A four-strong delegation from the International Transport Workers Federation (ITF) investigating labour rights abuses in Thailand this week have found that little has changed in that country's fishing industry, so notorious for its trafficking in migrant workers, slavery, torture, brutality and murder, despite media exposure last year and the laudable lead by America to downgrade Thailand to Tier 3 in its annual report on human trafficking. Tier 3 is the worst level for nations that fail to meet the minimum standards to protect workers as laid out in the Victims of Trafficking and Violence Protection Act of 2000.
The ITF team found that the fishers on board vessels it investigated were subject to poor working conditions, cramped accommodation and long contracts, some of them with no hope of returning home with any pay. ITF inspector, Keith McCoriston, commented on conditions aboard one vessel he inspected. "The crew was scared to talk to us. They had no contracts, no toilet, no shower and no mattresses. Cooking facilities consisted of an open flame and basic utensils. The 24-crew slept in cramped accommodation. We spoke to one fisher who had been on board for 10 months although we expect this is a gross understatement."
Apinja Tajit from the Stella Maris seafarer centre in Sriracha remarked: "We are dealing in many cases with abandoned fishers in Thailand and of the abandoned fishers outside of Thailand. We know of one fisher who was abandoned in hospital with no pay for breaking his leg while on board a vessel. Another fisher was so traumatized by his experience of abuse that he needs trauma counselling. He struggled to explain to us that he was chained like a dog for trying to escape the vessel he was on."
The fishing industry is big business in Thailand. Overall fish exports are said to be worth US$7.5 billion a year, of which canned tuna accounts for $2.3 billion or a 20% share of the world market. The farmed prawn export market is also huge, itself the offspring of the tuna industry. In the pursuit of tuna vast amounts of 'trash fish', too small to be edible, are scooped up and ground into meal for sale to the Thai prawn farmers, where it often ends up on shop shelves around the world as part of dishes like prawn stir fry. According to the Thai government 300,000 work in the fishing industry, while in the canneries they rely on foreign migrants for 80% of their labour needs. In all there are reportedly four million migrants working in Thailand's factories, fishing fleets and brothels. Most migrants in Thailand are undocumented. The ITF states that there are 40,000 Thai fishing vessels operating with only 10,000 registered, many with fake licences, and crewed by unregistered migrant workers. This "cloak of invisibility," says the ITF, "allows the boat captains to treat workers like modern day slaves."
Supporting these captains is a network of odious brokers who for extortionate fees promise migrants, many from poorer countries like Myanmar and Cambodia, jobs in factories and construction, while all the time planning to sell them to trawler captains for as little as £250 each. Helped by energy-boosting drugs, these duped, hapless fishers work 20 hours a day. Beatings are regular and there is torture and execution-style killings. One trafficking victim claimed he saw 20 slaves killed, including one whose limbs were tied to four trawler bows and torn apart at sea.
Thailand's fish worth more than fishers
Mark Davis, ITF deputy regional secretary for the Asia Pacific region, added: "The industry is facing huge challenges throughout the region but is is the workers who are suffering because of this. Neglect and abuse are rife for migrant workers and Thai nationals, too. How have we got to a position where a fish has more value than the worker who catches it?"
In my blog headed: "Thailand's trawlers of terror shame food supply chains," I implied that western buyers of Thailand's prawn-based exports, namely the big food retailers like Walmart, Carrefour, Costco and Tesco, often extolled their roles as responsible citizens shunning all forms of slavery and exploitation in their supply chains yet the problem remains almost untrammelled, indicating that consumers can no longer rely on such ineffectual protestations. Since then it would be fair to say that leading retailers like the UK's Tesco, a wholesale buyer of Thai canned tuna, are under pressure to improve worker protection following America's downgrading of Thailand to Tier 3, but what are they really doing to hit the insouciant, mega Thai industries who are still wanting in cleaning out their Augean stables of worker abuse in their supply chains? Certainly not, it seems, as much as Norway which, for example, has led the way in applying pressure, with one leading Norwegian retailer removing CP Foods' scampi-related products from its shelves, a move actively backed by the ITF and the Norwegian Seafarers' Union. CP Foods is a giant straddling the Thai fishing industry, with annual sales reportedly in the tens of billions of dollars.
It may seem blinkered and irresponsible to urge foreign consumers to boycott Thailand's seafood exports indefinitely, given that such action could hit the workers harder than their employers but there is a good chance that when faced with looming collapse these mega corporations, and the corrupt military government supporting them, will back down quickly, for nothing concentrates business minds better and so quickly than the power of the purse.
There are signs that Thailand's downgrade to Tier 3 has damaged its reputation, increasing pressure on big food retailers to improve worker protections in their supply chains, says Max Tunon, senior programme officer in Bangkok with the ILO, which monitors worker conditions worldwide. There are claims from the Thai tuna industry association that Tier 3 status has prompted improvements in the working conditions. The canneries have cut down on child labour and papers are being provided to workers which makes arbitrary detention more difficult. But critics say that the Thais have not addressed the crushing debt loads that workers take on to pay the brokers who land them jobs. The Government remains as corrupt as ever while the corrosive hand of the Thai mafia is ubiquitous. Until all this changes Thailand should remain firmly in Tier 3. Concerned consumers, meanwhile, could help by encouraging food retailers to source sea food products outside Thailand by boycotting all Thai-labelled products.
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Thursday, 26 March 2015
Sunday, 15 March 2015
Britain's new "Google Tax" threatens Irish recovery
A new British "Google tax" could threaten Ireland's impressive economic recovery, with unimaginably adverse consequences for both countries, so should Britain think again and wait for the OECD's reforms, know as the "base erosion and profit sharing (BEPS) project? The risks of Britain's unilateral approach suggests that it would be safer to adopt the OECD joint approach, even if that process would take years compared with the British "diverted profits tax" that will be levied next month on foreign companies that use "contrived arrangements" to avoid having a taxable presence in the UK and route profits to a foreign tax haven. The tax will be 25%, some 5% more than Britain's corporation tax. It is designed to sidestep Britain's treaty obligations by introducing a charge that would fall outside the corporate tax system.
The UK Treasury has denied that its new "Google tax", described as "a highly aggressive piece of legislation" by the Association of Chartered Certified Accountants, conflicts with the OECD's reforms and says that its diverted profits tax is complementary to BEPS and is consistent with the principle of aligning taxing rights to economic activity. Australia has indicated that it may follow Britain's lead.
Mine's a double Irish
The UK Treasury cited the "Double Irish" as an example of the tax dodging arrangements in its cross hairs. This legal tax avoidance ploy, used mainly by American technology and pharma companies, routes profits to tax havens like Bermuda, where they hold intellectual property rights. The Double Irish (DI) exploits the different definitions of corporate residency in Ireland and America. Ireland taxes companies if they are controlled and managed in Ireland, while America's definition of tax residency is based on where a corporation is registered.
The UK Treasury has denied that its new "Google tax", described as "a highly aggressive piece of legislation" by the Association of Chartered Certified Accountants, conflicts with the OECD's reforms and says that its diverted profits tax is complementary to BEPS and is consistent with the principle of aligning taxing rights to economic activity. Australia has indicated that it may follow Britain's lead.
Mine's a double Irish
The UK Treasury cited the "Double Irish" as an example of the tax dodging arrangements in its cross hairs. This legal tax avoidance ploy, used mainly by American technology and pharma companies, routes profits to tax havens like Bermuda, where they hold intellectual property rights. The Double Irish (DI) exploits the different definitions of corporate residency in Ireland and America. Ireland taxes companies if they are controlled and managed in Ireland, while America's definition of tax residency is based on where a corporation is registered.
Companies exploiting the DI put their intellectual property into an Irish-registered company that is controlled from a tax haven such as Bermuda. Ireland considers the company to be tax resident in Bermuda while the US considers it to be tax resident in Ireland. The result is that when "royalties" go to the company they go untaxed, and these royalties can be so substantial and manipulable that they sharply reduce or eliminate profits in a relatively higher taxing country like Ireland, even though Ireland has the EU's lowest corporation tax rate of 12.5%. Ireland, too, therefore, does not reap much corporate tax revenue from global corporations. In 2013, for example, Facebook, who employ about 425 in Ireland, saw its revenues there rise from Euro1.798 bn to Euro2.997 bn, but its corporate tax bill fell to a derisory Euro5.2 million.
Ireland does, however, benefit substantially from the tens of thousands of jobs created by US multi-nationals, which generates employee and VAT taxes and excise duties, which has a trickle down effect that boosts the many dependent industries. It also strongly boosts tangible exports provided by the likes of Apple and Pfizer. Foreign-owned firms, mainly American, are responsible for about 90% of Irish tradeable exports, and this rises to the mid 90s in respect of services exports. Much of that, however, could be put at risk, even though the foreign technology companies have invested heavily in Ireland and therefore, according to some, unlikely to move. Facebook's customers in Ireland, however, are dwarfed by those in Britain so it might find that paying 25% rather than 20% UK corporation tax if registered in Britain would be incentive enough to up sticks from Dublin to Britain, followed by others if the law of comparative costs, including tax, are in Britain's favour.
Well on the road to economic health, Ireland has done well, having suffered years of austerity, albeit brought on largely by themselves through their naivety over an unsustainable property boom. In 2014, for example, Irish tax payers paid Euro 3.5 bn more than in 2013, thanks to rising employment. But it is not out of the woods yet, and there is a real chance of a second Irish banking crisis related to high, non-performing mortgage loans. Now is not the time for Britain to risk harming that recovery, given the billions of pounds it stumped up to tide Ireland over its economic crisis and the importance of the Irish market for its exports.
The Institute of Chartered Accountants in England and Wales was right to say that the rush to push the legislation through ahead of the General Election meant it was unlikely to be "afforded the scrutiny it needs." Sod's law may always be at work but the law of unintended consequences, though far less common, can be far more ruinous.
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Friday, 13 March 2015
Was Afghanistan's war worth the cost?
Rarely, if ever, in the annals of military logistics have operations in Afghanistan cost so much and achieved so little. Underlying much of this tragic waste was the arrogant belief that concerns about the logistics problems of supplying a land-locked country, ideally suited to guerrilla warfare, with highly vulnerable supply lines stretching thousands of miles, could be tossed aside, given the overwhelming fire power and manpower of the invading allies.
Figures just released by Britain's Ministry of Defence (MOD) on the cost of the Afghan war for their financial year 2013-2014 show that supporting the 5,200 military personnel cost £232,225 per head, or £1.212 billion overall. That, however, was a year when operations in the 13-year war were beginning to be wound down. In the year 2012-2013 the comparable cost of supporting 9,000 military personnel at £297,025 per head was £2.673 billion. To these figures must be added the additional cost of new equipment, described as urgent operational requirements, which were £57.5 million in 2013-2014 and £333.3 million in 2012-2013.
Those figures are far from the end of the tally. Supporting the British military personnel in Afghanistan were 8,529 and 11,476 civilians for the years 2013-2014 and 2012-2013 respectively. And finally, one must not forget the high, tragic cost of supporting the permanently maimed personnel and the wives and children of the 450-plus killed in action, a figure that will inevitably grow given the expected suicides to come over years which, if previous recent military entanglements are any guide, will exceed the numbers killed in battle. At one stage the total costs of all the allied involvement was estimated to be US$2 billion a week, with the Taliban support costs calculated to be less than one tenth of the coalition forces.
Leaving aside the ignored historical lessons from previous super power invasions of Afghanistan over the last 200 years or so, any logistician worth his salt could see just how nightmarish and difficult the costs would be in supplying the allies in Afghanistan, surrounded by potentially hostile or ambivalent countries like Iran and Pakistan who lent succour willingly or otherwise to the Taliban. This meant that most of the supplies had to be airlifted from western Europe at a cost of US$14,000 a tonne compared with only $500 a tonne if Russia had allowed rail-borne supplies through its territory. The alternative to airborne supplies was the dangerous land supply line up from Karachi and through the mountainous passes. In just one attack in these passes, however, 40 oil tankers were destroyed by the Taliban.
So now that the last battle flags are being furled as the coalition forces depart, leaving only a small advisory contingent, could it be said that the allies' costs were worth it and what are the lessons for military logistics?
As far as the British financial cost goes, estimates will vary, the only certainty being a rising cost over years to come to support the wounded and their families. Sir Sherard Cowper-Coles, Britain's former ambassador to Afghanistan, who believed that there could never be a military victory, estimated the British cost running at £6 billion a year, while the MOD claimed that between 2001-2010 the cost was only £11.6 billion, but it subsequently admitted that the Afghan war was absorbing about 30% of the £35 billion UK annual defence budget. The true total British costs may never be known, especially as much depends on how the costs are calculated. But based on the MOD's last two accounting years, a total cost to date of the 13-year war of over £30 billion looks decidedly conservative.
The mooted positive effects of the Afghan war are broadly political and economic. On the political side, one of the reasons for the Afghan invasion was to prevent Afghanistan from becoming a safe haven for Al-Qaeda to prosecute its mischief abroad. In that regard, at the best this goal has been only partly successful. Al-Qaeda still has a presence in the country and the Taliban, estimated at 20,000 strong, are a long way from being defeated. Many question how the much bigger Afghan army would fare against the Taliban insurgents without the help of a departed NATO force.
On the socio-economic front, there seem to be more positives. Various polls show many Afghans in a positive mood about their future. Education for both sexes is now available and women are allowed to play a much fuller role in all branches of the economy. But even on this front nothing is certain, because the cause of their oppression remains in the wings. Meanwhile, the wealthy Afghans are taking no chances. They are quietly moving their wealth abroad.
In the wider scheme of things the economic ramifications of debt-fuelled war are like the sins of the fathers being visited on future generations. Soaring government debt means soaring interest costs, and that means two things: money diverted from pressing social needs and possible cuts in Government social security budgets. Back in the 6th century BC, the Chinese sage, Sun Tzu, summed up the economic problem of war succinctly: "Where the army is prices are high. When prices rise the wealth of the people is exhausted." Trying to put a price on such repercussions is incalculable but the outcome unarguably very pernicious.
Military logistics is not just about controlling the supply chain effectively to deliver all that is required to the war theatre at the right time. It is also about how the chosen battlefield can be used to degrade an enemy's military ambitions. In this respect, the Taliban had the country's geographical and climatic conditions working in their favour. That, perhaps, more than any other factor ensured the allies could not win a military victory. It is to be hoped that in future before nations consider going to war in distant lands they will think of all the costs against the perceived benefits and leave arrogance at the door.
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Figures just released by Britain's Ministry of Defence (MOD) on the cost of the Afghan war for their financial year 2013-2014 show that supporting the 5,200 military personnel cost £232,225 per head, or £1.212 billion overall. That, however, was a year when operations in the 13-year war were beginning to be wound down. In the year 2012-2013 the comparable cost of supporting 9,000 military personnel at £297,025 per head was £2.673 billion. To these figures must be added the additional cost of new equipment, described as urgent operational requirements, which were £57.5 million in 2013-2014 and £333.3 million in 2012-2013.
Those figures are far from the end of the tally. Supporting the British military personnel in Afghanistan were 8,529 and 11,476 civilians for the years 2013-2014 and 2012-2013 respectively. And finally, one must not forget the high, tragic cost of supporting the permanently maimed personnel and the wives and children of the 450-plus killed in action, a figure that will inevitably grow given the expected suicides to come over years which, if previous recent military entanglements are any guide, will exceed the numbers killed in battle. At one stage the total costs of all the allied involvement was estimated to be US$2 billion a week, with the Taliban support costs calculated to be less than one tenth of the coalition forces.
Leaving aside the ignored historical lessons from previous super power invasions of Afghanistan over the last 200 years or so, any logistician worth his salt could see just how nightmarish and difficult the costs would be in supplying the allies in Afghanistan, surrounded by potentially hostile or ambivalent countries like Iran and Pakistan who lent succour willingly or otherwise to the Taliban. This meant that most of the supplies had to be airlifted from western Europe at a cost of US$14,000 a tonne compared with only $500 a tonne if Russia had allowed rail-borne supplies through its territory. The alternative to airborne supplies was the dangerous land supply line up from Karachi and through the mountainous passes. In just one attack in these passes, however, 40 oil tankers were destroyed by the Taliban.
So now that the last battle flags are being furled as the coalition forces depart, leaving only a small advisory contingent, could it be said that the allies' costs were worth it and what are the lessons for military logistics?
As far as the British financial cost goes, estimates will vary, the only certainty being a rising cost over years to come to support the wounded and their families. Sir Sherard Cowper-Coles, Britain's former ambassador to Afghanistan, who believed that there could never be a military victory, estimated the British cost running at £6 billion a year, while the MOD claimed that between 2001-2010 the cost was only £11.6 billion, but it subsequently admitted that the Afghan war was absorbing about 30% of the £35 billion UK annual defence budget. The true total British costs may never be known, especially as much depends on how the costs are calculated. But based on the MOD's last two accounting years, a total cost to date of the 13-year war of over £30 billion looks decidedly conservative.
The mooted positive effects of the Afghan war are broadly political and economic. On the political side, one of the reasons for the Afghan invasion was to prevent Afghanistan from becoming a safe haven for Al-Qaeda to prosecute its mischief abroad. In that regard, at the best this goal has been only partly successful. Al-Qaeda still has a presence in the country and the Taliban, estimated at 20,000 strong, are a long way from being defeated. Many question how the much bigger Afghan army would fare against the Taliban insurgents without the help of a departed NATO force.
On the socio-economic front, there seem to be more positives. Various polls show many Afghans in a positive mood about their future. Education for both sexes is now available and women are allowed to play a much fuller role in all branches of the economy. But even on this front nothing is certain, because the cause of their oppression remains in the wings. Meanwhile, the wealthy Afghans are taking no chances. They are quietly moving their wealth abroad.
In the wider scheme of things the economic ramifications of debt-fuelled war are like the sins of the fathers being visited on future generations. Soaring government debt means soaring interest costs, and that means two things: money diverted from pressing social needs and possible cuts in Government social security budgets. Back in the 6th century BC, the Chinese sage, Sun Tzu, summed up the economic problem of war succinctly: "Where the army is prices are high. When prices rise the wealth of the people is exhausted." Trying to put a price on such repercussions is incalculable but the outcome unarguably very pernicious.
Military logistics is not just about controlling the supply chain effectively to deliver all that is required to the war theatre at the right time. It is also about how the chosen battlefield can be used to degrade an enemy's military ambitions. In this respect, the Taliban had the country's geographical and climatic conditions working in their favour. That, perhaps, more than any other factor ensured the allies could not win a military victory. It is to be hoped that in future before nations consider going to war in distant lands they will think of all the costs against the perceived benefits and leave arrogance at the door.
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