WTO: Chinese dragons vie for seat at trade table

Here in Cancun, at the World Trade Organization's fifth ministerial conference, it is the lesser-developed countries that are looking for a seat at the table. In particular, the G20 countries headed by China, Brazil, India, Argentina and South Africa. Furthermore, it should be noted that these five countries, plus six others, were present at the June Group of Eight meeting in Evian, France, where they were given a seat at the table.

Interestingly enough, at a time when U.N. Secretary-General Kofi Annan has called for a restructuring of the Security Council, China is the only Security Council member that is not a member of the Group of Eight. They and the other countries present in France will now be invited back to permanently participate. Obviously this heralds a major global structural change in world affairs which has yet to be recognized. Here in Cancun, the world structure continues to change.

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Here in Cancun, according to U.S. Trade Secretary Robert Zoellick, the U.S. is looking to take two giant steps forward and negotiate aggressively and boldly to eliminate all trade barriers and export subsidies on both sides of the table, instead of a few. Even though the living standard of the average American is falling, both Republicans and Democrats have maintained that free trade will bring prosperity to all.

The WTO agenda in its entirety is far too complex to understand. Here, the U.S. is focusing on three main areas: agriculture, manufactured goods and trade in services. Throughout the '90s, U.S. corporations transferred jobs to China to take advantage of its cheap labor. While this desecrated the blue-collar work force, the professional workforce is now up for grabs to the lowest bidder. Guess who wins every time? China. While the Chinese have historically always been quick and nimble, after being admitted to the WTO last year, they are now becoming its shrewdest player. But consider what is happening to their currency.

Because the Chinese renminbi has been tied to the U.S. dollar for the past 10 years (fixed at 8.3), as the dollar has dropped against the euro, it has made Chinese slave-labor products even cheaper, thus undercutting the products of Europe and those of other countries. As a result of this "imbalance," U.S. corporate executives have been hounding the Bush administration to allow the renminbi to float against the dollar on world exchanges. If the renminbi is allowed to float, it would rise 10 percent to 40 percent and increase their slave labor products by the same amount, thus, making their products more expensive, something U.S. CEO's do not want.

So let's take a look at what this really means. Large U.S. multinational and transnational corporations started to use China's slave labor to "reduce their expenses." As a result of transferring their manufacturing to a country with 1.3 billion people and an hourly wage below our minimum wage, the multinationals and transnational corporations have been able to increase their profits while U.S. wages have dropped and jobs have been eliminated. Instead of American workers receiving a raise, they are no longer able to afford what used to be taken for granted.

The higher profits Wall Street anticipates and heralds are really a result of sacrificing a higher standard of living for one that is reduced so that Americans can compete with slave-labor wages. Free trade means a lower standard of living, not a higher one. Ask those in the U.S. who do the work of three people or those who lost their jobs to a Chinese worker. The American way of life was due to protectionist measures put in place in 1933 to keep jobs at home. With the passage of the 27,000-page General Agreement on Tariffs and Trade in 1994 by a lame-duck Congress, all of that changed.

We now have these same multinational and transnational corporations going to Congress to tell them to put pressure on the Chinese to let their currency float freely so that they can maintain their profit margin. The bottom line is that, in a ruthless capitalistic system, the Chinese have finally found our "Achilles Heel."

While American CEOs have been willing to sacrifice American jobs and standard of living to increase their profits, they want both their cake and ice cream by telling the Chinese to float their currency so they can maintain their competitive edge and profits. So far, the Chinese have been polite to Secretary Snow. I hope they continue to be polite. Ruthless capitalists are up against ruthless communists. Somehow I get the feeling that they wear the same size of shoe.

Joan Veon is president of Veon Financial Services, Inc., an investment advisory firm, and an independent international reporter. Please visit her website, WomensGroup.org.