In South Africa, Wal-Mart Refuses to Buy Local, Threatens WTO Action, and Wins
Two things seem particularly noteworthy about the approval Wal-Mart won yesterday to acquire Massmart, a Johannesburg-based chain that operates across 13 African countries.
One is that, despite the ample publicity Wal-Mart has engineered for its "buy local" efforts, the company in fact has zero interest in cultivating local suppliers beyond stocking a few token local veggies suitable for a nice photo-op.
And two: even in countries where the law clearly states that the public interest must be protected in large mergers, global trade agreements give corporations the upper hand, or at least give government authorities an excuse to ignore their own laws.
In issuing its approval yesterday, South Africa's Competition Tribunal, a quasi-judicial body charged with protecting the public interest in large corporate mergers, imposed only minimal conditions on the deal, stating that stronger requirements to protect local suppliers and labor rights "could violate the country's trade obligations."
Wal-Mart first raised the specter the World Trade Organization (WTO) during its closing arguments before the tribunal, which had just heard a week of testimony from unions, government officials, economists and others who built a compelling case that the merger should be subject to strict conditions or rejected altogether.
The strength of the opposition seemed to surprise Wal-Mart, which has not made a significant acquisition since it bought the British supermarket chain Asda in 1998.
South Africa's robust trade unions, led by the Commercial, Catering and Allied Workers' Union (CCAWU), which represents Massmart employees, had begun organizing to block the merger last fall, issuing a list of demands shortly after the deal became public.
The government departments of trade, agriculture and economic development also came out against the deal.
One of the pivotal issues concerned sourcing. Massmart currently buys 60 percent of its goods from South African manufacturers and farmers. Wal-Mart would supplant these networks of local production and trade with its own global supply chain, sending a flood of imported food and other goods into a country that already has 25 percent unemployment. A government-commissioned analysis concluded that every 1 percent shift from domestic to overseas suppliers by Massmart would cost the country 4,000 jobs.
Momentum began to build in favor of imposing a local procurement quota as a condition of the merger. But local sourcing is untenable to Wal-Mart. Although the company has orchestrated heaps of positive media by stocking a few items of local produce in its U.S. stores, what makes Wal-Mart Wal-Mart is its global supply chain. The company is not so much a retailer as a distributor. Its market power comes from its ability to acquire goods in one location and distribute them across the planet with a remarkable degree of precision and efficiency. If buying locally from South African producers became a condition of the merger, Wal-Mart would have to drop the deal.
Worried about losing Massmart and, with it, a launching pad for all of Africa, Wal-Mart in its closing arguments raised the threat of a WTO action if the Competition Tribunal pursued the sourcing condition. Although the question of global trade agreements had not surfaced in the debate before, it became a central theme of the media coverage during the tribunal's final two weeks of deliberation.
Wal-Mart also offered a list of merger conditions that it told the tribunal it would be glad to comply with, including putting about $14 million into a "suppler development fund" to help South African producers learn how to become Wal-Mart suppliers. (The company is spending $2.4 billion to buy Massmart, which does about $7 billion in sales each year.)
The Competition Tribunal adopted Wal-Mart's minimal conditions as its own and approved the deal with no other stipulations.
International expansion is critical for Wal-Mart, which has seen same-store sales in the U.S. decline for eight consecutive quarters. But while it has established a foothold in South America, Asia, Europe, and now Africa, Wal-Mart's global ambitions have often fallen short of expectations. It pulled out of Germany and South Korea after losing billions of dollars. Its growth in China has been relatively weak given the size of the country, and Asda has yet to challenge Tesco's dominance of the UK market.
South Africa's tough and politically influential trade unions promise anything but smooth sailing for Wal-Mart's entry into Africa. CCAWU says leaders will be meeting later this month to chart their next move, which could include disruptive protests, strikes and "the mother of all boycotts."
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
Two things seem particularly noteworthy about the approval Wal-Mart won yesterday to acquire Massmart, a Johannesburg-based chain that operates across 13 African countries.
One is that, despite the ample publicity Wal-Mart has engineered for its "buy local" efforts, the company in fact has zero interest in cultivating local suppliers beyond stocking a few token local veggies suitable for a nice photo-op.
And two: even in countries where the law clearly states that the public interest must be protected in large mergers, global trade agreements give corporations the upper hand, or at least give government authorities an excuse to ignore their own laws.
In issuing its approval yesterday, South Africa's Competition Tribunal, a quasi-judicial body charged with protecting the public interest in large corporate mergers, imposed only minimal conditions on the deal, stating that stronger requirements to protect local suppliers and labor rights "could violate the country's trade obligations."
Wal-Mart first raised the specter the World Trade Organization (WTO) during its closing arguments before the tribunal, which had just heard a week of testimony from unions, government officials, economists and others who built a compelling case that the merger should be subject to strict conditions or rejected altogether.
The strength of the opposition seemed to surprise Wal-Mart, which has not made a significant acquisition since it bought the British supermarket chain Asda in 1998.
South Africa's robust trade unions, led by the Commercial, Catering and Allied Workers' Union (CCAWU), which represents Massmart employees, had begun organizing to block the merger last fall, issuing a list of demands shortly after the deal became public.
The government departments of trade, agriculture and economic development also came out against the deal.
One of the pivotal issues concerned sourcing. Massmart currently buys 60 percent of its goods from South African manufacturers and farmers. Wal-Mart would supplant these networks of local production and trade with its own global supply chain, sending a flood of imported food and other goods into a country that already has 25 percent unemployment. A government-commissioned analysis concluded that every 1 percent shift from domestic to overseas suppliers by Massmart would cost the country 4,000 jobs.
Momentum began to build in favor of imposing a local procurement quota as a condition of the merger. But local sourcing is untenable to Wal-Mart. Although the company has orchestrated heaps of positive media by stocking a few items of local produce in its U.S. stores, what makes Wal-Mart Wal-Mart is its global supply chain. The company is not so much a retailer as a distributor. Its market power comes from its ability to acquire goods in one location and distribute them across the planet with a remarkable degree of precision and efficiency. If buying locally from South African producers became a condition of the merger, Wal-Mart would have to drop the deal.
Worried about losing Massmart and, with it, a launching pad for all of Africa, Wal-Mart in its closing arguments raised the threat of a WTO action if the Competition Tribunal pursued the sourcing condition. Although the question of global trade agreements had not surfaced in the debate before, it became a central theme of the media coverage during the tribunal's final two weeks of deliberation.
Wal-Mart also offered a list of merger conditions that it told the tribunal it would be glad to comply with, including putting about $14 million into a "suppler development fund" to help South African producers learn how to become Wal-Mart suppliers. (The company is spending $2.4 billion to buy Massmart, which does about $7 billion in sales each year.)
The Competition Tribunal adopted Wal-Mart's minimal conditions as its own and approved the deal with no other stipulations.
International expansion is critical for Wal-Mart, which has seen same-store sales in the U.S. decline for eight consecutive quarters. But while it has established a foothold in South America, Asia, Europe, and now Africa, Wal-Mart's global ambitions have often fallen short of expectations. It pulled out of Germany and South Korea after losing billions of dollars. Its growth in China has been relatively weak given the size of the country, and Asda has yet to challenge Tesco's dominance of the UK market.
South Africa's tough and politically influential trade unions promise anything but smooth sailing for Wal-Mart's entry into Africa. CCAWU says leaders will be meeting later this month to chart their next move, which could include disruptive protests, strikes and "the mother of all boycotts."
Two things seem particularly noteworthy about the approval Wal-Mart won yesterday to acquire Massmart, a Johannesburg-based chain that operates across 13 African countries.
One is that, despite the ample publicity Wal-Mart has engineered for its "buy local" efforts, the company in fact has zero interest in cultivating local suppliers beyond stocking a few token local veggies suitable for a nice photo-op.
And two: even in countries where the law clearly states that the public interest must be protected in large mergers, global trade agreements give corporations the upper hand, or at least give government authorities an excuse to ignore their own laws.
In issuing its approval yesterday, South Africa's Competition Tribunal, a quasi-judicial body charged with protecting the public interest in large corporate mergers, imposed only minimal conditions on the deal, stating that stronger requirements to protect local suppliers and labor rights "could violate the country's trade obligations."
Wal-Mart first raised the specter the World Trade Organization (WTO) during its closing arguments before the tribunal, which had just heard a week of testimony from unions, government officials, economists and others who built a compelling case that the merger should be subject to strict conditions or rejected altogether.
The strength of the opposition seemed to surprise Wal-Mart, which has not made a significant acquisition since it bought the British supermarket chain Asda in 1998.
South Africa's robust trade unions, led by the Commercial, Catering and Allied Workers' Union (CCAWU), which represents Massmart employees, had begun organizing to block the merger last fall, issuing a list of demands shortly after the deal became public.
The government departments of trade, agriculture and economic development also came out against the deal.
One of the pivotal issues concerned sourcing. Massmart currently buys 60 percent of its goods from South African manufacturers and farmers. Wal-Mart would supplant these networks of local production and trade with its own global supply chain, sending a flood of imported food and other goods into a country that already has 25 percent unemployment. A government-commissioned analysis concluded that every 1 percent shift from domestic to overseas suppliers by Massmart would cost the country 4,000 jobs.
Momentum began to build in favor of imposing a local procurement quota as a condition of the merger. But local sourcing is untenable to Wal-Mart. Although the company has orchestrated heaps of positive media by stocking a few items of local produce in its U.S. stores, what makes Wal-Mart Wal-Mart is its global supply chain. The company is not so much a retailer as a distributor. Its market power comes from its ability to acquire goods in one location and distribute them across the planet with a remarkable degree of precision and efficiency. If buying locally from South African producers became a condition of the merger, Wal-Mart would have to drop the deal.
Worried about losing Massmart and, with it, a launching pad for all of Africa, Wal-Mart in its closing arguments raised the threat of a WTO action if the Competition Tribunal pursued the sourcing condition. Although the question of global trade agreements had not surfaced in the debate before, it became a central theme of the media coverage during the tribunal's final two weeks of deliberation.
Wal-Mart also offered a list of merger conditions that it told the tribunal it would be glad to comply with, including putting about $14 million into a "suppler development fund" to help South African producers learn how to become Wal-Mart suppliers. (The company is spending $2.4 billion to buy Massmart, which does about $7 billion in sales each year.)
The Competition Tribunal adopted Wal-Mart's minimal conditions as its own and approved the deal with no other stipulations.
International expansion is critical for Wal-Mart, which has seen same-store sales in the U.S. decline for eight consecutive quarters. But while it has established a foothold in South America, Asia, Europe, and now Africa, Wal-Mart's global ambitions have often fallen short of expectations. It pulled out of Germany and South Korea after losing billions of dollars. Its growth in China has been relatively weak given the size of the country, and Asda has yet to challenge Tesco's dominance of the UK market.
South Africa's tough and politically influential trade unions promise anything but smooth sailing for Wal-Mart's entry into Africa. CCAWU says leaders will be meeting later this month to chart their next move, which could include disruptive protests, strikes and "the mother of all boycotts."