Understanding Globalization:
A key first step in working for the common good

by Camille Colatosti

We're in the global economy -- whether we like it or not," says Charles Kernaghan, director of the New York-based National Labor Committee, an independent human rights organization that has spent nearly 20 years investigating sweatshop conditions both in the U.S. and around the world. "Sixty percent of the apparel we buy is imported; 80 percent of toys and sporting goods are imported; 90 percent of shoes and sneakers are imported. This is the reality."

The Liz Claiborne suits we wear, the Reebok sneakers we put on our feet, the Barbie dolls we buy for our children -- all of these items and more are made in factories located in El Salvador, China, Burma and Bangladesh, where workers earn 9 to 80 cents an hour.

"I've been to these factories," says Kernaghan. "They are hidden, surrounded by cinder block walls and rolls of razor wire. The entrances have thick metal gates. When you pass through the gates, you are greeted by armed thugs. And in the factories, by and large, the workers are young women. They are 17 to 25 years old, and when they reach 25, they're used up. Then they're fired."

In El Salvador alone there are 225 apparel factories that employ about 70,000 women. They send 587,000 garments a year to the U.S. "Despite everything," says Kernaghan, "there is not one single union in a garment factory in El Salvador, and the wages of 60 cents an hour do not meet the cost of living."

The situation is the same in factory after factory and in country after country. The factories are subcontracted by multinational corporations. The people who work there do not know the names of the companies they work for. The women in El Salvador, who earn 20 cents for each shirt they sew for Nike, do not know that the garment retails for $75 in the U.S. Adds Kernaghan, "The workers haven't the slightest idea of the role they play in the global economy."

A global shift in power from nations to investors

In that respect, El Salvadoran workers are similar to American workers: We do not understand our role in the global economy, either. Yet, understanding this is key, says Terry Provance, director of the World Economy Project at the Washington, D.C.-based Preamble Center, a research and organizing institution. Globalization has everything to do with our jobs, our wages and our lives. Globalization concerns not only the products we buy, but also the values we hold. Do we want to live in a world that values profit above all else? Or do we want to be part of a world that promotes equality, fairness and hope for everyone?

Globalization means that national governments no longer are in charge of their economies. The U.S. government, just like the El Salvadoran government, no longer controls the way business is conducted within the country's borders.

As John Hooper, of the Episcopal Network for Economic Justice, explains, "We've turned our national economy into a global economy by opening up all the channels by which money, resources and business decisions flow." This is not bad in and of itself, Hooper says, but "the thrust seems to be to avoid or override the decisions that individual nations make related to their economies."

Because it dismantles national barriers to trade and investment, globalization allows investors to drive the process and to move money around the globe without pause. This means that corporations make products where wages and costs are lowest.

This also means that transnational corporations, rather than governments and countries, are making the rules for national economies. Investors can make or break a country by pouring money into it, or refusing to do so.

The World Economy Project's Provance acknowledges some positive aspects of "the internationalization of life today: the facility and ability with which we can communicate and travel." But, unfortunately, these positive elements are "driven by a corporate process which deregulates trade and investment and concentrates power in the hands of corporations." In fact, power is concentrated in the hands of just 100 transnational corporations, who control 75 percent of world trade.

This process did not happen overnight. As Provance explains, "Globalization is the result of a trajectory of several hundred years. Through war in the Philippines and interventions in Latin America and Southeast Asia, the U.S. has gained advantage around the world. Now, instead of using armies to gain advantage, we use another weapon -- the market. This market, just like an army, can interfere with and change life."

In an educational video recently developed by NETWORK, a national Catholic social justice lobby, Amata Miller, IHM, notes that globalization has the potential for "creating interdependent and cooperative initiatives across geographic distances and national, ethnic, cultural, gender and racial diversities." Close links among nations, she says, could lead to prospects for peace, for sharing resources, and for fostering human dignity. But the potential is not being fulfilled.

A race to the bottom

During the past 20 years, Miller explains, as globalization has expanded, we've seen a "widening inequality and the exploitation of workers." We've seen "cultural traditions undermined, local communities destroyed, hostility to refugees and immigrants increased, the environment degraded, and secret government negotiations to advance finance capital."

"The problem," says the National Labor Committee's Kernaghan, "is that there are no standards or rules to govern this in terms of human rights, women's rights and on. We've unleashed a race to the bottom over who will accept the lowest wages and the least benefits and the worst conditions."

In fact, globalization has increased the burdens placed on the developing world. In the Philippines, deforestation by the lumber industry has caused a food crisis. Per capita income in Latin America is lower today than it was in 1970. And life expectancy in sub-Saharan Africa is expected to reach an all-time low in 2010 of only 33 years of age.

Some of these inequalities result from the controversial structural adjustment programs imposed by the World Bank and the International Monetary Fund, powerful international financial institutions largely controlled by the U.S. government. Structural adjustment programs are forced on developing nations as preconditions for financial help. These programs generally require devaluing national currency, raising interest rates, reducing government spending, increasing taxes, privatizing public services and shifting agricultural and industrial production from food staples and basic goods for domestic use to commodities for export. Sometimes these measures improve the government balance sheet, but more often structural adjustment programs increase income inequality, poverty and debt.

Jubilee 2000 -- a worldwide movement led by religious organizations "to cancel the crushing international debt of impoverished countries" -- argues that these programs "hit people living in poverty the hardest." Programs increase unemployment, decrease wages, and increase taxes.

According to the Boston-based United for a Fair Economy, developing countries are worse off today than ever before. From 1982 to 1990, developing countries in the South received approximately $927 billion in aid, grants, tax credits, direct investment and loans. But they paid $1.3 trillion in interest and principal, not including royalties, dividends, repatriated capital and underpriced raw materials. In 1990, the South was 60 percent deeper in debt than it was in 1982.

Worldwide poverty is on the rise. In 1974, one-quarter of the world's population lived in poverty. Today, more than half of the world is poor. More than half of the world's six billion people, states Kofi Annan, secretary general of the United Nations, "eke out a living on $3 a day or less."

The WTO: fighting 'discrimination' in trade

The decreasing ability of the developing world to protect the lives of its citizens becomes clear when we consider this fact: According to the Institute for Policy Studies, of the world's 100 largest economies, 49 are nations and 51 are corporations. Wal-Mart, with its annual sales of $137.6 billion, has a larger economy than over 100 countries, including Portugal, whose gross national product is $104 billion; Israel, with a gross national product of $88 billion; and Ireland, with a gross national product of $66 billion. How can small or even medium-sized countries influence these corporations?

With the advent of the World Trade Organization (WTO), the international organization that governs trade, the developing countries' situation has become even worse. As Mike Prokosch, coordinator of the Globalization Program at United for a Fair Economy, explains, for 50 years or so, since WWII, the General Agreement on Tariffs and Trade or GATT treaty negotiated lower tariffs and barriers on goods crossing boarders. GATT also eliminated other regulations that slowed down global trade. "But," says Prokosch, "GATT had no teeth. It was nicknamed 'Gentlemen Agree to Talk and Talk.' The WTO replaced GATT, and it has teeth. It also has a much broader charge than GATT."

The WTO administers treaties and expands trade into new services; it also makes binding decisions. Representatives to the WTO, usually a nation's trade minister, are not elected but are appointed by each of the 135 member nations. While the founding statements of the WTO expressed its goal of "sustainable growth and development for the common good," in reality, explains Dave Dyson, of the People of Faith Network based at the Lafayette Avenue Presbyterian Church in Brooklyn, the WTO seeks to end what it calls "discrimination" in trade by overriding any trade rules that might favor "human rights, community interests, or environmental safety."

Business over the environment and labor

For instance, in 1996, the WTO found a U.S. Congressional requirement for cleaner gasoline to be "discriminatory to Venezuelan and other refiners" who produced gasoline that did not meet U.S. environmental standards. When the European Union banned hormone-treated beef due to health concerns, the WTO said the ban violated corporate free trade. When the U.S. attempted to block imports of shrimp caught in nets that also capture and drown endangered sea turtles, the WTO called the block "arbitrary and unjustified." In 1997, the WTO ruled that Europe's trade preferences for Caribbean bananas grown by small farmers with little pesticide was unfair to large corporate plantations. The WTO has, in every environmental and labor dispute, sided with business.

Decisions to evaluate "discriminatory" trade practices are decided by a WTO panel of judges, whose identities are secret and who meet in secret. Their proceedings are not disclosed to the public. In fact, as Lucinda Keils of Groundwork for a Just World -- a Detroit-based social justice organization -- explains, "There is no requirement that meetings be open to the public in any way, or that the public or press have access to any documents, meetings, or decisions." Representatives from environmental, religious, community and labor groups do not have access to the WTO. The protests outside the WTO meetings in Seattle in December 1999 tell an important story. More than 1,500 non-governmental organizations registered with the WTO to express their concerns about trade and globalization. None were allowed access to the meeting.

According to Paul Hawken, a participant in the Seattle protests and author of "What Really Happened at the 'Battle of Seattle'" (BioDemocracy News, Jan. 2000), "WTO rules run roughshod over local laws and regulations. It relentlessly pursues the elimination of any restriction on the free flow of trade, including how a product is made, by whom it is made, or what happens when it is made. By doing so, the WTO is eliminating the ability of countries and regions to set standards, to express values, or to determine what they do or don't support. Child labor, prison labor, forced labor, substandard wages and working conditions cannot be used as a basis to discriminate against goods. Nor can environmental destruction, habitat loss, toxic waste production and the presence of ... synthetic hormones be used as the basis to screen or stop goods from entering a country. Under WTO rules, the boycott of South Africa would not have existed."

Under the rules of the WTO, adds Prokosch, "only countries can sue. Environmentalists, labor unions, human rights organizations do not have access to the WTO court."

A first step in changing the rules: demanding disclosure of factory locations

Ultimately, solutions to the problems that globalization generates will come from changing the rules of international trade. As the National Labor Committee's Kernaghan explains, "We have to put a human face on the economy. We need internationally recognized human rights. We work with people and workers all over the world. They tell us that they need jobs; they are willing to work hard, but they should have rights -- the right not to be hit, the right not to be paid starvation wages."

In the U.S., says Kernaghan, "we purchase 36 percent of all of China's exports. We purchase most of the garments made in El Salvador. This should give us a say over what and how goods are produced. We're the market for these goods. As the marketplace, we can be the voice for people locked in these factories, people who aren't given bathroom breaks and have taken to wearing adult diapers. Our work is all about this."

Kernaghan adds, "The American people are enormously decent and wouldn't buy products made by children or people earning starvation wages if they knew." The trouble is that the multinational corporations refuse to disclose the locations of the factories with which they subcontract. This information is secret. In China alone, Wal-Mart is estimated to use 1,000 factories, but their location is kept hidden.

Kernaghan continues, "We have said to companies, 'Will you give us the name and address of the factories that make the goods we purchase? We have the right to know in which specific factory goods were made.' But companies say they won't give up this information. They claim this would be a violation of trade secrets, but that's a lie. In any given factory, multiple labels are produced next to each other. Nike is being produced next to Reebok; the same worker at the same factory sews Liz Claiborne and Kathy Lee Gifford labels into garments. The companies know where their competitors' products are made. They just don't want the American public to know."

One of the first steps, then, to end sweatshop labor, to put a human face on globalization, is to demand that corporations reveal where their factories are located. "We need full disclosure," says Kernaghan. The National Labor Committee distributes "I Care" shopper cards. These index cards, which can be given to cashiers at Wal-Mart, read, "I like shopping here, but I am worried about where your products are made. Will you disclose this information?"

"Individuals have more power than you think," says Kernaghan. "Companies have told us when they receive a phone call from a consumer, they assume that 250 other people feel that way. When they receive a letter from a consumer, since a letter takes more time than a phone call, they assume 500 others feel that way."

Kernaghan continues, "People who are part of religious congregations have enormous power because companies are afraid of religious people. A company can look at a union and say, 'Well, the union is paid to attack us.' But the company can't dismiss a parish. What people of faith do is one of the most important forces needed to make this a better world. Imagine the impact of a letter to Wal-Mart, signed by all of the members of a congregation!"

'WTO: Fix It or Nix It'

Along with consumer response to globalization, other reform strategies focus on changing the rules of the WTO. A recent campaign, called "WTO: Fix It or Nix It," seeks overhaul of WTO decision-making. The Preamble Center's Provance describes efforts to implement minimum wages for people throughout the world. In addition, he hopes to implement minimum environmental standards. Most important, says Provance, is to empower civic governments, nations, to have a say over the way trade affects their country.

Along with the "Fix It or Nix It" campaign comes a national and international effort to build a broad coalition. "Challenging globalization and the WTO is a huge task," says Prokosch of United for a Fair Economy, "but Seattle was a really good beginning. We saw what we can do when we are united." (An estimated 40,000 to 60,000 people took part in protests at the December 1999 WTO meeting in Seattle to oppose the loss of human, labor and environmental rights around the world. Despite some news reports to the contrary, activists who participated in the protests all seem to agree with Hawken, who states, "This is what I remember about the violence. There was almost none until police attacked demonstrators ... There was no police restraint, despite what Mayor Paul Schell kept proudly assuring television viewers all day. Instead, there were rubber bullets, which Schell kept denying all day.")

"Seattle," continues Prokosch, "created an enormous confidence. We saw our strength and our numbers." An April 9 demonstration to "proclaim Jubilee" and "cancel the debt now" was expected to be an equally inspiring event. "This demonstration against the International Monetary Fund and World Bank is crucial," says Prokosch. "Those organizations are pushing countries into the global economy because of their debt. Until we can help other countries break out, they will keep getting pushed down and we will get pulled down with them."

Around the country, says Prokosch, "there is extraordinary seriousness about building broad coalitions. I've been at this 30 years and I've never seen a moment like this. This kind of confidence, maturity and optimism is inspiring and is going to fuel me for another 20 or 30 years." l

Camille Colatosti is The Witness' staff writer, <colakwik@ix.netcom.com>. For more information: contact Jubilee 2000, <www.j2000usa.org>; National Labor Committee, <www.nlcnet.org>; NETWORK: A National Catholic Social Justice Lobby, <www.networklobby.org>; People of Faith Network, <www.cloud9.net/~pofn>; United for a Fair Economy, <www.stw.org>; World Economy Project, Preamble Center, <www.preamble.org>; WTO: Fix It or Nix It Campaign, <www.tradewatch.org>.