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    APEC and Jobs

    from The Jobs Letter No.107 / 13 September 1999

    Robert Reid

    ROBERT REID of the Apec Monitoring Group looks at how the Apec agenda effects workers and jobs.

    Apec stands for Asia Pacific Economic Cooperation. It groups 18 "economies" of the Pacific Rim. In its own words it was established in 1989 to "sustain the growth and development of the region for the common good of its people".

    Others are more honest about Apec's role. Joan Spero, US Undersecretary for Economic, Business and Agricultural Affairs told US Congress (18 July 1995): "Apec is not for governments; it is for business. Through Apec, we aim to get governments out of the way, opening the way for business to do business."

    "The closures of factories and the subsequent job losses all relate to Apec's "neo-liberal" or free market, free trade agenda... which is essentially a license for the big Transnational Corporations to do what they like, where they like..."

    While the Pacific Rim economies were booming, Apec was claiming responsibility for this rapid growth. But now many of these economies have collapsed and the whole region is in recession. Millions of workers in countries such as Indonesia, Korea, and the Philippines have lost their jobs, and a new wave of job losses is breaking at the shores of this country.

    We have recently seen a rash of factory closures here in New Zealand. All the motor assembly plants, Mitsubishi, Honda, Toyota and Nissan have closed as have companies supplying components such as Kensons, Yasaki and Alcatel. Scores of clothing and footwear factories have closed or made people redundant during the year. Forestry giants Fletchers and Carter Holt Harvey (CHH) are undertaking major restructuring that has already seen hundreds of pulp, paper and timber mill workers sacked. Many thousands of workers have lost their jobs and many thousands more will be affected as job losses further destroy local economies.

  • The closures of factories and the subsequent job losses all relate to Apec's "neo-liberal" or free market, free trade agenda. Similar policies are being promoted by the World Bank, the International Monetary Fund and the World Trade Organisation. Successive governments in New Zealand have also been pursuing these policies since 1984.

    Apec is responsible for job losses in three main ways. Firstly, the overall free market agenda is essentially a licence for the big Transnational Corporations (TNCs) to do what they like, where they like. They take resources from the cheapest source, hire workers on the lowest possible wages and sell their product at the best possible price. Previously governments could constrain this power and dominance of the TNCs by insisting that they process raw materials in the countries they extracted them from, or manufactured or assembled products where they wanted to sell them. These measures created jobs for local economies. As governments remove such regulations on the corporations then factories close and jobs are lost.

  • Secondly, Apec has called for free trade in the Apec region by 2010 for "developed countries" and 2020 for "developing countries". The government says that this means the elimination of tariffs and other protection from local assembly and manufacture. We have already seen how the government's decision to end tariffs on motor vehicles by the year 2000 caused motor vehicle assemblers to close up shop last year. Currently the government is considering the elimination of tariffs in the textile, clothing,footwear and furniture industries "well before 2010". The closures and job losses that we have already seen in these industries are the result of tariff reductions that are taking place and uncertainty for the future.

  • Thirdly, Apec announced last year that it will seek "early voluntary sector liberalisation" in nine sectors including the fish, forest, energy and chemical sectors. The New Zealand Government has hailed this plan as bringing huge benefits for these sectors. Workers at Fletchers and CHH know differently as they see their companies restructuring in a way that may see New Zealand becoming only the tree farm with all the added-value processing done in high-tech mills off-shore.

    Tariffs were introduced to continue protection for local industry and jobs against imports from overseas. The higher the tariff, the greater the protection. Tariffs are a recent form of protection in New Zealand. Until the late '70s and early '80s most local protection was provided by import controls. Through the import controls in the middle of this century, New Zealand built up its economic base and created full employment. It was able to move from the Depression and unemployment of the 1930s to have one of the highest standards of living in the world.

    "Free the ideology that says that New Zealand clothing workers have to compete with those in Bangladesh, while CEOs, stock-brokers and top flight lawyers need to receive the same wages as their equivalents in New York, Tokyo or London."

  • Since tariffs replaced import controls, the Government has conducted regular reviews of the tariff levels, but always with the goal of reducing or eliminating tariffs. When tariff levels reach such a low point that the industry collapses the government will cut the tariff to zero.

    The government is currently reviewing the post-2000 level of tariffs. Unlike other years, it has said the starting point for this review is how to eliminate all tariffs by 2010, the year set by Apec for free trade in its 'developed' member economies.

    The government has already reviewed tariffs for the motor assembly industry earlier than the general review. It shocked workers and companies alike by determining that all tariffs on imported vehicles would reduce to zero by December 2000.

  • The government is captured by the free trade ideology of the neo-liberals which says that business can only prosper if all regulations are removed and it is able to exist in a totally free market. At a local level, the Employment Contracts Act was used to remove labour regulations from business. At an international level, "free trade" is seen as the magic solution to remove all international restrictions from business.

    However for the neo-liberals, 'business' means the large transnational companies. They have little concern for small local companies and no concern at all for workers. Free trade, free investment, globalisation and international competitiveness are all words which mean that international capital will invest where labour and raw materials are the cheapest and sell where the highest prices can be gained. It is the ideology that says that New Zealand clothing workers have to compete with those in Bangladesh, while CEOs, stock-brokers and top flight lawyers need to receive the same wages as their equivalents in New York, Tokyo or London.

  • The government says that eliminating tariffs will reduce the price of imported items into New Zealand, which will benefit the consumer and eliminate the cost of the tariff on the economy. This will make the economy perform better and everyone will be better off. However the reality is very different from the theory.

    The government claims that tariffs must be eliminated by 2010 because of "our Apec commitments". It then says that it wants to eliminate tariffs "well before" this date. However the entire Apec process is voluntary. "Commitments" are made by "economies" but have no legal standing. There is no "requirement" of any country to follow its voluntary commitments. A majority of Apec countries have indicated that they will not blindly follow their own Apec "commitments".

    But the Government wants to move to complete "free trade" even earlier than 2010 so it can lead other countries by example. This will be as successful as a mouse trying to lead a stampede of elephants. Little New Zealand will get squashed while the larger world economies continue to protect themselves.

    Trade Unions in the Apec region are split on how to deal with Apec. The NZ Council of Trade Unions (CTU) has joined the Asia Pacific Labour Network (APLN) which supports Apec and its form of free market globalisation. The CTU and APLN wish to see a social dimension in Apec, the establishment of an Apec Labour Forum and participation of union leaders in Apec committees, working groups and ministerial meetings. They have asked Apec to commit itself to "eliminate exploitation, discrimination and repression in the workplace".

    The NZ Trade Union Federation (TUF) and other trade unions in the region have a different view. The TUF believes that the basis on which Apec is founded is anti-worker. It says that requesting Apec to eliminate exploitation in the workplace would be "as successful as urging a tiger to become a vegetarian". Those trade unions opposed to Apec seek its destruction rather than seeking a seat at its table. Some have joined with other labour groups in the region to establish Apec Labour Rights Monitor (ALARM) to monitor the activities of Apec that will affect workers and to organise solidarity against the worker rights abuses that occur in all Apec countries.

    Source - Apec Workers, Jobs and Tariffs Fact Sheet produced by the Apec Monitoring group

    Jeanette Fitzsimons

    Green Party co-Leader JEANETTE FITZSIMONS comments on free trade and the challenge to build sustainable local economies.

    There is a glaring disparity between the theory and the practice of free trade. More trade should mean more work producing and distributing and accounting for trade goods - and therefore should create jobs. Yet the harsh reality for New Zealand has been that whatever jobs have been created in the past 10 years, by trade or other means, have not keep pace with the jobs that have been destroyed.

    With between 6-10% of the workforce out of work at any one time over the past ten years, and no hope of relief in sight, we have to ask what role our trade policies may be playing in making the situation worse rather than better.

    Within the small CER subset of the Apec free trade bloc, it is pretty clear that free trade has meant a loss of New Zealand jobs to Australia. Two percent of the current population of Australia (360,000 people) were born in New Zealand. Most of them are young people who have gone looking for jobs.

    Tariffs are particularly justified where our competitors are paying very low wages, have poor environmental standards or are subsidised by their governments.

    Under CER, New Zealand industries have shifted to Australia. For example: one year after the CER agreement in fresh produce was implemented, one third of New Zealand's tomato growers had gone out of business. A small tariff on clothing and footwear is the only protection for the remaining 16,000 or so New Zealand clothing and footwear workers - a workforce where job loss has been steady and constant in the past fifteen years.

  • We need to take a two-pronged approach to the problem: First, there is the need to prevent further unnecessary job losses. Maintaining tariffs on the importation of goods that we can and should produce for ourselves is one way of keeping jobs in New Zealand and providing workers with the wherewithal to buy locally produced goods. However, Greens do not take the view that any and every job is worth protecting in this way - we want to encourage environmentally sustainable production both here and overseas. Tariffs are particularly justified where our competitors are paying very low wages, have poor environmental standards or are subsidised by their governments.

    The second part of the Green approach to redressing free trade-induced job losses is to focus scientific research and development efforts, and regional investment, into sustainable production that earns a premium on world markets - premiums like the $35 currently being paid for a box of certified organic apples, compared to $7-$9 for the chemical equivalent. Fortunately, environmentally sustainable forms of production, such as organic farming, energy efficiency, waste reduction and resource recovery ... all create jobs.

  • It is essential to create jobs at the local level. For just as the global economy strips jobs out of New Zealand and displaces them to other countries, so the main urban centres in New Zealand suck people out of the heartland. This leads to environmental and social distortions and damage at both ends: for example, West Coasters (with a lot of help from a multinational PR company and public money) are fighting to log pristine native forests containing endangered bird species in an ineffective attempt to generate jobs on the Coast and keep the young people there ... while Aucklanders are mired in traffic pollution and congestion and reaching the limits of sustainable supply of water and electricity.

  • It is therefore very important that we strengthen local economies, to keep communities viable and healthy. Sometimes we can do this through developing trade with overseas markets e.g. by encouraging sustainable sunrise enterprises including diversification into new products like hemp, and by adding value to what we already produce. But sometimes we have to realise that if we want a local economy, we have to support local economic activity, and do our consuming as well as our producing locally.

    The Greens in the Nelson Tasman Bay area have been running a very successful 'Buy Local' campaign that has encouraged and strengthened the local businesses that provide local employment. The next step, for Nelson and rest of New Zealand, is to bring back community owned and operated banks, like the old trust banks, that will keep capital in the community, available for keeping the small and medium size businesses that provide most of the jobs in this country going. The Taranaki Savings Bank, New Zealand's last and only New Zealand owned and operated bank, has been profitable and successful in its mission to serve the economic needs of Taranaki. With new technologies, like the Internet, it is now possible to bypass centralised bureaucracies, and engage in community to community economic exchanges.

    Source - Jeanette Fitzsimons "Thinking Beyond Tomorrow" in speech to the "Reclaiming Apec" conference at Auckland University 7 September 1999

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