WTO - the new world order and movement of labor

[Timber Loftis]

This is related to the various immigration threads. The WTO/GATT, which is quickly getting every nation on board, governs TRADE among member nations. And, the general notion is that you can not pass protectionist trade laws. WTO governance, once you sign on, is not optional (like the ICJ) - all members can be called into the WTO tribunal by any other member. The text of the WTO Treaty documents that constitute international law is at: http://www.wto.org/english/docs_e/legal_e/final_e.htm

Generally, protectionist laws are stricken down... erm, rather sanctioned. There are exceptions to try to pigeon-hole yourself into (several in Article XX of GATT, and the side agreements on Technical Barriers to Trade and on Sanitary/Phytosanitary measures), but generally they're quite limited. EU got it's ban on hormone-treated beef and definitions of bananas (to only include the ones it wanted to buy) sanctioned. The US has had its foreign tax credit knocked about and (mark my words) is about to get slapped for steel tarriffs (Bush was even vocal about protectionism). Now, the penalty for being protectionist: the country you offended with your sanctions gets to tax you an equal $$$ in tariffs to make up for the wrongdoing. Usually, these are unrelated things. Regarding past protectionist laws, the EU has been sanctioned by allowing the US to impose higher tarriffs on such inane things as Ducati motorcycles.

But, there's a juggle-the-system shell game that goes on. When your first protectionist law is found to violate the WTO/GATT, just draft another one that tries to be protectionist in an okay way. At least you buy yourself time - usually a year or two. EU rewrote the definition of "banana" 3 or 4 times; the US is again reinventing its foreign tax credit.

Now, the rest of this post assumes that this enforceable but unweildy system actually gets nations to change their tarriff structures and comply.

THE LABOR BIT: In the end, this leads to the movement of labor. Take steel as an example. If the US decreases its tarriffs to comply with the WTO, US steelworkers, making $20-$30/hr, will drive the US businesses under when competing against foreign steelworkers making less - especially in industries where labor is a huge % of the costs. Jobs will flee the country, or cheap labor must be found. Americans won't work for less than minimum wage, but illegal immigrants will gladly do so. The tarriff regime sets in motion an inevitable shift in the economy that will trigger the movement of labor.

THE ENVIRONMENT BIT: As another example of a by-product of the WTO, let's look to the environment. Again, US products that have to comport with a higher enviro standard necessarily carry a higher cost for doing so. They ultimately can't compete against cheaper products made in countries where there are no environmental controls (which is why the products are cheaper to begin with). Thus, these situations create a "race to the bottom."

THE REAL PROBLEM: The real problem is that the WTO, the only enforceable, relative-quick-to-act form of internation governance concerns one thing: TRADE. But, that thing implicates many other things, such as labor and the environment. Thus, while TRADE - one of government's functions - is governed internationally, nothing else really is. Thus, there is no international Labor treaty to offset the labor problems created by GATT/WTO. And, when asked about this, the WTO quite blatantly states: "We do TRADE, nothing else." It's like having the SEC as the only government agency.

I think in the long run, either (A) sister organizations will pop up to deal with the other parts of our budding international governmental system, or (B) the WTO will start expanding its scope to deal with the problems it causes. Either way, any solution puts us further down the path to a global government that will ultimately develop.

[ 11-04-2002, 11:47 AM: Message edited by: Timber Loftis ]

So you see one world government in our future?

Thats gonna be a bloody fight if it ever comes down to it, since you would have to completely scrap our constitution. Of course by that time I think I will have been happily pushing up daisys for several decades [img]smile.gif[/img]

[antryg]

I'm taking a shot in the dark on this but I'm betting that Japan is not a member. If they are I'm sure they don't comply. Could you comment on Japanese involvment TL?

[Timber Loftis]

Actually, a world government based on stricter treaties (which is another developing trend) is likely to be in existence for a long time before any consitutions start getting ripped up. It's basically contract law - which is what treaties are anyway. But, if you write your treaties to include enforceability (like with the WTO) then you in effect start creating a psuedo-government.

So basicly its all because of the lawyers eh? Well we will know who to string up when the time for the militia's to start marching comes

[Charean]

We are getting there quickly with the Internet in any case!

I see what you mean, Timber. We are growing quickly to a world economy, the rest is just paperwork. And Magik, just because it is worldwide doesn't mean we will be scrapping our Constitution anytime soon. I think all it means is that we will be like a state in the world. Much like Texas is in the US.

Seems it will go to the economists and lawyers to work this out.

[Timber Loftis]

Originally posted by antryg: I'm taking a shot in the dark on this but I'm betting that Japan is not a member. If they are I'm sure they don't comply. Could you comment on Japanese involvment TL?

You can find a list of DSB (dispute settlement body) reports (available for purchase) here:
https://secure.vtx.ch/shop/boutiques...k=h_guidedis_e

If you scroll down, you'll see Japan is on the list quite a bit. Japan's big issue at the moment is food, and the made-in-Japan food label there is very important to the Japanese people, and has come under criticism for fraud and abuse in Japanese national news lately. I know that when I did my work analyzing WTO DSB reports (ghost-writing a chapter in a UN textbook), Japan and Australia got into quite a wrangle over Salmon. That was a 1996-97 case, I think, dealing with Sanitary/Phytosanitary measures.

Where Japan doesn't comply is with endangered species agreements. They just won't... quit... whaling... no matter what. Plus, they really like their tortoise-shell stuff to be made of real shells. Irks me a lot.

But, on the WTO front, Japan is BIG in the WTO. Japan and US work together on WTO issues a lot. They also both belong to JUSCANZ, a coalition in climate change negotiations made up of Japan, the US, Canada, Australia, and New Zealand, that has a LOT of weight.

What made you say this, BTW?

[antryg]

I've been confronted by Japanese protectionism in several ways. In the late 80's and early 90's I was helping in trying to introduce Some Texas agricultural products into Japan. The xenophobia and "buy Nippon" attitudes coupled with tariffs etc. were rediculous, especially since we were talking about a product that Japan didn't produce and yet there was a market. My first exposure though came through the stories of fellow students from China, Thailand, South Vietnam, and Korea. They provided example after example of the Japanese govt. paying private companies to sell products in those countries for prices far below the cost of manufacturing them. This was done to destroy fledgling companies in those countries. After all; why pay more for the same product just because it wasn't made locally. The end result was Japanese companies with strong bottom lines and full employment and no industry and no jobs throughout other parts of Asia. Once the competetion was gone, the cost of Japanese products would double or triple. Maybe things have changed now, but at that time my fellow students from Asian countries besides Japan All hated Japan with a passion.

[Timber Loftis]

Antryg, selling at below cost to drive out competition in a market is called DUMPING. NAFTA has a much stricter anti-dumping regime than the WTO/GATT does. Dumping happens.

Also, the Japanes government directly subsidizes its industry in ways that we find fiscally offensive in the US. Nothing wrong with it, it's just different. Harvard economist Lester Thurow calls is "Communistic Capitalism" when the government and industry are intertwined like this. The EU countries do a bit of it too. United and AirBus got into a big competition for the European air fare market, and United had a big economic advantage - 1% (in these terms, it's quite a bit of money). UK subsidies to AirBus of an amount equivalent to that 1% flipped the scale, and AirBus took off, so to speak - now it's thriving.

THere is a drawback to this: recessions. Japan's recession is based on 2 large factors: (1) not related here, the Japanese were "born to save" to quote Newsweek, (2) related here, when your government and industry are economically co-dependent, when one fails both go bust. Here, on the other hand, when industry takes a downturn, the common wisdom is to increase government spending and give the economy a kick in the pants to get going. JM Keynes' brainchild, that notion.

[Lord of Alcohol]

Timber bringing up your post in my immigration thread, how can this be stopped? Yes I'm sure they are being double taxed but in the end they are likely saving a few million. Or ten million. But in the end is it worth it? In fifty years we'll be a nation of people who know only how to tell other people what to do. Manufacturing is going quickly, skilled computer programmers being laid off ( I have one as a laboror on my crew), hey what can we do?