The WTO just doesn't get it. Global trade has hit the wall. U.S. Trade Representative Charlene Barshevsky, a WTO delegate, said concerning the expansion of world trade that we have picked all of the apples from the branches closest to the ground. However, she failed to say that picking apples on the higher parts of the tree would require breaking off some of the tree's sturdiest branches. The pain inflicted by expanding trade now exceeds the benefits. The rules of the game need to be changed so that the benefits outweigh the costs.
I will start with child labor. The leaders of the less-developed nations don't want the United States and other wealthy nations intervening in their domestic laws. They claim that they need child labor to survive. There were many politicians and businessmen in the United States that made those same claims during the 1930s when child labor was outlawed here. But after child labor was banned in the United States, we not only survived, we thrived, because children attended schools and gained skills that were needed by a rebounding economy.
We can prohibit child labor in the production of exports without interfering with domestic law in Third World countries. Pakistan and India could still use children to make products for domestic use, or to perform local services. However, soccer balls now made by eight-year-olds could not be exported. This should be a new rule for international trade. In fact, it should be rule number one.
Mexico allows child labor in factories and on farms. How did we allow NAFTA to slip by without addressing rampant child labor south of our border? Children in Mexico pick and pack the tomatoes and oranges that we buy at our local grocery stores. Children in Mexico and the Dominican Republic make T-shirts that have flooded into the United States.
By excluding child labor from exporting industries, we must increase the salaries for adults. This will allow more children to go to school because more parents will be able to afford it. Raising wages in one industry should raise wages in other businesses as well. This will increase wages around the world and allow more children to go to school to learn new skills. When these children become adults, they will be more productive and useful workers.
Rule number two is that there should be a global minimum wage. This wage would not apply to domestic industries, only to factories that desire to export. I suggest that the global minimum wage should start at one dollar per hour, which is about $2,000 per year, and increase annually.
Poor nations claim that if there is a global minimum wage that they will lose jobs. This is not true. Factories will stay in Mexico, China, Indonesia, Vietnam and India even with a dollar per hour wage. In countries where the current minimum wage is currently 25 cents per hour, like Indonesia, jobs will remain there. Nike, one of Indonesia's largest employers, will have no where else to go. Its workers in Vietnam will also get large raises. But won't that increase the price of shoes? Yes, but not much. Currently, labor costs represent only about four percent of the retail price of a pair of Nike shoes. If labor costs are increased four-fold, the price of shoes should only go up 12 percent. Nike will actually see more of their shoes sold because their own workers, for the first time, will be able to afford to buy a pair.
With a global minimum wage, we will no longer have companies surfing the globe for the cheapest labor. They will now have to search for the most productive and efficient workers. If minimum-wage workers in China make shoes more efficiently than workers in Vietnam, production will shift to China.
Henry Ford doubled the wages of his workers overnight in 1914 from $2.50 per day to $5. He wanted his workers to be able to afford his automobiles. Even though everyone thought he was crazy, he turned the United States into the great consumer society that it is today, with mass production and mass consumption. Third World countries now only enjoy mass production with subsistence consumption.
A global minimum wage will be a great engine of economic development in the Third World. It will cause real wages to increase. With new spending money in their pockets, workers in the exporting plants will spend more and improve the local economy. They will buy more food, clothing and other things. Third-World workers will rise above subsistence and start to improve their standard of living. And wonder of wonders, these new consumers will be able to afford American, Japanese and European products.
And finally, I come to rule number three. I propose that all new factories and power plants meet a global environmental standard. Whether these facilities are built in the United States or China, the same minimum standards should be met. This will tend to equalize the costs of production around the world. The Global Warming Treaty allows underdeveloped countries to build new plants that pollute. This is one reason that this treaty will never be enacted. With my proposal, the United States can still have higher standards than the rest of the world, but there will be an international standard for all new plants so that we have a level playing field and pollution will be minimized.
It is not fair for the United States to have tough environmental laws that drive companies to Mexico. Once in Mexico, the same company can now build a new plant that will send dirty air back to the United States. International trade should not be based on which countries have the most lax environmental laws.
These are just the first three principles that should guide the expansion of world trade. There are many other principles that we should consider. However, before the WTO meets again, the United States should lead the way and propose new ground rules for international trade which will end child labor, reduce poverty and minimize pollution.
Joel D. Joseph is founder of the Made in the USA Foundation, dedicated to promoting American products. Write P.O. Box 5402, Washington, DC 20016; phone 202-822-6060; email madeusafdn@mindspring.com.