Vol. XIII, Bulletin No. 1                                                    January 2008
Dani Rodrik Finds 5 Flaws in Editorial on Trade and Prosperity

Economics Prof Instructs NY Times

The editorial writers of the New York Times should arrange to take a refresher course on trade from Dani Rodrik, economics professor at Harvard University's Kennedy School.  In the meantime, they can make do with a stern lecture from Rodrik about the flaws in a December 23 Times editorial titled "Trade and Prosperity."

"With most polls showing that voters believe trade with other countries is hurting the American economy, there has been a lot of posturing about the perils of trade on the campaign trail," the Times wrote.  It then went on to express concern that Senator Hillary Clinton, rather than posturing, might actually be serious about a "time-out" to review all trade agreements, including the North American Free Trade Agreement, or NAFTA, her husband's prize trade package.

Newspaper Quick To Level 'Protectionist' Charge

Rodrik, author of the new book, "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth" (Princeton), titles his December 23 blog entry "The NYT doesn't get it on trade."  Here are the five points he finds wrong with the Times argument:

1. It automatically equates any desire to reconsider trade agreements and take a breather on new agreements as "protectionist."

2. It fails to recognize the ways in which technology and globalization interact to contribute to unequalizing trends in incomes, taking refuge in the defensive statement that "There is scant evidence that trade has played a big role in holding down typical workers’ wages."

3. It follows up this statement with "There is abundant evidence that it has contributed substantially to America’s overall economic growth," ignoring what every student of trade learns, which is that large gains from trade are possible only if there are also large amounts of income redistribution.

4. In portraying the conflict as purely one over incomes, it overlooks what is the greatest strain in the present regime of globalization -- namely, the incompatibility between the scope of markets (straining to become global) and the scope of regulatory institutions (still national).

5. And as a consequence, rather than accept the need to rethink the existing rules of the game, the editorial takes refuge in the same stale recommendations that every trade liberalizer has been offering for the last quarter century at least -- more safety nets, better training, and more progressive income taxation.

Rodrik adds that those ideas about the need for improving social insurance, while not new, need to be revitalized, as he himself urged in his 1997 book, "Has Globalization Gone Too Far?" (Institute for International Economics), and then continues on his blog.

But it is also time to recognize that the WTO rules need to become much more flexible to provide a better balance between international trade and domestic regulatory and other policy priorities -- in other words, to assure domestic electorates that their values and preferences are not being sacrificed to the demands of some globalization agenda constructed, in any case, by a narrow elite. 

Rodrik posted the above entry. December 23, with two links referring to previous blog entries.

China's Censorship as a Restraint of Trade

The greatest free speech case in history – that’s what Peter Scheer, executive director of the California First Amendment Coalition, calls his group’s initiative against Communist China, the biggest suppresser of free speech in the world.

Scheer’s coalition is urging the U.S. government to file a complaint against China for erecting barriers that deny U.S. Internet companies free access to China's market and thereby grossly violating the free trade rules of the World Trade Organization.  The potential beneficiaries of a successful complaint would be 1,200,000,000 citizens of China and dozens of foreign multinational corporations trying to sell goods and services in China’s huge market.
The California Coalition made a formal presentation of its case to the staff of the U.S. Trade Representative (USTR) in Washington on November 15.  Its briefing paper developed in detail how China’s repression of freedom of information violated key multilateral trade agreements, including the General Agreement on Tariffs and Trade (GATT), which covers trade in goods, and the General Agreement on Trade in Services (GATS). 
More Comprehensive Information Still To Come

“We will be submitting further, more comprehensive briefing materials in early January,” Scheer noted in an email to me.

The 1,700-word paper he submitted in November already seems to make a powerful case, especially since China patently violates one of the WTO’s cardinal principles – .the “national treatment” principle, which requires that imported goods and services be treated the same as those produced locally. “The government of China is actively preventing U.S. internet companies from doing business in China, while at the same time promoting Chinese Internet companies in the same or similar activities,” the briefing paper points out.  It cites several among the “a wide range of laws and regulations that result in de jure or defacto” discriminatory treatment of U.S. Internet companies.     

Earlier in 2007, a leading search engine operating in China, Google Inc., made its own overture to USTR suggesting use of the trade lever to combat Internet censorship.  Andrew McClaughlin, Google’s director of public policy, then called censorship “the No. 1 barrier to trade that we face.” (See “Rethinking Censorship, Google, and Free Trade.”)   At that time an AP article quoted a USTR spokesperson as saying that a human rights issue such as censorship typically belongs over in the State Department.

The biggest immediate barrier faced by the First Amendment Coalition is the conventional thinking of trade bureaucrats, who can’t quite wrap their minds around a modern development like the Internet.  Another huge barrier is the political and economic power that China and other censorship-infected countries have to prevent changes in global trade rules.

When the multilateral trading system was launched 60 years ago, its 23 founding countries unwisely gave dictatorial countries equal status with democratic ones.  Why must that equal treatment continue when clearly undeserved, notoriously so in the case of Communist China?
*   *   *
Yahoo Stockholders: No Free Speech Activists They

At Yahoo's annual general meeting last May, stockholders turned down proposals to put the company firmly on record as opposed to censorship of the Internet.  About 85 percent opposed a company anti-censorship policy, and all but 4 percent turned thumbs down on a proposed committee to examine the company's human rights policy in China and elsewhere.

China's Forgotten Victims of Dangerous Goods

"No mention has been made of the many hundreds of thousands of Chinese workers who labor under dangerous conditions, making toys and many hundreds of other kinds of export products. If lead paint is used, workers are the ones exposed to lead hour after hour  In numerous industries, all too often workers are exposed to noxious fumes and dangerous machinery.  They are poor migrants from China's countryside, and they endure work days averaging 11 hours, six to seven days a week, to earn take-home pay of $100 or less a month." -- Anita Chan and Jonathan Unger in the December 13 issue of YaleGlobal.

Bangladesh's Workers on 17-Year Treadmill

"Bangladesh, one of the poorest countries in the world, has many desperate needs.  None of its needs surpasses those of the country's impoverished workers -- men, women, and children, whose elementary rights are flagrantly ignored."

So began a June 1990 petition that the AFL-CIO filed with the U.S. Trade Representative against the government of Bangladesh for a range of serious labor abuses, all in stark violation of the worker rights tests that developing countries must meet to qualify for tariff reductions under the Generalized System of Preferences (GSP) provisions of U.S. trade law. 

The AFL-CIO has continued to use this trade lever in efforts to improve the plight of Bangladesh's workers, especially those in the country's booming garment export industry.  Now, the U.S. government has before it another AFL-CIO petition to withdraw selected GSP benefits if Bangladesh refuses to end glaring abuses of worker rights. 

Under AFL-CIO prodding over the last 17 years, Bangladesh improved some laws but has failed to implement them in good faith.  In its latest petition, filed in June 2007 and still pending, the AFL-CIO charges that "the situation is objectively moving backward" because the government  and management "violate these laws and harass workers to keep them from exercising their rights."

Over the years the Bangladesh Garment Manufacturers and Employers Association (BGMEA) has had excellent American legal help to deflect trade sanctions. Recently, according to the Daily Star of Dhaka, Bangladesh, a U.S. lobbying firm that includes Andrew Samet, a former U.S. deputy secretary of labor, is working to persuade Congress to grant further duty-free access of foreign textile products into the United States.

WTO Could Make World a Better Place

On January 1, 2008, the World Trade Organization is wishing itself a Happy New Year by celebrating the 60th anniversary of the multilateral trading system, which first saw day in 1948 as the fledgling General Agreement on Tariffs and Trade (GATT).  

Looking ahead, Pascal Lamy, director-general of the WTO, GATT's successor since 1995, said, "By striking an ambitious and development-oiented agreement in the [current Doha Round of trade negotiations], we can greatly strengthen a system which has done much to make the world a better place."

By a happy coincidence, two American scholars have just published a book whose message could help the WTO make the world a better place.. The book's title and subtitle capture its theme: "Trade Imbalance: The Struggle To Weigh Human Rights Concerns in Trade Policymaking" (Cambridge).

The authors, Susan Ariel Aaronson of George Washington University and Jamie M. Zimmerman of the New America Foundation, surveyed the human rights policies of Brazil, South Africa, the United States, and the Europe Union, and the lack of any in the World Trade Organization (except for property rights). The authors rank the United States higher than the other countries in trying to promote human rights through trade agreements, but even here, policymakers generally "develop trade policies as if they were strictly commercial policies."

As a result, for example, "national trade policymakers are generally not charged to promote the right to food at home or abroad, [but to] develop trade positions based on interests of their [own] agricultural producers and consumers and their national need to ensure food security, not on behalf of the world's hungry and poor."

Yet Aaronson and Zimmerman are optimistic about the WTO; unduly so. They write: "We believe that multilateral trade liberalization and the progressive realization of human rights are compatible," they write, and offer specific suggestions to achieve the balance they advocate.  One reform they deem especially important is for the WTO to ensure that member governments end the wholesale exploitation of workers, mostly women, in special "export processing zones" where foreign investors are exempted from labor and other legislation.

In their book, "Can Labor Standards Improve Under Globalization?" published by the Institute for International Economics in 2003, Kimberly Ann Elliot and Richard B. Freeman urged the WTO to transform EPZs into "globalization at its best" (see "The Global Siamese Twins"). Their idea got nowhere.

Diary: To Blog or Not To Blog?

The grass in the blogging world often appears greener, and there are times when I’m ready to cross over immediately.  At the beginning of December, for example, I was anxious to write and circulate the second story in this issue.  Here was an innovative idea to use trade laws to bring down Communist China’s information barriers, and a blog seemed to be the way to distribute it quickly and effectively

I publish a Website.  By comparison, I am a blogger sounds more impressive,  more in tune with the times.

But what would I call my blog?  Not the same as this Website.  But what?  Several titles drifted into my mind, and out again.  On the blog’s first page, should I run my picture, or of a Third World worker, or none of all?  To attract and keep an audience, I would have to post frequent entries on my blog.   Could I keep up a steady pace?

The more questions pondered, the more time passed.

So here I am again.  Does this look like a blog?  If so, find the “refresh” button and click it.

Human Rights for Workers: Bulletin No. XIII-1     January 2008    

Robert A. Senser, editor

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