Pacific Money

Echoes of United Fruit in Japan-Korea Trade Spat

Should companies be legally responsible for the working conditions of their foreign laborers in other countries?

Echoes of United Fruit in Japan-Korea Trade Spat
Credit: Unsplash

On the surface, recent tensions between South Korea and Japan may appear to be little more than a continuation of long-held animosities. Depending on what history you consider pertinent, both sides can offer legitimate grievances. Behind this dispute, however, lurks a serious human rights issue, one that quietly grows in international relevance as multinational corporations continue to sprawl across the globe, taking advantage of “improved” supply chains. 

The dark tale of United Fruit is well-known to students of American history. Anchored by close political ties to the US government, United Fruit ruthlessly expanded its business empire across the Western hemisphere by currying favor with dictators, using violence against workers, and facilitating coups d’états. One of the keys to United Fruit’s profitability lay in its ability to utilize cheap labor, taking advantage of dictatorships or divided governments to enforce work conditions frequently bordering on slavery.

As Peter Chapman describes in his book Bananas: How the United Fruit Company Shaped the World, United’s business model essentially summed up as follows: Use strong-arm tactics to gain national influence; destroy natural habitats to build banana plantations; force local people into low-wage labor; suppress pro-labor backlash; fight blight by spraying plantations with pesticides, poisoning workers; and, when spraying fails, find new locations to repeat the process. 

The recent Korea-Japan trade dispute begins with a similar story, with Nippon Steel and Sumitomo Metal (NSSM) playing the role of United Fruit. Prior to the U.S. entering World War II, South Korea had been colonized by Japan for 35 years. During this period, hundreds of thousands of Koreans were conscripted into various work forces, many of them sent to Japan against their will to labor in hazardous industries like coal and steel. 

According to estimates by the Supreme Commander for the Allied Powers, over 2 million Korean workers were brought into Japan, with over 1.3 million being repatriated after the war. Lee Chun-sik was one of these workers, sent to Japan in 1941 to work in steel mills at the age of 17. He was beaten, forced to work long hours, and paid nothing. It is the victory of his lawsuit, one that opened the door for the seizure of NSSM’s Korean assets, that triggered recent trade tensions, prompting Korea’s removal from Japan’s export “white list.”

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Lee’s lawsuit is, of course, not the first to seek Japanese reparations. Others, such as the highly publicized “comfort women,” have come before. But Lee’s case is fundamentally different because it names a Japanese corporation, not the government, as its defendant. From a legal perspective, this raises new and important questions about global corporate accountability, questions the international community will need to answer sooner or later.

The first of these is the simplest: Should companies be legally responsible for the working conditions of their foreign laborers in other countries? Even today, labor laws usually only apply domestically, meaning there is little or no protection for foreign workers in countries that lack such laws.

A 2005 U.S. lawsuit illustrates just how difficult it can be to sue a corporation across borders, even when the evidence is compelling. In this lawsuit, child laborers from Cote d’Ivoire sued Swiss chocolate giant Nestle for violating child labor laws, citing the “Worst Forms of Child Labour” convention ratified by the International Labor Organization in 1999. This convention defines the worst forms of child labor as “all forms of slavery or practices similar to slavery, such as the sale and trafficking of children.”

The plaintiffs were captured in Mali, beaten, and forced to work in Cote d’Ivoire against their will for long hours without pay. The similarities to Lee’s story are chilling. Despite the clear language of the 1999 convention, the Cote d’Ivoire lawsuit was dismissed, twice. Only last year was it finally revived, this time with a different charge: accusing Nestle of falsely advertising its products as “sustainably sourced.”

In June, a detailed expose by Peter Whoriskey and Rachel Siegel of The Washington Post showed coerced child labor remains extremely common in cocoa. This is despite overwhelmingly evidence of its prevalence and nearly 20 years of industry pledges to reform. As acknowledged in the article, modern corporations often insulate themselves from legal trouble by hiring out labor to local management, preventing the parent company from ever knowing about the plight of its workers. In Lee’s case, such ignorance could not be claimed because meticulous Japanese records proved his work history.

If Lee’s case ever went to trial in international court, I think it is likely he would lose. Not because the case lacks merit but because cases like this are often resolved through a “law of the times” precedent. Since the Korean law awarding him reparations did not exist during his forced labor, I doubt an international court would look favorably on its retroactive application. This is a common problem for most reparation cases, including those of African American slave descendants.

The Lee lawsuit, however, has opened a new avenue to consider: Instead of suing the state, sue a company that benefited. Imagine American slave descendants suing Lehman Brothers for its beginnings as a slave trading business or Aetna for its beginnings insuring slave purchases. Imagine the descendants of poisoned Guatemalan banana farmers suing Chiquita Brands International, the rebranded successor of United Fruit. I am sure these possibilities keep corporate lawyers up at night.

Perhaps because of those sleepless nights, some companies have already voluntarily offered apologies, disclosures, and, in some cases, reparations. Lehman Brothers is one of those to have apologized while Ford disclosed a Nazi labor report, showing it knowingly allowed slave labor in its German subsidiary during WWII. In 2000, several German companies collaborated to form the German Forced Labour Compensation Programme, offering reparations for WWII-era forced labor victims at a rate of $10,300 per claimant. These efforts are all commendable, but I don’t think they will be enough to stave off the future that is coming. 

With the governments of Greece and Poland recently renewing calls for German WWII reparations, I suspect Lee’s lawsuit will be studied closely as a model for targeting the assets of multinational corporations, both past and present. What if a Polish court authorizes the seizure of BMW’s Polish assets as reparations for BMW’s use of forced labor during WWII? Many countries are already destined to follow South Korea’s path by being exploited in the past or present, only to emerge in the future, wealthier and developed. As the number of these nations increases, so too will the lawsuits and grievances, forcing those of us in the international community to finally confront the uncomfortable questions about where our coffee and t-shirts come from and whether we have the guts to do anything about it.

Justin Fendos is a professor at Dongseo University in Busan, South Korea and the Associate Director of the Tan School at Fudan University in Shanghai, China.