Tasini argues that international trade can only be fair when regulations ensure an equal distribution across the globe of trade's economic benefits. Case in point: the quotas on apparel that have been in place for the past 40 years. They have helped developing countries achieve some measure of economic sustainability. Now that's about to end. And that's no good for anyone. Except China.
Jonathan Tasini is president of the Economic Future Group and writes his "Working In America" columns for TomPaine.com on an occasional basis.
While millions of amateurs will wake up in the New Year with a splitting headache—the real hangover of consequence will be felt by millions of poor people around the world thanks to blind, mindless ideology. On January1, almost without notice, the biggest shift in jobs in the shortest amount of time in history will begin: 30 million jobs. And you can thank so-called "free trade."
After 40 years, the New Year will mark the end of worldwide quotas on apparel, courtesy of the World Trade Organization. Quotas—far from being a bad thing—are a way to manage some fairness or equilibrium in trade relations. In contrast to the Wild West, cutthroat-system of so-called "free-trade," for which the WTO acts as ideological enforcer. Within 500 days, 70 percent of the industry will move to China —a $220 billion shift; $42 billion of that shift will happen just in the business other countries had with the U.S. Now, certainly, U.S. apparel workers are going to feel a terrible hit. The remaining U.S. industry will almost be wiped out: of the roughly 690,000 jobs left in apparel in this country, probably 400,000 will vanish in three years. These are often jobs in rural, poorer communities where there are not a lot of options.
A Blow To Developing Countries
But, I want to spend this column on the devastation that will be faced by other countries where the blow to economic sustainability should be of concern to progressives everywhere. Mexico, Turkey, African countries and Caribbean countries will be deeply shaken economically—losing millions of jobs and billions of dollars in badly-needed cash. The shift will happen so quickly—in economic cycle terms—that these countries will have no chance to replace even a fraction of the lost apparel jobs. In a short time, millions of people will be on the move, turned into nomads clawing for subsistence-level survival. It will make the displacement of the Okies of the Dust Bowl look like a short picnic outing.
Take Bangladesh. Apparel accounts for 78 percent of total exports and 1.6 million jobs. It has an unemployment rate of 40 percent and a per capita income of $1,900 a year. When the quotas expire, this poor, struggling country will lose 1 million apparel jobs, 62 percent of its industry.
How do we know this will happen? Look at the track record. Some segments of the apparel industry (like dressing gowns) were already removed from the quota system in 2002. What happened? China's share of those segments skyrocketed from just 9 percent in 2001 to 72 percent in 2004—an extremely short time in which to globally dominate an industry. While China was gobbling up the business, Mexico, Thailand, India, the Philippines, Taiwan, Bangladesh and Caribbean countries all lost at least half of their industry.
Now, I'm a little uneasy about the China-bashing that is all the rage today. Not because China has an authoritarian government that prohibits basic labor and human rights, undervalues its currency by 40 percent to give it a huge cost advantage and has a regime that might as well stow the red flag in the closet because it enables the wrecking machine called global capitalism. Rather, we have to remember that there is vast unemployment in rural parts of China. Fifteen million new Chinese workers a year need jobs, and tens of millions of Chinese people are being forced to work for 70 cents a day—none of whom have the right to form independent unions.
Addicted To Exports
Here's the supreme irony to this approaching human catastrophe. Over the past decade or so, politicians and economists who were going bonkers over U.S. aid to poor countries and trying to end it came up with the ingenious idea of addicting poor countries to export-related jobs. This was the foreign policy version of welfare reform—why should good 'ole American dollars be used to help poor people? At the time, pre-love affair with China, corporations salivated over the vast ranks of cheap labor in places like Bangladesh. So, desperate for some way to lift their people out of poverty, the poorest countries welcomed the manufacturing production.
In their limited way, the quota system was a good example of global economic engineering that made a positive difference for many desperately poor people. While quotas have been attacked as "protectionism," these quotas provided poor countries the ability to develop some manufacturing capacity. Quotas are a sane way to manage trade so the economic benefits can be more evenly spread out.
And that's what we need to understand about so-called "free trade." It's a way of managing trade, too. Except so-called "free trade" manipulates trade without any regard to whether the end result means sustainable economies for poor countries. Thank you very much, Bangladesh, Mexico, Turkey and the rest of the countries that sacrificed their citizens' bodies and limbs for profits—you're not cheap enough anymore. To hell with your people—we, global corporations, can get a better deal in China.
If the end of the global apparel quota system tells us anything it's that so-called "free trade" is not about finding the smartest workers. Forget the nonsense we've been taught by conservatives and liberal Democrats that workers are just too dumb and need to be retrained. So-called "free trade" means only one thing: the global rules of the economy will be set by how far the cost of a human being's labor can be driven down.