AFL-CIO Seeks U.S. Trade Sanctions Against China

Organized labor opened a new front in the trade wars Tuesday.

Employing a tactic never tried before, the AFL-CIO filed a petition asking the Bush administration to impose stiff penalties against China because its “brutal repression” of worker rights gives its companies an unfair competitive advantage -- depressing wages by as much as 86% and encouraging the transfer of U.S. jobs overseas.

Trade experts expressed skepticism that the AFL-CIO’s filing under Section 301 of the Trade Act of 1974 would succeed. Even if it did, they contended, imposing penalties on China wouldn’t staunch the migration of U.S. jobs overseas, because companies could shift production to other low-cost countries.

But whatever the outcome, the AFL-CIO simply by filing the petition has ratcheted up the pressure on the Bush administration to take action against China, the country that takes the most heat from critics of U.S. companies’ shifting production to foreign countries.

Democratic presidential candidate Sen. John F. Kerry, who has been endorsed by the AFL-CIO, has made the so-called offshoring of U.S. jobs a key issue in his campaign, lambasting President Bush for doing too little to protect American workers from foreign competition.

“The Bush administration has been totally negligent,” said Thea Lee, assistant director of international trade for the AFL-CIO in Washington. “They’re watching hundreds of thousands of American jobs go to China and American companies put out of business and they’ve taken no action whatsoever.”

The Section 301 trade provision has never before been used to force a foreign government to improve its labor conditions. (U.S. labor leaders also are working with manufacturers on a separate trade case that would accuse China’s government of unfairly lowering the price of its exports by keeping its currency weak.)

The federation wants the U.S. government to impose trade sanctions until China’s labor standards improve. What’s more, it’s demanding that the United States place a moratorium on new trade pacts until the World Trade Organization requires its members to uphold internationally recognized labor standards.

The U.S. trade representative’s office has 45 days to decide whether to initiate an investigation and up to a year to report its findings.

Richard Mills, a spokesman for the office, said he couldn’t comment on the petition until the U.S. government had a chance to thoroughly review it. But Mills said the Bush administration was committed to “aggressively enforcing our trade laws” and was a “leader in promoting internationally recognized standards and human rights globally.”

A commercial officer at the Chinese Embassy in Washington called the Section 301 complaint “regretful.”

Trade experts said it faced major hurdles.

Singling out China for punishment is difficult now that it belongs to the WTO, said Kimberly Elliott, a research fellow at the Institute for International Economics. The reason: If the U.S. imposed sanctions against China without WTO authorization, China could seek permission to retaliate, launching a potentially costly trade war.

Scott Flicker, an attorney in Washington who has represented Chinese firms in trade disputes, said the U.S. also would have a tough time proving that China should be singled out for its labor practices, given the disparities in worker rights and labor standards around the world.

And China experts disputed the AFL-CIO’s claims that low wages are the primary reason jobs are migrating to that country, pointing out that China has many other advantages, including modern factories and ports. Even if Washington were to succeed in forcing Chinese companies to pay higher wages, the work probably would move to other low-cost countries instead of coming back to the U.S., said Albert Park, associate director of the Center for Chinese Studies at the University of Michigan.

“This will be perceived as a political move to keep China down and help U.S. interests,” he said, “and it will not be perceived as being motivated by general concern for Chinese workers.”

But labor activists monitoring China welcomed the federation’s action, calling the complaint justified.

Since the early 1980s, China’s leaders have implemented free-market reforms that have lifted millions out of poverty.

The government’s drive to create jobs and boost exports, however, also created an environment conducive to worker abuse and exploitation, activists said.

Fearful that economic unrest could turn against Beijing, the government has banned independent trade unions and cracked down on the leaders of the worker protests that have erupted in hard-hit regions like the industrial northeast.

The only trade union allowed to operate is the All-China Federation of Trade Unions, which is under the control of state authorities.

Although China has laws on the books to protect workers from abuse, such as restrictions on working hours, government officials under pressure to create a profit-friendly environment rarely enforce labor laws, activists said.

“It’s undeniable that China has consistently failed to extend basic rights to workers, including the right to association,” said Ross Munro, director of research at the China Labor Bulletin, a Hong Kong-based labor rights group that promotes worker rights in China.

For organized labor in the U.S., what’s clear is that the battle isn’t only in Detroit or Philadelphia anymore but in booming Chinese factory towns such as Dongguan, which bills itself as the world’s largest producer of toys, furniture and electronic goods.

With its huge base of cheap labor, China exerts a competitive clout that is influencing prices, wages and labor standards around the world.

Stephen Diamond, a visiting assistant professor of law at Cornell University Law School who advises the AFL-CIO on legal issues, said the result was “an unholy alliance between large multinationals and a very authoritarian political regime” that the U.S. should fight.

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Times staff writer Tyler Marshall in Hong Kong contributed to this report.