Chapter 11- Globalization
The North American Free Trade Agreement includes a common monetary and fiscal policy between member nations.
False
If global markets are imperfect, a disproportionate share of profits is likely to end up with shareholders, rather than employees.
True
In a multinational corporation, if formal labor relations processes and structures are centralized, local managers should build networks across the entire organization to facilitate coordination and training.
False
In response to pressure from organizations such as the ILO and the International Trade Union Confederation, most companies today have a corporate code of conduct
False
Just as it facilitates corporate international trade, free trade agreements like the WTO and NAFTA also encourage internationalization efforts of labor unions.
False
NAFTA is a free trade agreement between Canada, Mexico, and the U.S. that allows both free capital and labor mobility.
False
One of the advantages to free trade is that the benefits of trade flow are shared equally between labor and management.
False
The GATT was an international agreement among countries to reduce tariffs on all products traded between them.
False
As a result of the GATT, average U.S. tariff rates have fallen from 50% in 1930 to less than 4% today.
True
Bantani Corporation, a large manufacturer of food packaging products, decides to purchase an existing manufacturing plant in India. This is an example of foreign direct investment.
True
If a signatory country to the WTO wants to pass a law to establish higher product standards for a particular import, it must be able to produce scientific evidence supporting the need for these standards.
True
One initiative of the International Trade Union Confederation is to pressure companies to adopt corporate codes of conduct that include a statement on the fair treatment of labor.
True
Relying on corporate codes of conduct to establish fair labor standards in an international market is a lot like relying on human resource policies to establish fair labor standards in a domestic market.
True
Removing trade barriers that were protecting an inefficient industry is likely to cause job losses in that industry.
True
The phrase, "The world is flat," refers to the idea that information technology gives people from all corners of the world the opportunity and ability to compete in a global economy.
True
While labor and environmental activists advocate for stronger protective regulations on trade, others argue that these are just a way to create unnecessary trade barriers and put poorer countries at a disadvantage
True
Transnational collaboration between unions includes all of the following except: A. Public pressure campaigns B. Sympathy strikes C. Information-sharing D. Coordinated lobbying E. All of the above
E
Fair trade and free trade are basically the same concepts.
False
Globalization increases the demand for unskilled labor in the U.S. which in turn reduces labor's bargaining power.
False
Developing countries and free trade economists object to: A. Linking labor and environment standards with trade policy B. Lifting trade sanctions and trade barriers without a full economic analysis C. Low labor and environmental standards D. All of the above
A
International investment portfolios can be beneficial because: A. They provide working capital for local companies and financing for foreign government operations. B. They keep uninformed investors out of the market so only those "in the know" can make wise investment decisions. C. They concentrate risk so not all countries are likely to be affected by economic downturns. D. International financial transactions are more predictable.
A
International investment portfolios can increase volatility in foreign exchange markets because: A. They can be highly speculative and short-term focused. B. They are too focused on long-term return rates. C. There are too many investors in the market. D. The markets lack competition and creates inefficiencies that result in rate fluctuations.
A
International trade can be defined as the cross-border flow of: A. Goods and services B. Investment securities C. People D. All of the above
A
The United States has negotiated a free trade agreement with: A. Canada and Mexico B. Japan C. Europe D. All of the above
A
The World Trade Organization has been criticized for: A. Taking a largely free-trade philosophy over a fair trade philosophy. B. Failing to reduce trade barriers that encourage free trade. C. Imposing harsh penalties on country's that fail to protect labor and environmental interests. D. Imposing sanctions on countries that set up barriers to free trade.
A
The most important problems with corporate codes of conduct are: A. Content and enforcement. B. Publicity and content C. Too few participating employers and enforcement D. Complexity and publicity
A
When it comes to the coordination dimension of global strategy and international management, the key conflict is between: A. Centralization and decentralization of policies and processes B. Coordination between international corporations and employees C. Local management and local employees D. Specialization and generalist policies
A
Which of the following cannot be considered a nontariff trade barrier? A. Taxes on imports B. Quotas C. Domestic subsidies D. Import licensing and product standards manipulated to favor domestic companies
A
Which of the following does not present a significant barrier to transnational labor collaboration? A. Differences in opinion about the need for unionization and labor protection B. Language, cultural, religious, and ideological differences between countries C. Legal constraints on transnational labor collaboration D. Differences in union structures and goals
A
Which of the following is not among the labor principles of the NAALC: A. Retirement income security. B. Prohibition of forced labor. C. Labor protections for children D. Equal pay for equal work of men and women.
A
Which of the following is not an outcome of the NAALC: A. Reduced the incidence of retaliation against workers who are attempting to unionize B. It has raised awareness of labor problems and increased understanding of the need for better labor standards C. It has generated public concern over trade and labor issues D. It provides an opportunity for greater cross-border cooperation among unions
A
Social dumping occurs when a foreign competitor is able to unfairly sell goods or services at a lower price than domestic producers because they are able to be more efficient.
False
The ILO is a specialized agency of the U.S. Department of Labor focused on social justice and human rights.
False
The North American Agreement on Labor Cooperation has been highly effective in improving labor standards among NAFTA nations.
False
The North American Agreement on Labor Cooperation is administered by the National Labor Relations Board which investigates complaints of violations of labor standards.
False
The North American Agreement on Labor Cooperation specifies minimum standards for the treatment of labor by all NAFTA countries and outlines penalties for failure to comply with those standards.
False
The WTO is a specialized agency for the United Nations focused on the promotion of social justice and internationally-recognized human and labor rights.
False
The ability to outsource is a key disadvantage of international trade for companies looking to reduce costs.
False
The agreement between countries that created the European Union provides trade agreements similar to those that exist between NAFTA nations..
False
The primary objective of European unification has been to create a thriving economy in response to increased competition from Asia over the past 30 years.
False
There are few benefits of immigration to the receiving country while there are many benefits to the immigrants' home country.
False
To avoid social dumping, the U.S. and Europe are forcing other countries to adopt principles of fair trade.
False
When looking to international financial investments, investors are more likely to think long term, making international markets more stable than a national market.
False
While globalization has increased the exportation of unskilled jobs from the U.S. to low-wage countries, white collar jobs are rarely outsourced abroad.
False
Explain the primary purpose of the European Union and its stance on labor standards for member countries.
The European Union was formed primarily out of political, rather than economic needs. The primary method of achieving integration, however, has been economic. Economic concerns prevail over labor and social concerns as the EU takes the perspective that economic prosperity will drive positive social changes, including better treatment of workers. That said, there has been concern with labor standards to establish basic human rights and prevent social dumping between member countries. As a result, the Community Charter of Fundamental Social Rights of Workers, or Social Charter, was adopted in 1989 to outline desired standards on freedom of movement, fair remuneration, equal treatment for men and women, health and safety protections, working conditions, vocational training, freedom of association and collective bargaining, and rights to information, consultation, and business decision participation for workers
What is the International Trade Union Confederation and what are its main objectives?
The ITUC is a worldwide federation of national union federations such as the AFL-CIO in the U.S., the Trades Union Congress in Great Britain, and the DGB in Germany. The ITUC formed as a way to strengthen international union solidarity and have more influence in the global sociopolitical economic system. Its main objectives are to facilitate consultation, communication, and cooperation among unions. The ITUC collects and publishes information and research to keep unions abreast of international developments. It also provides education and training to union leaders and financial assistance to emerging labor movements. The ITUC is an important advocate for organized labor at the WTO and other organizations and/or conventions. Among other things, the ITUC pressures multinational corporations to adopt codes of conduct that respect workers' rights
A European Works Council is a transnational, company-level committee of employees that gives workers the opportunity to learn about their company's financial health and future plans, and to have a voice in providing feedback and ideas about these plans.
True
A written pledge or statement by an employer outlining standards that it will abide by in conducting business is known as a corporate code of conduct.
True
Compared to other economic integration agreements, like NAFTA, one can say that the European Union has the greatest degree of integration.
True
Configuration refers to one aspect of a multinational company's global strategy whereby all of its processes are either consolidated in one location or located across several countries.
True
Developing countries are most likely to see labor standards as a way to protect U.S. jobs, rather than a good faith effort to improve the lives of working people worldwide.
True
Fair trade incorporates labor, environmental, public health, and other standards into trade agreements. Free trade advocates none of these.
True
For signatory countries to the WTO, quotas limiting imports are illegal.
True
Foreign direct investment can result in exploitation of labor, particularly in export processing zones.
True
Globalization occurs when there is increased economic integration among countries.
True
International investment portfolios create cross-border flows of investment securities like stocks and bonds.
True
One of the key benefits of international trade is that it allows consumers and producers to benefit by exploiting each country's comparative advantage.
True
One response of the labor movement to increased globalization and the growth of multinational corporations is to explore different methods of transnational collaboration.
True
The European Commission consists of representatives from members of the European Union and is responsible for drafting legislation on issues of common interest to all countries
True
The ILO's Declaration on Fundamental Principles and Rights at Work establishes a set of core labor standards that includes the freedom to bargaining collectively at work.
True
The International Trade Union Confederation is an attempt to bring national union federations of many countries under the same organization.
True
The NAALC has helped to increase the public's awareness of potentially harmful trade and labor practices within member nations.
True
The NAFTA Labor side agreement calls for compliance and effective enforcement of the labor laws within each member country.
True
The North American Agreement on Labor Cooperation was created primarily to prevent social dumping by U.S. companies operating in Mexico.
True
The Social Charter is a legally binding agreement between European Union countries outlining desired standards of treatment of people, including workers.
True
The World Bank requires companies to abide by the ILO's Declaration on Fundamental Principles and Rights at Work as a condition of borrowing money.
True
The coordination dimension of global strategy refers to a multinational company's decision to standardize its practices across location, (e.g., similar compensation, staffing, and training practices)
True
The cross-border flow of goods and services is called international trade.
True
U.S. trade policy has tended to focus on reducing tariffs and other barriers to trade.
True
Unlike the free trade arrangements of the WTO and NAFTA, workers in any European Union country can freely cross member nation's borders to work.
True
When a country agrees to extend the same tariff terms to a particular set of countries so as to provide equal market access, they are said to be giving most favored nation status.
True
What is a European Works Council and what role does it serve?
A European Works Council is a transnational company-level committee of employees that has consultation and information rights. In other words, a EWC allows employees from each country to be informed about decisions that might affect them. EWC's must meet with management at least once per year to be informed and consulted regarding the progress of the business. It can also request a meeting with management when there are exceptional circumstances such as a plant closing. The requirement for what information must be provided and who represents the employees is decided by the national law of each country. The EWC is not empowered to conduct collective bargaining but rather to create an open and healthy dialog between management and labor.
What is a corporate code of conduct and how effective are they in securing labors' rights in an international, global economy?
A corporate code of conduct is a written statement of standards that a company pledges to follow in its business activities. They often specify fair business practices, labor standards, environmental standards, corporate citizenship and ethics, and respect for relevant laws. Corporate codes of conduct may address child labor, discrimination, and health and safety issues and, less frequently, collective bargaining rights. Corporate codes of conduct are voluntary and therefore not legally enforceable. This fact explains the relatively weak effect of corporate codes of conduct in addressing labor concerns in an international market. Because the codes are voluntary and rely on publicity rather than legal power for enforcement, it is difficult to enforce the content. Companies can create their own standards, exclude standards that serve their best interests, or change and ignore standards to suit their immediate needs. Further, the codes need not address all issues important to labor (e.g., collective bargaining). Companies that rely on self-monitoring have no accountability. While some codes are monitored by human rights groups, this can be controversial because enforcement may hold companies to high standards or these groups may not have the resources to adequately monitor many employers
Explain the dimensions of a corporate global strategy. How does each affect labor relations?
A multinational corporation's global strategy has two central dimensions: configuration and coordination. Configuration involves the location of various activities, such as whether production is concentrated in one country and exported to other markets or whether production is globalized into various countries through foreign direct investment. It affects labor relations by influencing relative bargaining power between corporations and employees through, for example, threats to move operations from one country to another. The coordination dimension consists of the degree to which activities in different countries are homogenized versus autonomous. It affects labor relations in the degree of centralization versus decentralization of policies. Labor relations process will need to find ways to incorporate responses to local customs and problems. A highly centralized approach means that local customs and practices will likely not be honored and employees will need to conform to a common approach. A highly decentralized approach may introduce inefficiencies and inequities in treatment and local managers will need to build networks across the organization to facilitate coordination and learning.
Most complaints under the NAALC: A. are filed against Mexico B. are filed against multinational companies C. are won by organized labor and workers. D. Are settled in hearing or arbitration.
B
Currently, all global trade agreements sanctioned by the WTO have a social clause requiring them to abide by the ILO's Declaration on Fundamental Principles and Rights at Work.
False
The ILO's unique tripartite structure consists of ____________________. A. three main goals: labor standards, enforcement, and education B. each country sending representatives of government, labor, and business C. management by three co-presidents D. affiliation with the WTO, UN, and IMF
B
An export processing zone is: A. A place where exports are inspected and packaged for shipping out of the country. B. A special area within a developing country that is dedicated to attracting and supporting multinational investment. C. A place where exports are inspected once they arrive in the receiving country. D. A place where labor and employment standards are regulated to ensure a fair export-import trade
B
Because U.S. laws tightly regulate the disposal of toxic materials from the thousands of electronic devices discarded each year, some companies have contracted with companies in China and other countries to dispose of these products. Unfortunately, the lack of regulation in these countries has resulted in unsafe disposal practices, creating toxic waste areas where drinking water and soil are no longer safe. This situation illustrates the concept of: A. Comparative advantage B. Social dumping C. International degradation D. Competitive advantage
B
Compliance with corporate codes of conduct to establish labor standards in the global arena is generally a function of: A. The enforcement powers of the WTO B. Corporate self interest and good will C. International labor laws D. Domestic labor laws
B
Configuration affects labor relations through its effects on the relative bargaining power between A. countries B. corporations and employees C. labor unions D. countries and corporations
B
Configuration and coordination are two dimensions of: A. A works council B. A multinational corporation's global strategy C. A corporate code of conduct D. Transnational labor coordination
B
Corporate codes of conduct: A. Address labor issues in a global economy and can be legally enforced. B. Address labor issues in a global economy and are enforced through public and consumer pressure. C. Are labor standards that can be imposed on a company by their government. D. Have been very effective in ensuring labor rights are recognized and honored
B
Cross-border flows of corporate investments such as purchasing or establishing foreign subsidiaries and joint ventures is called A. International trade B. Foreign direct investment C. International investment D. Indirect foreign investment
B
If a WTO country is in violation of a trade agreement, it risks: A. Having its economic policies taken over by the U.N. B. Having to pay damages. C. Immediate trade sanctions. D. Nothing - the WTO has no enforcement power.
B
The North American Free Trade Agreement (1992) A. Provides for both capital and labor mobility between Canada, U.S., and Mexico. B. Allows companies from Canada, U.S. and Mexico to invest in any of these three countries. C. Requires companies in Canada, U.S. and Mexico to live up to uniform labor standards. D. Creates new tariffs that make it more difficult for other countries to trade in Canada, U.S., and Mexico.
B
The purpose of the NAALC is to protect: A. The environment B. Labor C. Free trade D. Corporations
B
Which of the following cannot be attributed to the effects of globalization? A. Increased demand for new skills and knowledge of managers B. Decreased international job mobility C. Downward pressure on labor standards and unionization D. Pressure to lower government regulations
B
Which of the following is likely to decrease the ability of a European Works Council to contribute toward employee representation? A. Strong codetermination rights B. Weak or inexperienced union leaders C. Management support for codetermination D. Strong national unions
B
A European Works Council is: A. An integrated community of 25 European nations that are progressing toward economic union. B. A community of European countries that have agreed to live by the "Social Charter" C. A transnational, company-level committee of employees from different operations that has the right to consult with and receive information from a company. D. A workplace-level committee of employees with joint decision-making rights with management.
C
According to free market economic models, free trade across countries encourages all of the following except: A. More efficient utilization of scarce resources B. Increased size of product markets C. Generalist countries (i.e., countries that can produce some of everything) D. Reduced monopoly power of domestic companies
C
Bemish Corp. decides to diversify its portfolio by buying stocks of Indian and Chinese companies. This is an example of: A. Direct foreign investment. B. International trade agreements. C. International investment portfolio. D. Defensive portfolio investment
C
Corporate codes of conduct as a method for establishing fair employment are problematic because they lack common minimum standards and ____________________. A. Acceptable language B. Reasonable length C. An external enforcement mechanism D. Their legality
C
European Works Councils are intended to: A. Provide collective bargaining for workers. B. Assist in mediating labor disputes. C. Provide information to workers that can lead to cooperation between management and labor. D. Determine country labor laws and minimum labor standards.
C
The ____________________ principle states that domestic and foreign products must be treated equally. A. no quota B. most-favored nation C. national treatment D. fair trade
C
The greatest successes of the NAALC include all of the following except: A. Increased educational activities and cross-border understanding of labor issues. B. Greater public awareness about trade and labor issues. C. Fewer freedom of association and collective bargaining violations by participating countries. D. Greater cross-border cooperation is possible.
C
The intent of the NAALC is to: A. Standardize labor practices B. Increase labor standards C. Ensure domestic labor standards are enforced D. Remove labor standards as a barrier to free trade
C
The rights of a European Works Council include all of the following except: A. The right to request a meeting with management under exceptional circumstances like a plant closing. B. The right to learn about an employer's financial health. C. The right to collectively bargain. D. The right to meet with management annually and be consulted regarding the business' progress.
C
U.S. labor's biggest fear of foreign direct investment is: A. Loss of capital investment in the U.S. B. Increased national debt owed to foreign countries C. Loss of jobs and downward pressure on wages. D. All of the above.
C
U.S. trade policy focuses on ____________________. A. capital mobility across countries B. labor mobility across countries C. tariff reductions D. all of the above
C
As long as it does not create trade barriers, the WTO allows member countries to establish: A. Standards necessary to protect human and animal life or health B. Standards necessary to conserve exhaustible natural resources C. Standards necessary to protect plant life D. All of the above
D
Company codes of conduct typically include a statement of commitment regarding: A. Fair business practices and respect for relevant laws B. Labor and environmental standards C. Corporate citizenship and ethics D. All of the above
D
Foreign direct investment is vulnerable to criticism because: A. It can be used to exploit workers with no alternatives and degrade the environment when there are no protections or incentives B. It can result in job loss for domestic workers C. It does not encourage development of countries by bringing in jobs and new technology D. A and b' E. All of the above
D
Removing trade barriers that were protecting an inefficient industry will likely cause____________________ in that industry. A. lawsuits B. transnational collective bargaining C. management shifts D. job losses
D
The Declaration on Fundamental Principles and Rights at Work established: A. Participative management standards for the European Union B. A set of standards for labor unions to follow when representing employees in countries participating in the ILO C. A common law of basic human rights throughout the world D. A set of core labor standards for countries participating in the ILO
D
The EU's Charter of Fundamental Rights of the European Union is: A. Similar to a U. S. union's constitution and by-laws. B. A declaration by companies operating in the EU that states they will be socially conscious. C. A declaration of the rights of each country of the European Union. D. A declaration of desired standards pertaining to worker's rights.
D
The European Union includes ____________________. A. Capital mobility across member countries B. Labor mobility across member countries C. A common currency D. All of the above
D
The European Union includes all of the following except: A. Coordinated foreign policies B. Capital mobility C. Common monetary and fiscal policies D. Common labor laws
D
The North American Agreement on Labor Cooperation promotes all of the following except: A. Freedom of association and the right to organize B. The right to bargain collectively. C. The right to minimum standards for wages and safe working conditions D. Management rights to determine work assignments.
D
The Primary impetus for the European union was and is: A. Greater economic potential of the region. B. Greater mobility for travelers and workers. C. Increased tourism. D. Greater political stability.
D
The World Trade Organization: A. Was created to establish labor standards for all countries participating in the General Agreement on Tariffs and Trade B. Was created to isolate trade power in the hands of the major industrialized countries of the world C. Was created to raise tariffs and discourage trade between foreign countries D. Was created to administer the General Agreement on Tariffs and Trade provisions and to handle future trade negotiation
D
When a foreign competitor is able to unfairly sell a product at a lower price because it receives subsidies from the host government or exploits, lower labor or lower environmental standards, it is called: A. Free market competition B. Competitive advantage C. Enterprise unionism D. Social dumping
D
Which of the following is not a type of European Works Council? A. Symbolic B. Service C. Participative D. Socialist
D
Which of the following is not considered an advantage of immigration? A. It provides a way for people to seek asylum and create a better life for themselves B. It generates exchange of ideas and innovation C. It provides a source of low-skilled labor that may be willing to work in undesirable jobs D. It results in overall wage increases because there are more job applicants and employers are able to choose the "cream of the crop"
D
Labor standards established by the ILO's Declaration of Fundamental Principles and Rights at Work are legally enforceable.
False
Because immigration is tightly controlled, the vast majority of immigrants to the U.S. are skilled workers.
False
What are the advantages and disadvantages to foreign direct investment?
Foreign direct investment can open new investment opportunities and benefit countries by bringing in more resources which in turn creates new jobs and new technology. This provides the base for further economic development and growth. Foreign subsidiaries of multinational companies often pay higher wages than local domestic companies and share the profits. However, foreign direct investment can also result in the exploitation of workers with low bargaining power, degrade the environment where there are no protections (i.e., social dumping). Further, it can result in the loss of jobs and downward pressure on compensation for employees in the "home" countries.
Briefly define the four dimension of globalization
Globalization has four major dimensions. International trade refers to the cross-border flow of goods and services; in other words, imports and exports. Foreign direct investment refers to the cross-border flow of multinational corporation investment, purchasing or establishing foreign subsidiaries and joint ventures. International investment portfolios are the cross-border flow of investment securities whereby investors buy foreign stocks and bonds but do not control foreign enterprises. Finally, immigration refers to the cross-border flow of people who are migrating from one country to another.
In 2012, President Obama introduced a "deferred action" initiative for immigrant youths illegally brought to the U.S. as children. This initiative would allow approximately 1.8million immigrants under the age of 31 a two-year, renewable reprieve from deportation provided they meet certain qualifications (e.g., graduation from HS, no felony convictions). In general, what are the advantages and disadvantages to immigration as a component of globalization?
Immigration provides an avenue for people to escape persecution or poor working and living conditions in their own country. It offers them the opportunity to find a better life for themselves. Given this, unskilled immigrant workers are often willing to take jobs that others are not and will work for less pay, thus making them a cheap source of labor for host country companies. Highly skilled immigrant workers can fulfill labor shortages in the host country which allows host country companies to continue operations and keep wage rates down. Immigration brings new cultures, foods, and ideas that can be beneficial to the destination country. These same things, however, can also cause tension in the destination country as citizens may feel their livelihood is threatened by immigrant workers and cultural differences can lead to misunderstandings and tension. Low-skilled immigrant workers can depress the labor market for high school students and dropouts. They can also create management challenges for employers and communities (e.g., language barriers, racial conflict).
What are international investment portfolios and how can they be beneficial as a component of globalization? How can they be potentially harmful?
International investment portfolios are packages of foreign stocks, bonds, and mutual funds owned by individual or institutional investors (e.g., a pension fund). International investment can be beneficial because investors may be able to influence decisions of foreign companies to address labor and environmental concerns. International investment provides companies in developing countries with working capital to fund their operations. These portfolios spread risk across countries and allow investments to find their most productive uses. The danger of international investment portfolios is the temptation to engage in currency speculation that creates high volatility in the foreign exchange markets. This volatility can destabilize developing country economies and can have severe negative effects on wages, job opportunities, and living standards.
What is the ILO and how does it address labor standards associated with globalization? What are the core labor standards of the ILO?
The International Labor Organization is a specialized agency of the United Nations focused on promoting social justice and internationally recognized human and labor right. The ILO has a unique tripartite structure with representatives from labor, corporations, and government sent from each country. Its primary activity is adopting and promoting minimum labor standards. The ILO has adopted a set of core labor standards around freedom of association and collective bargaining, abolition of forced labor, no discrimination in employment and pay,elimination of child labor and other issues. While not legally enforceable, the ILO relies on publicity, diplomacy, and technical assistance to encourage compliance with its labor standards
What is the NAFTA Side Agreement on Labor and how it is used to address labor issues in Mexico, the U.S., and Canada?
The NAFT side agreement on labor, called the North American Agreement on Labor Cooperation, was adopted to address labor's fears that low Mexican wages might undercut U.S. competitiveness, put downward pressure on U.S. wages and working conditions, and cause widespread plant closings and job loss. The NAALC provides 11 guiding principles that promote union activity, nondiscrimination, equal pay, minimum wages, and workplace safety. However there are no uniform standards and, at best, the NAALC provides a forum for complaints against employers to be heard. These complaints stem from violations of each country's individual laws and not an attempt to create common labor standards across the 3 countries.
What is the role of the World Trade Organization and what philosophy does it promote with respect to globalization?
The World Trade Organization is an international organization of over 150 countries that provides a forum for negotiating and enforcing global trade agreements. Initially it was created to administer the General Agreement on Tariffs and Trade (GATT) and to handle trade negotiations. The WTO promotes free trade through the reduction of trade barriers including tariffs, quotas, domestic subsidies, discriminatory government procurement policies, and regulations. The WTO allows countries to establish standard necessary to protect human, animal, or plant life or to conserve exhaustible natural resources as long as these are not trade barriers. The WTO has the authority to resolve trade disputes and any country found in violation must change its trade policy or pay damages.
How can four schools of thought on the labor problem from Chapter 2 be useful to considering options to regulating globalization to limit short term costs and problems associated with exploitation?
The alternatives to govern the global workplace parallel the alternatives for workplace governance (i.e., the four schools of thought on industrial relations). First, the free market argument suggests that no regulations are necessary and that, left to its own devices, the free market will determine the optimal outcomes for producers, consumers, and workers. Second, a human resource management perspective would suggest that corporate self-monitoring is the best approach. This position would advocate the adoption of corporate codes of conduct and the spread of best human resource management practices. Third, an industrial relations perspective would suggest that what is needed is a strong labor movement worldwide. This perspective would advocate a mix of laws protecting worker rights to unionization and protective labor legislation. Finally, the critical industrial relations perspective would suggest that none of these methods will be successful and that the only solution is worker control over factors of production, perhaps starting with a strong socialistic labor movement worldwide.
What are the benefits and problems associated with international trade?
The benefits of international trade stem from the assumptions of a free and open market. Free trade across countries allows consumers and producers to benefit from specialization. A country with a comparative advantage in producing a particular product (due to its proximity to raw materials, skills and talents of its people or another factor) can capitalize on its strengths to produce that product more efficiently than other countries. This reduces the price to all consumers and frees other economies to develop their own comparative advantage. Free trade increases the size of markets and allows companies to take advantage of increased economies of scale at the same time it reduces the monopoly power of domestic (sometimes inefficient) producers. Countries benefit from increased growth and income while consumers enjoy lower prices and greater choices. The downside of international trade, however, is the loss of jobs and wealth as the economy adjusts to increased free trade. Faster growth may increase pollution and environmental degradation. The emphasis on comparative advantage overlooks the importance of corporate strategies to creating a competitive advantage and ignores the importance of governmental policy in creating these advantages. Finally market imperfections can distribute the benefits of international trade unevenly. Most particularly, unequal bargaining power between countries or between labor and capital owners can make it easier for exploitation to occur.
All components of globalization have increased dramatically since the 1970s. Many companies in the U.S. now do business abroad, invest abroad, and have relocated facilities abroad. Given the extent of this corporate internationalization, why haven't unions followed suit to the same degree? In what ways have unions begun to collaborate?
There are significant barriers to transnational labor collaboration and unionization including language barriers, cultural and religious differences, and ideological differences regarding the role of workers and unions in society. As well, there are not yet strong interconnected social networks for unions and workers to share knowledge and strategies. Unions may fear losing domestic autonomy and control over their own domestic agendas. There are often significant legal barriers to cross-national unionization and collaboration between unions. Even union structure and goals differ widely throughout the world as demonstrated by the more social movement agenda of, say, French unions compared to the practical, business union model of U.S. unions. Finally, there is strong employer resistance to international unionization. The emphasis on international collaboration between unions has been on international solidarity campaigns in which union workers from one country show support for union workers in another country. They may, for example, contribute financial or public support to their cause. Global union federations are becoming increasingly successful in getting multinational corporations to sign international agreements to respect workers' rights to collective bargaining and minimum wage and safety standards. In addition, unions have been increasingly successful in using the Internet and social media as a way to apply public pressure to businesses throughout the world.