The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. I'm Jim Lehrer in Washington.

MR. MAC NEIL: And I'm Robert MacNeil in New York. After tonight's News Summary, we take a fresh look at NAFTA, the North American Free Trade Area [Agreement] in the light of Mexico's economic crisis. Then a report from Washington State on some controversial efforts to control employee theft. Rolf Ekeus, UN Special Commissioner, discusses evidence that Iraq may be making biological weapons, and Roger Rosenblatt considers television talk shows. NEWS SUMMARY

MR. MAC NEIL: The United States is threatening to impose billions of dollars in trade tariffs against Japan. White House Press Secretary Mike McCurry said President Clinton is considering such action if Japan does not further open its automobile market to U.S. products. U.S. law allows the imposition of sanctions to counter unfair trade practices. At a White House briefing McCurry spoke about the current trade talks with Japan.

MICHAEL McCURRY, White House Press Secretary: We've been in discussion for over 18 months with Japan on the subject of imbalances in trade. We made progress on some issues, but we're very concerned about some of their practices in the auto sector, and we believe that they keep competitive foreign products out of the Japanese market, and we continue to raise that issue with them. We've been negotiating intensely with the Japanese. We will continue to do so. We believe that resolving these imbalances through negotiation is the best route to go, but if that fails, we will have to consider other options, and other options are available.

MR. MAC NEIL: Chrysler today reported earnings of $592 million in the first quarter of this year, a drop of 37 percent from a year ago. The automaker also responded to a buyout offer by saying it was not for sale. Yesterday, a group of investors, including stockholder Kirk Kerkorian and former chairman, Lee Iacocca, made a nearly $23 billion bid for Chrysler. Its chairman said again today the offer would be considered, even though the car maker is not on the block. The latest report on the economy showed that retail sales rose .2 of a percent last month. The Commerce Department said the increase was led by gains in sales of furniture and building materials. Jim.

MR. LEHRER: California Congressman Bob Dornan entered the 1996 race for President today. The conservative Republican paid tribute to soldiers killed in Vietnam. He also emphasized the importance of fiscal and moral responsibility. He made his announcement in Washington, D.C., in front of a monument to slain enforcement officers, and he explained why he was running.

REP. BOB DORNAN, Republican Presidential Candidate: It is because of the American dream and my terrible feeling that it is disappearing before our eyes, that our culture is melting down, that moral decay is rotting the heart and the soul of our country, and I believe that America is poisoning itself, that we are destroying this God-blessed nation of ours, and I'm going to carry that message to as many states as I can. I will tell you that if someone is not publicly indignant about the bankruptcy policies of this, the richest country ever, destroying the American dream economically, and if somebody is not publicly indignant and saying stop this, with our cultural meltdown and moral decline, then I'll show you somebody who doesn't understand the facts. I'll show you somebody who's a bystander, watching the destruction of their country. Come with me. At least, wish me well and watch me and help me participate in this great debate.

MR. LEHRER: Dornan joins a field of six other candidates for the 1996 Republican nomination. A federal appeals court ruled today that a woman must be admitted as a full cadet to the Citadel. Shannon Faulkner attends classes at the South Carolina military college but has not been allowed thus far to take part in military training or to wear a uniform.

MR. MAC NEIL: Two men have been indicted on charges of planning to blow up U.S. commercial airliners in the Far East. One of them is Ramzi Ahmed Yousef, the alleged mastermind of the World Trade Center bombing. He is awaiting trial for that crime in New York. Today's indictment also accuses him of planting a bomb aboard a Philippines airliner last December, killing one person. The other man is Abdul Hakim Murad, who was arrested in the Philippines three months ago and brought to New York last night. At a news conference in New York today, U.S. officials said the two men once shared an apartment in Manila.

JAMES KALLSTROM, FBI: In the apartment was a computer that contained information relating to flight numbers and departure times of commercial aircraft of the United States, times for detonation of bombs aboard such aircraft and a letter threatening to attack American targets signed by the 5th battalion of the Liberation Army, the same signature used on a letter composed in 1993 claiming responsibility for the bombing of the World Trade Center.

MR. MAC NEIL: Murad was arraigned today and pleaded "not guilty." Yousef will be arraigned later this month. A third man named in the indictment remains at large.

MR. LEHRER: An FBI team arrived in Israel today to investigate last weekend's suicide bombings in the Gaza Strip. An American college student was among the eight people killed. The FBI agents' involvement comes under a 1986 law allowing prosecution when Americans are killed abroad by terrorists.

MR. MAC NEIL: The government of Ukraine today agreed to close the Chernobyl Nuclear Plant by the year 2000. In return, it is asking for help from the West in building a gas-fired power plant to replace it. In 1986, one of Chernobyl's reactors exploded, causing at least 8,000 deaths. It was the world's worst nuclear disaster. That's our summary of the top stories. Now it's on to a NAFTA update, employee theft, Iraq and biological weapons, and a Roger Rosenblatt essay. FOCUS - TRADE TALK

MR. LEHRER: We return first tonight to NAFTA, The North American Free Trade Agreement. There were conflicting predictions of doom and disaster and of goodness and glory when it came into being two and a half years ago. Well, who is right so far? Tom Bearden begins our coverage with this report.

TOM BEARDEN: The trade agreement reached by the United States, Mexico, and Canada in August of 1992 held out the promise of the world's largest free trade zone, with economic gains for all three countries.

PRESIDENT GEORGE BUSH: [August 1992] It'll create jobs and generate economic growth in all three countries. Increased trade with North America will help our nation prepare for the challenges and opportunities of the next century. The Cold War is over. The principal challenge now facing the United States is to compete in a rapidly-changing, expanding global marketplace.

MR. BEARDEN: The agreement would affect a broad sweep of American industry, most noticeably agriculture, autos, textiles, and banking. Under the terms of the agreement, the three countries agreed to lower and eventually eliminate tariffs and quotas on thousands of products and services and strengthen protections on investments. The Bush administration and later the Clinton administration also argued that an additional benefit of NAFTA would be less illegal immigration from Mexico into the U.S. as Mexico's economy improved. [people singing about NAFTA] But the agreement prompted a long and bitter national debate in the United States, primarily over the merits of linking the world's largest economy with its much poorer neighbor. To critics, the result would be massive job loss as U.S. companies moved South to take advantage of cheaper labor costs in Mexico.

H. ROSS PEROT: [CNN - November 1993] U.S. companies, because it is so difficult to do business in this country, can't wait to get out of this country and go somewhere else, and, if possible, get labor that costs 1/7 of what it costs in the United States.

MR. BEARDEN: To help gain congressional approval, the Clinton administration added several so-called "side agreements," promising cooperation on environmental enforcement and clean-up projects, particularly along the U.S.-Mexican border, creation of a North American Development Bank that will lend to communities adversely affected by NAFTA, and cooperation in investigating labor abuses. In addition, the U.S. created its own retraining fund for workers who lost their jobs due to NAFTA. In the year after NAFTA was approved by Congress and began to be implemented, American exports to Mexico continued to grow, but imports from Mexico into this country have grown even faster. And by January of this year, the once large U.S. trade surplus with Mexico had crossed into deficit. And in recent months, Mexico's peso crisis has brought new turmoil to the picture. In December, a devaluation of the peso by the newly-inaugurated president, Ernesto Zedillo, turned into a route in international currency markets, leaving Mexico in a precarious financial situation. The Clinton administration responded with a controversial aid package intended to stabilize the currency and bring back international investment.

PRESIDENT CLINTON: [January 31] The risks of inaction are greater than the risks of decisive action. Do I know for sure that this action will solve all the problems? I do not. Do I believe it will? I do. Am I virtually certain that if we do nothing, it will get much, much worse in a hurry? I am.

MR. BEARDEN: But the aid package also forces Mexico to take harsh austerity measures which will greatly slow the country's once booming economy, lowering, at least in the short-term, the prospects for American exports and possibly impacting other of NAFTA's provisions.

MR. LEHRER: Now, to a discussion. Rufus Yerxa worked on NAFTA as a top U.S. trade official in both the Clinton and Bush administrations. He's now practicing law -- he's now practicing law with an American law firm in Brussels. Willard Workman is vice president international at the U.S. Chamber of Commerce. Pat Choate is an economist and author with Ross Perot of the book Save Your Job, Save Our Country, Why NAFTA Must Be Stopped Now. John Cavanagh is a fellow at the Institute for Policy Studies and co-author of a new book on the world economy, Global Dreams. Pat Choate, you were one of the leading disaster predictors. So, how's it going?

PAT CHOATE, Author: We had a disaster, and so far, we're being asked to provide up to $53 billion to help bail out the Mexican financial system. As Ross Perot predicted, what happened is in the first year you had American companies begin to move to Mexico, you had the devaluation, which was predicted, it came right on schedule.

MR. LEHRER: Because of NAFTA?

MR. CHOATE: Largely it happened because I think of NAFTA. What happened, NAFTA passed. There was this enthusiasm in both countries. There was the idea that Mexico could quickly transform itself. The Salinas administration, which we now learned was very corrupt, engaged in practices, economic practices to hold up their economy which ultimately meant that Mexico was going to have to devalue the peso. The U.S. government, on the other hand, since it had gone so far out on a limb to get NAFTA passed, they had so overcommitted themselves, that they did not bring pressure on Mexico when they should have brought pressure on Mexico to bring their fundamentals back in order, and, thus, we had both the Mexican government and the U.S. government praising NAFTA up until December of this year. And as a consequence of this, the circumstance got totally out of hand, and now we have a circumstance where illegal immigration is up, we have a million Mexicans who've been put out of work since the beginning of the year, we're looking at --

MR. LEHRER: In Mexico?

MR. CHOATE: In Mexico. We're looking at a doubling of the illegal immigration coming across the border, and finally we're looking at a $15 billion trade deficit with Mexico this year. So everything that Perot said on the disaster that would happen is happening. And I predict it's going to get even worse.

MR. LEHRER: Mr. Yerxa, what happened?

RUFUS YERXA, Former Trade Official: Well, first of all, we have to say that there is a crisis in Mexico because of the currency policy, because of monetary policy that had absolutely nothing to do with NAFTA, and secondly, we have to say that the disaster which Mr. Perot and Mr. Choate predicted has not actually come to pass. In fact, if you look at their predictions of the giant sucking sound and 6 million jobs at risk from NAFTA, what has happened in the year and a half since NAFTA was actually enacted is the U.S. unemployment rate has dropped from 6.7 percent to 5.4 percent. Manufacturing employment in the United States has increased by 300,000 jobs just in the last three months. Yes, there is clearly a problem with Mexico's economic stability which basically affects working conditions and the future potential for economic growth in Mexico. The only way that can be addressed is through Mexico taking the correct macroeconomic policy steps, and the thought that by getting rid of NAFTA, we're going to help solve the problem is utterly ludicrous. In fact, NAFTA has helped to ensure that Mexico did the right things to adjust to this crisis, rather than doing the wrong things by closing its market.

MR. LEHRER: How?

MR. YERXA: In the early 1980's, Mexico had a very similar crisis to this one. How did it respond? It responded by raising its tariffs, closing its borders to foreign investment. The consequence was hyperinflation in Mexico, a reduction in foreign investment there, and actually more serious economic conditions, and a serious drop in U.S. exports. We saw our exports to Mexico decline by some 50 percent in the early 1980's. The NAFTA ensures that Mexico will not respond to this crisis in that kind of self- defeating way.

MR. LEHRER: Why? Because NAFTA force is --

MR. YERXA: Because NAFTA ensures that they keep their tariffs low. It also ensures that they continue to remain open to foreign investment. A country in a crisis like Mexico has a natural political inclination to respond with policies of economic nationalism. Those are what the political winds call for, but they actually make the crisis worse. The NAFTA makes it less likely that a country like Mexico in this situation will do that and more likely that they'll respond with the correct measures to, to correct their stakes in monetary policy.

MR. LEHRER: Mr. Cavanagh, how do you see it as we sit here now?

JOHN CAVANAGH, Institute For Policy Studies: Well, I would ask the question back to Mr. Yerxa. Correct for whom? Clearly, we, those of us who are opposed to NAFTA from a labor, environment, and citizen perspective, were always very clear that NAFTA would be good for a small narrow range of people, corporate interests in this country, the wealthy in Mexico, and I think that's proved true. NAFTA is a kind of corporate bill of rights that's made it easier for corporations to go there, and now they get the bargain basement wages that have gone down even further with the peso's collapse. But we said workers in both countries and ordinary citizens and communities would hurt. We've just finished a one-year assessment of NAFTA, a study we've put from the Institute for Policy Studies, which shows quite clearly we know that at least 40,000 workers have filed claims in the United States that they have lost their jobs because of NAFTA. Over half of those have been certified by the Department of Labor. Those people are hurting. And on the Mexican side, real wages are going down. So on both sides, people are hurting. Let me give just one example.

MR. LEHRER: What about Mr. Yerxa's point that if you look at the United States as a whole, employment is actually up?

MR. CAVANAGH: Unemployment [employment] is up a bit in the United States, but one of our major claims about NAFTA is it would increase the bargaining power of corporations to press down wages and working conditions in both countries. And we now have dozens of stories from factories across the United States where workers have been saying the company comes in and says you take a wage cut, you take a cut in benefits, or we'll move to Mexico. What we've seen in the United States over the past year is a continuing deterioration in the quality of work, which in many ways is the most important issue.

MR. LEHRER: Mr. Workman, is that happening?

WILLARD WORKMAN, U.S. Chamber of Commerce: Oh, I don't think so. First of all, NAFTA doesn't have anything to do with the currency crisis in Mexico. What caused, in my view, what caused the crisis was the fact that the $100 billion in foreign investment, some U.S., some Canadian, some European, some Asian, that flowed into Mexico from '89 through in '93/'94, was very fluid. It wasn't fixed asset investment. Only about 20 billion of the 100 billion were plants, nuts and bolts, and machinery, depots, and things of that nature. It was portfolio investment. And in an age where in one day the equivalent of 1/6 of a year's worth of trade, $1 trillion, can flow around the world through the financial markets, as soon as the, the speculators and the investors in this liquid, these very liquid assets got nervous, they pulled that all out. That's what precipitated the peso crisis. I also might note that the economic policies, the macroeconomic policies that Mexico was following in 1992, '93, and '94, were basically the same thing that Singapore did 20 years ago. They ran 15 percent annual trade deficits for 15 years. The difference was 20 years ago, you didn't have this instant movement of capital around the world.

MR. LEHRER: Well, let's talk about the jobs thing. Back to you, Mr. Choate. You heard what Mr. Yerxa said. In fact, I recall on this program, going into this argument, the pro-NAFTA people acknowledged that there was going to be some job loss in the United States. But their argument was that it would be -- there would be more jobs created in the long run, if not the short run. Has that not, in fact, happened?

MR. CHOATE: No, it is not happening. We can identify over 400 plants inside this country that have been adversely affected. Either they've moved to Mexico, or they have had to shrink themselves because of NAFTA. We can see already that there's --

MR. LEHRER: But with no corresponding thing. Mr. Yerxa --

MR. YERXA: The American manufacturing sector is doing very well right now, and it's doing very well largely because of trade. Mexico, even with this crisis, Mexico is still our third largest export market and exports have grown. And exports are growing in the sectors that are the highest paying sectors to the U.S. manufacturing work force. Now --

MR. CHOATE: No, no. Let's go back to the arithmetic here. Our biggest deficits are in autos and vehicles, electronics, and what we're seeing is the doubling and tripling of our deficit with Mexico. We're going to have a $15 billion trade deficit with Mexico this year. The administration says that a billion of trade equates to 17,000 to 20,000 jobs. A $15 billion trade deficit then leads to a loss of roughly 300,000 jobs. Mexico is in a position where even their own government, their ambassador in speeches here, say that Mexico must become an export platform, which we feared that they would become. Mexico --

MR. LEHRER: What's that mean?

MR. CHOATE: It means that they will be a place where American and European and Japanese companies will go for low wages, they'll put things together there at low cost because of the wages, then they'll shift those goods duty free into the United States. The point is Mexico can only work itself out of its situation by running massive trade surpluses with us for the foreseeable future.

MR. LEHRER: Where do you come down on the jobs issue, Mr. Workman?

MR. WORKMAN: I agree with the numbers. There's about seventeen to twenty thousand jobs per billion dollars in U.S. exports, and you're talking about we're going to run a trade deficit with Mexico this year. All right. Let's go back and compare this year with 1993, pre-NAFTA. From '93 to '94, trade grew about $50 billion, and we ran a slight trade -- well, we ran a trade deficit with Canada, and we ran a slight trade surplus with Mexico. So just focusing on the deficit, you know, imports minus exports, it doesn't quite get you there. The whole pie, this thing, everybody was talking about the pie grows. Well, the pie grew in '94. And it's not going to grow as much in '95. We all know that.

MR. CAVANAGH: It will shrink in '95.

MR. LEHRER: When you say pie, what are you talking about? You're talking about the total trade between the United States and --

MR. CHOATE: But let's go into the substance. Let's don't deal with the aggregate. Let's do as you wish. Let's go into the, into the numbers, themselves. 40 percent of that trade is simple maquila work. Where we take, for example, the sleeves or the body from a suit that are cut here with lasers, we ship them to Mexico, and 60 cents an hour, you have Mexican workers put it together, and it brings it back across the border. The big increase in trade with Mexico has been us sending capital goods or factories to Mexico and in the maquila trade. Only about 10 percent of that trade reaches the Mexican consumer, because the Mexicans are poor.

MR. LEHRER: Mr. Yerxa.

MR. YERXA: Over the long-term what's actually going to happen in any arrangement where the borders are open is that trade will find a rough balance, but the fact of the matter is that the critics of NAFTA continually refuse to acknowledge what NAFTA was really all about. Before NAFTA, Mexico had a closed economy; the United States had an open economy. Let me finish. The NAFTA changed that situation in Mexico dramatically. Now you have Pat Choate, who originally was telling us we were going to lose 6 million jobs because of NAFTA --

MR. CHOATE: Over 10 years, and we will.

MR. YERXA: -- and since NAFTA, we've seen jobs increase in the United States and manufacturing employment increase, and the job increases are in the highest-paying sector because of a very strong pro-trade, pro-export policy. But the more important point, I think, is that he also suggests that we're seeing increased immigration to Mexico. He acknowledges that the economic problems right now are in Mexico. How is it that we're seeing economic problems there, and yet, all the American jobs are going to Mexico? His equation just doesn't add up. He's got it figured that the jobs go there and the people here.

MR. CHOATE: Ninety million Mexicans, that's the answer.

MR. LEHRER: Mr. Cavanagh.

MR. CAVANAGH: We are facing -- let's talk about the impact of this on ordinary people -- we are facing in both countries a major crisis for workers where in both countries workers are watching their wages and their working conditions erode as companies play them off against one another and also off against the ability to go to China or Indonesia. And I think we should go back to some of the companies that promised such great things with NAFTA. Allied Signal, the head of it, Lawrence Bosset, said before NAFTA, we will never move jobs to Mexico. Five of the communities where workers have filed complaints that factories have been closed down or jobs have been lost have been with Allied Signal plants. And I noticed in yesterday's Wall Street Journal that Mr. Bosset is the sixth highest paid executive in 1994, giving himself $12 million.

MR. LEHRER: Let's go to the future. Mr. Choate began by saying that things were bad now, and it's going to get worse. Do you agree with him?

MR. CAVANAGH: I agree that in Mexico things are likely to get worse.

MR. LEHRER: Because of NAFTA?

MR. CAVANAGH: NAFTA has accelerated two problems in Mexico. One, that the beneficiaries of integration -- and there are some -- the wealthy -- there are 24 billionaires -- they're getting richer, but the poorer, the majority, the tens of millions of people symbolized by the people in Chiapas, who have taken up arms against their government, are left out, marginalized, or hurt.

MR. LEHRER: Mr. Workman, is it going to get worse?

MR. WORKMAN: I think it's -- this '95 not only economically but politically and socially is going to be a very tricky year, what no one has talked about.

MR. LEHRER:With or without NAFTA, it's going to get rough.

MR. WORKMAN: With or without NAFTA, but what the Zedillo administration is doing, in addition to a very tough austerity plan, is they are putting in place some political reforms. They are opening up the government, the PRI, the party that's been in power for over 60 years. In the Zedillo government, for example, the attorney general is from the opposition party. This is unheard of politically in Mexico. I --

MR. YERXA: Actually this happens every Mexican election.

MR. WORKMAN: Well, not when you have the attorney general investigating two political assassinations from 1994. So I think this is very positive. I think it's very tricky. I love the Zedillo government for not closing, as Rufus noted, as they did in '82, for not closing their economy, they're going forward. They're accelerating the privatization, and they're not rolling back the tariff commitments that they made on the NAFTA. So I think '95 is going to be tricky, but we're optimistic for '96.

MR. LEHRER: You don't see anything to be optimistic about?

MR. CHOATE: The only way that Mexico can pay off its $200 billion debt is to run massive export surpluses with the United States. That means many, many, many hundreds of thousands more jobs going to Mexico.

MR. CAVANAGH: The big argument of the opponents is that freer trade is going to impoverish both countries. The fact of the matter is that over the long-term it's going to make both countries better off. I don't deny that Mexico has got short-term problems that are very serious and that are basically going to hurt Mexicans a lot more than they're going to hurt people in this country. But if you want to see those problems get worse and if you want to see it really cause job losses for Americans, repeal the NAFTA agreement, and you will see the 700,000 jobs in this country that depend on trade in Mexico are greatly endangered.

MR. LEHRER: Are you advocating that?

MR. CHOATE: No. What I advocate is we should go back and renegotiate NAFTA and do it right this time. We should talk about labor rights for the Mexican workers. We should talk about programs that will guarantee that they will be treated well, that they can unionize. We need to also talk about protecting the environment in Mexico. We could have done this agreement right, but we chose not to. Now, if -- we've got to come back and redo it.

MR. CAVANAGH: And those issues are covered in the side agreements, and we're going to make progress in the areas of labor and the environment.

MR. YERXA: But they're covered, unfortunately, in a totally inadequate way. Side agreements were negotiated with NAFTA because we put a lot of pressure on the administration to do so. They were very weak, though, essentially toothless. And I would agree with Mr. Choate we should put NAFTA back on the table, talk about renegotiating it, and we will have the same opportunity next month as President Clinton extends negotiations - -

MR. CAVANAGH: Labor and environment were negotiated because President Clinton believed they ought to be part of the agreement. That's the reason they were negotiated.

MR. LEHRER: We -- I can't negotiate for any more time, gentlemen. Thank you all four very much.

MR. MAC NEIL: Still ahead on the NewsHour, a report on employee theft, the United Nations man in Iraq, and a Roger Rosenblatt essay. FOCUS - BIG BROTHER?

MR. MAC NEIL: Next, a workplace conflict between the property rights of employers and the privacy rights of employees. Rod Minott of public station KCTS-Seattle reports.

ROD MINOTT, KCTS-Seattle: On college campuses talk of George Orwell's 1984 and "Big Brother" usually belong in the classroom, but not too long ago here at the University of Washington, the book became a frequent reference in a bitter dispute involving charges of spying and secret videotaping.

JOAN WEISS: I was outraged. I know it's long past 1984, but I don't like the idea of Big Brother watching me at work. I don't like the idea of not knowing that there may be a camera monitoring me.

MR. MINOTT: Joan Weiss was an employee at this hospital parking garage at the university. She described what happened.

JOAN WEISS: This is the door here that my co-worker looked at and saw the two holes in the door, and he looked through, I think, the bottom hole here, saw camera gear and a person on the other side.

MR. MINOTT: What they'd stumbled on was a hidden video camera aimed at the area where the parking garage attendants worked. At first, university managers said they'd installed the camera to monitor traffic but later admitted setting it up as part of an investigation. There were concerns that someone might be stealing from the garage's cash register. University officials declined to be interviewed on camera about the incident. Accurate data on the extent of surveillance is hard to come by, but security and privacy experts agree that camera monitoring, both overt and secret, is on the rise in workplaces across the country. It's led to clashes between business owners who claim a right to protect property and employees and privacy advocates who say monitoring is intrusive and often unnecessary.

LEWIS MALTBY, American Civil Liberties Union: Privacy is really an endangered species in the workplace today.

MR. MINOTT: Lewis Maltby heads a workplace privacy task force for the American Civil Liberties Union. He spoke to producer John Denatale in New York.

LEWIS MALTBY: Employers are doing things that it's just hard to comprehend, reading people's computers when they're not looking, eavesdropping on their telephone calls, reading their E-mail, listening to their voice mail, listening to their offices with secret microphones, watching them with hidden cameras. It just goes on and on, and it's wrong. It's got to stop.

STEVE BROZOWSKI, Security Manager, Sears: She's run a transaction. Here we have a no-sale.

MR. MINOTT: But it's not stopping. On this day, Steve Brozowski, head of security for Sears Roebuck in the Northwest, shows off a new high-tech weapon in the battle against retail crime. It's a video recording system that simultaneously displays cash register sales, an electronic eye that can spot whether a store worker is stealing.

STEVE BROZOWSKI: Here we have a void transaction. It's obviously identifying for us the associate, the transaction number, the amount that's involved. If we do, unfortunately, have to apprehend someone, we will have evidence that is black and white, very clear cut.

MR. MINOTT: Experts say the monitoring is being driven not only by the shrinking size and cost of high-tech spy gadgets but also by a surge in workplace crime, the biggest problem, employees who steal. Linda James is a security consultant who helps businesses find ways to stop theft in the workplace.

MR. MINOTT: Now, what's one of the most common ways employees will steal from their employers?

LINDA JAMES, Security Consultant: At the cash register. It's very common for the majority of theft to occur at the register area. The most typical types of theft are voiding a sale, fraudulent refund of a sale, and no-sales, which means not ringing throughthe register at all.

MR. MINOTT: A hidden camera caught this cashier nervously pocketing from the register. She counts, then palms $77. Store detectives later found she'd stolen a grand total of $800. This grocery clerk is only pretending to scan those items. Nothing is rung up -- $50 of goods handed over for free. Consultant James says the high cost of theft losses justifies surveillance.

LINDA JAMES: Approximately $10 billion a year is attributed to employee theft. Unfortunately, we don't keep very good records on employee theft, and the estimates are that it's actually about three or four times higher than the $10 billion.

MR. MINOTT: So it's upwards of $40 billion a year?

LINDA JAMES: At least.

MR. MINOTT: That $40 billion estimate is backed by the U.S. Chamber of Commerce. In fact, the Chamber also blames 1/3 of all business failures on employees who steal.

JENNIFER: It was hard. My paychecks were good, but not enough.

MR. MINOTT: Jennifer, who refuses to be identified on camera, knows theft firsthand. At one time she worked as a sales clerk for a department store, and when her bills began piling up, she says she started stealing.

JENNIFER: And when I really needed to get cash or do a deposit, we would take like say $50 and then write down how many ones we wanted -- tens, you know, quarters, whatever -- and stick it in a little paper bag and go downstairs. And so I'd always put an extra $20 in there, and then on my way down the stairs, take it back out.

MR. MINOTT: Would you just put it in a purse or in your pocket?

JENNIFER: I would put it in my waistband in my dress or skirt or whatever.

MR. MINOTT: Eventually, Jennifer was caught. She confessed to taking $1500. Faster and more powerful cameras like this pan-tilt zoom-zoom system have helped improve the odds of catching crooked workers, as well as nabbing shoplifters. Many stores monitor continuously with these cameras, which are usually wired from the ceiling and housed inside bubble casings that are tinted.

JEFF LARSON, Store Manager: [Fox's Spy Outlet] This one right here, that's probably the smallest board pinhole lens camera you're going to see.

MR. MINOTT: And now more bosses are planting miniature hidden cameras. This store in Seattle sells many types with lenses as small as the tip of a pencil.

JEFF LARSON: You could hide it in basically anything because all you need to do is have the little, the little hole showing, just a little pinhole showing, that's all you have to have. So, I mean, you could conceal it even behind a business card. You can conceal it anywhere really.

MR. MINOTT: They are, in clocks, stereo speakers, even smoke detectors.

JEFF LARSON: Basically, disguised as a smoke detector, and it's got a little board camera inside it.

MR. MINOTT: Now, who buys this sort of thing?

JEFF LARSON: Retail stores. They like to put 'em over cash registers. Anybody who wants to see over something, on top a table where money is exchanged or jewelry is exchanged or things like that.

MR. MINOTT: Hidden or not, it's all legal. Experts say under the law business owners can place these cameras virtually anywhere. Experts add that when it comes to privacy rights, workers enjoy few safeguards.

LEWIS MALTBY: They're not protected at all. The only statute we have in this area is the 1986 law from Congress, the Electronic Communications Privacy Act, which says that an employer cannot deliberately listen to a personal conversation you might have while you're at work. That's certainly a good start, but it doesn't help us at all when it comes to E-mail or computers or maybe even voice mail.

JOHN DENATALE, Producer: How does it fare in terms of camera surveillance?

LEWIS MALTBY: It has no application to cameras at all. So if the boss wants to put a hidden camera in the office, even in the bathroom, even inside the stall, there is no law that says they can't do it.

MR. MINOTT: Critics cite this video as a dramatic example of that abuse. In 1991, a hidden camera in the men's locker room at the Boston Sheraton Hotel caught workers in some very private moments, changing clothes, taking naps. Hotel managers say they were looking for evidence of drug dealing. Now, several of the workers are suing for invasion of privacy. The trial, expected sometime this year, is likely to set a precedent on privacy and use of hidden cameras in the workplace. Steve Brozowski of Sears says during theft investigations at his stores, he uses hidden cameras only as a last resort and strictly limits where they can be placed.

STEVE BROZOWSKI: Our surveillance is conducted only in, in open areas of the store. We definitely do not do any type of recording in a fitting room, or a restroom, or any area that's private.

MR. MINOTT: Brozowski says in his 10 years as security chief for Sears, he's never been slapped with a lawsuit over privacy and says he'd fire any employee caught spying with cameras in non-public areas. Like Brozowski, privacy advocates argue cameras should be used as a last resort, and only if there's a reasonable suspicion of criminal activity or misconduct. Last year, Congress considered ways to regulate electronic monitoring in the workplace, drafting restrictions designed to head off abuses, including barring cameras in bathrooms and dressing rooms. A labor interest favored bills introduced in the House and Senate business; groups strongly oppose them. According to Maltby, compromise legislation died when Congress failed to act before recessing for the elections. Eventually, parking lot workers struck a deal with the University of Washington to remove the hidden camera. It happened under threat of filing an unfair labor practices charge. Despite the truce, Joan Weiss remains angry.

JOAN WEISS: I never knew for sure whether somebody was dipping into the till or not, or taking money in some other way. I was concerned about this, and I certainly felt like it should be dealt with, but never that my boss should put a camera in the building and spy on me and my co-workers.

MR. MINOTT: No proof of theft ever surfaced. Even so, university managers reserved the right to install cameras again in the future when or if needed. NEWSMAKER

MR. MAC NEIL: Next tonight, the continuing effort by the United Nations to keep Iraq from developing weapons of mass destruction. Iraq has been under U.N. monitoring since it lost the Gulf War in 1991. The United States and other members of the Security Council also have maintained economic sanctions on Iraq until they're assured Iraq is no longer trying to develop nuclear, chemical, or biological weapons. Today the Security Council received an update on Iraq's compliance with the weapons ban. Rolf Ekeus, a Swedish diplomat, is in charge of U.N. monitoring. I talked with him after he reported to the Security Council. Mr. Ekeus, thank you very much for joining us.

ROLF EKEUS, Chairman, UN Commission on Iraq: It's a pleasure to be here.

MR. MAC NEIL: I gather you told the Security Council there is a high risk that Iraq could have the materials to make biological weapons. What is the evidence for that?

MR. EKEUS: Iraq has imported in the year between 1988 -- the year before the Gulf War, a very large amount of biological growth media, which is used as breeding ground for growing bacteria for weapons purposes, to produce agents for weapons purposes. And these imports Iraq had was of such magnitude that it in no way corresponded to any reasonable, legitimate use. In parallel, Iraq also imported large amount of equipment, technical equipment, and also constructed something that in our eyes looked like production facilities in the country.

MR. MAC NEIL: So some of this media material in which cultures are grown, that, I gather, is still missing?

MR. EKEUS: Yes. The amount of 17 tons are missing, and that corresponds to bacteria, something like one to two ton of anthrax or botulinin, which are the, the type of biological agent which could be sued for weapons purposes, and which were eminently suitable in relation to that type of media.

MR. MAC NEIL: Is this a new development, or a track that you have been pursuing all along?

MR. EKEUS: We have suspected that Iraq was working on the -- had been working on the biological program, but the, this matter was clarified when we late last year managed to get hard evidence about the size of and the character of the imports to Iraq.

MR. MAC NEIL: What do they, what do the Iraqi authorities say when you say ask where the missing media is?

MR. EKEUS: Well, Iraq explained that this media was distributed just before the war, when it arrived into Iraq, to some regions of Iraq, four regions or governance, as they call it in Iraq, and there distributed to hospitals for diagnostic and hospital purposes. Through the -- during the riots in March '91, in Iraq, they say, the rioters went to the hospitals and found this media, destroyed it, and also in the process destroyed all documentation related to this, this distribution of this media.

MR. MAC NEIL: And you don't believe that?

MR. EKEUS: No, we don't believe it simply because this media were in such -- delivered in such amounts, in such packages, and under such circumstances that it didn't correspond to any legitimate or possible use for the hospital purposes.

MR. MAC NEIL: If -- if they won't tell you where it is, and it still exists, how can you find it? Presumably, there are no technical means of detecting such material.

MR. EKEUS: We can -- the question is first of all, if these media have been produced or consumed in production of bacteria or bacteriological agents for weapons purposes, it's our main concern.

MR. MAC NEIL: You mean, if they're already made germ warfare materials from this?

MR. EKEUS: Yes, yes, because that can -- that can be done, and it is not -- that is difficult to store this if it is properly processed. So this is a concern. That's why we have to find the media, we have to ascertain that Iraq has not produced agents, prohibited agents. Otherwise, we have to continue our research, but expect that Iraq under the pressure of sanctions will clarify the issue. However, is quite -- our concern is that there is nothing remarkable about having media as such. So Iraq could easily disclose this media if they were available and not consumed, so there are lots of question marks there.

MR. MAC NEIL: If it had been consumed, then the weapons containing such germ warfare material would presumably exist somewhere.

MR. EKEUS: Yes. If it has been properly treated, that means been dried and put in dry form into bombs or special containers. Iraq had all the equipment; spray dryers for drying the agent, and also filling machines for filling them into weapons or into containers, and then they can be stored in room temperature for five, ten, twenty years. So this is a real, real problem, if we don't find it.

MR. MAC NEIL: Until they come up with the material, you will report them in non-compliance to the Security Council, and the Security Council will not lift the sanctions, is that the logic of the present situation?

MR. EKEUS: It appears to be the logic. We have been -- we have now informed the Council about all the ins and outs of this problem, and it appears that the Council is in agreement that this is a serious and major problem and an obstacle towards process and towards at least lifting the oil embargo.

MR. MAC NEIL: In your experience with the other issues under your control, will that leverage cause them to -- bring them around? In other words, do you suspect that they will soon produce the material or some explanation, because they want the sanctions lifted?

MR. EKEUS: Our experience is, indeed, quite positive in the sense that we have had recent cooperation with Iraq with regard to establishing a control system, a solid control system with the future, where we don't complain about the Iraqi contribution to that once Iraq has come forward, even if grudgingly, in the question of clarifying the missile program Iraq had and chemical weapons. So if we only on our side can define clearly, clearly to them the importance and the character of the problem, there may be some hope. And I have also some indication from the Iraqi deputy prime minister and other leading officials in Iraq that Iraq may, indeed, clarify the issue and help us to sort out that in the coming months.

MR. MAC NEIL: In the areas under your responsibility, is this risk of biological weapons the only issue that remains outstanding on which they have not complied?

MR. EKEUS: Well, there would only -- it's a little risky to take. We feel confident that we have sorted out all the long-range missiles. There are no long-range missiles left in Iraq. We also feel that we have sorted out the production capabilities in that area. There are still some hesitancy about the material balance in the chemical area. There are some precursors imported which have not been really accounted for with regard to its whereabouts. But with a broad brush, one can say that we feel that Iraq is not now able to reestablish its weapons program with the possible exception of biological weapons.

MR. MAC NEIL: Would you be able to report to the Council they had satisfied you if they now came forward with an explanation for this biological material?

MR. EKEUS: Yes. Explanations we get all the time, so what they have to come is with --

MR. MAC NEIL: Proof.

MR. EKEUS: Yes, exactly, a good solid, honest admittance of what they have done, and then we need to verify that. That is necessary. We need to put our eyes on it, and we have to test that this is the right material. So it needs a verifiable admittance by Iraq, and also -- so that is the major issue, no doubt that.

MR. MAC NEIL: Mm-hmm. The United States says that Iraq may be persisting in efforts to develop nuclear weapons. Do you have an opinion on that?

MR. EKEUS: We have, obviously, a concern always in the nuclear area, because some, some information has been held from us, been held from us since some time, but overall, it -- the International Atomic Energy Agency, which is doing most of the work in this area, feel that there is no risk for -- that Iraq can undetected reestablish a nuclear program. So, overall, I think we can express satisfaction there.

MR. MAC NEIL: As a neutral observer who goes to Iraq quite often, what is your own personal observation of the human effect that sanctions are having there?

MR. EKEUS: Well, the sanctions are biting quite hard. We don't see, I would say, a desperate situation. We don't see starvation, but we see a very harsh, typical hardship situation, and also that some, maybe malnutrition in the long-term can, can be, start to be felt. And there is obviously also some lack of certain specialized medicines and so on. They are slogging through under certain quite, I would say, gradually hardening conditions.

MR. MAC NEIL: Mm-hmm. The Iraqi regime has so far refused to accept the Security Council offers to sell a limited amount of oil periodically in order to buy food and medicine. There are reports that their attitude is softening on that. Do you think that's true, that they will now accept to sell limited amounts of oil so they can buy food and medicine?

MR. EKEUS: Well, it depends very much on the conditions. I think Iraq is concerned that one major concern for Iraq is that the -- such arrangement would delay indefinitely the more complete lifting of the oil embargo and then deny Iraq the broader freedom of reestablishing its import and export situation and developing its economy. However, if Iraq gets the necessary guarantees for a shorter arrangement, a stopgap, a bridging arrangement, they may go along with it or give some, also technical considerations in the long run.

MR. MAC NEIL: Well, Mr. Ekeus, thank you very much for joining us.

MR. EKEUS: Thank you.

MR. MAC NEIL: Thank you. ESSAY - BARING SOULS

MR. LEHRER: Finally tonight, essayist Roger Rosenblatt considers TV talk shows.

ROGER ROSENBLATT: Of all the questions asked about daytime TV talk shows that deal in exposing private lives, the one that gets to me is what happens to the guests, or to the live audience, after the show is finished, and they all go home to consider what has happened? What happens when they go home? The question might be asked with some urgency these days. The Jenny Jones Show, a product of Time-Warner, invited a man to be in the audience and told him that a guest on the show was going to declare love for him. The man was led to believe that the guest would be a woman. It turned out to be another man. So distraught and mortified was he by this public declaration that three days after the show was taped, he killed the man who had declared his affection. The Jenny Jones Show, indeed, Jenny Jones, herself, mouthed the conventional words, "regret" and "tragedy," called the incident an individual aberration, and said, in effect, that the show must go on. Of course, it does go on, and that's the killer. Jenny Jones or Time- Warner or any of the producers of the other confessional talk shows can shout "regret" and "tragedy" till they're blue in the face. But the fact is they toy with lives on these shows -- the most fragile, dangerous, and secret cells of lives. Often when the guests go home, they have revealed things in front of millions that they have never said to anyone else before -- families and closest friends included. After the show is over and they are no longer of use to Jenny Jones and company, all they have to return to is themselves, broken open like eggs.

RICKI LAKE: -- Finding out here on national television, as we're finding out, that this guy is getting married --

WOMAN ON TALK SHOW: It hurts. It really does hurt.

ROGER ROSENBLATT: To my mind, the shabbiest offense these shows can and do offer is the first amendment defense: we have a right to lay barethese secret lives; let's go for it. In age in which the counterculture media has virtually disappeared, companies like Time-Warner, King World, Fox, and Paramount have become both culture and counterculture. First, they concoct things like the Jenny Jones Show, then they defend their rights of free expression. For the viewers of these shows, free expression may mean weird, cheap thrills, though, in truth, I believe that more people recoil from these confessionals than are titillated by them. For the guests and the live audience too, free expression may mean chaos. Tune in any day to one of a dozen of these shows: a teenage daughter will confess to making love to the mother's boyfriend in her mother's bed; three teenage boys will deride a teenage girl for being a whore; they sit in rows of chairs as if at school. Cheating wives will compete with cheating husbands for the "worst thing you can possibly imagine" award, and when the hour of public emotional mayhem is done, everyone goes home, where they have only themselves to live with. Who knew that one day one of these creatures on public exhibit would pull a gun? Everybody knew. It's why the shows exist, to tap the emotional danger zone, to light the fuses. An interesting decision of the Jenny Jones Show was not to air the love declaration episode after the taping. But why not air it? By their money-driven lights, that show would get fabulous ratings. And as Jenny Jones said, if you really believe that the killing was an individual mishap, you shouldn't blame yourself for the consequences. You can't be morally responsible. But they are morally responsible, both the shows and the media companies who make them and the television stations and cable channels that air them. And what's more, I think they know it. And acting on whatever residue of conscience remains within them, they did not air that show because they could not bear to look at it, after they went home and had only themselves to live with it. I'm Roger Rosenblatt. RECAP

MR. LEHRER: Again, the major stories of this Thursday, White House Press Secretary McCurry said the U.S. may impose trade sanctions on Japan if no progress is made in talks on automobiles and parts. Chrysler's chairman said the company is not for sale but the board will evaluate investor Kirk Kerkorian's takeover offer. And conservative Congressman Robert Dornan of California became the seventh Republican to announce his candidacy for President. Good night, Robin.

MR. MAC NEIL: Good night, Jim. That's the NewsHour for tonight. We'll see you tomorrow night with our regular Friday political analysis, among other things. I'm Robert MacNeil. Good night.