Labor and Globalization

General Overview: What Is Globalization and Free Trade?

Globalization: The tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets.

Free Trade: Unrestricted trade among nations without government tariffs or customs duties on imports.

Globalization can be traced back to the times of Marco Polo and the Silk Road where trade between Europe and China crossed continental divides. Globalization as it is commonly understand it today really emerged at the end of Word War II when the United States began to invest greatly in foreign economies. The world has gone through a new kind of worldwide economic development, and global trade has increased over twenty times. Global trade is credited to free-market countries spurred by free-trade agreements.

The assumption of free trade is that it will benefit everyone that engages in it. The origin of this assumption can be trace back to 1817 when the classical economist David Ricardo defined his doctrine of comparative advantage. He argued that gains would be made for each country engaged in trade if each country specialized in the production of a good with a cost advantage in production. They would then trade with other countries for the goods that those countries specialized in. He also argued that although importing goods at a lower price would lead to the lowering of the real wage and a rise in profits, the end result in the long run would be that it would positively impact the income levels of all countries involved in the trade of goods.

One of the first major blows to labor that stemmed from globalization and free trade was the North American Free Trade Agreement (NAFTA). The agreement eliminated the restrictions on the flow of goods, services, and investment in North America. Prior to the treaty, Mexican tariffs averaged 250% in comparison to the US tariffs, and with the implantation of NAFTA approximately half of these were eliminated and the remaining tariffs and restrictions were to be phased out over a fifteen year period. NAFTA has been subjected to considerable debate since before it was passed and continues to remain as a top concern to labor unions today.


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View Current Globalization Issues Here:

NAFTA Pros and Cons
NAFTA Safety
White-Collar Outsourcing
“By American” Campaign
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Union Response:

Unions have evolved from their initial outright opposition to NAFTA and globalization. They continue to remain opposed to free trade on the grounds that large corporations searching for the cheapest labor possible are exploiting free trade. A by-product of offshoring has created a situation in which workers are being pitted against each other in the United States and against foreign competition. This foreign competition with cheap labor drives the cost of labor even further down and in turn has an additional adverse effect on foreign workers. It has essentially created a race to the bottom for the lowest wages possible. The foreign workers are working for pennies on the dollar, which only continues to entice more corporations to view this labor market as a profitable cost cutting measure.

Unions believe that free trade has had the exact opposite effect in America as what was initially intended. Unions realize that free trade has an important role in the global economy, but unless it is properly regulated it will continue to spiral out of control and worsen the labor situation. They see the need for expanding labor unions in order to protect offshore workforces and in turn, ultimately regain control over the rapid loss of jobs within the United States. The globalization of labor and manufacturing is at a point in which unions do not see stopping it as a viable option, rather they see a need to adapt to it and push to have greater control over globalization, providing greater protection for American labor as well as the foreign labor that is being exploited.

Although globalization and free trade were initially seen and in most cases are still viewed as having a negative impact on American labor and labor unions, the impact of NAFTA has directly contributed to some advancement for unions. Following the passing of NAFTA, many people believed that the race to the bottom that ensued would lead to the end of labor unions outright, but the results proved to be completely opposite and only served as a driving force for unions to recognize their shortfalls and strive to do more than survive.

Many labor unions have evolved to approach the globalization issue by seeking to not only strengthen their organizations within the United States, but to expand their organization and ties beyond U.S. borders. Realizing the corporate strategy of pitting American workers against cheap foreign labor, American labor unions have recognized that they must work to protect foreign workers if they are going to successfully make significant gains within the U.S. work force. By strengthening foreign workers and focusing on global solidarity, unions are increasing their ability to address the issues brought on by globalization.

NAFTA has served as a means of stimulating labor trans-nationalism; it has strengthened ties between unions within the U.S. as well as abroad. NAFTA generated an intense and aggressive political mobilization in which unions recognized the need to work together against the common issue of free trade and this in turn spurred new labor ties and networks. These new ties and networks were non-existent before the implementation of NAFTA and have garnered a stronger and more cohesive relationship amongst American unions as well as numerous foreign unions located in Canada and Mexico.

An example of this is the current relationship between the AFL-CIO and Mexican and Canadian workers. Instead of expounding on the issue that foreign workers were stealing American jobs, the AFL approached the issue from a substantially different direction. The AFL-CIO realized that it could either contribute to the race to the bottom or it could maintain its focus on the goal of raising and maintaining standards. The enemy of the American worker is not the foreign worker; it is the corporations that are seeking to increase their profits by moving offshore and exploiting cheap foreign labor.

Another recent example of unions adapting and expanding can be found in a move taken by the United Steel Workers in 2008. The USW and the Unite the Union, in England and Ireland, completed a merger, which subsequently formed what can be considered the first global union, Workers Uniting.

Regarding the merger, Leo Gerard, the USW President stated, “This union is crucial for challenging the growing power of global capitol. Globalization has given financiers license to exploit workers in developing countries at the expense of our members in the developed world. Only global solidarity among workers can overcome this sort of exploitation.”


United Steelworkers (USW) and Unite the Union Sign …
Uploaded by multivu

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Sources:
Beckman, Steve. “Review: A Trade Union Guide to Globalization.” UAW.org. http://www.uaw.org/atissue/02/042402beckman.html (accessed April 18, 2009).

Field, Lloyd M. “Globalization and Unions.” Lloyd M. Field Newsletter. http://www.lloydfield.com/files/newsletters/620081028.pdf (accessed April 09, 2009).

“Free-trade Cartoon.” WorldSocialism.org. http://www.worldsocialism.org/spgb/feb06/images/Free-trade%20cartoon.jpg (accessed April 18, 2009).

Key, Tamara. “Even Labor Unions Can Gain from Free Trade.” YaleGlobal. http://www.hartford-hwp.com/archives/40/204.html (accessed April 15, 2009).

Marshall, Scott. “Labor in the Era of Globalization.” PoliticalAffairs.net. http://www.politicalaffairs.net/article/articleview/1571 (accessed April 18, 2009).

“What is Globalization?” Globalization101.org. http://www.globalization101.org/What_is_Globalization.html (accessed April 18, 2009).

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