Can We Create an International Trade System that Protects Labor Standards?

In yesterday’s Trans-Pacific Partnership thread, Brian asks:

I understand the issue with “shipping jobs overseas” and how major corporations get near slave labor when they do that. And obviously, there is extensive corruption of the ruling class in the exploited labor’s home countries.

But what I am wondering, what kind of policies (not protests) could the United States realistically implement to better the working conditions of the labor forces in other countries?

And hypothetically, if the working conditions were all up to a general standard considered humane, would free trade agreements still be considered bad? And if so, why?

These are good questions. Let me answer them with some specific examples from the American past and some ideas for the future.

The United States has attempted in the past, on relatively rare occasions, to create and enforce conditions on trade overseas. It can happen and it must happen.

In the 1910s, conditions for seaman were terrible around the globe. When the U.S. improved standards, it undercut its shippers’ ability to compete with its foreign competitors in an industry that was perhaps the first in the world to be truly global. As Leon Fink shows in Sweatshops at Sea, the response of the International Seaman’s Union and the Wilson Administration was to pass the Seamen’s Act of 1915. To quote from Out of Sight:

The ISU publicized the horrors of what happened on the ships, far out of sight from American consumers. It used the Triangle Fire to make its case: “No one will claim it is safe to crowd people into a theater or a shirtwaist factory and then to lock the doors.” Furuseth furiously lobbied President Woodrow Wilson to sign what became known as the LaFollette Seaman’s Act, which he did in 1915. The law banned corporal punishment on ships, gave seamen the right to break their contracts in exchange for half their wages earned to that point on a voyage, and most importantly, made the law applicable to any vessel sailing to an American port. As Fink states, this law created a “race to the top,” as the U.S. government used its power to force foreign nations to agree to American working standards if they wanted to trade in American ports. Conditions for seamen improved around the world as they had the option to walk away any time their ship landed in the trading behemoth that was the United States.

It didn’t work all that well because soon after the U.S. also banned most immigration, which meant that most of these workers couldn’t actually immigrate to the U.S. Moreover, the Harding and Coolidge administrations, not to mention the Department of Commerce, had no interest in actually enforcing this law. The Supreme Court ended up declaring some of the provisions unconstitutional in the 1950s.

The Smoot-Hawley Tariff of 1930 also banned goods made by slave labor, with the 1997 Treasury-Postal Appropriations Bill adding goods from forced labor or indentured child labor to this list. Similarity, the U.N. Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES) was enacted in 1975. Today, 176 nations have signed the accord. There’s no question these laws are regularly violated. The Chinese used prison labor all the time to make goods for export to the U.S. Just having the laws on the books is far from enough for them to work and there’s not a lot of incentive for the U.S. government to enforce these laws against the Chinese. That’s because we don’t pressure the government to do so. But without the laws, there is no chance of them helping. Right now, we have tools at our disposal that can work if we choose to use them. In the case of CITES, where there is some will to enforce the law, there’s no question it has been a positive force to reduce illegal wildlife trafficking.

We can also borrow from the EU. Again, to quote Out of Sight:

In 2013, the European Union created a new logging code on sourcing timber from tropical nations. Throughout the tropics rainforests are declining in the face of cattle ranches, mining operations, and illegal logging. The EU code places hard penalties upon those trafficking in illegal timber. Timber suppliers must provide documentation of where and how the timber was harvested, keeping detailed paperwork for five years about the timber traders selling the wood. This forces timber companies to take responsibility for the actions of their suppliers. For us, it provides legal precedent for national and regional governance over corporate behavior in a contracting regime. This far outpaces any U.S. law on the timber trade and provides an excellent example of how government can force companies into compliance on standards of sourcing products. There is no reason the U.S. cannot do the same thing with apparel and electronics, as well as timber.

Perhaps the most useful and relevant historical example is not that old. In 1994, organized labor was angry at Bill Clinton for signing NAFTA. When the House initially rejected Clinton’s request to negotiate new trade deals in 1997, it forced him to bargain. One sop he threw labor was its proposal to include in a new trade deal with Cambodia a clause to incentivize the Cambodian government giving more rights to workers. The 1974 Multi-Fibre Agreement placed textile import quotas on the developing world in order to discourage a race to the bottom in the apparel industry. This Cambodian deal increased their quotas in exchange for more workers’ rights, including unionization. And it worked. Workers received $50 a month for a 48-hour week, received a dozen federal holidays, vacation days, sick leave, and maternity leave. This became the only free trade agreement with an enforceable labor provision. Overseen by the International Labour Organization, the deal included inspections and real incentives for apparel factory owners to comply. It wasn’t perfect of course, but it was the best agreement for workers yet made in a trade deal.

But at the end of 2004, both the Cambodian agreement and the Multi-Fibre Agreement expired. With the latter, the modern race to the bottom in apparel production began. And the Cambodian workers’ protections immediately collapsed. Once again from Out of Sight:

Cambodia now had to compete with the rest of the world without inspections or union contracts. Within weeks of the quota ending in 2005, underground sweatshops appeared with terrible working conditions. Now even freer than ever before to concentrate in nations with the worst workplaces standards, Cambodian labor saw its union pacts quickly scuttled and its working conditions and wages plummet to some of the lowest in the industry. Wages fell by 17 percent for Cambodian garment workers between 2001 and 2011. This story starkly demonstrates the differences between a global labor system with and without regulation.

There are more examples as well. In short, the U.S. government can do a lot in these trade deals and in the global economy to ensure basic rights are respected and enforced. But it does not. It rarely has incentive to do so. The elites of most all of the nations involved have little incentive to care about these issues. The U.S. wants good relations with the leaders of Bangladesh and Cambodia and Vietnam, which have little accountability on these issues with their own people. Bangladesh is largely run by the apparel contractors, who hold several seats in Parliament. So of course the Bangladeshi government isn’t going to do anything about the problems of their apparel factories except kill some union organizers. U.S. labor isn’t strong enough anymore to force the American government to enact the kind of international trade standards that would actually protect workers overseas and undermine some of the incentive for American companies to ship production abroad. Meanwhile, the American corporations who can openly buy politicians in a post-Citizens United world very much want the current system to continue, which is part of the reason for Obama’s push for the Trans-Pacific Partnership.

But none of this means we shouldn’t or can’t make global production standards that give workers rights. We have a few useful historical precedents that should inspire us to know that we can do this. But for the most part, we need to envision what global production standards should be, how we would empower workers to be able to take the lead in enforcing them, what the inspection system would be, and what the enforcement mechanism would look like. These are not easy questions to answer. They are conversations we need to have. I think the U.S. should pass a set of basic standards around labor and environmental regulations and force companies to comply with them by giving workers the right to sue companies in American courts for their enforcement. I’d also like a pony. But if we don’t talk about the world we want to see, that world will never come to pass. I know this isn’t happening as a result of the 2016 elections, no matter who we vote in. But we must fight to make these issues central in the American political system, if for no other reason that the fleeing of American jobs overseas undermines the American working and middle classes.

And it’s important to note that the mere threat of enforcement can make a difference. Again from Out of Sight:

In 1992, Iowa Senator Tom Harkin introduced the Child Labor Deterrence Act that would have prohibited importing goods made with child labor to the U.S. that called for both civil and criminal penalties for violators. Indian carpet makers, reliant upon child labor, began moving toward an independent monitoring system working with German unions, although when it became clear that Harkin’s bill would not pass, the Indian carpet industry resisted meaningful monitoring and therefore the system was weakened and easily avoided by the carpet makers. Unfortunately, Congress has never passed the Child Labor Deterrence Act, but the case of the Indian carpet makers suggest suppliers and importers are watching American labor law and will react positively to mandates.

For the last question on the potential of supporting a trade regime that actually protected people and the environment, the answer is that it depends. Were we to see real, enforceable standards on these trade agreements that held corporations and their CEOs specifically accountable for the actions of the companies, we could then debate whether trade agreements were worth it. But it’s pretty clear that, first, fewer American jobs would go abroad if this was the case and, second, that those jobs that are moved abroad would have less reason to again move if workers organized or a government decided to protect its citizens. So the immoral aspect of the global economy would decline and the rate of jobs leaving our borders would too. That’s a win-win. Ultimately, what we need is not all the jobs in the United States and none in poor nations. We need workers to have safe jobs with living wages and the right to organize without worry that the factory will move somewhere else. We need rivers running clean and kids not unable to study because the chemicals from apparel factories in the air and water give them headaches. If this happened, my objections to so-called free trade agreements would probably disappear, but then they wouldn’t be anything like current free trade agreements.