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Leo W. Gerard

 By Leo W. Gerard
International President

A group of tire importers that should be competitors banded together recently to ally themselves with China in a trade case.

Doesn’t sound like they’re working for the interests of the United States, does it? No, they’re not. They’re collaborating with China against American manufacturing in general and American tire workers, represented by the United Steelworkers, in particular.

They’re opposing the union’s petition seeking a limit on the flood of Chinese tires that has so overwhelmed the U.S. market in the past five years that six American tire plants closed and nearly 7,000 American workers lost their jobs.

China cheats in international trade. It does so by manipulating its currency and subsidizing its manufacturing, which results in lower prices for its exports. For the tire importers, calling themselves the American Coalition for Free Trade in Tires, China cheating means higher profits.

After taking up with China, these companies are not the American Coalition of anything. They’re the Chutzpah Coalition. Here’s the quote that explains why: “If you impose quotas, you harm American jobs because of the impact on all of the people that work for independent dealers.” The Chutzpah Coalition lawyer, Jim Jochum of Jochum, Shore & Trossevim had the lack of insight to say that.

What we have here are tire import companies that grew and profited at the cost of American tire plants and American workers now asserting that if they are forbidden from importing limitless tires, then the result will be terribly wrong and unfair because some of their importing jobs might have to be cut.

If imports are limited, preserving thousands of American tire workers’ jobs, here’s what Del-Nat president Jim Mayfield asked at the Chutzpah Coalition press conference, “What’s supposed to happen to my company and my workers?” A call to Del-Nat asking for the total number of employees got this response: 68.

That’s chutzpah.

For those unfamiliar with Yiddish, chutzpah is not generally considered a positive attribute. The typical definition goes something like this: A boy kills his parents then seeks the court’s mercy because he’s an orphan.

In dealing with the Chinese and this coalition, there’s reason to believe chutzpah can be deadly. Chinese manufacturers are notorious for cutting corners in ways that proved lethal to consumers.  Babies, cats and dogs have all died from melamine-laced milk and pet food from China. In another case, the Chinese manufacturer of Aqua Dots substituted a chemical, which when ingested reacted like the “date rape” drug, forcing a recall of the toy after it sickened American children who put the dots in their mouths, and caused at least one youngster to end up in a coma.

And then there’s the tire case. On Aug. 12, 2006, four Philadelphia carpenters were driving home after work when the treads on one of the Chinese-made tires on their van separated. The rollover crash that followed killed two of the men and permanently impaired a third. An investigation showed that the tires, imported by Foreign Tire Sales – one of the members of the Chutzpah Coalition – did not contain a gum strip between belts necessary to prevent tread separation.

Initially, when the National Highway Traffic Safety Administration ordered Foreign Tire Sales to recall the defective tires, the company said it couldn’t afford to do that. Foreign Tire said it could pay only 10 to 15 percent of the approximately $80 million cost of recovering nearly half a million tires. Sure, it could profit from importing defective products. But it wasn’t prepared to pay to clean up the mess.

Later, it decided that only 255,000 tires needed to be returned. Ultimately, Foreign Tire was spared when drivers turned in fewer than 20,000 of those tires – less than 8 percent of the total. Who knows what happened to the remainder of those questionable tires or the people driving the cars they were on.

Foreign Tire, the Chutzpah Coalition and China want to continue importing freely – free trade not fair trade. And Chinese officials have taken steps to ensure that happens. Early in May, according to a report in the People’s Daily, China’s Vice Minister of Commerce met with U.S. Embassy personnel in Beijing “to negotiate on two trade remedy investigations targeting Chinese-made products that U.S. industries recently filed with the U.S. government.”

After that, the International Trade Commission released a memo revealing that Chinese officials attempted to discuss trade cases in a private meeting – a contact that was improper because other parties in these cases did not have an opportunity to argue their side. The ITC memo said China expressed particular concern about petitions filed under Section 421, the China-specific trade safeguard law that the USW used in the tire case.

Here’s what is at risk for China and their Chutzpah Coalition allies: in 2004 China sent 14 million tires to the U.S. valued at $453 million. By last year, that had increased to 46 million tires valued at $1.7 billion.

The USW wants the U.S. International Trade Commission to limit the imports to the 2005 level, which was 21 million. That number then could rise by five percent the following year, and five percent more the year after that. 

Congress added Section 421 to the U.S. Trade Act in 2000 to give U.S. industries and workers an opportunity to obtain product-specific relief from sharp increases in imports from China. Section 421 could provide resolution more quickly than a dumping or countervailing duty case.

Another good reason to call this group of tire importers the Chutzpah Coalition is that in its news release, announcing its formation, it suggested it represented “thousands of Americans working in the tire industry.” Not likely. Two of the six members refused to say how many employees they have – Dunlap & Kyle Co., Inc. and Foreign Tire. But the total employed in the U.S. for the other four together: American Omni Trading Co.; Del-Nat Tire Corp.; Hercules Tire & Rubber Co. and Orteck Global Supply & Distribution Co., is 400.

That’s hardly “thousands of Americans.”

But they’ve cost 7,000 Americans their jobs. And they’re fine with that. They’re working hard every day to add more to that number.

By Leo W. Gerard

International President

Lies, traderous lies and statistics

In the free for all Twenty-First Century, it all sounds terrific – free markets, free trade and free commerce. But really, it’s lies, traderous lies and statistics.

The d in trader is deliberate. This is about the sleight of hand billed as free trade.

We’re constantly told it’s a win-win. In 2000, when China was admitted to the World Trade Organization, for example, a former president said that exports to China already supported hundreds of thousands of American jobs, and this figure would grow substantially with the new access to Chinese markets that the WTO agreement would create. Politicians also promised the U.S. would benefit from exports to the rapidly growing consumer market in China.

The opposite, however, has occurred: China has exploited the U.S. consumer market while U.S. companies have been restricted to selling to China bulk goods such as grains, scrap, and chemicals, some intermediate products such as semiconductors and some durable products such as aircraft.

The China trade promises were snake oil.

The Economic Policy Institute released a study Wednesday revealing what happened to American jobs since China was admitted to the WTO. Between 2001 and 2007, 2.3 million workers lost their jobs or were displaced because of trade deficits with China.

Annual earnings lower

Annual earnings for all U.S. workers without a college degree are $1,400 lower because of competition with China’s low-wage workers and because China now accounts for such a huge percent of all of our imports. Displaced American workers, who did find new jobs, lost an average of $8,146 a year in earnings each. That is $156 less each week to use to feed the kids, to pay the mortgage, to meet the car payments.

Coincidentally, on the very same day EPI released its report, talks in Geneva, Switzerland to open global markets even further collapsed as China and India refused to allow free trade when it came to their own agricultural products. Both countries wanted to impose or raise tariffs on imported agricultural goods to protect their indigenous farmers.

Remember, it is for the most part, bulk goods, such as agricultural products, that the U.S. is exporting to China. A sticking point in the negotiations, for example, was soybeans. U.S. trade representative Susan C. Schwab had agreed that China could increase tariffs on soybeans in 8 of every 10 years, and still China walked away from the Geneva talks.

So here is the question: how can this relationship possibly be called free trade when China wanted to impose tariffs on our soybeans in 8 of 10 years, when it is manipulating its currency, when it is subsidizing its manufacturing, when it is failing to enforce even the most basic environmental and labor regulations?

That is snake oil.

We need fair trade. And so do Chinese workers and families, who are being abused by this so-called free trade system that benefits only CEOs and major shareholders of global corporations.

Unfair trade kills

What do Americans workers and families get out of so called free trade? A report, “The Toxic Truth: Unfair Trade Kills” issued recently by the United Steelworkers details the gross destruction, including a four-year-old who died after swallowing a lead pendant that was attached to his shoe imported from China; two Philadelphia carpenters killed when their van crashed while they were traveling home from work on defective tires manufactured in China, and 81 patients from across the country poisoned by contaminated heparin, a blood thinner imported from China.

In addition, the U.S. Consumer Products Safety Commission recalled 30 million toys made in China last year because they were doused with dangerous leaded paint; Chinese-made pet food sickened and killed untold numbers of American cats and dogs because it contained tainted wheat protein; officials pulled off the market poisonous Chinese toothpaste; children were sickened by Aqua Dots toy kits made in China with a substitute chemical that turned into the “date rape” drug when swallowed, and the U.S. blocked import of Chinese fish containing banned antibiotics.

That’s just the consumer viewpoint. The EPI study dispelled the myth that a good education is insurance against job displacement. EPI found that 31 percent of the jobs lost since China entered the WTO were among workers with college degrees and more than half – 55.6 percent — of the displaced were in the top half of American wage earners. The China trade deficits have contributed to the loss of 200,000 scientist and engineer jobs within this nation’s manufacturing base, a 10.7 percent drop.

This is what free trade has given the U.S. Poisonous products. Lost jobs. Lower earning power.

It’s not just us though. Think about this: One effect of free trade is polluted air wafting all the way across the Pacific Ocean to the shores of California, a state that enforces environmental standards higher than the national ones. Twenty-five percent of the pollutants in the Los Angeles basin come from China. That’s tragic for Californians who try so hard.

Tragic for China too

That’s also tragic for the Chinese people who live with befouled air every day. (Well, except during the brief period of the Olympic Games when the country is attempting to impress the world. After that, the cars, trucks and industrial pollution will return full force.) More than half of the rivers in China are too polluted to serve as a source of drinking water – often because of untreated pollution pouring into them from factories.

An investigative report issued earlier this month by the National Labor Committee describes conditions in the Kai Da Toy factory in Shenzhen, China where the Sesame Street’s Kid K’Nex Ernie construction toys are made. In violation of local and national laws, the factory’s employees are forced to work 13 to 15 hours a day, 7 days a week without health care. After deductions for room and board, they are paid 28 cents an hour, far below the requisite minimum wage. The 600 workers include 100 16-year-olds, and earlier this year, included numerous children who “disappeared” after an investigation by a Chinese newspaper.

NLC inquiries have repeatedly uncovered violations of Chinese labor law. Chinese firms don’t have to pay U.S. minimum wage. But they need to follow their own rules and not make virtual slaves of their country’s own adolescents.

Adult American factory workers trying to support families cannot compete with Chinese teenagers living four to a dormitory room on the factory site without any health or other benefits, working sweatshop hours, seven days a week.

What kind of “free trade” system is this? Those Chinese adolescents aren’t free. The American factory workers who have lost their jobs have forfeited financial freedom.

Still, the Kai Da factory will make big money. And the American corporations selling the Ernie construction toys will make big profits. Free trade works just fine for them.

If so-called free trade is ever to be replaced with fair trade, workers and families in China and America and every other trading country must demand it. Fair trade means that at the very least, labor and environmental regulations must be respected and enforced, so that people are not enslaved and the environment destroyed in the name of global corporate profit.

Really, at some point, when politicians claim these free trade deals are a win-win, and the actual result is 16-year-old Chinese youngsters working 16 hour days and American workers idled while their youngsters play with toxic imported toys, aren’t the lies traitorous?

By Leo W. Gerard
International President

Toxic Toys
Over the past year, American parents rebuffed foreign-made toys when they contained leaded paint, poisonous cadmium beads or the “date rape” drug.
These toxic toys created a scandal as it became clear that the Bush administration’s deliberately stripped down Consumer Product Safety Commission was not protecting American children and families from dangerous imports. Republicans eschew government regulation, but its absence has allowed our supermarkets to sell us imported tainted toothpaste and deadly dog food.
Now, the National Labor Committee (NLC), which often works with the United Steelworkers to combat sweatshop labor conditions internationally, has released an investigation of the Kai Da Toy Factory in Shenzhen City, China, where the Sesame Street Kid K’Nex Ernie construction kits are assembled, that raises a moral question for American parents: Are they willing to rebuff toys that are toxic to other people’s children?
In this case, it’s the children of Chinese parents who the National Labor Committee found work in grueling, sweatshop conditions to assemble toys that are supposed to bring joy to American boys and girls, toys of Ernie that, ironically, is the character symbolizing playfulness, not work, on Sesame Street.
Even if the Ernie K’Nex toy isn’t bathed in lead paint, the National Labor Committee inquiry found that he’s drenched in the sweat of young workers, including some child laborers. Here is what the NLC discovered:

Forced overtime

The 600 workers at the factory, including 100 16-year-olds, routinely put in 13 to 15-hour days, and work seven-day weeks for months on end. Occasionally, they’re required to endure 23½-hour work days. The weekly overtime is mandatory, even though it exceeds China’s legal limits.
Despite the long hours, workers earn less than one cent per Ernie doll they assemble – 43 cents an hour. That is below Shenzhen City’s minimum wage of 62 cents an hour. And, like the minimum wage in the U.S., that is not subsistence earnings in China. After the factory deducts for room and board, the workers receive only about 28 cents an hour.
The rooms are shared by eight workers, sleeping on metal bunk beds, washing their clothes in sinks, and using communal bathrooms. Many of these workers are young teenagers, who pay additional money toward tuition with the hope of eventually attending technical schools.
Younger children who were working in the factory earlier this year disappeared after a Chinese newspaper, Southern Metropolis, revealed in April that hundreds, if not thousands, of children from impoverished areas in Liangshan Prefecture in Sichuan Province were being sold to work as slave laborers in toy and garment factories.
The Kai Da factory does not cover health care and will dock pay if workers refuse overtime. In addition, if a worker quits before a committed period of time elapses, typically six months, the factory will withhold an entire month’s pay.
These practices are all illegal under Chinese law – the excessive overtime, paying less than minimum wage, and not providing health care. But the National Labor Committee documented them.
K’Nex responded to the report by saying: “We are a family owned company, and we are committed to the safety and welfare of children. The . . .toy factory is ICTI (International Council of Toy Industries) certified, which means that we comply with the highest safety and labor laws in the toy industry. We take the NLC allegations very seriously, and as a result we are launching an immediate investigation.”

Laborer-children

The question, however, is whether K’Nex, or any multinational, is devoted only to the safety and welfare of customer-children and not to that of laborer-children who produce the products.
Or, really, more fundamentally, how did we get ourselves into a situation in which children in China are assembling Ernie toys for children in America? Surely the late Mr. Rogers, were he here to advise us, would say there’s something deeply wrong with this neighborhood. Sesame Street could benefit from a little morality training from Rogers, a Presbyterian minister: It’s wrong to abuse one child so another may play with a cheap Ernie toy. It’s wrong to abuse a child for corporate profit.
There’s something else at play here as well. As children began to toil in China, factories closed in the U.S. The American toy industry lost nearly 60 percent of its jobs over the past 15 years. U.S. factories closed. American workers found themselves unemployed. Now, Chinese adolescents are assembling toys in sweatshops for American parents to buy and wrap for Christmas for their children – well, the American parents who still have jobs and houses in which to put those Christmas trees anyway.
It’s difficult not to buy a toy made in China with 85 percent of those in U.S. stores made there now. But a parent wouldn’t knowingly hand his own child a dangerous toy, one with lead paint or the Aqua-dots kit with its “date rape” chemical substituted by a Chinese manufacturer.
American parents must provide the same consideration to Chinese youngsters and boycott toys that have endangered them by working them in sweatshops. The Sesame Street Kid K’Nex “Ernie” is one of those toys.
The National Labor Committee investigation has provided us with that documentation.

Fair trade

No moral American can enjoy seeing their child play with a toy covered with the sweat of a child laborer. We must have fair trade agreements and regulation that ensure products imported into the U.S. are manufactured in factories that, at the very least, conform to the minimum child labor, wage and overtime laws of the countries of origin.
Sen. Byron Dorgan, a Democrat from North Dakota, has introduced legislation, the Decent Working Conditions and Fair Competition Act, supported by the NLC and the USW, that would make it illegal it import or export goods made with sweatshop labor.
If we as a country can protect property with trademarks and copyrights, and if we can defend foreign pets by prohibiting the importation of cat and dog fur, it’s time to pass Dorgan’s bill protecting human beings from degrading and inhumane sweatshop conditions.