Trading Profits for Change
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| Jeremy Lehrer is a writer in New
York. |
Father Oliver Williams puts it best when he describes the reason why an industry relents to advocacy and public pressure to reform abusive practices. "When I feel the heat, I see the light," says Williams, director of the Center for Ethics and Religious Values in Business at Notre Dame University. With the spectre of egregious sweatshop conditions looming in the public eye, the apparel industry felt the heat and saw the light. In August 1996, a coalition of advocacy, labor, and industry organizations gathered in Washington, D.C., with nurturing from the White House and Department of Labor, to form the Apparel Industry Partnership. The Partnership's ultimate goal, as described in an April 1997 communique, would be to "assure Americans that the clothes and shoes they buy are made under decent and humane working conditions." The goal, without a doubt, is difficult, and the organization formed to achieve it raises fundamental questions about the possibilities and methods of eliminating industry abuses. Because the Apparel Industry Partnership will have no legal enforcement power, what chance is there that the Partnership will have any impact on industry practices? What are the advantages and disadvantages of standards that are observed voluntarily compared to those that are enforced by law? And what are the implications of globalization for both legislative and voluntary efforts to achieve change in industries? At the moment, the Apparel Industry Partnership is engaged in the difficult process of developing the nonprofit association that will implement and supervise the Partnership's "Workplace Code of Conduct." The Code of Conduct and the Partnership's "Principles of Monitoring" are the touchstones for the Partnership, providing standards for factory conditions and guidelines for the monitoring process. Specifically, the Code includes provisions regarding forced labor, child labor, harassment, nondiscrimination, health and safety, freedom of association and collective bargaining, wages and benefits, hours of work, and overtime compensation. Discussions regarding the oversight and implementation of these provisions are not without disagreements. While members of the Partnership are optimistic about its future, they acknowledge that creating a workable coalition that satisfies advocacy, labor, and industry agendas is very difficult. As Pharis Harvey, a member of the Partnership and executive director of the International Labor Rights Fund, observes, "We're still negotiating, and the negotiations are tough." Kevin Sweeney, director of communications at the California-based apparel manufacturer Patagonia and another member of the Partnership, adds, "It takes a long time to iron this out." Once the Partnership completes the current round of discussions, it will issue a report detailing the group's monitoring system and organization structure. Linda Golodner is president of the National Consumers League and a cochair, along with Roberta Karp of Liz Claiborne, of the Partnership. Regarding the process of smoothing out all "the little details," Golodner explains, "They're very complex issues. We want to do it right. We don't want to release something that is not complete and comprehensive." While some advocacy and labor representatives argue that the Code does not go far enough, other coalition members argue that the Code goes too far. Wages are one example of a contentious issue for the Partnership. Advocacy and labor groups wanted the Code's provision for wages to be a "living wage" that would tie wages to a cost-of-living index. Currently, the Code's provision on wages calls for employers to pay "at least the minimum wage required by local law or the prevailing industry wage, whichever is higher." Sweeney argues that the Partnership should not impose conditions that would place undue pressures on the handful of companies (currently eight) that are involved in the Partnership. "I want to acknowledge that there's only so much we can do, and let's do that, and then gain momentum." Another question that remained unresolved was what exactly would happen if a company were found to be in violation of the Code of Conduct. The Apparel Industry Partnership is not the first or last coalition organization that has been formed in an attempt to implement change without the power of legal enforcement. There are other examples of coalitions that, using only the power of moral opprobrium—and the fiscal opprobrium that sometimes follows—have struggled to achieve change. One of these, the International Labor Organization, is comprised of industry, government and labor representatives from 174 member countries. Originally formed in 1919, the ILO was created to "advance economic and social stability around the world by promoting human rights in the workplace; employment and job creation; and fair trade among nations through observance of basic labor standards." The ILO became a specialized, independent agency of the United Nations in 1946 and, among other activities, conducts an annual review of labor practices in countries around the world. ILO committees issue various reports documenting conditions, and a process is in place for reviewing complaints. While the ILO itself has no enforcement power, its reports can be used by governments to determine whether or not to withhold aid based on the documented abuses. ILO critics contend that the organization is crippled by its inability to impose legal or fiscal sanctions, but the organization has seen its share of successes. According to the ILO, governments have reformed laws or labor practices in more than 2,000 cases over the last 30 years due to ILO investigation and procedure. Current director-general Michel Hansenne has observed that after South Korea passed legislation in December 1996 that violated ILO conventions, ILO criticism spurred the government to reform the legislation to conform to ILO standards. Anthony Freeman, director of the Washington, D.C., office of the ILO, observes that countries "do go to some lengths to avoid the moral opprobrium," and adds, "I've seen the worst offenders twist in their seats." Freeman adds that differences in labor standards often boil down to a very lively discussion about the ground rules for acceptance into the global trading community. Many developing countries argue that developed nations' attempts to impose their labor and human rights standards are unfair. Father Williams, who has dealt with representatives of developing nations, particularly South Africa, summarizes their arguments by noting that until the U.S. built up a huge capital base, the country essentially ignored labor and environmental standards and maintained a protectionist trade policy. If developing countries are forced to match developed nations' standards without an infusion of capital and technology, these countries will never accrue the capital base the developed nations now have. Thus, attempts to enforce labor or environmental standards are seen by developing countries as one way of "keeping the rich nations rich and the poor nations poor." Jay Vogelson, chair of the ABA's Standing Committee on World Order Under Law and the former chair of the Section of International Law and Practice, also expresses caution about holding developing nations accountable to the standards of developed nations. "To the extent that economies are not relatively equal, there are different issues," he says. "We from the United States cannot impose our labor or living conditions on undeveloped countries. We can't bring those countries to our level of economic well being." The point raises an interesting question about the complexities of globalization and the different standards and living conditions throughout the world. On one hand, advocacy and labor groups maintain that wage conditions, for instance, are unacceptable. Father Williams and others agree that while there are exceptions, the jobs offered by the multinationals in developing countries are often better than other options within the country. If a company pulls out of a country, workers are left with even worse options. The observation, however, does not justify abusive, dangerous, or oppressive working conditions. "There's no perfect system. It's extremely complicated," Williams explains. "I think we can do better than we do now. And when gross violations are found, to expose them." During apartheid in South Africa, the global trading community witnessed an earlier example of an apparent clash of business and human rights interests that resulted in a coalition for change. While a large number of companies left South Africa entirely, there were multinationals that never left South Africa but followed strict guidelines for investment in the country. The guidelines for investment were developed by the American civil rights leader Rev. Leon Sullivan and were an attempt to develop business practices that would counter apartheid measures. Dubbed "the Sullivan Principles," the guidelines were strengthened over time; at one point, the companies still in South Africa would buy advertisements in newspapers to convey their disapproval of the government's actions. The company advertisements were voices against the actions of the government, and the government did not expel the companies from the country since their investments were an important element of the country's economy. The companies that remained in South Africa followed the Sullivan Principles and were rated by an accounting firm that evaluated each company's performance for each of the guidelines. Father Williams, who was a member of the board that oversaw the implementation of the Principles, explains that in the case of South Africa, the companies that remained in the country provided a base for the postapartheid economy. Had all companies disinvested from the country, the new government would have been left without much of an economic foundation. One could only hope that the companies investing in China now would follow something akin to the Sullivan Principles in their business practices in that country. If a few key companies would agree to do this, other companies are likely to follow, since the formation of these coalitions often has as much to do with peer pressure as anything else: once one company signs on, other companies are likely to do so as well. For the Apparel Industry Partnership, a few key players could add a great deal of market share and thus fiscal power to the group. As Kevin Sweeney observes, if five major retailers would sign on to the Partnership, 50 percent of the clothes sold in the United States would be manufactured or sold by companies that adhere to the standards established by the Code. Rugmark is another organization formed in an attempt to address industry abuses through voluntary compliance with a code of conduct. In an effort to end the notorious child labor linked to the rug-making in India and Pakistan, Rugmark developed a complex code and independent monitoring system that attempts to ensure that carpets are not made using child labor. The Rugmark label is put on carpets that have been produced according to stringent Rugmark guidelines, and a fee levied on Rugmark carpets funds marketing efforts as well as education and rehabilitation programs offered to the children who might otherwise have been working the looms. Harvey notes that the Rugmark verification process is still being refined, and his comments suggest that coalitions need to remain dynamic. "We are still finding some problems. Those problems are now being examined, looked at, and tightened," Harvey explains. "It's a process that's an evolution in an industry that is notoriously difficult to control. It's a work in progress." Once standards are developed, monitoring the developed standards is fundamental in ensuring that companies or countries put their money where their mouths are. Without a monitoring system, coalition codes or principles become exactly what some critics might accuse—public relations ploys without any real effect. As Father Williams observes, "If you don't monitor the code, it's dead in the water." There are advantages and disadvantages to voluntary coalitions as opposed to legal regulation, though everyone seems to agree that government-enforced regulations are the best means of preventing industry abuses. Kevin Sweeney, of Patagonia, explains that he believes the Partnership's initiatives should be legislated into law. "In the long term, these organizations need the full force and effect of the law," Sweeney says. "If a handful of a companies can take action against sweatshops, it makes it easier for Congress to legislate this. It's a waltz. Sometimes government leads, sometimes corporations or groups of corporations lead." One advantage of a voluntary code, as noted by both Sweeney and Linda Golodner of the National Consumers League, based in Washington, D.C., is that corporations can sometimes exceed the basic standards outlined by the Code of Conduct. With the law, corporations achieve "compliance," but Golodner observes that Partnership members can exceed compliance. "The Partnership is one way that we can go beyond even what the law is and say, ‘What is labor decency?' and ‘How can we assure consumers what are labor standards above and beyond the law?' " But Golodner also cautions that ultimately laws are necessary. "You have to have the laws, you have to have the regulations. There are companies that are the bad apples that will not be socially responsible. Nothing can supersede having a law and regulation." Ironically, coalitions may be the way that change will be effected in the future if WTO decisions follow the trend of placing trade above other considerations. GATT panels established a precedent that legislation imposing trade sanctions for what a country deems "process" violations is protectionist and thus prohibited. The U.S. Marine Mammal Protection Act prohibited the import of tuna caught using methods that kill large numbers of dolphins. While opposition to this legislation seems contrary to common sense, Mexico brought a case against the United States in 1991 for GATT arbitration. Mexico argued that the U.S.'s prohibition of Mexican tuna was a violation of GATT rules. In September 1991, a GATT panel issued a decision stating that while the U.S. could apply regulations on the quality and content of imported tuna, it could not impose sanctions based on the method of tuna production. In 1994, a second GATT panel upheld the first panel's findings and issued a report that was not adopted before the WTO superseded GATT. The nexus of trade and social issues is bound to come to a head in future years. For the moment, the World Trade Organization has resisted efforts to link trade and labor standards. Following a WTO Ministerial Conference in Singapore, the ministers issued a statement that described the ILO as the "competent body" to deal with labor standards and added, "We reject the use of labor standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question." There will undoubtedly be additional efforts to link labor and environmental standards with trade in the WTO and outside of it. One reason fast-track legislation was opposed and defeated in 1997 was that labor and environmental standards were to be left out of core trade agreements. Jay Vogelson notes, "What WTO administers are not labor and environmental standards. WTO responsibility is to enforce and follow the trade agreements under its charge." In reference to the attempt to add labor and environmental standards to WTO agreements, Vogelson says, "Ordinarily, trade agreements do not cover anything but trade. The emphasis is on lowering trade barriers." While the ILO currently has no enforcement power, there are proposals that would strengthen the organization or give it additional oversight responsibilities. At the U.N. Social Summit in 1995 in Copenhagen, ILO "core standards" were accepted as a basis for further discussion, and advocacy groups and some governments would like to see the WTO incorporate a consideration of these standards into the trade organization. Pharis Harvey would like to see the ILO act as an investigative body whose findings would be enforced by the WTO. "We're moving inexorably to a better system of linking better standards to trade," he says. "As the global economy begins to be more and more of a reality for the countries and as more countries face increasing pressures, the will to shop in ways that are supportive of standards will grow. I think the interest is just beginning to be started." The general agreement seems to be that while regulation enforced by law is the most assured means of enforcing labor, environmental, and other standards, change coalitions without legal enforcement power can be effective in achieving reform. But the key in any coalition for change is not only meaningful standards but also an effective and independent monitoring system whose evaluations can be trusted. Beyond that, alleged abuses must be evaluated, penalized, and publicized if necessary. Organizations must follow through on the words put down in sometimes lofty-sounding treatises and outlines. These fundamental foundations will ensure that workplace or environmental codes are not simply cosmetic adjustments behind which an ugly core of abuses lurks. |