Now Departing For China: Boeing JobsAaron Bernstein
After months of skirmishes over everything from human rights to arms control, U.S. relations with China are beginning to thaw. If the International Association of Machinists (IAM) has its way, though, the warming may be little more than a false spring.
The union, which began a strike against aircraft giant Boeing Co. last month, has been prodding the Clinton Administration to initiate a harsh trade action against China. The charge: that the Chinese government demands technology and production transfers from Boeing and other companies as the price of market entry.
THREATS. An interagency task force in Washington has been examining the issue since October. If the Administration decides not to pursue the idea, the union is threatening to file its own trade case with the U.S. Trade Representative under Section 301 of U.S. trade law. If it does so, the White House could wind up in the diplomatic hot seat anyway. "These filings can never be easily dismissed," says Joseph A. Massey, a former assistant U.S. trade representative who teaches at Dartmouth College.
The union's broader agenda is to call attention to the extensive movement abroad of U.S. jobs and technology. U.S. employers have been shifting production overseas for years, often to take advantage of cheap labor rates for low-skilled work. But lately, developing countries have demanded the export of high-skilled jobs as well.
The result is that even the best American jobs may be in jeopardy. As a leading U.S. exporter, Boeing is a prime example of the trend, since most of its 32,000 IAM members are skilled workers earning $40,000 a year or more. In exchange for access to the booming Chinese market, the Seattle-based company recently agreed to build half of the fuselage for its new generation of 737 jets in a military plant in Xian, China. In the process, the IAM says, it will give the Chinese access to the company's aircraft design and shift skilled production jobs there. "They're squeezing every munce of productivity out of the workers and then throwing them on the street," charges John J. Sweeney, the AFL-CIO's new president, who on Nov. 12 walked the Boeing line with other union execs.
"THAT'S CRAZY." Boeing officials say the swaps are necessary to compete with Airbus Industrie, the European aircraft consortium. The two are fierce rivals: On Nov. 14, Boeing beat Airbus and won a contract to build 77 planes for Singapore Airlines. But union officials say Boeing's technology exports only set up increased competition for U.S. workers. "Now there is Boeing in China and Boeing here," AFL-CIO Secretary-Treasurer Richard L. Trumka told strikers at the Nov. 12 rally. "What we have is one hand of Boeing competing with the other hand, and that's crazy."
Other companies already are unhappy about China's mercantilist tactics. Chrysler Corp. recently killed a plan to make minivans in China because the government demanded too much technology. And on Nov. 8, the U.S. Chamber of Commerce demanded that China curtail its anticompetitive behavior before it's allowed to join the World Trade Organization. Still, the technology transfers continue. AT&T, for one, has agreed to set up a mini-Bell Laboratories in China as part of a deal to sell phones there.
In recent years, the U.S. has been much more willing than other industrialized countries to shift technology abroad. Since 1986, foreign sales of industrial patents, licenses, and designs have soared from $8 billion to $18 billion, after adjusting for inflation (chart). U.S. purchases of foreign technology total only $4 billion, up from $1.5 billion in 1986. By contrast, Japan, France, Germany, and Britain all import as much technology as they export. "Boeing is just an extreme case of the technology transfers that the U.S. has been doing for a long time," says Greg Mastel, a trade expert at the Economic Strategy Institute.
Clinton came to office plugging the idea of a high-skills, globally competitive economy. Now he may have to decide how much of a diplomatic flap his campaign promises are worth.