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    China Business
     Apr 5, 2007
Page 1 of 2
Chinese heat is on US sweatshop lobby
By Brendan Smith, Tim Costello, and Jeremy Brecher

Editor's note: This article is adapted from a recently released report by Global Labor Strategies, "Undue Influence: Corporations Gain Ground in Battle over China's New Labor Law". The full report is available at www.laborstrategies.blogs.com .

In a historically unprecedented visit, influential Chinese scholar and labor-law expert Liu Cheng arrived in Washington, DC, to garner support from US legislators and labor leaders for a law that is pending not before the US Congress but before the National People's Congress (NPC) in China. Liu Cheng has been a key



adviser to the drafters on a labor-law reform bill currently working its way through the Chinese legislative process.

His visit is part of a behind-the-scenes battle that is raging worldwide over reforms in China's labor law. On the one side are Wal-Mart, Google, General Electric (GE) and other global corporations that have been aggressively lobbying to limit new rights for Chinese workers. On the other side are pro-worker-rights forces in China, backed by labor, human rights, and political forces in the US and around the world.

Liu Cheng's visit to Washington was part of that international support campaign. He warned in an interview that support for the new law within China is not enough. "Some National People's Congress representatives are influenced by the employer lobby. Although the principles of the amendments are secure, there may be concessions on the details, so we call for help."

In March 2006, the Chinese government, with considerable popular backing, proposed a new labor law with limited but significant increases in workers' rights. But the American Chamber of Commerce (AmCham) in Shanghai, the United States-China Business Council, and US-based global corporations are lobbying to gut the proposed law. They have even threatened to leave China for such countries as Pakistan and Thailand if the law is passed.

Their aggressive tactics appear to have had an impact. Last December, the Chinese government released a revised draft of the Labor Contract Law with significant changes in contract, collective bargaining, severance, and other rights guaranteed for Chinese workers that would favor corporate interests.

The corporate community quickly claimed credit for these revisions. The US-China Business Council declared the draft a "significant improvement". Individual corporations were also pleased with the results of their lobbying campaign.

Scott Slipy, director of human resources in China for Microsoft, recently explained to Business Week: "We have enough investment at stake that we can usually get someone to listen to us if we are passionate about an issue.

"Comments from the business community appear to have had an impact. Whereas the March 2006 draft offered a substantial increase in the protection for employees and a greater role for unions than existing law, [the new draft] scaled back protections for employees and sharply curtailed the role of unions."

Despite successfully removing important pro-worker provisions from the first draft, the business community has launched a major new lobby effort to further gut the legislation, which was expected to be voted on this year by the National People's Congress. (Editor's Note: The 2007 session adjourned without discussing the measure.)

The US-China Business Council, for example, has told the Chinese government that elements of the revised draft are "burdensome", are "prohibitively expensive", and will have "an adverse impact on the productivity and economic viability of employers". One corporate lawyer ominously warned: "We will have to wait until the final draft is written and see how the law will be implemented. If the law is too negative for employers, then we might see a slowdown of recruitment."

Pushback
But as AmCham and other corporate lobby groups congratulated themselves and prepared to escalate their demands, forces inside and outside China organized to oppose this undue corporate influence.

International union federations have pressured their employers to reverse course; human-rights organizations have mobilized support for Chinese workers' rights; members of the US Congress have introduced legislation decrying the corporate intervention and apparent complicity by the administration of President George W Bush; and China's official labor organization, the All-China Federation of Trade Unions (ACFTU), has taken a strong stand against corporate pressure.

Such counter-pressure has fractured the unity of US and European-based corporations in China and their lobbying organizations. AmCham in Shanghai, which lobbied for changes in the draft law, has been invited by the Chinese government to weigh in again. But AmCham is meeting resistance to its position from some of its own most powerful members. For example, Nike has virtually repudiated AmCham's position.

According to Nike vice president Hannah Jones, "Nike has a long history of actively supporting the Chinese government's efforts to strengthen labor laws and protections of workers' rights." When AmCham took its position on the law, Nike "had yet definitely to state a position either internally or externally to AmCham on the draft labor law currently under review".

The European Chamber of Commerce in China had initially warned that the new law might lead foreign corporations to

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US puts squeeze on Vietnamese labor (Nov 22, '06)

 
 



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