Even with Toys, All Roads Lead to the WTO

Lori Wallach of Global Trade Watch had an interesting twist on the dangerous products coming out of developing countries, especially China, a twist that I have been interested in for the last few years: Everything goes back to our trade agreements, or more pointedly, to how entry into the WTO has been structured.

Because of cheap labor, little in the way of environmental or product regulations, and great tax breaks (remember: FDI companies in China paid 15% taxation, while indigenous firms, 30%), manufacturing firms fled the U.S. to third world countries. China was and still is the new economic nirvana.

With NAFTA, firms went to Mexico. Then came China’s entry into the WTO. China is far bigger than Mexico with a huge, disciplined labor force. (Mexico is now feeling the pressure of China’s competition.)

Wallach points out that companies like Mattel “pushes its suppliers, its manufacturers, its subcontractors in China to cut costs….”

Now, we should remember that Mattel is the primary manufacturer of these toys. They may outsource, subcontract, call it what you will, but they are the manufacturer. Mattel makes the toys. Period. Mattel is in the business of making toys, just as Fisher-Price was. (Mattel bought Fisher-Price.)

If you want to trace the problem back to its roots, try it this way. Mattel, seeking the cheapest place to make its toys and to increase its profits, goes to those countries offering the greatest benefit. When the WTO welcomed China into its fold–despite the fact that there was absolutely no effective environmental or product regulatory body, no effective protection of labor standards or conditions, the WTO set the wheels in motion that led eventually to the shoddy products now issuing from China. Mattel is, of course, horrified. It’s all the fault of those careless Chinese. Bullshit.

Mattel is passing the buck. Mattel, I repeat, is the manufacturer. The workers in those Chinese factories make peanuts. The real pig on the block is Mattel. And who fattened this pig? WTO trade policy.

Who pushed for China’s entry into the WTO before China was ready? Why, our own corporations, of course. China has become an export platform before it was ready to become one.

Trade agreements are made for corporations, not workers or the environment, or finally not even the consumers, although the last is where the consumer finally starts to pay attention. Take a look at worker conditions and environmental conditions in the maquiladoras, a direct result of NAFTA.

At some point we are going to have to lay all these problems at the feet of our trade policies and, of course, the WTO.

Most economists refuse to look at the source of the problem: How trade policy is fashioned. Yes, they occasionally complain about how third world countries are screwed with their agricultural products or how protectionists measures are built into the agreements favoring large corporations.

What economists refuse to do is to look at how the game has been structured. Labor arbitrage and environmental arbitrage do not matter. Those are natural advantages that a country can offer, they would say.

I say they do matter…. a lot.

If a country despoils its environment, that despoilment affects us all. Lest you forget, China is slated this year to become the number one emitter of CO2. China’s non-CO2-pollution-clouds now have world wide reach; they are visible from outer space, great brown splotches. (The Olympics will be quite interesting.) And I have not mentioned the poisoned rivers or lands. Who profits? We do, of course: cheap products. And, of course, our companies–Intel, Mattel, Apple, etc. do. Sometimes they are directly responsible; often they simply profit indirectly: If a country pays little attention to the environment, it can afford to tax less, making doing business much cheaper.

If a country does not protect its workers, or does not allow them to bargain collectively, that affects every other worker in the world.

There are ways to globalize, to pull countries into real trade agreements that will test and reward ingenuity and hardwork.

Insist that the environment be protected. Insist that workers be protected. Insisting on these conditions is not being protectionist. It is acknowledging that some kinds of regulations and protections benefit of us all, Chinese as well as Americans.

Protectionism has never been the real issue. It’s a strawman, erected by those who do not want to discuss how trade agreements are structured.