From: wlarkin@hounix.org (Ward Larkin)
Subject: NAFTA:  a critical analysis ( 3 of 4 )
Organization: Houston UNIX Users Group (HOUNIX), Houston, TX
Date: Sat, 07 Nov 1992 16:16:34 GMT

      U.S. LABOUR AND NORTH AMERICAN ECONOMIC INTEGRATION:
                 TOWARD A CONSTRUCTIVE CRITIQUE

                    Stephen Fielding Diamond
              Email:  SFDYLAW@YaleVM.YCC.Yale.Edu

Part 3 of 4


An Alternative Strategy for Labour
Managed versus Free Trade

How can labour respond adequately to the challenges of the free
trade debate? A starting point would be to note that there is no
such a thing as "free" trade any more than there is a free lunch.
In fact, there is now a very intense debate within the business
community about how U.S.~Canadian~Mexican economic integration
must be "managed" to achieve its full potential. The label free
trade is little more than a metaphor aimed at limiting the
participants in the debate to business interests. This
"management" debate takes for granted the need to form elaborate
legal and institutional structures to put the agreement into
place and to regulate its impact once it has taken effect. Many
different subject areas are dealt with in the agreement,
including intellectual property rules, changes in Mexico's rules
on foreign investment, the cross-border harmonization of product
standards and certification, the establishment of a dispute-
resolution mechanism, and debate about the rules of origin, which
will ensure that the benefits of cross-border trade are limited
to substantial investors in the region.
     This "managed trade" position represents what might be
called the neutron bomb approach to economic integration. It
secures a safe and level playing field for capital, but it
ignores the general human and social cost of the agreement. It
pays no attention to the unemployed stagnating in the Rust Belt,
it ignores cross-border pollution, and it fails to examine the
implications of integrating societies with vastly different
standards of living. As an alternative, labour should argue for
an agreement that reckons with the total social cost of the
integration process.
     Such costs are often labelled externalities or political
factors precisely because of the inability of mainstream economic
theory to deal with the full impact of economic change and
development (see the chapter by Helleiner in this volume). But
the existence of this wider reality is, in fact, the reason for
the establishment in every advanced economy of institutions such
as collective bargaining, environmental regulation, and minimum
standards for labour as well as for products. Only democratic
institutions can adequately examine, debate, and regulate this
integration process. The rules and standards of such institutions
must encompass more than the agenda of the business community.
     There can be no more dramatic proof that this community,
with its trickle-down approach to economic development, is not up
to the task we face in the post~Cold War era than the very crisis
of the economy and labour force of the United States and Canada.
A decade of speculation in real estate and junk bonds has pushed
us into a deep recession. Have we reached such a stage in human
development that to rescue our economy we must pay another
nation's productive adult population sixty cents an hour to
assemble twenty-thousand-dollar automobiles and advanced
computers, while denying them basic social services and human
rights? Can we claim with any sincerity that this will be the
basis upon which to build a reasonable future for their community
and nation?


Regulating the Social Cost of Integration

The market alone cannot be relied upon to take account of social
and human resources--the horizon of any individual business is
inherently narrowed by competitive pressures. Contrary to the
neutron bomb approach of the so-called free market, the social
costs of economic growth and integration should be made central
to the debate. Job creation, health care, labour standards, water
and air pollution control, migration issues, wages, housing,
education, progressive taxation systems, and debt relief--these
should be the basis of a new regional economy. If Mexico and the
United States can cooperate to expand bilateral trade, why can
they not cooperate to create employment opportunities, protect
the environment, and enforce occupational health and safety
standards (see Diamond 1986)?
     Some partial efforts in this direction have been made. The
AFL-CIO has backed labour and human rights provisions in U.S.
trade legislation (International Labour Rights, 1988). Such
efforts are limited in their impact by broader political conflict
and the development needs of the targeted countries. In essence,
they raise the cost of development while not necessarily
reorganizing economic structures. Another approach is being tried
in the Mexican context. A Coalition for Justice in the
Maquiladoras, with the backing of the AFL-CIO's Industrial Union
Department and church groups, has proposed a Code of Conduct
aimed at U.S. firms operating in the already existing export-
based free trade zone of northern Mexico (Coalition for Justice,
n.d.). In addition, an attempt to expand the very limited nature
of bilateral trade unionism between U.S. and Mexican labour has
been made. But only a few meetings have been held at the highest
levels of the Confederation of Mexican Workers and the AFL-CIO,
with little or no impact on union activity (California AFL-CIO
News, 1988; Interviews by author of various regional and national
AFL-CIO officials, 1990-1991).
     Efforts in all three areas--labour rights tied to trade,
expanding labour law to cover international investment, and
multinational trade unionism--must continue. One of the likely
by-products of any trade negotiation process, even one limited to
the current Bush agenda, is that these efforts will be stepped
up. International attention to human and labour rights in Mexico
can greatly aid the efforts of Mexican workers and their unions.
Such pressures will raise the social standards of living in
Mexico, while resisting a decline in the living conditions of
U.S. citizens and Canadians. But these efforts will remain
partial and ameliorative and the process they stimulate in Mexico
will take many years.
     Labour must now attempt to institutionalize these efforts
within the framework of the emerging economic structures. One
concrete possibility would be to include labour issues as
constituent parts of the dispute-resolution mechanisms that are
integral to trade agreements. U.S. workers, for example, should
be able to monitor any plant closings or new investments by U.S.
firms. If there is a factual basis for a claim that such
investments are aimed not at new markets in Mexico but at taking
advantage of cheaper labour costs to reexport to old markets
here, then the affected U.S. (and Canadian) workers should be
able to bring a charge to a new trinational social rights agency.
Compensation or adjustment spending could be ordered. Or, at the
minimum, the agency could order the company to undertake
"mandatory" bargaining with the union. This would mean a
commitment to negotiate over alternatives to plant closure until
a compromise is reached.
     Similarly, Mexican workers should have access to this agency
to bring claims that foreign investors are refusing to recognize
their collective bargaining rights or are not acting as good
corporate citizens. The latter concept could cover environmental
concerns, plant health and safety issues, and taxation. The
internal political problems in Mexico point to the need for such
an autonomous agency concerned with the social impact of economic
integration. This agency could be investor-financed. Those
companies that win new markets or higher profits because of
integration would be taxed to fund the agency and its essential
investigative units.
     The advantages of a such an agency are many. To private
investment capital it would provide a policing effort to keep out
sweatshop competition. It would mean the establishment of some
basic sense of due process and fairness in investment decision-
making. It would provide a public forum for argument over the
investment process. This would be essential to encouraging
Mexican workers to come forward. It would provide an organizing
tool for labour movements in all three countries. To bring
successful charges forward on behalf of U.S. workers, for
example, would require an investigation of investment patterns in
Mexico by U.S. unions. This could force U.S. and Mexican workers
into greater contact and, eventually, cooperation. It would, at
the same time, require a constant assessment of the genuine
benefits of the integration process.

-- 
-- Ward Larkin
   wlarkin@hounix.org
Newsgroups: sci.econ