Working for Labor Rights

An interview with Pharis Harvey

 Pharis Harvey is the executive director of the International Labor Rights Education and Research Fund in Washington, DC. He has worked for the past 14 years to broaden U.S. human rights law to include protection of workers rights and to secure compliance with the labor rights provisions in U.S. trade law. He is also the coordinator of the Alliance for Responsible Trade, a national coalition of labor, human rights, environmental, religious, agriculture and consumers organizations that advocates protection of environmental, labor and human rights standards in U.S. trade agreements.

Multinational Monitor: Could you describe the provisions of U.S. law that relate to international worker rights, and the extent to which those provisions are actually being applied?

 Harvey: The major provisions are, first, the GSP law, the Generalized System of Preferences, which sets requirements for countries that want beneficiary status which means tariff-free access to U.S. markets for selected goods. It makes it necessary that they be taking steps to afford workers internationally recognized workers' rights, including freedom of association, the right to organize and bargain collectively, freedom from forced labor, a minimum age of work for children, and acceptable conditions at work relating to hours, wages and health and safety. All fairly vague language, but there has built up since the law was passed in 1984, a fairly decent set of understandings about what those standards refer to, and an increasing reliance on international labor conventions to define those standards and to judge compliance, which is a very good development. The Bush administration was very unsympathetic to the law and did its best, in most instances, not to enforce the law with any trading partner of substance. But during the last couple of years, that began to change; and it is as much a product of the change in the administrators of the program as it is in anything else, so far as we can tell. They began to treat it with more seriousness, take petitions more seriously and investigate more seriously the kinds of abuses that were being documented by the petition program.

There is also a similar law that restricts access to overseas investment insurance for American companies in developing countries, under OPIC, the Overseas Private Investment Corporation. That program examines countries that are not in the GSP program and takes the rulings under GSP as guidance for countries that are. Under that program, we were able to get South Korea expelled from beneficiary status about three years ago, and we've been able to keep it expelled because they haven't made any changes in their labor laws. It's still excluded from the program because there hasn't been any change. There've been other democratic changes in Korea, but not affecting labor.

The third law, one that has not yet been tested with a case, is a Section 301 definition that was added to the trade law. Section 301 defines unreasonable and unfair trading practices, and in 1988, we succeeded in getting an additional item added to the definition of these practices, which was the use of repression of labor rights for competitive advantage, and again, defining those labor rights in the terms of the GSP law. But there's a large number of loopholes, and a great deal of room for presidential discretion, and it's a slow and ponderous process.

And last year, after the National Labor Committee did the exposé of the Agency for International Development (AID) fostering labor repression in El Salvador, the appropriations bill was amended with Section 599 to require all AID programs to pass a test of whether they supported programs that repressed worker rights, or supported programs that had the effect of taking jobs out of the United States. It is quite likely that when the AID reform bill comes up next year, that will be made a permanent feature in the law.

We also got a working group established to determine rules for regulating labor rights in the international trade system. Unfortunately, the negotiators were the Reagan administration. They weren't terribly interested in doing that, and so they did it with a smirk and a smile and a wink, and all the other countries quickly understood that this was being done simply because Congress had mandated it, and so there was no progress.

We decided in 1989 or 1990, that before we came back to GATT with this we needed to develop a stronger body of allies and support among Third World countries, so that the issue could be taken by them as something besides U.S. protectionism, which is how they interpreted it. So we've developed a good linkage with Mexican trade unions, that is, those that are not controlled by the government, to develop some conditionality on trade relating to labor rights. That work was responsible for Clinton's making the promise that he did to negotiate a NAFTA side agreement on labor rights. Unfortunately, what they negotiated isn't worth the effort they put into it.

MM: How do those independent Mexican unions feel about NAFTA?

Harvey: They are opposed to it. They see it as a way by which the current conditions of labor and wage suppression, and trade union suppression can be locked into place, without any positive change. They see it as a way of strengthening the hold on power of Salinas and a handful of his cronies who are now the recipients of a privatized Mexican economy without any democratic reform that would enable Mexican workers to have some say in the economic policy of the country. They are in favor of a trade agreement, and they are in favor of more trade, just as we are, but they believe that it has to be a part of an overall movement toward more democracy or it just strengthens the hand of an authoritarian government.

MM: How would NAFTA do that?

Harvey: It locks in existing labor relations by making it easier for U.S. companies simply to move - as they are doing with the maquiladoras - to Mexico, and produce goods under conditions where wages can be controlled by a combination of state-controlled unions and government wage setting, and where labor negotiations can be undermined, as they constantly are in Mexico, by the legal harassment of union-side lawyers, the arrest of people for extraneous charges and the use of the military on occasion to break up unions and strikes.

MM: But since that Mexican labor structure is already in place, what difference will NAFTA make?

 Harvey: Well, part of the reason we have tariffs and import restrictions is to make sure that we're not forced to compete with workers who are laboring under unfair conditions. If you break down all barriers to trade without setting in place some ground rules for the conditions under which things are made, you have the effect of undermining the progress that we've made in this country over the last century to establish some reasonably fair conditions for work and rules for labor union activity. Mexico has many of those same rules, but has a political system that has simply made those rules inoperable.

 There are very few trade unions in Mexico that have been able to establish themselves as independent - there are a few, but they don't have legal existence because the government won't give it. Those unions point out that the situation of workers in Mexico has declined very drastically in the last decade; there has been an average 40-50 percent decline in wages since 1980, and a rapid increase in the number of farmers forced off their land in the last couple of years.

MM: But given the disparity between the two economies, the difference in wage levels, wouldn't any other provisions guaranteeing worker rights still fail to solve the basic problem that companies would just take advantage of the disparity in order to pull wages in both countries down?

 Harvey: If you see Mexico as permanently caught in being a Third World producer of goods with a cheap labor force, yes. But Mexico is always going to have to compete with China. Everybody is going to have to compete with China. If Mexico goes down the cheap wage road, it can't compete with China. It's a dead end for Mexico. Trying to set up a regional trade agreement with Mexico as sort of our own sort of domestic China won't work in a global economy. If you had a wall around the region, maybe it would work, maybe you could have a high wage enclave in the United States and all the dirty work would be done in Mexico. But it won't work in a global economy. Mexico really doesn't have a choice if it wants to advance industrially, other than to build in the capability of wages that are commensurate with its productivity. South Korea now has wages that are about 35-40 percent the level of the United States in many industries. Mexico used to have wages that were about one third those of the United States. If Mexico took on deliberate policies, and if the U.S. worked with Mexico to take on deliberate policies, through increased wages, so that wage competition between us would be phased out, then Mexico could become part of a prosperous North American region. But otherwise, it's caught in a vise. It can't permanently be a cheap labor source for the United States. Mexico doesn't exist as a permanent cheap wage solution as long as there are places like China where the wages are lower still. And the effort to make it such is likely to be self-defeating or to be a downward pressure on wages in the United States, so that harmonization comes by means of downward pressure here rather than upward pressure in Mexico.

MM: Does GATT work on the same principle as NAFTA?

 Harvey: The GATT ideology says that the conditions under which products are made are irrelevant to trade. The condition of the products themselves is the only thing that matters. That ideology has been in ascendancy in the trade system since about 1948. We need to open up the trading system to the development of global rules that begin to mitigate some of the problems that are being created by the vast mobility of capital now. The computer revolution and the communication revolution have made it possible for companies to break up production into a hundred different pieces and to farm that production out wherever they can get the best possible deal, from a government willing to sell its land, its environment or its people. And that is having a globally deleterious effect on political systems, ecosystems and workers' rights around the world. The vast increase in child labor, particularly in South Asia, is partly a product of this kind of bidding among nations to out-compete for cheap wages. Because of the NAFTA debate here, in places where free trade agreements are under negotiation, such as in Latin America with the Andean Pact, the U.S.- Chilean discussion, all of these discussions are now having the issues of environment and labor injected into them in some new ways.

The opponents of NAFTA, for the most part and with few exceptions, want to see a trading system with better rules, not fewer rules. They don't want to see capital mobility enhanced without rules that protect capital exploitation from breaking down labor's part in the productive process.

MM: Is there any way, practically speaking, to diminish capital mobility or control it in some way?

Harvey: The only thing I think you can do is to make it more responsible. While access to the U.S. market is still an incentive, then that is an effective way to make global capital more responsible. That's what the GSP program is all about. We still have the opportunity in the United States, while we still have a major market share, to use those rules to try to get better behavior out of corporations that want to sell here. You also have ways to effect corporate behavior that are rooted in corporate image. Reebok and Nike spend more to protect or to advertise the image of their company than they do for the production of their product.

MM: Could you describe briefly how shoe production works in Indonesia?

Harvey: There are about 25,000 workers in the shoe industry in Indonesia. They work for about seven or eight large companies that are about half Korean owned and half Indonesian owned, and make their product on consignment. So the same companies may be producing for both Reebok and Nike. Adidas is there, they're all there. Converse is moving in. Converse has done a lot of production in the U.S., but they're moving out now, to Indonesia or Australia.

MM: What are the wages and working conditions? What is it like for people who might want to unionize?

 Harvey: Well, if they want to unionize, then the SPSI, the Indonesian government- controlled union, comes in and sets up the union for them.

Those who attempt genuine, free union organizing get fired, hauled off to jail or "disappear" and are occasionally killed.

Wages in the shoe industry in Indonesia tend to hover between 2-3,000 rupiahs, about a dollar to a dollar fifty per day. There was recently a work stoppage at Reebok.

Multinational Monitor: Last year, Reebok adopted a code of conduct regarding the factories in Indonesia. Has the company done anything concrete about implementing it?

Harvey: Well, I'm waiting. We did a lot of work with them on the code in August. And they made quite an extensive tour of all their plants to try and get an accurate picture, and Doug Kahn from their human rights foundation came back from his tour recognizing that there were some problems in some of the factories. But he frankly said, "I don't know how far we can go on this and how fast we can go on it."

MM: Couldn't Reebok simply say to its contractors: "Pay a higher wage"?

 Harvey: They could do that.

MM: If Reebok doubled the wages of its workers in Indonesia, what effect would that have on its overall costs and profits?

 Harvey: Well, if Reebok doubled their wages, it could raise the cost of a shoe from $79 to $80 and nobody would ever notice it. There is now about $1 worth of labor that goes into a shoe.

 In 1991, Paul Fireman, the CEO of Reebok, was paid at least two times as much as the entire workforce of the Indonesian shoe industry. Reebok has 25,000 workers in Indonesia. If you allow $1.50 a day, for 300 days a year, you've got an annual wage of $500 a person. Add in a few benefits and bring it up to $600 maybe. 25,000 times $600 is $15 million, and that's at the most generous counting. Fireman made $31,000,000 in 1991.

MM: What do you think of companies like Reebok, which give human rights awards, and make a major point of claiming they're a company that stands for human rights?

 Harvey: I think it makes them vulnerable to some practices within their own industry. It puts a heavy burden on people like us and you to look at their records to see if they deserve the accolades they give themselves.

MM: So, you think it makes them vulnerable to pressure?

Harvey: Oh yes, absolutely. I also think there's something genuine in the motivation of some of the people in the companies. It's not all public relations - 80 percent maybe- but I think it is partly, in Reebok's case, the product of old New England money that has a sort of noblesse oblige quality to it. Nike has taken a very different attitude; they've frowned on the whole area. But now they're developing their own code of conduct. They've been forced to. I don't know how powerful the code of conduct movement can become. It won't be any more powerful than the amount of sunshine that we're able to put on corporate practices. Otherwise, its just public relations. But Levi Strauss, which began the movement, has pulled out of China for the most part.

MM: Why did they do that?

Harvey: For reasons of objecting to military control of work forces in China.

MM: Were they receiving political pressure from within the United States?

Harvey: They received pressure that grew out of two incidents. One was the closing of their plant, I think it made Dockers jeans, in El Paso, and moving it across the river to Mexico, with very poor treatment of their workers, and it inflamed the whole city and Levi's came in for a great deal of pressure and a long campaign to boycott Levi's products locally and regionally.

 Then, about a year later,Levi's got burned by the exposure of labor conditions in Taipan. You have a bunch of hot shot entrepreneurs taking advantage of the fact that Taipan, which is about 200 miles from Guam and is a separate commonwealth related to the United States since 1986, is inside the U.S. tariff wall. So things that are made in Taipan can be labeled "Made in the USA," but wages are less than half the U.S. minimum wage. So, this group of entrepreneurs began importing large numbers of Chinese, Korean, Thai, Filipino workers, keeping them there as guest workers without any rights, without any residence rights, so that they couldn't organize. They couldn't bargain for any conditions. They were mostly non-English speaking, so they really had no outlet, and in many instances were virtual captives of the factory and its compound. The factory conditions both in work and living were really very poor. But Levi was contracting with one of those firms for the making of one of its products, and it got caught and decided after that it would develop a code of conduct for its contractors. It was the first company that ever established a code. All companies that we had ever dealt with prior to that had taken the position that they couldn't regulate the conduct of their contractors.

Levi Strauss saw that its name was being sullied by these two incidents, so it established a code of conduct. At that time, they were contemplating moving into China, and a lot of criticism came to them for that. So, after reviewing it for a year or two they decided not to move to China, and then to make a moral point of not investing in China.

The point of all this is that companies who have an image to maintain as part of their product are vulnerable to consumer pressures for some quality in the work force, and we hope to levy some of that pressure.

MM: Could you run through quickly what has been accomplished under GSP over the years?

Harvey: Well, a number of countries have been excluded. Chile was excluded from the GSP program early on in the process, and that was an important element in putting pressure on Chile at the time of the ending of the Pinochet government. Paraguay was also excluded and that was an important part of the pressure for reform in Paraguay. Both Chile and Paraguay have come back into the program now after some reforms. But I'm not satisfied that the Paraguayan reforms really affected labor in any serious way; the problems in labor law there have not been resolved.

 Burma, is currently excluded from the GSP program and the Central African Republic has been pulled out as well.

In Sri Lanka, a petition we filed in 1991 got a promise out of the Sri Lankan government to open their export processing zones to labor organizers. The zones there are like military compounds where you can only get in if you have a workers' pass, and there is heavy surveillance in the area around the compound so that any labor organizer that goes into the neighborhood immediately gets spotted. The workers who have contact with the organizer come to work the next day, and suddenly their pass is no longer valid. The government made a promise that they would allow labor organizers in, and that they would change the labor law to exclude the export processing zones from the national security regulations. These regulations were being used to say that all products that were exported were national security sensitive, and that therefore any worker could be fired for absenteeism, including strikes, and that any kind of collective action would be considered a national security threat. But those promises have not been carried out. So we filed again this year.

The petition that we filed unsuccessfully on Guatemala for seven years was finally accepted by the U.S. government for review last year. A decision was just about to be announced when President Serrano decided to overthrow the Guatemalan constitution in May, and the GSP program and the leverage of that was the essential factor in forcing Serrano to resign.

MM: Could you briefly tell the story of the Indonesian petition?

 Harvey: Well, it played out in a very complex way in the administration. We filed a petition, and Asia Watch filed also. The petition was accepted for review. On the face of it, it would have been hard to deny it because most of the information in the petition came out of the State Department's country reports, which the government tends to take as absolute and verified fact, whereas everybody else is suspect.

MM: But didn't the State Department lobby against your petition?

Harvey: Yeah, you see, they've adopted since the Reagan years a policy of being truthful in the country reports, but not letting that get in the way of policy. In the case of a country like Indonesia, it's very difficult to claim that the freedom of association and the right of collective bargaining existed in any real sense. Those are the two most important elements in the GSP law. There was also the fact that Indonesia was accepted two years before, partly on the basis of a promise to produce a report on forced labor which was never produced, and on the basis of promised reform in freedom of association which never came about. I think they were inclined to up the ante a little bit and institute the review. It was a time also when there was growing concern about East Timor in higher levels of government, and that may have been a factor.

MM: Where does the cose now stand?

Harvey: That's a good question. It's not entirely clear what the U.S. government will insist on. The major problems are the fact that regardless what you call the SPSI, it is a government-dominated, military-controlled organization for labor control. They've got to demonstrate some real willingness to allow trade unions. That means that there are some laws that are going to have to be changed. You can't have laws on the books that require 100,000 members or 10 unions in a federation totaling 100,000 members, before you can have any legal existence as a trade union. Some signs of seriousness in enforcing the minimum wages. Some signs of intent to really cope with the child labor problem will help.

MM: How much child labor is there in Indonesia?

Harvey: Quite a lot. The only study I've seen that's close to number-conscious is one that was done by Kompass, and they indicated that at the time, in the export processing zone, for example, that the work force was about 60 percent under age. That's under 14.

 The Indonesian government inspected and claimed they didn't find any children. Inspections are not surprise inspections in Indonesia. The child workers told investigators for a human rights organization that they were from time to time told to stay home that day, that the inspectors were coming.