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12 November 1998 Edition

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Tread with care in race for jobs

Robert Allen argues that we should be wary of trade agreements drawn up for the benefit of US multinationals

Jobs have always been an emotional issue in Ireland. Many thousands have emigrated because there is no work for them in their native land. Others languish on the dole, most unable to empower themselves, many with no hope for the future.

The short term answer to this, back in the 50s, was to invite foreign companies to the 26 counties with promises of lucrative grants and tax concessions. In return they would employ and train Irish people. We would be able to create our own industries and keep our young at home.

This idealistic image of big business was soon shattered as the corporations flooded into Ireland, took advantage of the concessions and then when their global markets faltered they cleared off home or to a third world country where they could pay lower wages and extract greater profits. Those corporations that stayed infiltrated the hierarchy of Irish politics and social life to make sure their profits were not affected by any form of resistance or criticism.

By the 70s the 26 counties had become a primary manufacturing base for foreign corporations because of its high productivity, labour flexibility, relatively low labour costs, low or non-existent taxation, political stability, government funded incentives, a highly educated and English language workforce, unpolluted groundwater and, most significantly, high rate of return on capital investment.


Irish industrial policy


In 1958 Whittaker (an economist) and Lemass (then Taoiseach) introduced an industrial programme which would attract foreign investment to the 26 counties. Whittaker and Lemass believed the state could entice with grants and tax concessions the highly professional transnationals and get them to train Irish people in corporate management. We would be able to set up and successfully run our own manufacturing industry and target global markers.

In theory this was a plausible and laudible concept. In practice it was very different. The corporates poured into Ireland but their motives differed from those of Whittaker and Lemass. The profit motive was all that concerned the corporates who used Ireland as an export platform for their products. Opposition to this form of industrial development raged throughout the 60s, 70s and 80s as the chemical industry (mostly from the US) and latterly the electronics industry built factory after factory.

Critics argued that the corporates would exploit Irish labour and damage Ireland's pristine environment and then leave when global market forces dictated. And this is exactly what has happened.

Although export capital from Ireland's foreign corporates boosts the 26 counties balance of trade figures it has been at the expense of labour-intensive, indigenous local industry. Unemployment has increased from less than 5% in the 60s to more than 20% today. Emigration, significantly from the west of Ireland, has remained constantly high.

Between 1977 and 1982 the average rate of profit on US capital investment in Ireland was 30.7%, higher than Japan and Italy by 13 points and double that of Germany. Although it dropped to 23% for the the period 1982-87 it was still four times the EC average. The IDA boasted that Ireland was the most profitable industrial location not only in Europe but in the world.

Despite the IDA's rosy image of Ireland and its people, some of these same people have not been prepared to accept jobs at any price. Throughout the history of foreign capital investment in Ireland there has been opposition to it, largely because it has often been the dirtiest industry it could find. Once here that industry began to poison our island and has continued to do so.

Yet nearly half a million people earn their living directly and indirectly from Ireland's manufacturing industry, which contributes approximately £10 billion a year to our colonial capitalist economy. Figures like these make opposition to any kind of development hard to sustain, especially when the forces of capitalism are able to trot their propaganda with ease.

The OCED once summarised Ireland's industrial development as ``better than countries and regions against which it is competing in the race to attract foreign direct investment. Ireland has a higher proportion of output in fast-growing electronics, chemicals and food-processing, and a lower proportion of output in traditional industries, including mechanical engineering, textiles and clothing'', which have declined. The result has been a dual economy with, on one side, a modern industrial sector consisting largely of electronics and chemicals and on the other, declining indigenous industries such as food, drink, tobacco, wood, textiles, clothing, footwear and concrete products.

The modern industrial sector uses Ireland primarily as an export platform and here again electronics and chemicals are the twin pillars of this success.

This type of dependent development, which realises a huge public debt and an economy dominated by foreign capital, has led to massive repatriation of profits from corporations operating in Ireland. Over 80% of corporate profits are repatriated. Between 1980 and 1985 £4,035 million in profits were repatriated by corporates operating in the 26 counties, with the figure for 1985 alone reaching £1,316 million. Since then it has increased from £2,377 million in 1991 to £2,888 million in 1992 and £3,350 million in 1993.

John McMahon, an economist with the IDA, once estimated that 85% of profits leaving Ireland were from the electronic and chemical industries. During the Merck Sharp and Dohme legal battle, the US corporation admitted that their weekly profits from Ballydine (their Co Tipperary Irish base) came to £1 million. It has been known for decades that corporations come to Ireland not to provide jobs but to make huge profits for themselves.

Despite this industrial activity, unemployment and emigration are still abnormally high. And the noises from Dublin have not changed. Every time a company pulls out of Ireland, the IDA is quick to announce new job creation figures, and the government quick to offer new concessions. For the past four decades it has been the same old story - short term answers to long term problems.

Now a sinister new development, which could turn Ireland into a carpetbaggers' paradise, is being pushed by Irish and American business interests under the guise of the peace process.

On 8 November 1997 New York senator Al D'Amato introduced in the US Senate a bill ``to authorise the (US) President to enter into a trade agreement concerning Northern Ireland and certain border counties of the Republic of Ireland, and for other purposes''.

D'Amato's bill was clear. ``It is in the interest of the United States that the precarious peace process now under way in Northern Ireland and the Republic of Ireland succeed, both to ensure stability for important allies and friends of the United States and to assure a mutually beneficial flow of trade and commerce.''

And so were the reasons. ``Locally sustainable economic development within Northern Ireland and the border counties of the Republic of Ireland creates the basis for political stability and enhances the likelihood of peace. The granting of reasonable tariff concessions for products and goods originating in Northern Ireland and the border counties of the Republic of Ireland will provide an incentive for such development.''

D'Amato was also succinct about the benefits of such an agreement to US companies. ``While there is no precedent in EU practice for the free trade agreement contemplated in this Act, the effect of such an agreement will be to support important on-going efforts by the EU to achieve greater social cohesion in a unique and disadvantaged region, to the long-term benefit of the EU, the United States and the larger international community.''

D'Amato claimed that a free trade agreement would ``help rid Ulster of the religious and racial hatred which has plagued its people for more than 300 years. This legislation seeks to use the power of economic security to help move the peace process forward.''

The counties which D'Amato identified are among the most disadvantaged in Western Europe - a fact even the Dublin government will concede. Sligo, Donegal, Monaghan and Cavan have both high unemployment and emigration. In west and mid Ulster jobs are like gold dust. Fruit of the Loom in Donegal and Du Pont in Derry were never short of labour. This is also a consequence of flightly corporations and now that Fruit of the Loom have decided that the Irish labour market is no longer exploitable it has become worse.

In recent years Ireland has lost several large employers who moved to climates where the labour is cheaper. Yet, in the Six counties with a greater supply of labour than jobs, wages can be kept low. According to the 6 county Industrial Development Board (the northern equivalent of the IDA) average wages and hourly benefits are lower than in the rest of Ireland, Britain, Italy and the US - all places where rates of pay exploit a desperate workforce.

There is also a low level of overt labour militancy in the Six counties, according to a US Department of Commerce study of work days lost to labour actions. In 1991 (measured in days lost per 1,000 employees), there were 463 in Spain, 452 in Germany, 40 in the US, 34 in England, Scotland, Wales and the Six counties in total and only 32 alone in the Six counties. The entire northern half of Ireland is ripe for picking and that is exactly what the US on behalf of its industry wants to do.

The effect of unrestricted commerce is now well known. Since Mexico allowed itself to be coerced into the Northern American Free Trade Agreement (NAFTA), it has been US and Canadian corporates who have benefitted. Low wages, lax health and safety standards and compliant unions have allowed corporations to maximise their profits. This has led to the Maquiladora factory zone, where workers had to go on hunger strike to get their union recognised. In the southern state of Chiapas it has provoked the Zapatista movement, the armed EZLN, and in the south-western states, the EPR.

But those behind this initiative have not found it as easy as they anticipated despite stated support from various politicians. The Washington based lobby group Pathfinder - which was employed to act on behalf of northern Irish entrepreneurs - have struggled to get it off the ground despite some subtle propaganda in the US media. D'Amato's Bill attracted little interest among the Irish media, but it did meet considerable opposition, ironically from both inside and outside the corridors of power in Belfast, Dublin, London and Strasbourg. The unoffical line from the Dublin government is that it is not wanted or needed. ``It's a non-starter,'' is the view from the 26 county Department of Trade.

The reason for this thinking is linked to Irish industrial policy (the Whittaker-Lemass programme which has been ceaselessly pursued by the IDA and local authorities since it was introduced in the late 50s). Why introduce new elements or new legislation when the existing legislation is perfectly adequate to attract foreign investment, is the line from Dublin.

Pathfinder haven't been deterred. ``Because of general Irish apathy and unwillingness to push, we've modified the legislation to short circuit EU fillibusters and Irish procrasination,'' said a spokesman for Pathfinder who added that the amendment should see the Bill debated in the new year.


NAFTA

The North American Free Trade Agreement (NAFTA) was set up in 1989 by the US, Canadian and Mexican governments to allow the free flow of capital between these countries.

It is an agreement that benefits the rich at the expense of the poor. The rich are the US and Canadian corporates. The poor are Mexico's impoverished peasants plus US and Canadian workers.

In Mexico NAFTA has allowed corporates to exploit the labour force and the environment. Low wages and low production costs, lax health & safety and environmental standards and compliant or non-existent unions have made it easy for the corporates to make huge profits.

In the US and Canada it has meant the erosion of steady employment and the disintegration of labour standards. Industrial action is nullified by the constant threat that the jobs can be moved to places like Mexico where workers are forced to toe the corporate management line and production levels are higher.

NAFTA is a regional version of the global trade and investment agreements which have allowed corporations to circumvent the power and authority of national governments and local communities, thus endangering workers' rights, the environment and democratic political processes.

The first global agreement was the General Agreement on Tariffs and Trade (GATT), which was set up in 1948 and now has 132 member countries. The World Trade Organization (WTO) followed to enforce GATT's rules. Although GATT's primary purpose is the elimination of global trade restrictions, the corporates have always hankered for more power. This has led to the proposed Multilaterial Agreement on Investment (MAI).

Additional reporting: Tom Shelley

An Phoblacht
44 Parnell Sq.
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Ireland