Business First, Freedom Second

By Bruce W. Nelan

Only a week before Bill Clinton was due to arrive in Indonesia for a state visit, a court in the northern city of Medan sentenced labor leader Muchtar Pakpahan to three years in prison. Pakpahan is the sixth official of the Indonesian Prosperity Trade Union to be convicted in connection with workers' riots that wrecked several factories and blocks of shops in Medan earlier this year. Sixteen of his colleagues are still on trial in what looks to many like an attempt to bust a union that the authoritarian Indonesian government views as dangerously independent. U.S. officials "deplored" Pakpahan's sentence and said Clinton would discuss the case and other "problems in the human- rights area," including the closure of three influential publications, with Indonesia's President Suharto this week.

The Medan court's timing probably was not coincidental, and it highlights the difficult balance Clinton is determined to maintain on his trip to Asia, which centers on a summit meeting in Bogor, Indonesia, of the 18-nation Asia- Pacific Economic Cooperation group. Clinton's commerce-oriented policy pits his drive for good relations and ever increasing trade with the nations of Asia against his avowed concerns for human rights. As a candidate, he jabbed at George Bush's China policy, saying the U.S. has "a higher purpose than to coddle dictators and stand aside from the global movement toward democracy." Last May he effectively amended that, detaching the issue of human rights from the annual review of free trade with China. The best way for the U.S. to advance freedom in China, he said, was through efforts "to intensify and broaden its relations" with Beijing.

Before taking off last week for Manila en route to Indonesia, Clinton again expressed his confidence that he could have it both ways. "I don't think we have to choose," he said, "between increasing trade and fostering human rights and open societies." He would be frank about differences on these issues "as well as our potential partnerships with the Chinese, with the Indonesians and with others," he said.

The diplomatic discussions in Bogor are not the only framework for the debate on trade and human rights. It has spread into the boardrooms of major U.S. corporations, onto factory floors in Asian countries and back to the counters at American shopping malls. International human-rights organizations are pressing multinational corporations to speak up for their workers abroad, and executives are considering codes of good labor conduct. Many Americans, now accustomed to boycotting lettuce, grapes and tuna fish for humanitarian and ecological reasons, are shifting their scrutiny to the conditions under which their running shoes and their kids' toys are produced. Those conditions often include a sweatshop pace, low wages, long working hours and little freedom for workers to organize or speak their mind.

Clinton seemed to gloss over such concerns last May when he decided that China should retain its most-favored-nation trading status despite its intransigence on human-rights issues. In Asia, apparently, the business of America is business. Tony Lake, the President's National Security Adviser, is euphoric about the future for U.S. trade to be fashioned by the meeting in Indonesia, by a congressional vote on the new 123-nation world-trade agreement scheduled for next month, and by a Western Hemisphere summit in Miami in December. Taken together, he says, they will "shape the economic architecture of the next century."

While designing this economic architecture, Clinton has promised, he will work with American business leaders on a voluntary set of principles for their activities in China and, by extension, other authoritarian states in Asia. Human-rights advocates thought they would hear the details before the President began this trip to Asia, but it did not happen. Human rights supporters and their sympathizers in the Administration, mostly at the State Department, have been pushed aside by the trade-first advocates. "Trade does take a priority," concedes one of the White House officials involved. "It is followed closely by support for democracy, followed by economic and political reform where possible, and then human rights."

To his credit, Clinton did not simply let his pledge about a code of business principles slip away. In June the White House called a meeting of interested groups and collected about 30 company codes for discussion. Bowman Cutter, the deputy head of the National Economic Council, who chaired the session, stressed that the principles were to be voluntary and developed from the bottom up, drawing on the best experience of businesses, and not by bureaucratic fiat.

After that, the effort stalled. Most business executives dislike codes in any form because they fear voluntary rules will later turn into legislation, as was the case with South Africa and the Sullivan Principles, which required U.S. firms operating there to ban apartheid in the workplace and provide a range of benefits for workers. Businessmen with interests in China asked why they were being singled out -- they were not violating anyone's rights -- and opposed "country specific" codes.

As Clinton's departure date for Indonesia approached, human-rights groups began pressing the White House for a major statement or the unveiling of a set of business principles. Commerce Secretary Ron Brown circulated the draft of a voluntary code to the chief executives of three major U.S. corporations -- Kodak, Chrysler and TRW -- for preliminary approval. Not only did those three balk, but several business groups lobbied the White House, arguing that a voluntary code would be only the first step toward regulation and also pointing out that the fuss could overshadow next month's congressional vote on the new trade pact negotiated under the General Agreement on Tariffs and Trade. The result: the principles have been deferred, and Clinton will not preach a human-rights sermon in Bogor. As a sort of welcome present, Indonesian Manpower Minister Abdul Latief said last Friday that his government would overhaul and liberalize its labor laws.

Even without White House guidance from the top, some corporations are feeling enough pressure from below, sparked by advocacy groups, to put codes of their own into effect. Reebok's guidelines for its suppliers in Indonesia and elsewhere support the right of workers to organize and bargain collectively. American employees of Nike conduct weekly inspections of suppliers' factories in Indonesia to check on working conditions. Such measures are not foolproof, but they represent a major effort to make a difference. Levi Strauss dealt with the question of labor rights by pulling out of China altogether in 1992; Timberland did likewise this year. But many U.S. corporations doing business in Asia have not even thought about the need for a code.

The issues involved are not easy to resolve. In most of Asia, factory workers have traditionally put in long hours for low wages and that, in fact, is why American enterprises have moved in. There is no consensus on what a fair wage might be (base pay runs as low as $1.75 a day in Indonesia), nor on the degree to which U.S. firms should challenge their host governments or support their workers in seeking political freedoms and the right to form unions. "Wages are only a small part of it," says a trade unionist in Jakarta. "What's important is that the workers have their dignity, and they'll only have that if they have the right to organize." The challenge is toughest in China, where the only legal organizer is the Communist Party, and workers can land in jail simply for complaining. "We can't have a code that requires American companies to break host country laws," insists a business lobbyist in Washington.

This is not good enough for human-rights advocates in the U.S. Deborah Leipziger, of the Council on Economic Priorities in New York City, rejects the argument often heard in Asia that Americans are trying to impose Western standards in order to make Asian products less competitive. "I don't buy it," she says, "because there are universal standards of human rights." < Child labor should be banned, and there should be an international standard for calculating fair wages, she says. More specifically, Sidney Jones of Human Rights Watch/Asia insists American executives ought to protest to the Indonesian government about the sentencing of Pakpahan and other union leaders.

The most important question is how to make Asian governments more responsive. To this the Administration has an answer: engagement over the long term. "We'll stay engaged," says a State Department official, "and keep articulating our view of what would represent progress for us." A White House official argues that economic growth and prosperity pave the way for better social and political conditions. "Coming into the mainstream ((of nations)) and shifting to markets," he says, "does in fact create trends that favor human rights."

Behind the diplo-speak are the bargaining levers available to superpowers. The Chinese government is almost desperately trying to arrange a full-dress visit by Clinton to Beijing and is quietly being told it will have to pay something for it. The U.S. message is that Clinton cannot make the trip if it might look like a failure, and it cannot succeed unless China improves its human-rights performance. This approach has two virtues: it forces the two governments to discuss the issue directly, and it just might work.

With reporting by James Carney with Clinton, Tom Curry/New York and J.F.O. McAllister/Washington, with other bureaus