There is a gaping hole in "Secrets, Lies, and Sweatshops" -- BusinessWeek's Nov. 27 cover story exposing how Chinese factories evade the efforts of Western audit firms investigating labor standard compliance. Not once does the 3,000-word story refer to China's proposed comprehensive new labor law. It's an odd omission -- you would think that an investigation into the illegal exploitation of labor in China would take the time to at least mention domestic Chinese efforts to improve the legal standing of workers.
The absence becomes even more perplexing after reading an analysis of the new law published in Japan Focus by Earl Brown, a labor lawyer who once served as general counsel to the Teamsters. The law is a carefully constructed attempt to redress the accelerating inequities caused by China opening up its labor force for the world's exploitation. As such, Brown notes, it has come under sustained, vociferous criticism from U.S. employers operating in China who declare that it will raise their costs of doing business, and who have promised that there will be a "flight of capital" to more accommodating nations should the law pass.
But BusinessWeek's article portrays U.S. employers from a quite different angle; expending millions of dollars in good faith on audits attempting to ensure that workers are treated well, only to be fooled and tricked by the iniquitous Chinese. "Can corporations successfully impose Western labor standards on a nation that lacks real unions and a meaningful rule of law?" asks BusinessWeek.
Certainly not, if those same companies are threatening to move to Vietnam at the first sign that the Chinese government may actually be attempting to institute meaningful labor standards!
This is not to say that the new labor law is some kind of panacea that will achieve what the audit firms hired by Nike and Wal-Mart cannot. A law is only as good as its enforcement, and Chinese authorities have a long record of being selective about just which regulations they'll chop your head off for disobeying. Nor is it easy to deny BusinessWeek's sobering conclusion, that no matter how hard the audit firms work, "Ultimately, the economics of global outsourcing may trump any system of oversight that Western companies attempt."
But BusinessWeek's failure to consider what the Chinese government is attempting to do might be partially explained by its use of the word "impose" in its question about how "Western labor standards" are going to be inculcated in China. The choice signifies an incredible lack of sensitivity to how Western demands, for anything, play in China today. Gunboats impose demands. Trading partners, theoretically, negotiate a deal. Anyone who thinks the West is going to impose anything on China at this stage of the game isn't paying attention.
The same kind of tone deafness can be heard in the post-Democratic takeover of Congress rhetoric on "free trade." It has become commonplace to assert that new trade agreements are dead unless they incorporate "labor and environmental standards." Sometimes this stance is even explained as a strategy for improving the living standards of Chinese workers.
That is an overly optimistic interpretation. To attempt to incorporate labor standards in, say, a bilateral agreement between the U.S. and China will most likely kill the chances of any such agreement occurring. Look at it from the point of view of Chinese trade negotiators. Regardless of the moral or ecological sense such stipulations make, for China to agree to demands that would make its goods more expensive in Western markets, in the context of a trade deal, would undoubtedly be seen as a concession that would have to be matched by an equal concession from the United States. Like, say, allowing the Chinese to produce generic versions of patented pharmaceuticals, or letting a Chinese oil company buy an American one.
Of course, that's not going to happen. So, no trade deal. So, no improved living standards for Chinese workers.
And yet, domestically, there is pressure for change within China. As the recent World Bank study that determined that China's poorest became even poorer during some of the boom years of the early 2000s proves, a rising tide does not necessarily raise all boats. China's leaders are not blind to this. Concurrently, American consumers have also made it clear through their rhetoric, if not their buying habits, that they too find sweatshops objectionable.
So the question becomes how to connect those two impulses. How can international groups that audit labor practices work in partnership with the Chinese government to enforce laws that the Chinese leadership wants to institute? And how can the gobal community support those efforts to ensure that the result of them isn't simply a great migration of sweatshops to the next available poor country?
The conventional wisdom is that the Doha "development" round of the World Trade Organization trade talks is all but dead, its near-lifeless corpse about to be dumped in a landfill by the incoming Democratic Congress. But if the Democrats want to put some meat on the bones of their rhetoric about fair trade -- the obvious place to start is right there. And one of the first items on the agenda could be figuring out a truly cooperative approach to balancing the global equation between capital and labor that avoids imposing one side's standards on the other.
UPDATE: Reader Jesse Covner, who has been contributing on-location insight from China to How the World Works for many months, has some useful perspective on this issue.