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| by Richard Kokholm-Erichsen International Confederation of Free Trade Unions (ICFTU) Received from the Internet, 30 Nov 96 | by Richard L. Bolin and Robert C. Haywood, Directors Find us on the Internet at: http://www.wepza.org |
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Table of contents:
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Procedure: We numbered the 312 paragraphs in the ICFTU paper so we could match them with our comments and questions. At the end we have placed notes containing supplemental information which are numbered in our text. The 20 paragraphs where ICFTU mentions a specific EPZ by name are marked with "#" before the number and reviewed in our Notes at the end. Wepza's "Behind the Wire" Summary and Notes Page
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1. One of the most disturbing aspects of the growth of the global market is the increasing number of Export Processing Zones where millions of workers, mainly young women, are employed in grossly repressive conditions. This booklet describes what working in the zones means in reality. It is a shocking revelation of the dark underside of globalization and a call for action by the international trade union movement, governments and employers to end a major scandal. | 1. Don't let the repeated use of extreme language bother you, you will get used to it -- "millions of workers employed in grossly repressive conditions", "shocking", "dark underside of globalization", "scandal". We've heard that song before for 30 years or more. In balance, we might use extreme language ourselves -- we apologize in advance if this is bothersome. As for "reality" about EPZs, with few exceptions, it is not in the ICFTU booklet. |
| #2. The original idea behind the creation of Export Processing Zones was to allow employers to import materials to be worked on and then re-exported without having to pay duty. It started in the early sixties with a zone round Shannon airport in Ireland which was threatened by the loss of employment in the refueling of aircraft on transatlantic routes. It was seen as a cheap way of creating jobs without spending scarce taxpayer money and avoiding a bureaucratic system of reimbursing import taxes on goods intended for export. However, from the beginning this seductive idea had a major drawback. It requires the sealing off of the zone or of designated factories, often behind high fences, to prevent untaxed goods being smuggled into the rest of the economy. As the EPZ concept spread around the world, governments found that they had to add further incentives to attract foot-loose investors to their enclave; subsidized factory buildings, telecommunication links, energy supplies and most worrying of all guarantees that the labour force would stay cheap and uncomplaining. | 2. "It started in the early sixties with a zone round Shannon
Airport" Well, this is the popular myth, and only a decade or so late. The EPZ
is a duty free zone where manufacturing occurs -- some of the old free zones in
Europe allowed processing of grain into flour (e.g. Danzig/Gdansk, Hamburg),
but most free zones did not allow manufacturing -- they were for trading only.
The fact is that during 1947-1951 on the Island of Puerto Rico in the Caribbean Sea the government developed the first modern EPZs as duty-free industrial parks with standard buildings ready for occupancy for export industries. Puerto Rico provided full promotion support including tax incentives and operated overseas sales offices beginning over a decade before Shannon passed legislation in 1959 and began to plan its zone. (A detailed explanation is given in Endnote 2). At the western end of the Caribbean the Barranquilla Export Processing Zone in Colombia, South America, was created in December 1958 -- allowing manufacturing in the Free Zone -- before Shannon legislation was passed. Fences around zones are found in many countries, including the USA and Pakistan. They are not found in Mexico or China. Furthermore there are fences around most construction sites which employ union labor throughout the world, and around many union factories. Fences are just not an issue. Smuggling and other property crimes occur in all countries; that is why industrial facilities have fences. This article emphasizes the fences in order to make the absurd comparisons to jails and concentration camps. Clever rhetoric, but insulting to those who have truly suffered in concentration camps. "Foot-loose" is a favorite word of the ICFTU and the AFL-CIO. It suggests that EPZ industries respond quickly to stimuli like wage increases. The facts are that most industries stay in place for many years. In popular EPZs they can be replaced quickly if they leave for any reason (there are people waiting). While there are examples of rapid disappearance of firms overnight in many countries, these are not usually in EPZs. Indeed studies have shown that EPZs in developing countries are more stable than either domestic industry, or raw material production. "Enclave" is still another much-used union word to liken zones to "foreign" -- not part of the community -- but this is another rhetorical trick to try to separate EPZs from being seen as real industry. But EPZ workers who receive paychecks and support families in the community with their work know better. World Bank lending policies discourage subsidizing buildings -- EPZs must charge a reasonable rent to yield a return and pay the World Bank back. In addition subsidized rent is now recognized as an illegal subsidy, and is subject to action through the dispute settlement mechanism of the WTO. This argument has not been valid for 30 years. Zones need high quality "industrial" infrastructure such as electricity and telecommunications. Placing and maintaining such quality infrastructure in the small area of a zone is much less expensive than allowing factories to locate anywhere in a city and then extending these quality services to them. It also allows sound environmental management, and city planning. This is why many cities in the United States also use industrial zoning and industrial parks for their domestic industry. Relatively few countries' zone laws differentiate labor regulations from those in the domestic area. No country anywhere "guarantees" that labor will stay "cheap and uncomplaining". The labor force in developing countries is generally "uncomplaining" because the workers are absolutely delighted to win a chance to work and get paid. They don't stay "cheap" for very long in countries with successful Export Processing Zones. Examples: Taiwan ROC at US$0.16 per hour, fringed, in 1971 -- $5.00 per hour today; Singapore at US$0.32 per hour in 1971 -- $6.00 per hour today. Even in Mexico which has had major difficulties with finance and an inflation of almost 100,000 fold, the 1st year worker in a border EPZ industrial park makes US$ 2400, and in the 2nd year $3200 including fringes. Some 900,000 workers are currently employed in nearly 3000 new factories. |
| 3. The proponents of EPZs have argued that after a few years the incentives could be done away with and the enclave reintegrated into the rest of the country, but as the incentive packages got bigger and more zones were created in other countries it has become harder to wean investors off their special advantages. Indeed pressure has increased to constantly improve the attractions to stop companies relocating to other still cheaper locations. Many experts now question whether the zones actually increase overall employment at all or help the national development process. They certainly do boost the profits of the companies involved but at the expense of other businesses and employment outside the zones or in other countries. | 3. A few proponents have argued this point
wrongly in the mistaken belief that free zones are temporary. But they are not
temporary. This year the Free City of Danzig/Gdansk in Poland on the Baltic Sea
celebrates 1000 years of success as a free zone (and with much-admired huge
union-led success recently in promoting democracy and worker freedom as well).
We expect zones to be around as long as there are nations that trade.
Zones are far more than a few financial incentives and that is one reason why the ICFTU cannot understand the real modern role of zones which is the management of permanent investment attraction and risk reduction centers through intelligent application of services of great variety in an ever-changing market of global production and distribution. Through such efforts they do and will perform an increasingly necessary function of attenuating and eliminating obfuscating present and future bureaucratic restrictions in the global manufacturing and distribution process. In turn, the workers of the world will benefit from higher incomes and the consumers from reduced costs. We believe that Free Zones and Export Processing Zones will be needed for centuries as "Islands of efficiency and freedom to produce and distribute in a sea of confusing laws and regulations, politics and delays." The point about pressure on countries to increase attractions in order to compete is also silly. Countries offer packages of incentives to compensate investors for the high costs of doing business in underdeveloped locations. As less developed countries try to attract investment, their incentives must be better because the difficulties and risks of doing business are higher. The slant put on the facts by the ICFTU shows a fundamental (and intentional) misunderstanding of business practice and investment. In some of the countries that have become more industrial through their EPZs such as Ireland, Taiwan, Mauritius, Singapore, and Hong Kong the incentives have become less attractive as the costs of doing business have declined. Experts can be found to say almost anything, particularly if funded by unions interested in getting the answers they want. Questions can only be raised by making heroic assumptions about developing countries having full employment and unlimited capital. These are not sustainable assumptions. This statement also shows, again, an amazing arrogance. EPZs have been an early and fundamental part of all the countries that have moved from underdeveloped to become Newly Industrial Countries (NICs). Are we to believe that union experts know more than successful world leaders? |
| 4. Even some of the most avid supporters of trade liberalization now see EPZs as a distortion in the global market place which encourages a "slash and burn" pattern of development rather than sound long term investment and the transfer of technology. At best the country gets a few years worth of low wage low productivity jobs before the export processors move on to another country. At worst the country and its workers become trapped at the wrong end of a long international chain of production dependent on some of the world's most vicious employers competing in a cutthroat business for the bottom end of the global market. | 4. It is true that some economists see EPZs as a second best
alternative to total trade liberalization, and a distortion that could lead to
trade diversion in a less perfect free trade environment. Such a view is not
based on, nor does it lead to, the interpretation given in this paragraph. We
believe these economists underestimate the services provided by EPZs and let
the idealized image of free trade stand in the way of the incremental gains
that EPZs offer.
Except in cases where the political environment became dangerous there are NO countries which have experienced the onward movement of the pioneer companies WITHOUT encouraging that movement as they progress up to the more desirable higher technologies and more pay. "Evolve and Gain" is a more accurate phrase than "Slash and Burn." General Motors, Ford, Chrysler, Toyota, Nissan, Fiat, General Electric, Siemens, Philips, and RCA use EPZs and are all unionized in many places. If these are the "most vicious employers", "cutthroat business", and "bottom end of the global market", then unions have far more to worry about than EPZs. |
| 5. This report shows the human cost of the EPZ experiment. Behind the concentration camp style fences in many countries, unscrupulous employers are abusing the basic rights of a predominantly young female workforce. In some countries basic labour legislation and core workers' rights are set aside in the zones. In others the zone managers simply use a system of pass controls to exclude union organizers and workers who try to join a union. Many of the worst of these so-called "free zones" allow employers the freedom to exploit without restraint but restrict the basic workers' right to freedom of association. | 5. It shows nothing of the kind. But while it is full of innuendoes, very few sources are named, and almost no references are made by name to an EPZ where alleged infractions of labor rights occurred. ICFTU's motive might be to use the growing success of EPZs to gain free publicity -- but this would be an extension of the tragedy of their trying to eliminate 15 million jobs in developing countries that depend on EPZs. That will not serve ICFTU's cause well in the end, no matter what it is. |
| 6. Their continued growth calls into question the legitimacy of the entire international trading system. Democratic governments and socially responsible employers must join the international trade union movement to prevent the intensification of competitive pressures, exemplified by the spread of EPZs, from undermining the basic rights of workers. | 6. Now this paragraph begins to show the true agenda of this
article! It is not reasonable or responsible to claim that the entire world
trade system becomes illegitimate just because of alleged problems with one
part of it (the EPZ). It would appear that the true target is all international
trade that has reduced the monopoly powers of trade unions in individual
countries. It demonstrates a longing of the trade unions to return to the "good
old days."
This call for worldwide solidarity is another call back to the "good old days" when the call was for the "Workers of the world to unite..." But the efforts now being made in this article are on the backs of 15 million workers in the developing world. Old style trade unions don't like competition; they prefer the status quo. Or is it perhaps that the ICFTU is a pawn of advanced nations unions trying to protect existing systems and failing to accept the challenge and the many opportunities that world trade growth brings to all peoples? |
| 7. The ICFTU and its affiliates are campaigning vigorously for the inclusion of a clause on international workers rights in the multilateral rules set by the World Trade Organization. Our objective is to increase respect for basic ILO standards worldwide. The growth of trade holds the potential for increased employment and improved working conditions but will not reach millions of workers if gross exploitation, repression and discrimination are allowed to continue and spread. Already international union action is putting pressure on governments and employers to stop the denial of the basic freedom of zone workers to join a union of their own choosing and bargain with their employer for decent conditions of work. Companies that sell products on the international market place are being made increasingly aware that consumers want reassurance that not only is what they are buying up to a high standard of quality but that it has been made by workers who are treated decently. Hypocrisy is bad for business. | 7. The world governments in establishing the ILO did not give
it the enforcement powers of the WTO. The labor movement is trying to rectify
that by finding a way to access the WTO's Dispute Settlement System to use for
their narrow agenda. We understand that this will not happen for the same valid
reasons that prevent the ILO from having a similar Dispute Resolution System
within their organization.
Most of the countries of the world are opposed to ceding to an international body their sovereign right to set and enforce labor regulations. The WTO is not a world government and should not take on the role of setting and enforcing fiscal policy, labor policy, environmental policy, or other legitimate roles of national governments. Were it to do so it would destroy the WTO, which may be the point of the ICFTU anyway. Note as you read the ICFTU document the numerous and general condemnations of world trade. It is not EPZs that are a problem to trade unions but rather all sorts of world trade. Consumers seem to want quality at low cost. Union organizers would like consumers who behave differently, but alas have not found them very often. Such altruistic motives can affect some buyers but not very many for very long. Union leaders also try to forget the very high cost protectionism has on the very consumers they would like to enlist in their campaign. Hypocrisy is bad for EVERYBODY, but it has not stopped the ICFTU from using it throughout their report. In paragraph 6 they question the "legitimacy of the entire international trading system", now they talk about its potential. |
| 8. Tackling the global crisis of unemployment and poverty requires a coordinated international approach as called for by UN's Copenhagen Summit for Social Development. Export Processing Zones are a dangerous step backwards which vividly symbolize the tendency to try and hide the fundamental problem that unrestrained competition leads to exploitation. Fencing in and denying working people their basic freedoms is an outrage that will be exacerbated by the powerful forces of globalization unless effective international action is taken to prevent the violation of trade union rights in Export Processing Zones. | 8. Central planning did not work well in the
Soviet Union or elsewhere when it has been tried. Tackling the global crises of
unemployment and poverty will require each individual nation, and regions
within each nation, to focus on solving local problems for business. But even
if global planning were required, the rest of this paragraph is a non
sequitur. We assert that EPZs are a reflection of the fact that efficiency
must be enhanced in the many different cultures of the world that have little
experience in manufacturing and distributing goods and services, and that they
are on the leading edge of the fight to solve the unemployment and poverty
crises in the world. They allow national governments to find policies that work
for their people, and to spread these policies widely.
As we have seen earlier, fences are a specious issue. Anyone who has seen the thousands of workers streaming into and out of EPZs during shift changes knows fences are there to protect property and not to confine workers. The political freedom of workers and other citizens are protected or abused by governments and have no relation in any way to a fence about an industrial facility. The outrage is the use of such emotionally laden utter nonsense. Restraining competition is a very old idea of the socialist movement of the last century, which has been quite well proven to be restraining the world from development. Worker rights and freedoms are far higher in all of the NICs than they were before EPZs and global trade were encouraged. The powerful forces of globalization are easy to define: people want better and less costly products and services; and they want jobs which pay them money they can spend on these products and services. Now the second agenda of this article becomes clear. EPZs are not the problem, nor even worker rights. The problem is the ability of old-line trade unions to interest workers and governments in giving them a role in the developing global economy. The ICFTU wants to use the powerful DSS of the WTO to protect trade unions. Trade UNION rights, again, not human or worker rights. |
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B. Part one:
Export Processing Zones and the Violation of Trade Union Rights
1. An international phenomenon | |
| 9. "The metal covered buildings lie under a leaden sky. Nothing in their appearance suggests there are human beings inside. They look like giant warehouses. Inside, the only sound is the noise of machines. There is not a single human sound: no voices, no laughing, and just the occasional whisper here and there. From time to time, someone gets up and asks to go to the toilet. The workers are only allowed to go once during their ten or twelve hour shift, and even then, their time is strictly limited. If they are absent for more than three minutes, the supervisor shouts for them to come back to work. Once the women have entered the building, the doors are locked. Nobody can leave, or have any contact with the outside world. Their whole world is behind those doors." | 9. Not claimed as being in an EPZ.
What country/city? What EPZ? What Year? What Company name? This is a classical description of very poor management, and is most likely a factory that is locally managed and barely survives while producing a poor quality product. Yet the women come to work, not because they are forced to, as in a concentration camp, but because the opportunities for them outside the factory are even worse. The first of several bathroom crises in this document. Writing about bathrooms makes the reader feel a little shame and humiliation, like a peeping Tom. They want you to feel that way, because it hinders your recognition that this type of poor management is not productive or useful, and has little or no relation to Trade Union rights. No fire laws. Not typical of EPZs. Poor city management in any case. Of course their whole world is not behind those doors, any more than your whole life is in a bathroom stall when you go about that part of your life. The families that they are supporting on their wages are part of their life. Their village, their community, religion and nation are also part of their life. A trade union may not be, and that really is the problem for the author. |
| 10. "Sometimes, it is more than the body can stand. Temperatures soar, particularly in summer. Even if one of the women falls ill, she is not allowed to go to the doctor. Recently, Amanda fell ill. As the hours passed, she felt worse and worse, but she was not allowed to leave. After six hours, she fell dead at her machine: she was 22 years old and she died because she did not have permission to walk out of a door. Anger drives some of the workers to organize. But any efforts are immediately repressed. Order is restored, with the supervisors using every method available. The end justifies the means: shouting, harassment, and physical violence. If somebody were to ask where the scenes described above took place, no doubt most of us would reply: in a prison or a concentration camp. Wrong. It is simply the way workers are treated in the maquiladoras of Central America." ----- Adriana Rosenvaig, International Graphical Federation (Latin America) | 10. EPZ not mentioned.
The source is said to be Central America. What country? What city? What company? What year? Adriana Rosenvaig was evidently a representative of a union organizing effort called International Graphical Federation (Latin America) -- but not Central America??? Her capacity to generalize to all workers in all maquiladoras in Central America this sad experience and to then relate it somehow to physical violence against union organizing efforts, and liken that to prisons and concentration camps is highly imaginative. Please note that "maquiladora" does not equal "Export Processing Zone". Many maquiladoras are outside Zones in Mexico and elsewhere. |
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