Enforceable Standards

I endorse all of Robert Kuttner’s essay on the need for enforceable standards in the garment industry as the only way disasters like the Rana Plaza collapse in Bangladesh can be prevented. Kuttner rightly points out that there are precedents for creating these standards:

NAFTA was approved by Congress in 1993, over the fierce objection of the unions and with about two-thirds of House Democrats voting no. Clinton got it through mainly with the support of Republicans. When Clinton came back for new authority in 1997 to negotiate more trade deals, the House rejected his request. So the administration began discussions with the unions to see what kind of labor provisions might win their support. The administration was particularly eager to make a trade agreement with Cambodia, which was just emerging from the Killing Fields years under the Khmer Rouge and desperately needed access to U.S. consumer markets. In those years, textile and apparel imports were allocated according to a national quota system, known as the Multi-Fiber Arrangement. In yearlong discussions with Clinton officials, leaders of the apparel and textile union UNITE proposed a novel approach. As part of the trade deal, the Cambodian government would enforce workers’ rights to organize and join unions. If Cambodia kept its word, it would benefit from a significant increase in its import quotas. “The administration didn’t exactly take our version,” recalls Mark Levinson, one of the union’s architects of the plan. “We proposed more power for unions and workers in Cambodia. They accepted the broad idea of trading a quota increase for labor rights but brought in the ILO to oversee it.”

Thus did the U.S.–Cambodia free-trade deal come to include the world’s only enforceable labor rights as part of a trade agreement. Under the U.S.–Cambodia Bilateral Textile Agreement, signed in January 1999, Cambodia received a bonus export quota to the U.S. if its labor practices were found to be in compliance. Thanks to the agreement, Cambodia’s clothing exports increased from $26 million in 1995 to $1.9 billion in 2004, representing 80 percent of its industrial exports. Wages increased, and unions not only gained a foothold in the apparel industry but also were able to negotiate contracts with major hotels such as Raffles. But under another trade pact, the entire multi-fiber quota system was gradually phased out over a ten-year period ending in 2004, and fashion brands were now able to look for the cheapest producer worldwide. Freed from quota constraints, China quickly became the world’s largest exporter of clothing, other nations cut costs to match China’s price, and the United States gave up its leverage to reward Cambodia for respecting labor rights.

By 2004, Cambodia’s factory owners were repressing trade unions, hauling union leaders into court and holding them financially responsible for losses due to strikes. Government, fearing a loss of Cambodia’s global market share and no longer having any reward for enforcing workers’ rights, was siding with the industry. The popular leader of Cambodia’s largest union, Chea Vichea, was assassinated. Between 2001 and 2011, wages in Cambodia’s garment industry fell 17 percent. The ILO’s monitoring program continues, but cooperation with it has evaporated. Factories have shifted more workers to short-term employment contracts. Trade union members are routinely fired. Illegal overtime has increased, as has child labor. This deterioration has intensified even though the purchasers of garments made in Cambodia are international brands such as Nike, Disney, and H&M, all of which have corporate codes of conduct.

This is not the only example of the American government getting involved successfully to prevent a race to the bottom. So frequently, defenders of capitalism say that there’s nothing governments can do short of old-school protectionism to prevent the exploitation of workers overseas, but this is patently untrue. The Cambodia example is one. Early 20th century laws that improved the lives of sailors around the world is another. A third is banning products made by slave labor (or from endangered species for that matter, which is also applicable here). In fact, the U.S. government can do a great deal. It just chooses not to.