sat in on a talk about sweatshops by Charlie Kernaghan, head of the National Labor Committee. Roddick became an instant convert to the cause of human rights for workers.  After she died unexpectedly on September 10, Kernaghan wrote a moving tribute to "a dear friend, a major supporter, a spectacular activist, and fellow traveler."  Here are a few paragraphs from what he wrote about her dedication:

Anita and [her husband] Gordon went with us into worker slums across Dhaka, Bangladesh.  Anita, who had traveled all over the world, told us that the Bangladesh garment workers were some of the hardest working people she had ever met, yet tragically, also the poorest.  How could young women working 12 to 14 hours a day, seven days a week, sewing clothing for the largest multinational corporations in the world, like Wal-Mart, be so poor that they had to brush their teeth with their fingers using ashes from the fire because they could not afford a toothbrush and toothpaste?
.   .   .
I cannot think of a single time when we asked for help that Anita did not respond, whether it was contacting the media, meeting with members of the British government, calling CEOs, funding projects or going with us into the developing world where workers were being exploited.

In fact, when Anita died, we were in the midst of planning another trip, this time to the Mosquito rain forest in Honduras, to meet with the indigenous people who are being killed and severely disabled diving under incredibly dangerous conditions to harvest lobsters for the U.S. companies. 

Anita would call us every few weeks, wanting to be updated and to discuss what she could do next.  For us, these calls were so uplifting and exciting that we started to let our staff and interns listen in.  Barbara and I could never get used to this.  We would almost have to pinch ourselves to see if it was real that Anita could care so much about our work and be so genuinely encouraging and ready to help.  After all, we knew Anita was such an important person, playing a huge role on the world stage.  But it was real, just as Anita was the only corporate executive who was with the workers and students on the other side of the barricades being tear-gassed during the great WTO protests in Seattle.
.   .   .
When we told Anita how the U.S.-Jordan Free Trade Agreement under the Bush Administration has descended into human trafficking of foreign guest workers, who were being held under slave labor conditions, she immediately raised this with Queen Noor.

Anita made you feel big.  After all, our big-sounding National Labor Committee has a staff of just four people.  Yet Anita made you feel like a real player.  This is what great people do.  They light a spark in ordinary people like us and lift them up.  What also amazes us is that Anita did this not just for the NLC, but for dozens and dozens of cutting edge human rights and environmental organizations all across the world -- personally touching and uplifting thousands of activists....
It is our hope that the sparks that Anita lit in thousands of activists across the world will continue to grow into a mighty flame, to make the earth a saner, more caring and more just place.

In a separate tribute on its website, the United Steelworkers of America calls Anita Roddick the "21st Century Mother Jones."
*   *   *

'We Must Find a Way To Hold Corporations Accountable'

"Abolish Sweatshops!" is the an article that Anita Roddick published on her website five years ago. Excerpts:

Here's something else people generally don't know: the label on your shirt, shoe, sports equipment, or handbag often has more rights and protections than the child who sewed it in. Under current trade rules, the label, the trademark, the logo, and the product are all protected under enforceable intellectual property and copyright laws backed up by sanctions. Every company says they could not operate in the global economy without such rules and regulations. They tell you they need a level playing field.

Yet when you ask these same corporations to extend reasonable protections on the safety, dignity, and survival of those workers who manufacture their exalted products, they respond: "That would be an impediment to free trade." We need to rewrite these rules so that the child has at least the same legal protections the product enjoys.

But boycotts are not the answer. Workers in the developing world desperately need these jobs, and they are willing to work very hard; only they want to be treated as human beings and not animals. We must find a way to hold our corporations accountable, to respect human and worker rights, and pay fair wages.

Integrating Corporations and Human Rights

One of the most important challenges of our time is to harness the power of multinational corporations to serve the global common good.  If that is true, then John Ruggie, a professor at Harvard, has one of the most important assignments of our time.  For two years now, Ruggie has been working as the UN Secretary General's Special Representative on Business and Human Rights.  His mandate is to produce a comprehensive UN position paper on the proper role of multinational corporations in advancing human rights.
That subject has split the UN Commission on Human Rights (now the Human Rights Council) ever since its advisory group of experts in 2003 published  a document titled "Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights," or Norms for short. In the polarized debate that followed, many human rights groups championed the Norms; organized business vigorously condemned them.

Employers and some governments would have been pleased if the UN had dropped the whole idea into a burn bag.  Instead, in July 2005, UN Secretary General Kofie Annan appointed Ruggie to assume the burden of breaking the stalemate.

Ruggie mobilized a team of specialists to help him conduct research on a wide rang of related issues and conduct consultations with a wide range of persons with a stake in those issues. He has managed to deliver speeches and write articles to keep people informed on what he was up to.   Last month, in an essay published on the website of the Ethical Corporation, he discloses the framework he will use for his conclusions, based on his mandate (as he put it) "to explore what measures governments, business, and other social actors could take to improve corporate human rights performance, and to recommend those options I believe would work best."

Four Principles for an Overall Human Rights Strategy

His findings so far, he writes, have "generated broad insights into how to move ahead," which he summarized in "four guiding principles for the mandate's recommendatory phase," that is, principles for an overall strategy for integrating human rights and business.

The first of his principles: Any strategy, to be successful, must "must strengthen and build out from the existing capacity of states and the states system to regulate and adjudicate harmful actions by corporations -- not to undermine [that capacity]."

He concedes that working with and from the present system has "very real constraints."  There is the hesitancy of national governments to take action.  Moreover, "in the international arena states compete for access to markets and investment funds, which may impede their ability to act on behalf of the international community's overall interests" (i.e., the global common good). 

But "conflating [the human rights duties of corporations] with the obligations of governments undermines the social roles of both."  Distinguishing the roles of both will expose how "the current system cannot possibly function as intended and where more fundamental change, therefore, is required."  (This analysis is partly a rebuttal to what he considers the main flaw in the Norms, but his conclusion about the need for change will not please the die-hard opposition.)

The second principle:  The focus of the current debate on the liability of individual corporations needs to be broadened, even replaced, by one of "shared responsibility."   As he has done before (see "Corporate Shared Responsibility"), Ruggie emphasizes that "the individual corporate liability model alone cannot fix larger imbalances in the system of global government that create the permissive environment for human rights abuses." 

To Deal With System That Creates Permissive Environment 

Ruggie's third principle: "Many elements of an overall strategy lie beyond the legal [or statutory] sphere altogether." Here Ruggie invokes a warning expressed by a human rights authority and Nobel prize-winning economist, Amartya Sen:  that treating rights primarily as "laws in waiting" {or only as what government demands) puts an undue limitation on social forces other than statutory law that can advance the recognition of human rights.

"The implication of Sen's insight for the business and human rights agenda," Ruggie explains, "is that any successful system needs to motivate, activate, and benefit from all of the moral, social, economic, and legal rationales that can affect the behavior of corporations.  This requires incentives as well as punishments, identifying opportunities as well as risks, and building social movements and political coalitions that involve representation from all relevant sectors of society, including business.  This is already occurring in the environmental field."

His fourth principle follows from the third:  The distinction between voluntary and mandatory measures, of which some of the protagonists in this debate are so fond, itself has grown stale and unhelpful.  Societies cannot survive on voluntary rules alone, and "those that have relied disproportionately on command-and-control regulation often have been bad news for business and human rights alike." 

Searching for the Right Mix That Works

Summing up, he writes: "The challenge, clearly, is determining the right mix and balance, in which an objective assessment of what works, not ideological preferences or particular interests, ought to determine the course of action, as it will determine my recommendations."

Next June, when Ruggie will make his overall strategy more specific, he will face an immediate test of what works: whether his proposal wins acceptance by representatives of all relevant sectors of society, including business.  Though overshadowed by the Iraq war and the U.S. Presidential campaign, this global drama needs to be watched more closely than it now is.

Human Rights for Workers
: Bulletin No. XII-10     October 2007           

Robert A. Senser, editor
Copyright 2007
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