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Matt Kennard details his new investigative report for In These Times, which exposes first-hand the severe mistreatment of workers and union busting in Cambodian and Chinese Special Economic Zones

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DHARNA NOOR, TRNN: Welcome to the Real News Network. I’m Dharna Noor joining you here from Baltimore. Special economic zones or SEZs are areas in which the laws of business differ from the states in which they’re located. For the past five decades over 3,000 SEZs have been created. Of late they’ve been featured in economic development plans from nations from South Africa to [Papa] New Guinea and they can even be found in over half of all the world’s countries. They employ over 65 million people. Proponents of instating these SEZs tout them as drivers of boosted economic development through increased foreign capital and the creation of jobs but what kind of jobs exactly? What are the labor conditions? Well here to take this up with us is Matt Kennard. Matt is the deputy director at the Center for Investigative Journalism and the author of two books, the Racket, and Irregular Army. With [Claire Provo] he coauthored the investigative report for In These Times New Edition. It’s called Inside the Corporate Utopias where Capitalism Rules and Labor Laws Don’t Apply. Thanks for joining me today Matt. MATT KENNARD: My pleasure. Thanks for having me. NOOR: So you and Claire actually got the rare opportunity to report on the conditions inside of these Special Economic Zones. The ones that you visited were in [Shenzhen, China] and where you were was in Cambodia. And in both you reported that you found rampant labor abuses, union busting. Talk about these conditions. About what you saw, what Claire saw, what workers told you about their experience. What was pay like. What are the conditions generally? KENNARD: Well in Cambodia, I went to the main, I went to three Special Economic Zones but two of the biggest in the country. And what I saw there was just labor have completely no power of special occurrences. I mean they have very little power in countries like Cambodia or China anyway. But in Special Economic Zones they have Even less than they do outside. And I think this is by design. That is what I saw in Cambodia. Special economic zones particularly in Cambodia but generally worldwide are created to be an environment where corporations run rampant. That is actually how they are set up. Whether that be because they get better tax breaks, that they don’t have to pay duties. There’s various different legal mechanisms. But a big part of it. You can all work yourself from the outside society. Make it very hard to independent unions to get in. Make it very hard for them to organize on the inside. And what the workers I was talking to in Cambodia said was if we try to organize independently, we’ll be fired, we’ll be disciplined. We’ll basically, the risk of that job is too great. And what that means is that the special economic zones that I went to, no independent unions exist. Now how they get around that in terms of the legal structure in Cambodia is quite interesting because there are unions inside. But they’re what according Cambodia yellow unions. Which are unions which are controlled by the government and the employers. So you have this – in a legal sense they’re not breaking the law because there are unions but the unions don’t do anything good for the workers. And the workers are aware of this obviously. Because when they actually have grievances they can’t take it to the union or the shop steward that exists. What that means is that you have this real bubbling of dissent and anger from workers within these zones. But no actually legitimate place for it to go. So what it means is that often strikes are spontaneous. They’re unorganized and they often turn violent because of that. Because there is no significant course that workers can go through. So essentially, the conditions are awful in terms of wages. The minimum wage in Cambodia is $140 a month. That works out for the workers in the Special Economic Zones and also outside. About 81 cents an hour. And they’re making our shoes, they’re making our coats, they’re making out t-shirts. And they get absolutely miniscule amount of any profits that a crew from those products. When they try and organize to better their wages they’re often as I said fired. They’re often thrown out of work. In a country like Cambodia that’s a very very big thing. Because there is no work. And that is the interesting thing with the minimum wage. The minimum wage in the US and the UK is something and the western world is something that the unfortunate few get paid. Whereas in Cambodia millions of people get paid the minimum wage. That’s how the economy runs. So it’s a very very important marker for the society. And before it was low as $18 a month. And then there was a massive uprising in 2013 of organized labor and various different civil society groups. That was a mass strike and it scared the government so much that they upped it to a 140. Now there’s a campaign to get it over $200 an hour which I think most people, civilized people would think would be a fair amount but at the moment it’s not happening. So it’s the same as Shenzhen. Shenzhen is a zone where surveillance is huge. It allows capital to run free but actually the freedom of the workers doesn’t exist at all. CCTV everywhere and workers are generally treated as cattle basically. They go there, tightly controlled. So it’s a corporate utopia. I don’t think it’s an exaggeration to say that. And a corporate utopia, you can imagine what it’s like for labor. Corporations see laborers as a problem really in terms of going on strike. But Also in terms of their profit margins. NOOR: So can you talk a little bit about how this is all possible. Are SEZs actually exempt from the labor laws of China and Cambodia respectively? KENNARD: It’s a good question. Actually SEZs developed over in the last 30 years especially in Asia. And [Shin Zhen] was one of the first ones in Asia. It was in 1980 and in [Shin Zhen] there was a different tax regime and a different corporation tax regime. A different export duty regime because it was a communist state. And obviously changing the national policy would’ve been so difficult and I don’t know if it would even be possibly that they thought well what we’ll do is carve out a little zone where we can do exactly, we can have hyper capitalism on a small scale what is now a big scale in [Shin Zhen] but was then a small scale. And e can maintain the communist dictatorship so we will retain our positions. And as it’s developed is what’s happened is its quite interesting that special economic zone model which started in the 80s a time when it was at the start of the neo liberal periods. So at that point there were tariffs. There was quite a – trade wasn’t completely liberalized in a way that you see now. So what you see now is that special economic zones in some symptoms have become [inaquinistic] because the welders become a special economic zone. And as this, some people talk about the special economic world whereby we just have a completely globalized world where corporations can just cross borders with real ease like they couldn’t before. So in Cambodia for example, in fact in the special economic zones the difference with the national policies are very very small. And because of that what they use to attract investors is partly they say behind the walls you can do what you want with labor. That is a major selling point. And you see that in Cambodia. That corporations know when they’re going to a place that there will be control over labor. They’ll have it very easy. Because Cambodia’s one of the most corrupt countries in the world so they can navigate the bureaucratic system very easily but in fact in terms of tangible benefits, financial benefits to corporations, there aren’t many inside the special economic zone you can’t get outside. In some ways it’s a branding exercise. NOOR: So then what are some of the differences I guess? You were in these special economic zones in Cambodia. What are some of the differences you saw between the labor conditions in these SEZs verses outside? Because I know that you said you know labor obstructions in Cambodia more generally aren’t great. Aren’t up to the standards that they should be. So what are some of the discrepancies there? KENNARD: Well there’s one major one which is in Cambodia I talked about the yellow unions which the government and employee unions basically don’t do anything important for workers or anything significant. In fact, probably the opposite. But there are also massive independent unions which are massively under attack by the government and the ruling class. But they do exist and they’re very powerful. And they, I talked to a number of them and they said we can’t get inside the special economic zones and they said it’s basically a matter of physical security. So this zone is walled off from the rest of society and it has security guards there. So they say if we ever want to go in and organize or talk to workers, we can’t they’ll never let us in. Then they say what happens with special economic zones that they’re built in the middle of nowhere often. So the workers will leave and get straight on a bus to go back to their village and there’s no time for even the independent unions to organize in that sort of brief 20 minutes while they’re waiting for the bus. They said its basically impossible because also the security will come and stop us doing that. Because they’ll see us. So that there’s no way an independent union can get into these special economic zones. And that’s by design. They could be allowed in if the owners and if the government wanted them to. But obviously they don’t want them to. And the other point is that special economic zones are owned by corporations themselves. They’re money making activities. So the special economic zones have a massive incentive not to let independent unions in. And it’s a massive selling point for them. So there’s a big difference. I mean the situation for Cambodian workers as you say, it’s not great anyway. But it’s much harder to organize for your rights within the special economic zone. NOOR: And as I said before there are still – despite all of this there’s lots of proponents of using these SEZ as economic drivers. I wanted to take a look at a clip now of the deceased Deng Xiaoping who is called sometimes the father, the architect of China’s economic reform. He was the architect of the SEZ in Shenzhen that your colleague visited. So this is a clip from CCTV where he’s explaining why he thinks that SEZ was a success. DENG XIAOPING: Before dumping the reform and opening up policy, our villagers could only fish. There was no other means to earn money. But after the policy, our hands were free and we could make full use of our resources to get rich. NOOR: So here he’s saying that before we adopted this reform, villagers could only fish and that the SEZ helped broadened industry. What’s your response to this sort of rhetoric? KENNARD: Well its’s interesting and what things that Xiaoping is saying, is replicated across the whole world, especially in Asia. And I talked to development banks and other banks that deal with development. They all say the same thing that the country like Cambodia, its biggest selling point in the global economy is its low wages. It doesn’t really have any infrastructure. So special economic zones, low wage, garment workers is the way forward. Essentially, if you want to make you r country a slave to the global economy, yes okay fair enough. But of course, Cambodia traditionally is a rural economy. There’s no reason that all these development banks like the World Bank and these private sector lending under IFC, the IMF can’t construct development models that involve massive investment in agriculture. You can give money to small scale agriculture which has a long thousand years’ tradition in Cambodia. But obviously that’s not going to make anyone rich. And that’s not going to integrate Cambodia in the global economy the way that they want. So then they have this—they give this idea that there’s no other way to do it and we have to do special economic zones and we have to rely on investment from the western world or the rich countries in Asia. But in fact what that means is Cambodia never can raise its minimum wage without a whole host of people growing up [aplectic] because they all say and this might be true, if this is your development model. Well if we raise the minimum wage, everyone’s going to pullout instantly because the only reason they’re in Cambodia is because we’re playing them $140 a month to their workers. So I understand the sentiment but it’s basically sent as a zero sum gain. There’s no other way to do it. But of course there’s no other way. Of course what they could do is invest in a traditional industries and traditional agriculture that has been in Cambodia for thousands of years. NOOR: And are these conditions new or have SEZs always sort of exhibited these atrocious working conditions? Because as we’ve said they’ve been used in economic development plans in the past 50 years but people think of globalization as being sort of a more recent phenomenon. KENNARD: I would say it’s mixed. Special economic zones are interesting because there’s so many different types of them. They’re a really interesting thing in terms of the capitalist model and the neo liberal model but they’re not much known about. There’s export processing zones. Integrated economic zones. Special economic zones. There’s really about 10 acronyms you could do so they’re all slightly different and some it’s not about labor. It’s more about attracting investment or its more about export duties. So everyone’s different. I would say that they were created to allow essentially hyper capitalism to take place in states where it was too difficult to happen on a national level. So China being doing the perfect example, you couldn’t ever have done what they did in Shenzhen on the national level. But now you sort of mutated and become this way of controlling labor. It’s become this way of branding yourself. I mean in Cambodia as I said, there were no tangible benefits. But it was a good branding exercise when an investor goes to Cambodia they said oh yes we’re building 10 new special economic zones and then this investor gets excited and asks for what do I get for that? And they say oh not really much in terms of tangible actual financial benefits. So I would say that obviously in a corporate utopia you’re going to have bad conditions for labor but that isn’t always the main issue in terms of special economic zones. In the case of Cambodia, in the case of Shenzhen, I think that the workers outside Shenzhen are also treated very badly in China. So it’s a mixed bag I would say. NOOR: So what are solutions then? Do we need to abolish SEZs or should be try to preserve them because apparently they can do some good but try to advocate for better labor conditions? Do we try to push for the World Bank to treat them differently? Or for states themselves to treat them differently? What should we be pushing for? KENNARD: It’s an important question and one that shouldn’t be taken lightly because obviously there are millions of people working in these places around the world. So you can’t just say that they should be abolished and all these people lose their job and sort of flail around in a horrible country for conditions for workers. So I would say in theory yes. I think they should totally be gotten rid of because they are a symptom of a global economy which it functions on the rest of the bottom. So we have a basically a system whereby you will be more successful in attracting an investment if you’re the most uncivilized country possible in terms of workers’ rights, environmental regulations, taxation. Everything that we think is good about uncivilized societies. You have to do away with to attach investment. And that’s what the whole neo liberal model rests on. And special economic zones are the emblem of the neo liberal model because they bill themselves as corporate utopias place where they say to investors, you don’t have to abide by all the horrible regulations of national policy. The democratically created, hopefully, regulations of national policy. You can just bypass all that. You can have low wage workers which are entirely controlled. You can get your work exports out without any duties. So I would say that it would be very very pessimistic if I said that this model had any future because this model is founded on a very very unjust idea that we just have to create a wasteland globally which is good for corporations and I just don’t think that’s the way forward. And also there’s always another way. The way the world bank and others will say is, well you don’t care about these workers. You don’t care the investment goes. Of course the World Bank has billions of dollars it deals with. It can invest in whatever industry it wants. It can invest in anything that it wants in terms of sustainability, in terms of agriculture. They just don’t do it because the point is the world is set up to represent the 1%. And to create a global economy which runs in the interests of corporations. So of course they’re not going to come up with ideas that are going to benefit the people of Cambodia on a long term. They’re going to come up with ideas which give jobs in the short term. But obviously make some people very very rich. NOOR: If you’d like to read more about this you can check out the report that Matt Co-authored with Claire [Provo]. Again it’s in the latest issue of In These Times. It’s called Inside the Corporate Utopias Where Capitalism Rules and Labor Laws Don’t Apply. Thanks so much for joining us today Matt and talking about this really important report with us. KENNARD: Thank you for having me. NOOR: And thank you for joining us on the Real News Network.


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Matt Kennard is a Deputy Director at the Centre for Investigative Journalism. He was previously a reporter for the Financial Times and is the author of two books, Irregular Army and The Racket, which was released in paperback in April this year. Follow him on Twitter @kennardmatt

With Claire Provost, Kennard co-authored the investigative report, "Inside The Corporate Utopias Where Capitalism Rules and Labor Laws Don't Apply". Check out the full report
here in In These Times.