Oxfam International's Rigged Rules and Double Standards

...Yet, the dominant position of the United States in the world market for agricultural products has been sustained by factors more politically deep-rooted than subsidies...

...This practice further diminishes the TNCs' structural links to the development of low income host countries...

...farmers...

...Trade within the same TNC and its network of subsidiaries and sub-contractors...

...They insist on their "comparative advantage"— an enormous supply of workers, many of them unemployed and willing or required to work for low wages...

...And whether they would contribute to the social protection of working people and relieve unemployment and poverty, given the existing circumstances of brutal competition, seems dubious at best...

...The aim of developing-country leaders and their international advisers is not primarily to relieve poverty but to attain high rates of economic growth...

...Although the labels read, "Made in Bangladesh," the yarns are imported from India, the cloth from Taiwan and Korea, the lining and packaging from China, and the buttons from Indonesia...

...This configuration of social actors weakens Oxfam's case for linking the relief of poverty to world trade...

...Oxfam points to the opportunities that the high growth rate of world trade offers for developing countries...

...Unless conditions are imposed by the host country, TNCs don't contribute much to the diversification of the local economy...

...Similarly, Oxfam and others imply a commonality of interests among the poor and among the developing countries, but these countries are caught in the nets of the world market, subject to the competitive forces it spawns...

...IN THIS ARTICLE I will review and criticize a work produced by Oxfam International that argues that international trade as currently managed deepens the poverty of developing countries, where the vast majority of the world's poor reside...

...Labor costs are also kept low at the behest of the TNCs, the international financial organizations, and, not infrequently, because of competition among developing countries— for example, between Mexico and China...

...UNCTAD states that "Export-oriented foreign affiliates . . . often import all or most of their "components and raw materials, assemble the product in the host country, and then export the semi-finished or finished output...

...It views "The vast potential of trade . . . as a force for economic growth, human development, and shared prosperity...

...According to the World Investment Report 2002 issued by the United Nations Conference on Trade and Development (UNCTAD), three basic forces have driven the rise and expansion of TNCs over the past quarter century: liberalization of investment regulations and property rights, rapid technological change, and intensifying competition...

...DISSENT / Summer 2004 n 105 BOOKS Basically, Oxfam lacks a realistic conception of the competitive forces that drive the world market—forces that place a premium on efficiency, technology, and low costs...

...These countries in fact are in the forefront of restricting or (in the case of China) denying the basic (or core) labor standards as defined by the ILO...

...An equally important problem bearing more immediately on economic development is the frequent absence of linkages between TNCs and hostcountry enterprise...

...Hundreds of trade unionists "have been beaten up, arrested, jailed and tortured" for demanding payment of wage arrears, improved working conditions, negotiations, or a fair share of company income...

...Trade policies of "most developing countries," Oxfam writes, are not integrated with any national strategy to reduce poverty...

...And why should one expect that they would be...

...AGRICULTURE has been, and remains, emblematic of the technological and organizational changes that the world market imposes...

...When the ministry of finance of Peru, for example, negotiated liberalization of agricultural imports with the IMF and the World Bank, the ministry of agriculture was barely consulted...

...Mechanization and chemicalization are outcomes of this research...

...The answer is hardly positive...

...Unceasing efforts are made to broaden investor and property rights, privatize public services, strengthen "free markets," no matter the social costs...

...In a memorable passage in the Communist Manifesto, Karl Marx wrote that "cheap prices . . . are the heavy artillery with which the bourgeoisie batters down all Chinese walls . . . " And aren't we witnessing the nearly grotesque inversion of this statement as the Chinese take "asymmetrical advantage," with their deliberate policy of keeping labor cheap, threatening the disintegration of labor standards everywhere...

...Oxfam cites with approval the rural Landless Workers Movement in Brazil, which has established more than a thousand settlements on the unused land of large estates...

...They are not necessarily allies in Oxfam's endeavors...

...Oxfam's conception of the market parallels Amartya Sen's (he is the honorary president of Oxfam and fully endorses its work...

...Supplying and coordinating the deliveries are contractors or brokers seeking the lowest cost sources...

...Oxfam itself provides information regarding the primary economic-policy goals of developing countries, noting that governments "frequently favor large commercial farms . . . . Investment in irrigation and roads tend to be heavily concentrated in areas" where such farms may be located, "and extension services and research are designed to benefit their crops," which promise foreign-exchange earnings...

...Oxfam does not specifically discuss either the pressure or the legislation...

...Hence, Oxfam urges that governments enact and enforce all ILO conventions, including the right of workers to associate freely, organize trade unions, bargain collectively, and strike...

...No assessment of the implications for rural livelihoods, income distribution, or poverty was carried out in advance"—and the case of Peru is not atypical...

...Small farmers often lack roads to markets or access to credit at affordable rates of interest...

...Their model most probably is derived from the experience of Western countries and Japan, where economic growth has produced rising living standards...

...But the movement is dwarfed by Brazil's concentrated land ownership and "capital-intensive farming systems, generating large volumes of output but limited employment...

...U.S...

...Oxfam points to the predominance of ministers of finance as key players in formulating the liberalization policies recommended or insisted upon by the IMF and the World Bank...

...UNCTAD) Slicing the value chain is facilitated by low (or no) tariff barriers, as well as by cheap and swift transportation and communication...

...UNCTAD writes that in many export processing zones "trade unions are generally barred from organizing to improve the conditions of workers...

...It is hard to see how they strengthen the case that making trade "fair" will improve the lives of the world's poor...

...Oxfam articulates views that are broadly representative of other critics on the left who, while accepting the global integration of markets, also seek to limit the rule of capital and to govern global trade and finance in ways that will ultimately compel a partial redistribution of the world's wealth to the poor...

...H. BRAND has frequently contributed to Dissent...

...Those at the bottom have gained little...

...But that rate would seem to be inflated by the extreme fragmentation of the division of labor indicated by the Cardin BOOKS example...

...many are even worse off...

...Subsidies, of course, allow American agribusiness to undersell other producers on the world market—they represent, as Oxfam puts it, unfair competition...

...An ILO study states, "The inescapable conclusion is that the balance of power has shifted to the business sector...

...In addition, subsidies help prop up land values...

...Oxfam holds to the conviction that the TNCs are major agents in providing the orga108 n DISSENT / Summer 2004 nizational know-how and financial ability for economic development, hence in alleviating poverty...

...The widespread "favorable investment climate" thus created is of course indicative of the eagerness with which governments seek links to the world market—links of which TNCs are the major agents...

...Gavin Wright's account, in New South, Old South, of the introduction of the mechanical cotton picker during the midtwentieth century provides a useful illustration: it "involved an all-out research effort by public agencies as well as private firms, with intense concern for the competitive position of American cotton, but little for the human consequences...

...this book is a work of conscience— it appeals to men and women to help make space available to the poor at the table of the wealthy...

...But where in a capitalistic world economy is there a market without this drive for "asymmetrical advantage...

...The work details the numerous rules imposed by the industrial countries and codified by the World Trade Organization (WTO), as well as by protective tariffs and nontariff barriers, that prevent "the rising wealth generated by trade" from benefiting the poor...

...Cardenas's warning has, of course, been ignored, and in 2002, some seven hundred thousand people lost employment in farming and related food industries...

...It is a human problem never well addressed since the early years of the industrial revolution, one now aggravated by a merciless drive to compete for food and fiber markets at prices too low for small farmers to meet their costs or other rural workers to survive on the land...

...DISSENT / Summer 2004 n 109...

...By emphasizing the depressive effect of subsidies on world market DISSENT / Summer 2004 n 10 7 BOOKS prices, Oxfam neglects this reality, evidently believing that removing subsidies will contribute to "making trade fair...

...106 n DISSENT / Summer 2004 Host countries' easing of foreign direct investment (FDI, that is, investment in productive assets and services) has been reflected in bilateral regulatory agreements, virtually all favorable to investors, amounting to about thirteen hundred between 1991 and 2001, and made by seventy-one countries in the latter year alone...

...Although Mexican food processors gain significant advantage from lower-priced corn imports, which to some extent they pass on to consumers, the employment losses suffered by displaced small farmers are certainly not "offset" by those gains...

...The export successes of these operations "have not been matched by rural poverty reduction...

...Adherence to ILO conventions (not just their adoption but also their enforcement) would also diminish the "comparative advantage" of low-cost labor on which developing countries insist...

...Emphasis in original) THE COMPETITION for direct investment translates, as I have noted, into poor countries' unceasing attempt to attract TNCs...

...02111 or www.maketradefair com...

...Those changes have displaced innumerable workers and their families, who migrate far afield, crowd into unwelcoming cities, or enter foreign countries intolerant of their presence...

...At the same time, it is highly critical of TNCs' contempt for labor rights and the high value they attach, along with the WTO, to intellectual and other property rights...

...Oxfam does not say so, but one may assume that ministers of finance usually belong to the privileged strata of their societies...

...But "management" implies a degree of control that those agents do not possess...

...But will it help (or has it helped) to relieve poverty in developing countries...

...Capital rules in this era...

...Repression of worker rights is not universal, but their marginalization effectively is...

...Oxfam masterfully analyzes the marginalization and impoverishment of farmers, not only in Mexico (see Oxfam Briefing Paper 50), but in many other developing countries as well...

...Oxfam is not a threat...

...At the same time, labor's power to influence management decisions concerning best-practice production methods, technological changes, or work assignments has been declining...

...Cuauhtemoc Cardenas, at one time a candidate for the Mexican presidency, would have taken "subsistence agriculture, which produces most of Mexico's basic grains" off the bargaining table altogether (when NAFTA was being negotiated), because "millions of peasants will be thrown off the land if their inefficient, backward, and uncompetitive forms of production are suddenly exposed to the volatile world commodities market...

...It would establish internationally agreed upon price floors under non-fuel commodities, and guarantee minimum producer incomes by means of an international insurance fund...

...Years ago, Cardenas complained, "After more than 25 years of operation, maquiladoras' backward linkages remain virtually nonexistent...

...A garment factory in Bangladesh that manufactures designer-label shirts for Pierre Cardin shows the problem...

...But attempts to impose conditions may well conflict with TNCs' investor "rights...

...Commonality of interests will always be transient in nature...

...So the ability of workers to defend themselves is radically diminished...

...It would permit the imposition (or re-imposition) of tariffs by developing countries where food supply or infant industries are threatened by the import liberalization policies required by the IMF...

...it is replicated "across much of Africa . . . " Although in many countries labor and social affairs ministries are charged with poverty reduction, they carry little political weight...

...And the failure of linkages is fostered by corporate strategies that "slice" the value chain of production—so that, for example, "labour-intensive activities are moved to sites with cheap but efficient labour...

...International trade is indeed "managed" by a combination of commercial and financial institutions and TNCs...

...And Oxfam's reform proposals seem very modest...

...This potential, however, cannot be realized, "not because trade is inherently opposed to the interests of the poor, but because it is managed in a way that concentrates wealth and undermines freedom...

...That experience, however, has also shown that economic growth does not "raise all boats," that strong political pressure and legislative regulation are BOOKS required to alleviate poverty...

...The International Confederation of Free Trade Unions (Brussels) in its year 2000 survey, cites workers' rights abuses in 113 countries...

...Yet, I will argue, it is doubtful that "fair trade" can even begin to realize this vision...

...In terms of the facts and criticisms it presents, it is a valuable guide for leftists, for social democrats, and for union activists...

...These developments intensify competition on the world market...

...It may bring some improvements, but will not eliminate the laborsaving technological advantages or the superior infrastructures of transportation and finance that the high-income exporting countries now possess...

...Agricultural research has been institutionally rooted in the United States for some 140 years and has been a major contributor to productivity...

...The implicit denial that worker rights are human rights is exemplified by their relegation to NAFTA side agreements, whose enforcement is often indefinitely delayed by administrative wrangling...

...The drive is inherent in a world economy propelled by competition and ruled by the need for profit...

...Oxfam's critique, however, is not confined to the "management" of trade but extends to policies of the International Monetary Fund (IMF), to oppressive working conditions that exist especially in the "low-wage ghettos" of developing countries, and to some of the practices of transnational corporations (TNCs...

...But the prospect that international institutions or TNCs would accept these reforms is dim under present political conditions...

...Oxfam fully confirms this...

...In Development as Freedom, Sen writes that problems attributed to the market mechanism arise "not from the existence of the market per se" but from such factors as "unregulated use of activities that allow the powerful to capitalize on their asymmetrical advantage...

...But the ILO conventions come into conflict with the core interests of TNCs—to keep labor costs low, workers "disciplined," and management rights unchallenged...

...Joseph Stiglitz, formerly the chief economist of the World Bank, has written that although growth has occurred in Mexico and other Latin American countries, "the benefits have accrued largely to the upper 30 percent, and have been even more concentrated in the top 10 percent...

...The result is that about two-thirds of world trade in manufactures consists in intraproduct trade, that is...

...It would curb intellectual property rights and insist on strict observance of ILO conventions...

...Such fragmentation follows from an unceasing search for low costs, especially low labor costs, and, given the deprivation of worker rights this search entails, it is unacceptable to Oxfam...

...International economic and financial institutions will remain indifferent to the claims of the poor unless their interests are not only questioned but threatened...

...Subsistence farmers in Mexico are displaced by imports or cheap corn from the United States— cheap because it is subsidized at an estimated $20 per ton—the difference between cost and the lower price at which the corn is sold abroad...

...It attributes this human disaster to two factors—the liberalization of imports by these countries, which the "conditionalities" imposed by the IMF have compelled, and the subsidizing of agricultural exports...

...Developingcountry governments themselves partake in the "management" of globalization, as Oxfam documents...

...In large measure, these labor policies, according to UNCTAD, reflect "intense competition for export-oriented foreign direct investment translating into a race to the bottom (in social and environmental standards) and a race to the top (in incentives...

...The largest hundred TNCs account for about onehalf of those affiliates and their employment...

...Large numbers of rice farmers in Haiti have also been pauperized by cheap rice imports from the United States...

...Leaders of developing countries have often protested against demands by worker organizations and their allies in advanced countries, as well as by the International Labor Organization, that they observe core labor standards, denouncing such demands as an agenda for protectionism...

...and they are likely to nurture ties to high-positioned international civil servants, bankers, and investors...

...There are an estimated 65,000 TNCs today, operating 850,000 foreign affiliates, not counting subcontractors in host countries...

...The mechanization of coffee plantations in Brazil, for example, which have employed some three million persons, is expected to slash employment by as much as 90 percent...

...agricultural policy," writes Oxfam, "has been deliberately tailored over the last 20 years to generate a surplus for export, and to provide adequate incomes for U.S...

...It would abolish agricultural subsidies...

...it provides at least some sense of political orientation...