Monday, November 07, 2011


APEC: Where's Labor?

By Henry Curtis

To produce something you need raw materials, labor and capital. But only capital is represented at the Asia Pacific Economic Cooperation (APEC) meetings. Labor is discussed, promises are made, jobs are outsourced.

Matson Ship entering Honolulu Harbor

APEC Business Advisory Council  

The APEC Business Advisory Council consists of three representatives from each APEC Country.

The APEC Business Advisory Council (ABAC) holds meetings in conjunction with APEC but there is no corresponding APEC Labor Advisory Council.

The U.S. members are executives with Procter & Gamble, which grossed $82 billion in 2011; Caterpillar Inc., the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines with assets of $70 billion; and JPMorgan Chase & Co., the world's largest public company with assets of $2 trillion.

Members from other countries also represent the business elite:

Banking: Industrial and Commercial Bank of China Limited is the largest bank in the world with a market capitalization of USD 269 billion, has 386,723 employees, 3.61 million corporate clients and 216 million individual customers, with a network of 16,232 outlets across China, 162 overseas subsidiaries and a global network. The Bank of Tokyo-Mitsubishi  has revenue of $30B. JSC VTB Bank (Russia) has total assets of $153 Billion (2010).

Telecommunications: LG Electronics (South Korea) is a global electronics and telecommunications company. LG Electronics is the world's second-largest manufacturer of television sets and third-largest producer of mobile phones, with revenue of $ 48.2 billion (2010), profits of $ 1.1 billion (2010) and 80,000 employees. Grupo Carso  is a global conglomerate company owned by the Mexican tycoon Carlos Slim.  The conglomerate was worth over $60 billion US dollars and held the largest telecommunications company in Latin America under its belt of companies. HTC Corporation (Japan) is a telecommunications company which posted revenue of $11B. Cinépolis (Mexico) is the largest movie chain in Latin America and the fourth largest in the world with 230 theaters, 2,160 screens and over 13,000 employees.

Financial:  Gresham's Private Equity (Australia)  is a private equity manager specializing in  leveraged buy-outs valued between $100 and $500 million.  Cathay Financial Holding Co., Ltd  is one of the largest financial services firms in Taiwan.

Agriculture: COFCO is China's leading oil and food importer and exporter, and one of its largest food manufacturers.  Jollibee (Philippines) is the country’s leading fast food chain with 600 domestic stores and over 50 international stores.

Chemicals & Minerals: Mitsui Co. has 151 offices in 65 countries, revenue of $73B and net income of $5B. The company invests and trades in iron, steel, minerals, chemicals, energy, electronics, food, vehicles, telecommunications, marine and aerospace. The Chilean Copper Corporation is government owned and posted revenue of  $16.0 billion (2010). The company is the largest copper producing company in the world and owns the world's largest known copper reserves and resources.

Diversified: Basic Element (Russia) employs 250,000 people worldwide and has assets of $45B. The company focuses on Energy, Manufacturing, Financial Services, Construction and Aviation. Summa Group (Russia) is a diversified private holding with significant investments in the port logistics, engineering, construction, telecommunications, and in the oil and gas sectors. Hydro-Québec is a government-owned utility with revenue of $12B (2010).


The APEC CEO Summit is another way business elites can interact with the political elite.

The CEO Summit will feature Chinese President Hu Jintao, US President Barack Obama, and Russian President Dmitry Medvedev.

There CEO Summit will have a panel on labor but without anyone actually representing labor.

"The 21st Century Workforce. Re-envisioned. — How can economies best ensure a healthy, motivated and  well-educated workforce for 21st Century prosperity?  How can the region most effectively develop and use its talent pools?" The speakers will be Asia Editor of the Financial  Times David Pilling; Australian Prime Minister Julia Gillard; ABAC Chair, Procter & Gamble's Deb Henretta; and World Bank Managing Director Sri Mulyani Indrawati.

Free Trade Agreements

A major focus of Free Trade Agreements (FTAs) is finding ways to minimize labor costs and maximizing outsourcing to those areas. Outsourcing is a passive way of saving we’re firing higher paid workers and replacing them with less well paid workers located in other countries, where the wages are lower, the benefits are lower, and the laws aren’t as strict.

The North American Free Trade Agreement  (NAFTA) was pushed by Big Businesses which wanted to write the international laws under which they would operate. NAFTA became law in 1994. One focus of NAFTA, APEC and other FTAs is on the free movement of capital between nations.  

FTAs focus on maximizing profit at the expense of other inputs including labor. Some saw the threat coming. Others came to realize those impacts after NAFTA was implemented.

Rep. Stephen F. Lynch (D-Mass)  “Free trade should not mean free labor.”

General Electric is the nation’s largest corporation. During the 1970s GE dumped over 1 million pounds of PCBs into New York State’s Hudson River, where almost 200 miles became contaminated.  

In January 2011, GE CEO Jeffrey Immelt was named by President Obama to head the President’s Council on Jobs and Competitiveness.  Mr. Obama said “’he understands what it takes for America to compete in the global economy’ ...The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.”

General Electric  has decided now to outsource its X-Ray Division to Beijing. Great for business, lousy for labor. Although some businesses manage to find consultants who argue that pouring jobs into a foreign region raises everyone’s paycheck.

For the past several years India led in call centers. People who call to inquire about airline reservations, computer malfunctions, or whatever, got someone with an Indian accent.

Businesses saw Indian wages rising although they were still far below American wages. Businesses saw American concerns with foreign accents. Therefore businesses found a solution. While India still leads in total outsourcing, the Philippines now lead in total revenue gained from foreign low-end, non-technical, call centers. Filipinos are trained to speak English with “accent neutralization.”  So Hawaii residents can fly American airlines and pay foreigners who speak unaccented English to book the travel.

In a “Wall Street Journal/NBC News poll, more than half of those surveyed, 53%, said free-trade agreements have hurt the U.S. That is up from 46% three years ago and 32% in 1999. Even Americans most likely to be winners from trade—upper-income, well-educated professionals, whose jobs are less likely to go overseas and whose industries are often buoyed by demand from international markets—are increasingly skeptical.” (Wall Street Journal: Americans Sour on Trade, October 2, 2010)

The 2008 U.S. Presidential Campaign

During the 2008 campaign, Senator Hillary Clinton and Barack Obama stressed the need to promote the interests of labor and the environment. The following quotes were made during the election, but as of yet are unfulfilled promises. 

Senator Hillary Clinton

"I have been a critic of NAFTA from the very beginning. I didn't have a public position on it because I was part of the (Clinton) administration. But when I started running for the Senate, I have been a critic." She further argued, "I was always uncomfortable about certain aspects of it, and I have always made that clear."

We need to have a plan to fix NAFTA. I would immediately have a trade time-out.”

I believe that all trade agreements must have strong labor and environmental provisions. That is  why, as President, I will thoroughly review NAFTA and make necessary changes. This  agreement is now 14 years old and its shortcomings are evident. The labor protections, for example, are not what we would demand today.”  

"Strong, enforceable labor and environmental provisions must be part of the core text of every trade agreements. If they are not, our workers will have to compete on an unfair playing field. That is not acceptable." 

Barack Obama

One of the first things I’ll do as President will be to call the Prime Minister of Canada and the President of Mexico and work with them to fix NAFTA. We’ll add binding obligations to protect the right to collective bargaining and other core labor standards recognized by the International Labor Organization. And I will add enforceable measures to NAFTA, the World Trade Organization (WTO), CAFTA [Central America Free Trade Agreement] and other Free Trade Agreements (FTA’s) currently in effect.”

 “If we cannot have stronger labor standards, environmental standards, and safety standards, then my job as president will be to look at what effect this has on the economy overall. Let me give you a very specific example. It is true that some of the border communities along Mexico and Texas have benefited from NAFTA. What is also true is that there are enormous numbers of Mexican agricultural workers and farmers who’ve been displaced, and part of the reason that we’ve seen such a problem with immigration over recent years is the grinding poverty that exists in Mexico. And so I can’t look just anecdotally at where it has helped, I want to look at overall, can we improve this so that it’s good not only for workers in Ohio and workers in Texas, but also good for workers in Mexico who right now can’t support themselves and ending up coming here and potentially depressing U.S. jobs as well.” 

Free Trade v. Free Labor

Free trade agreements include international lawsuits against any form of trade barrier. Free trade ignites a race to the bottom, as governments fight to win the race in lowering corporate taxes, stripping regulatory oversight and cutting social spending.

The poor, workers, small farmers, the displaced, indigenous and ethnic organizations, and non-governmental-controlled labor unions nearly unanimously oppose free trade agreements.

The first comprehensive Free Trade Agreement signed between the U.S. and any Asian nation was with Singapore. The U.S.-Singapore FTA was completed in 2003 after three years of negotiations. A Singapore company with a U.S. subsidiary can hire non-Singapore workers from other Asian countries such as China, and  bring them into the U.S. with L-1 visas.  The subsidiary firm can undercut American businesses by paying their foreign workers less and offering less benefits.

Free Trade versus Fair Trade

The AFL-CIO and the International Trade Union Confederation (ITUC)  support making workers’ rights the core value in developing a strategy for global economic growth. While Big Business stresses the need to maximize profits, the global labor movement emphasizes the need to increase jobs, protect workers’ rights, minimize trade imbalances and halt unfair trading practices such as currency manipulation.  

AFL-CIO Officially Endorses Occupy Wall Street

On October 5, 2011, AFL-CIO President Richard Trumka issued a Statement about Occupy Wall Street:

Occupy Wall Street has captured the imagination and passion of millions of Americans who have lost hope that our nation’s policymakers are speaking for them. We support the protesters in their determination to hold Wall Street accountable and create good jobs.    We are proud that today on Wall Street, bus drivers, painters, nurses and utility workers are joining students and homeowners, the unemployed and the underemployed to call for fundamental change.  Across America, working people are turning out with their friends and neighbors in parks, congregations and union halls to express their frustration – and anger — about our country’s staggering wealth gap, the lack of work for people who want to work and the corrupting of our politics by business and financial elites.  The people who do the work to keep our great country running are being robbed not only of income, but of a voice.  It is time for all of us—the 99 percent—to be heard.

As we did when we marched on Wall Street last year, working people call on corporations, big banks, and the financial industry to do their part to create good jobs, stop foreclosures and pay their fair share of taxes.

Wall Street and corporate America must invest in America:  Big corporations should invest some of the $2 trillion in cash they have on hand, and use it to create good jobs. And the banks themselves should be making credit more accessible to small businesses, instead of parking almost $1 trillion at the Federal Reserve.

Stop foreclosures:  Banks should write down the 14 million mortgages that are underwater and stop the more than 10 million pending foreclosures to stop the downward spiral of our housing markets and inject more than $70 billion into our economy.

Fund education and jobs by taxing financial speculation:  A tiny tax on financial transactions could raise hundreds of billions in revenue that could fund education and create jobs rebuilding our country.  And it would discourage speculation and encourage long term investment.

We will open our union halls and community centers as well as our arms and our hearts to those with the courage to stand up and demand a better America.”

Local 5

Cade Watanabe (UNITE HERE! Local 5): “Lori Wallach and [Public Citizen’s] Global Trade Watch organization has done a great job of educating us, and we are in turn trying to sort of help spread the word to folks within our membership, ordinary working families who sort of have to deal with the impacts of these kinds of free trade agreements. ...we’ve got to educate our community, to educate our members, about the type of things that go on. We got to rise us, we got to stand up, exactly what we have been fighting for for years and years against these hotel owners, a lot of whom are now the Biggest Wall Street Banks. The owners of the hotels, the Marriott and the Hyatt, you know the same guys that we bailed out with taxpayer money. Same guys that have infiltrated our treasury department and our government.”

How Goldman and the Waltons lost a bundle. By Allan Sloan, Fortune Magazine (October 27, 2009) Did you make bubble-era investments that left you so far underwater you needed a submarine? If so, you've got company. Gather round, and I'll show you how some of the smartest and richest folks in America lost more than half a billion dollars by buying into the commercial real-estate bubble in the summer of 2007. The losers are Goldman Sachs, arguably the smartest and shrewdest Wall Street house in the country; and the Walton family, America's richest. Goldman and the Waltons put $1 billion into Hyatt Hotels Corp. in a private deal a little over two years ago -- at a price per share more than double that contemplated by Hyatt in its forthcoming initial public offering.”

Hyatt is seeking to bust the union and outsource their jobs.

Lauren Ballesteros (UNITE HERE! Local 5): APEC is “devastating to labor worldwide. The TPP [Trans-Pacific Partnership] is like a NAFTA on steroids. With NAFTA we see that almost one in four manufacturing jobs” were outsourced. “The thing about APEC is that it’s so secretive, there’s no transparency. ...We’re only dealing with  the impacts and the implications of what we know that was in NAFTA ...The perfect example is the Hyatt Hotel which we’re fighting right now and trying to keep the jobs here. ...They want to create a call center in India” so they can outsource the accounting department. The hotel hires “night cleaning workers to come in” and they are paid half the daytime wage. “It’s there way of doing business ...Cutting labor costs.”

Cade Watanabe (UNITE HERE! Local 5): “I think the scariest one is, and Lori has talked about it, things that come under Mode 4, the possibility of outsourcing service contract kind of work.” The Peru Free Trade Agreement had “a section in there that allowed for folks get trained and certified in one country and to be brought over to the US to do work that should be done by union workers here, and that undermines our standing  and undermines our contracts, that undermined our quality of life as working people in this country. ...That is the kind of thing that is in TPP as far as we know ... that labor should be really leary about. And we’ve got to do our job to get these issues out there, sort of start the dialogue, sort of start the conversation. ...People are going to realize how ridiculous these kind of agreements really are and how much they  don’t just make sense for us here.”

Governor Abercrombie

Hawai`i Governor Neil Abercrombie held a press conference at the Hawai`i Convention Center on November 7, 2011, the first day of the Asia Pacific Economic Cooperation (APEC) Meetings. He stressed high tech, the military, astronomy, and the politically connected. He concluded by saying that everything is rosy and to ignore those who say otherwise. He did not mention labor, workers, or the general public.

All the things we talked about. It’s just great. I was at Aerospace over there, Referentia, Keck Observatory, all the Big NOAA, all the things we did in Congress, especially, for some of the high tech companies here. It was a good example of what we call a small business innovation program coming out in the Armed Services Committee. We invested in cutting edge technology and ideas. You see that Hawai`i had the brain power here. All they needed was a little financial support and their is business. Whether it’s the Pentagon. Whether its involved in the best astronomy facilities in the world. Whether it’s involved in helping people understand tsunamis. Whether it is across the Pacific. ...

Take a look at the businesses that in here, they're here because they've succeeded, and again, as I look right now, Referentia, Williams Aerospace, the Keck Observatory and the Astronomy facilities. Those were all initiatives, Hawai`i based, that people were skeptical about. And yet they're here and they're on the cutting edge. This is the kind of thing we're going to do there's people needing people, whether it is doing business, whether it is alternative energy, serving as a laboratory and a partner for our Asian Pacific region partners, and potential partners, whatever it is, Hawai`i is going to be an anchor for all of this.”

Referentia Systems Incorporated and Williams Aerospace succeeded because of political connections and taxpayer funded grants.

Referentia Systems Incorporated succeeded financially by getting repeated military grants to develop military software. They made politically corrected donations. Referentia Systems Incorporated executives gave Neil Abercrombie's campaign 12K (2009-10) (Source: . They got more federal grants. They now employ nearly 100 people throughout the United States.

SenatorInouye: "Referentia Systems Incorporated ...was started in 1996 with a staff of thirty, and now employees ninety-four people at military bases throughout the nation and overseas, with offices in Honolulu, Hawaii; San Diego, California; Albuquerque, New Mexico; and Sterling, Virginia.  ...In its earliest years ...secured its first SBIR Phase I award in 2004.  Since then, Referentia was awarded thirteen more SBIR Phase I and seven SBIR Phase II grants."

In 2011 Referentia Systems Incorporated Wins $9.92 Million Federal Contract by the U.S. Naval Air Warfare Center Aircraft Division,  Lakehurst, N.J., for the development and demonstration of a cross-aircraft-platform ground-based data management and analysis capability.

Williams Aerospace is another Hawai`i company going after federal money for the development of weapon systems. Williams Aerospace was founded in 2002 by Jeff and Leilani Williams. They seek to make the next generation of air, land and sea based unmanned vehicles. Williams Aerospace is focusing on a high altitude, long endurance, military drone that they named “Snoopy.”

Governor Abercrombie: “Aren't you glad to see Pearl Harbor operating the way it is, I mean it's high tech. We have thousands of young men and women who are working there, proud to be there. Astronomy is getting ready to move into the first rank, in the world for years, maybe decades to come. The high tech industries here, companies, entrepreneurial, advanced, excited, the young people that are working there couldn't be more positive about their future. I think it's just wonderful.”

I asked the Governor: “Are there any downsides to APEC?” and he replied “Not for us.” He noted that “There are a whole lot of people, I'm sorry to say, a vested emotional interest in always seeing us on the losing side.” Perhaps they are part of the 70% who have come to distrust Abercrombie’s need to attack anything and everything, or perhaps they arthe 99% majority.

Gov. Abercrombie stopped by the HECO booth and told Darren Pai that China is leading the world in clean energy. He then asked: Have you talked to the Chinese about money?

Faith Action for Community Equity

Civil Beat must be commended for publishing on November 2, 2011, a commentary by Reverend Samuel Lawrence Domingo, Pastor of Keolumana United Methodist Church, and President of Faith Action for Community Equity (FACE Oahu). 

Rev. Sam Domingo

We welcome all of the delegates to APEC with Aloha. However we cannot keep silent about the subject of the talks that world leaders are engaging in while they are here. APEC is the Pacific version of an emerging system of supra-national governance – economic globalization - that is eroding the basis of national identity and sovereignty. 

Free Trade Agreements subject the laws that cities, states, provinces, and even nations make to an unelected set of international financiers. 

These finance capitalists from Goldman Sachs to Singapore’s Sovereign Wealth Fund are gathering in Hawaii next week and making plans that could, if passed without changes, restrict our ability to govern ourselves. 

This is an area of grave concern for churches, temples and other institutions of civil society.

On the table for APEC is the Trans-Pacific Partnership (or TPP) which is the first trade deal initiated by President Obama’s White House. 

As a candidate Obama made strong commitments to conduct trade deals differently than his predecessors. He stood up not only for the environmental and labor protections that were lacking in NAFTA, CAFTA, and the more recent South Korean and Colombian free trade deals – but also for the need to protect America from the job losses that these past agreements inflicted on us. 

I pray that the President holds firmly to his original vision, but leaked early drafts of the plans look like the same old thing.

And the same old thing is bad news for the 99 percent in our country. 

When billionaire candidate Ross Perot ran for office he predicted that after passage of NAFTA, we’d hear a giant sucking sound of jobs leaving the country — and 20 years later there are 2 million less American manufacturing jobs thanks mostly to NAFTA, GATT, and their successor agreements. 

The net effect of these agreements has been to create a worldwide race to the bottom, so that investors move factories to the countries with the least restrictions on child or slave labor, the least environmental and safety standards. 

Meanwhile the terms of the trade deal forces us to accept these goods as if they were made in our own country.

This isn’t just bad because trade agreements like the proposed TPP being discussed next week prevent us from protecting keiki from lead paint in toys, or labeling tuna “Dolphin Safe” (a label that has been struck down last spring by the WTO as “too restrictive on trade”). 

It is also bad because manufacturing is the basis for American prosperity. 

Manufacturing turns raw goods into finished products, adding value to the economy. Countries with strong manufacturing sectors get rich off this virtuous cycle, the way China is doing today. 

Trade deals like this one are killing manufacturing in America at the expense of the middle class, but to the benefit of the investor class who are loyal to quarterly stock earnings above God and country.

In Hawai’i this isn’t an abstract problem since some of the jobs sucked out by past trade agreements were ours. 

Over the last 20 years Hawaii lost almost all of our remaining sugar and pineapple to Mexico, displacing thousands of workers, and stripping diversity from the local economy. 

The collapse of our agricultural sector has also paved the way for urban sprawl, not only on Oahu but increasingly on Maui as well.

The effect of the economic globalization represented by APEC is to flatten the difference between nations and cultures. 

It disintegrates values, customs and beliefs that are local. In Hawai’i we highly value the sense of local; it is a word charged with meaning for us. And we’ve all watched over the years as that sense of local identity has weakened

Liberty House becomes Macy’s, Hyatt becomes Goldman Sachs, the Wisteria disappears, and Honolulu gets another Cheesecake Factory. When an international hedge fund buys Turtle Bay, they ban the shaka and try to close the beaches to local people.

But cultural identity and nostalgia are not the main problem in front of us. 

The current draft TPP contemplates a number of provisions which hurt Hawai’i’s ability to govern itself. 

One part of the draft talks about limiting government abilities to negotiate drug prices in a block. 

Another provision limits public procurement programs – curtailing any kind of buy local preferences we might want to enact down the road. 

Australia and New Zealand have pushed for these kinds of provisions to be abandoned, as did Candidate Obama. The question is will President Obama require these reforms before signing off on the TPP?

FACE is a small faith based organization, located in the most isolated place on earth, a small island chain in a very big world. 

Usually our work is limited to the things that are right in front of us – the first issue we ever worked on was reserved seating for the elderly on theBus. 

Our members are churches and temples, we are not politically sophisticated, nor wealthy nor powerful. 

But churches are the places where people come for some of the most important moments of their lives – baptisms, marriages, and funerals. As pastors we are therefore in a good position to see clearly the beauty of life and we cherish these things above profit margins and stock index numbers.

Unsophisticated we may be, but we understand context, we can see that the foreclosures all around us are traced back to the violent and limitless greed pumping through the heart of Wall Street. 

We are inspired by the young people occupying the parks in New York and around the world. 

We also hear the words of Pope Benedict the XVI who has offered a prophetic critique of the current crisis over the last few weeks asserting that “the economy cannot be measured by the maximum profit but instead by the common good… the economy cannot function only with mercantile self-regulation…”, and we feel called to act in our own small way to push the TPP towards the Pope’s higher standard.”

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this took a lot of work to compile -- thanks Henry! and thanks DN.
A fascinating and important read.

actually the first comprehensive free trade agreement between the US and an Asian country was the Treaty of Amity and Commerce between Siam and the United States in 1833 -- not to mention all of the not quite so comprehensive "free trade" like treaties imposed on China and Japan in the mid 1800s.

i don't disagree that neoliberal wholesale demolition of all trade barriers is not a good thing. however, should the focus be on stopping the lowering costs of production/transaction or on improving the working conditions of those not in the US so that working conditions is no longer a differential for capitalists to extract surplus value from cynically using national borders? the way the US engages in economic protectionism, while promoting free trade elsewhere, seems to be detrimental to third world workers and does not promote or uplift our own working conditions.

i don't agree that economic nationalism, the way described above, is the way to eradicate poverty worldwide. the way to halt the 'race the bottom' is to use the leverage of the first world consumer and government intervention in the markets to pull up the working conditions of the third world, not by using us vs. them rhetoric...

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