Fighting China or the WTO?

Sze Pang Cheung

THE TENSION AMONG groups which protested in Seattle would emerge in April when two marches would proceed within the same week, one [led by the AFL-CIO -ed.] targeting China’s entry to the World Trade Organization, another [April 16-17] fighting against the International Monetary Fund and World Bank, just as activists have fought against the Multilateral Agreement on Investment and the WTO.

Can we walk on both legs, or do we need to choose sides?

Since the Seattle protest, anti-China sentiment has grown in the United States, as unions and NGOs turned to target China’s entry to the WTO. Although WTO’s Seattle debacle was caused by tensions among its members rather than the protests in the street, the Seattle protest ended with a sign of hope, and an emerging consciousness against neoliberal globalization, and even capitalism.

The anti-China turn represents a backward step from what we achieved in Seattle, because now we hear unions and NGOs say it is China that is the problem rather than the WTO, neo-liberal globalization, or capitalism.  China of course has a poor record of human rights and workers’ rights.  But we need to question whether this reason is sufficient to oppose its entry to the WTO.

Many WTO members are just as authoritarian as the Chinese government.  Furthermore, the U.S. government itself signs fewer ILO [International Labor Organization-ed.] conventions than the Chinese government, and prison labor and sweatshop labor are widespread in the United States.

More important is the fact that the WTO itself is an anti-democratic institution that does not respect workers rights or human rights.  Therefore, in the last two months, we heard activists criticize the AFL-CIO strategy and argue that it is better to ask the WTO to be dissolved than to oppose China’s accession.

The AFL-CIO’s muted voice on the impact of the Sino-U.S. trade agreement on Chinese workers is a symptom of protectionism.  If there is any legitimate reason to oppose China’s entry to the WTO, it is because China’s accession hurts working people’s interests in China, in America, and also in Asia.

The AFL-CIO has told American workers that their interests would be hurt by the Sino-U.S. trade agreement, but it should be emphasized that the problem is not limited to the American working class, but affects the working class in general.  It is not a question of workers’ interests in a particular nation, but class interest in general that should be the concern.  The AFL-CIO, however, fails to recognize this fundamental problem.

Chinese Jobs Cut Back

Chinese working people will be hard hit by the trade agreement and China’s accession to the WTO. Investors estimate that 27% of Chinese auto capacity will be shut down in the next five years, and millions of autoworkers will lose their jobs.[See note 1]  Even in textiles, the industry that is supposed to benefit most from the Sino-U.S. trade agreement, Chinese workers are already bearing the cost. To fulfill the requirement of accession to the WTO, China has to cut its subsidies to the textile industry.  As a result, more than one million textile workers lost their jobs in the last two years alone.[See note 2]

This case shows us that even before China is a member of the WTO, it is already affected by the WTO’s trade agreements.  It also shows us that it is not only American textile workers who are hurt by China’s accession to the WTO. The “protect American jobs” stance of the AFL-CIO simply misses the real enemy, and undermines cross-regional class solidarity.

The Chinese peasants will also be hard hit by accession to the WTO. Officials say ten million peasants will lose their livelihood after China joins the WTO. And officials tend to underestimate the real situation! But given the serious unemployment problem in China, it is unclear how China will swallow another ten million peasants who rush to urban areas seeking jobs and survival.[See note 3]

Again, we have to emphasize that these are not problems unique to China.  They happen to all developing countries when they join the WTO, as their trade and economic policies are required to be harmonized with WTO’s neo-liberal globalization regime.  The WTO’s “harmonized destruction,” as Gerard Greenfield has termed it,[See note 4] has proved detrimental to the interests of working people.  For this reason, if we are motivated by genuine concern for workers interest, we should oppose the WTO, rather than a particular country’s membership.

Regional Race to the Bottom

China’s entry to the WTO will also have a great impact on working people in other Asian countries.  One of the U.S. government’s motives for getting China into the WTO is to accelerate liberalization in the whole region.  An economist from the Institute of International Economics comments:

“In fact, China’s accession would put pressure on existing WTO members, including India but perhaps also Korea and even Japan, to further open their own markets in a bout of competitive liberalization.”[See note 5]

The impact of the race to the bottom was immediately felt in Hong Kong after the Sino-U.S. trade agreement was signed.  Faced with the imminent prospect of China’s entry to the WTO, the Hong Kong government shamelessly told its people that the future “challenge” is how to become more competitive-meaning creating a more favorable environment for foreign capital and cutting labor costs.

India also took many people by surprise as it moved quickly to liberalize its economy after the Seattle meeting.  In January 2000, the Indian government announced the removal of quantitative restrictions on imports between India and the United States on 1400 items in traditionally protected areas such as agriculture, textiles and consumer goods.

Activists in India accused their government of “post-Seattle sellout.” Again, whether faced with a more favorable environment to TNCs or liberalization of the economy, workers in Asia will pay the price.  If we take all these impacts into consideration, it seems more unreasonable to target our campaign at China.

Reform the WTO?

The campaign to block granting Permanent Normal Trading Relationship (PNTR) to China is tied to a reformist attitude towards the WTO. Unions and NGOs in the campaign also advocate putting labor and environmental standards into the WTO’s trading agreements, so as to set the floor of downward harmonization.  The WTO’s power will supposedly guarantee that there is a limit to globalization’s race to the bottom.

This idea, which is known as the social clause, is strongly opposed by developing countries, including China.  Since China’s delegation made a strong statement against the social clause at the Seattle meeting, unions and NGOs have consolidated their view that if China is allowed to join the WTO without any promise to improve its records on workers rights and human rights, the task to reform the WTO would become more difficult after China’s accession.

The effort to reform the WTO, to give globalization a “human face,” to ask a powerful neoliberal institution to take care of the problems it has created, is admirable or contradictory, depending on how you look at it. It is also amazing that unions and NGOs are embracing an idea proposed by the Reagan government in 1986 to the GATT, the predecessor of the WTO.

Finally, it is politically confusing to see American unions siding with the Clinton government on one side, while unions in developing countries are siding with their governments and arguing that there is no universal standard of labor rights which can be applied to all countries with different levels of development.

The social clause may be a powerful tool, but in what sense is it powerful?  Is it a powerful weapon in our struggles to fight for workers’ rights under globalization?

The problem with the social clause is that it tries to link labor standards with trade.  It does not punish violations of workers’ rights per se; it is only when violations of workers’ rights have led to “unfair trade” that the social clause applies.

For example, prison labor is used in China to produce exports for the United States, and the U.S. government and unions find that such violation of core labor standards has led to “unfair” competition between Chinese imports and American products.  Under a social clause in the WTO, the U.S. could then file a complaint to the WTO’s Dispute Settlement Body, requesting that China stop using prison labor or risk trade sanction.

The problem here is that prison labor also exists in America but is is not affected by the social clause, since most of the production of American prisoners is for domestic consumption and hence does not lead to “unfair trade.” Such a trade-oriented approach to workers’ rights ends up creating a double standard that distorts the meaning of core labor standards, which are supposed to be universal.

Further, the method of trade sanctions inherently serves the interest of the more powerful countries at the expense of the less powerful ones, since sanctions are less of a threat to an economically powerful country.

More importantly, the social clause would not punish those who have violated workers’ rights.  Enforcement of the social clause through the mechanism of trade sanctions imposed on a given country would create hardship for the people in that country, but not for the capitalists who have violated workers’ rights.  If the challenge for labor today is to fight against capital which has become more and more powerful under globalization, what good then is the social clause?[See note 6]

So what is to be done?  The AFL-CIO’s strategy is popular because it has mobilized anti-China and anti-communist sentiments rooted deeply in American culture.  It is also attractive because it takes an easy way out in the fight against globalization: While it requires nothing less than a global movement against the system to stop the WTO, the strategy to block granting China Permanent Normal Trading Relationship in the Congress is a far easier battle.

Finally, the popularity of the proposed social clause is based on a wrong analysis of job loss in developed countries.  Unions in developed countries have been teaching their members that they are losing their jobs because capitalists are moving production in search of cheaper labor in developing countries.

As a result, workers in developed countries blame cheap labor in developing countries for “stealing” their jobs. But this is only partially true: 70% of global capital movement is within developed countries.

Asking the WTO to take care of workers’ rights is not struggle against, but surrender to global capital.  By working within the framework of this neo-liberal institution, advocates of the social clause seem to admit that workers are so weak that we need to borrow the power of the WTO to protect our interests.

There is increasing recognition even among official unions that we need international solidarity to resist globalization.  In practice, the AFL-CIO’s anti-China strategy does the opposite.  A “problem-as-solution” approach will get us nowhere.  To build up global solidarity among workers, we need to abandon reactionary politics, base our movement on a correct analysis of the core problem, and be prepared for a difficult battle.

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Sze Pang Cheung is a research activist in Hong Kong. He is a member of the editorial board of Globalization Monitor, a Chinese bi-monthly bulletin in Hong Kong, which gives critical information and analysis on issues related to globalization from a leftist perspective.  The author can be reached at kontau@ctimail3.com

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