An Understanding of Labor’s Role in Trade?

Persumably the Congress and the White House reached an understanding whereby the environment and labor standards will be “enforceably” included in up-coming trade negotiations, one of which is with Colombia, notorious for killing more labor leaders than all other countries combined.

Under the administration-Congress deal, U.S. free-trade partners will have to abide by basic international labor standards outlined in a 1998 International Labor Organization (ILO) declaration. They also would have to adopt and enforce laws consistent with seven major multilateral environmental agreements.

To read the ILO declaration, go here.

For a good overview of the understanding between Congress and the White House, read Jay Van Andel’s description on the Heritage Foundation website.

The nuts and bolts of the understanding are not fleshed out–or not leaked out. The U.S. itself “has not ratified” many of the ILO conventions. I suspect the Bush/Democrat understanding may be more smoke and mirrors. But read the Heritages’s description; you will start to see some of the issues and the problems.

At least the terms of the debate have altered slightly: Labor and the environment are now on the table, momentarily.

There is a growing awareness that globalization is not quite what it was trumpeted to be. In his one of his latest pieces, In “Divided over Trade” Krugman concedes two important points:

  1. That low wages in third world countries are in fact pushing down wages in the U.S.
  2. That U.S. should include “strong labor standards” in our pending trade agreements” with third world countries, albeit those agreements may not achieve much.

Labor abitrage in the form of sweat shops and child labor is a reality, part of what Krugman concedes is “the dark side of globalization.”

“And no, cheap consumer goods at Wal-Mart aren’t adequate compensation,” says Krugman. Again, I agree. But where was Krugman when China was about to enter the WTO? Where was Krugman on NAFTA?

As for the tools to meet this reality, Krugman mentions only one: Universal health care in the U.S. Universal health care will certainly help; after all, even China has included socialized health care in its future plans.

But is health care sufficient? I do not think so. Besides, how will the U.S. pay for it? Insurance vouchers? Government run? New taxes? On whom? We are already deep in debt.

And will “strong labor” standards pass WTO muster in countries already receiving “most favoured nation” status. Again, I do not think so, not unless those standards are included in the present Doha round. Just how will labor standards be enforced? Or is this just more temporizing?

And what should we do with the disaster NAFTA , a disaster that has failed to stem the tide of impoverished Mexicans fleeing northward? Mexico now has a nice trade surplus with U.S. The answer is, of course, to expand NAFTA to include Colombia, Peru, and Panama, whose average wages/hour are $0.80, $0.98, and $1.07 respectively. Suddenly, these poor countries are vital to our well being. Colombia? Peru? Well, business can always send troublesome U.S. labor leaders to Colombia. I am sure Walmart would approve.

Somehow, I cannot shake the comparison between the Iraq war and our trade policy. When all else fails in Iraq, instead of seriously looking at why we are there, we send in more troops. With trade, instead of seriously looking at why our trade and account deficit grows, we add more poor nations. And, begrudingly, we toss in labor and environmental standards that have as yet no specificity and little open public debate.

One uncomfortable fact that has received much attention and less explanation is the rising inequality of wealth worldwide. Krugman alluded to it when he complained that “profits” are not trickling down to workers. How can this be?

I think we should start putting some facts together. Or maybe we should just forget about labor and environmental standards. Let’s put Hillary back on Walmart’s Board of Directors. Walmart would approve of sending disgruntled U.S. labor leaders to Colombia.