Labor Rights

by Jeff Ballinger

Director of Press for Change,
a consumer information organization
monitoring labor rights issues in developing nations


Author Francis Fukuyama made an address at a symposium to launch New York University's "Krasnoff Program of Global Business Studies." The symposium's main theme was the same as the title of Fukuyama's latest book: Trust. According to George G. Daly, Dean of NYU's Stern School of Business, "trust" has been given short shrift as a subject for business students because it "is viewed as a 'soft' topic, an ethereal, non-quantifiable, non-scientific variable." There is, perhaps, no area of human endeavor where trust is harder to come by than in the field of human resources management; the tension between "labor rights" and "management flexibility" cannot be understated, even in countries with decades of labor-management experience. When one complicates matters with up to a half-dozen differing nationalities, two or three languages, unpredictable host governments and conflicting laws, it seems hopeless to consider undertaking to get workers, buyers, contractors and "interested observers" to trust one another. Still, that is the mission of the world-wide consumer campaign for sweat-free apparel.

In pushing ahead for real change, it is important to understand that Fukuyama was talking about businesses using trust to build informal information-sharing networks in highly-developed enterprises, among highly-skilled workers, managers, etc. What he said about the other end of the production scene, however, has relevance here. He talked about the "implicit premise" of "Taylorism" (the basic factory organizing principle for most low-skilled jobs); that there are "economies of scale in managerial intelligence" that benefit the enterprise; and that workers "react to this system through their unions" and demand formal guarantees about the operation of the workplace. Working without benefit of trade unions, however, most apparel and footwear workers in the developing world just go on from day to day in various stages of alienation. While these young workers may benefit later in life from Fukuyama's post-Taylorite "high-trust" organization, it is within the consumer movement's power to deliver to them a modicum of dignity and a chance to improve their conditions.

It is most important to get as close to the workers as possible and not to impose "solutions" from above. I have watched in bemusement for nearly nine years as literally thousands of (mostly) well-intentioned people around the world have written, re-written and circulated drafts of codes of business practices for transnational corporations. How much different would these codes read if they were drawn up by workers, I wondered. Once I discussed code language and practice with "specialists" from Reebok ­ a company with thousands of Asian contract workers. "During the five years of this code's existence," I asked, "did you ever once sit with the vice-President for sourcing and ask what it would cost to fix a problem like forced overtime or punishment for taking a sick day?" They had to admit that they had no idea what would be the cost involved in fixing a couple of problems workers cited to our researchers repeatedly. As for the Reebok code of conduct ("Human Rights Production Principles"), those who pay attention to these matters attest to that code as being pretty good. What workers would think is another question altogether.

When I returned from Asia after more than a decade there, I began to seek some answers for questions raised by our research. As I had suspected from my own work, there were professional sociologists who believed that the effort of research itself was important to simple people in the developing world -- when those simple people themselves were carrying out the research. "Participatory Action-Research": I found it very helpful to read the work of Muhammud Anisur Rahman (International Labor Organization, Geneva) and Dr. Orlando Fals-Borda (President of Latin American Council for Adult Education). Similarly, I found the work of Prof. Ozay Mehmet (Carlton University, Ottowa) most enlightening. For example, in "Westernizing the Third World: The Eurocentricity of Economic Development Theories" Prof. Mehmet develops his idea of "pro-labor development" with a strong emphasis on "grassroots voices and reasoning" and empowering local culture. He does see a role for "outsiders" -- but only those who have come to learn about and appreciate local environments.

A word should be said about studies carried out by international bodies such as the International Labor Organization and the United Nations Development Program. Often, these studies are unavailable outside government and donor circles. (Some have very mundane titles such as "Employment Consequences of the Plywood and Textile Export Surge"; others are more tantalizing, like "The Serious Decline in Real Wages for Java and Its Effects.") This makes it impossible for workers and their allies to address the arguments of "development specialists" and their own government officials. Through the years, I have wrested away a few of these reports -- far more have remained confidential. The workers have a right to gain all the knowledge they can about how their national economies are being run. The plywood/textile report, for example, notes the use of outrageously excessive overtime in these industrial sectors, which are primarily foreign direct investment. Since job creation is a dominant theme in the drive to attract foreign investment, it would seem reasonable to limit the use of overtime, thereby creating tens of thousands of new jobs (reducing accidents, taking pressure off young mothers, etc.). Workers and their advocates never had a chance to make these policy arguments, however, because the statistics about the reliance on excessive overtime were never made available to them.

We must move,then, in the direction of what Fals-Borda and Rahman describe as "breaking the monopoly" of information in the development field, not only by sharing information but by putting the workers themselves in control of gathering the information.

In 1992, I designed the most extensive independent industrial worker survey carried out in Asia in the last decade --Legal Assistance for Industrial Dispute Settlement (LAIDS). Funded by the Jakarta office of the U.S. Agency for International Development, the research was carried out for 28 months (1993-96); during the year of most intense activity, LAIDS had two hundred surveyors in the field. Surveyors averaged sixty interviews per month, compiling a grand total of 160,000 completed survey forms.

Years earlier, I administered a USAID Human Rights grant: Minimum Wage Compliance in Factories on Java. While much smaller than the LAIDS study, the impact was much greater, due to the shocking results -- over 40% of employers were paying less than the minimum wage, less than a dollar a day at the time. Meanwhile, the government admitted that the wage was only about 60% of what a single adult needed to survive. It was during this survey that I found that the sport shoes-for-export factories were among the most persistent law-breakers. To get an idea of the difference between independent research and that which is controlled or used for purposes other than improving the lives of workers, consider the "inspections" of the Manpower Ministry (of Indonesia) the year before the minimum wage survey was carried out: the 700 inspectors of the ministry found over 16,400 labor code violations. Only 60 cases ever got to the first adjudicative step -- of those, nine verdicts were posted. By contrast, the relatively tiny minimum wage survey team was able to generate tremendous media pressure on corrupt officials and lawbreaking foreign investors. Reliable press reports indicate that, six months after the minimum wage survey, compliance had improved by 15-20%.

The same year as the minimum wage survey, a group of young Indonesian labor economists at the Institute for Technology at Bandung (ITB) launched a joint study with the prestigious Dutch Institute for Social Studies in the Hague. It was a study of the shoe industry, from large export-oriented firms to the smallest mom-and-pop operations. While the report did not surprise most of those familiar with the depredations of the Korean and Taiwanese investors, the government decided to put a brake on press reports. Head of the influential Investment Coordination Board, Santoyo Sastrowardoyo, indicated his strong displeasure and the authoritative daily, Kompas, editorialized the next day, "Perhaps the wages of shoe workers is too delicate a subject to be discussed publicly." To be sure, the government of Indonesia finds independent research annoying and, in certain cases, threatening. For over two years, for example, LAIDS surveyors were kept out of East Java -- a decision heavily influenced by the local military command. Similarly, the Governor of Central Java -- a military man himself -- kept the minimum wage survey out of Central Java altogether. He openly stated that he wanted a "favorable business climate" in response to criticism of his actions.

While dozens of garment factories were surveyed during the LAIDS research, I only found one sport shoe-producing factory; it had about 8,000 workers. Of the 550 interviewed there, 380 answered the final, open-ended question about special problems. Almost sixty complained about "humiliating treatment by management." Around forty complaints each were marked up for: dirty drinking water; not being able to take a day off (even with a doctor's note) without losing your attendance bonus; and, forced overtime. One does not need to reflect on these complaints for long before coming to the conclusion that it would not cost a great deal of money to fix many problems which workers grumble about. Without employing the proper survey techniques, however, the goal of identifying and fixing some of those problems will remain elusive.


Time to Gear for a Revolution in Worker Rights

Two years ago, Kevin Sweeney, formerly an official at the apparel company Patagonia, wrote an Op-Ed piece for the Los Angeles Times titled: "We Can Work Up to a Living Wage." He described the continuing efforts of the White House-backed Apparel Industry Partnership to mount a credible campaign to curtail "sweatshop" abuses at the factories of contractors in the developing world. At the same time, the brave young activist, Dita Indah Sari, languished in an Indonesian jail, having been sentenced to a five-year term in 1997 for "sowing hatred." Amnesty International honored her work among young, mostly female, factory workers in a special tribute to those imprisoned for organizing around issues outlined in the Universal Declaration of Human Rights. Amnesty's "Defend the Defenders" postcard about Dita's work noted that she had rallied Indonesians to demand their rights under the UDHR's Article 25 -- the "decent standard of living" provision. Only months before Dita Sari was arrested, she helped workers to conduct a protest sit-in at the Indonesian parliament; the factory workers were producing expensive shoes for export.

Ironically, the period around Dita's arrest could be viewed as "the good old days" for Indonesia's low-wage workforce; they had managed -- through five years of strikes and agitation -- to push the country's minimum wage up to just about the government's "minimum physical needs" figure for a single adult ($2.50 a day). That's 300% higher than when I arrived in Indonesia in 1988! Then it all came crashing down, when the "Asian Contagion" hit. Western journalists who once lauded the workers' attempts to tame huge multi-national enterprises (MNEs) began to write that they were lucky to have any kind of job at all. In early-1998, Nike and Reebok were praised for "increasing" Indonesian workers' wages to $1.20 a day, despite the fact that this represents a 25% decline in real wages compared to two years ago.

As workers and worker rights advocates struggle mightily against repressive governments, their efforts are mocked by MNEs that feign concern and busy huge teams of lawyers, accountants and public relations consultants with "reform" efforts. In recent years, they have come up against groups of university students -- from BC to USC -- which are edging closer to victory in their fight for accountability in the burgeoning student anti-sweatshop movement.

Administrators are desperately trying to tamp down the students' passion and commitment; a common ploy is the decision to join the "Fair Labor Association" (FLA). Students like Nora Rosenberg at Brown issued strongly-worded denunciations, criticizing the FLA's low standards for compliance -- no living wage requirement, for example -- and hostility to the key issue of disclosure of factory locations. These same administrators express concern about the effect that the enforcement of better conditions for apparel workers might have on the developing nations so desperate for foreign investment. This argument would be viewed with disdain by the workers and activists I have encountered in Asia over the past fifteen years.

Corporate misbehavior overseas "has become the most popular human rights issue of the day in this country," said Richard Dicker, who monitors U.S. corporations for Human Rights Watch. Dicker. Sweatshop abuses now make headlines and every day more consumers in the developed world are questioning how the goods they are being offered are being made.

Companies know, and what needs to be understood by everyone else, is that the exploitation of cheap labor-from the barrios of Los Angeles and the maquiladoras in Mexico to the tightly regimented factories of Asia -- conforms exactly to the business-first model for economic growth promoted by the World Bank and the International Monetary Fund (IMF) and embraced by successive U.S. administrations in what is known as the "Washington Consensus." In this model, MNEs play countries off against each other in their quest for low-wage, tax-free, regulation-free manufacturing environments. Human rights and labor abuses are but "complications," the word used by Jeffrey E. Garten, former Under Secretary of Commerce for International Trade and one of the chief proponents of the primacy of "commercial diplomacy" in the Clinton administration, in an address to the Foreign Policy Association in New York in 1995.

Labor and rights activists took pride in firing up the sweatshop issue and in Congress's denial of fast-track trade authority to the White House; the victory that helped to "warm up the crowd" for the big anti-WTO demonstration in Seattle. But MNEs and finance capital already are virtually free to operate globally with little or no interference. The formal de-linking of human rights and trade by the Clinton administration in 1994 signaled business that the doctrine of unfettered markets was locked in and that all else is, well, complications, to be handled by ever greater amounts of spin, disingenuous gestures and outright dissembling.

What has been unleashed is a global machine which is enormously powerful, mobile and quick, to borrow the imagery used by William Greider in his book, One World, Ready or Not: The Manic Logic of Global Capitalism. The campaign to expose the human wreckage this machine leaves in its wake should continue and be expanded. But new strategies and techniques need to be developed for the long haul, based on the idea of creating a global civic movement, if there is to be any real possibility for injecting democracy into the market. A number of these are suggested in the last section of this paper. One deserves mention here at the top.

The crux of the sweatshop issue at the moment is the issue of factories being monitored by people and groups whom workers would trust. Business is fighting it ferociously and ultimately will retain the power, in alliance with anti-democratic and corrupt regimes, to bar access to its facilities abroad by truly independent monitors.

What should and can be done, therefore, is to empower the workers to be the monitors themselves. This means making far greater use of participatory action research, an approach which thus far has been vastly under-utilized but has proven effective in raising worker consciousness and spreading self-organizational skills in both the developed and developing worlds. One of the reasons why the National Labor Committee, the Hong-Kong based Asia Monitor Resource Centre and the Hong Kong Christian Industrial Committee have been so effective in bringing worker abuses to the fore is that their research is so thorough and carefully conducted. Consider the potential if workers themselves were to acquire the same skills.
Greider is less than optimistic about the prospects for bringing the global machine to heel, but he believes it is possible if "people discover their social connections to distant others around the world and act upon them." Participatory research programs fit the bill. But first, a closer examination of the machine itself.


"Nike is U.S. foreign policy in action."

Nike CEO Phil Knight in the 1996 Nike annual report

Knight's statement is probably one of the truest he has ever made. Since the Reagan administration, a principal goal of U.S. foreign policy has been strengthening American business abroad. And despite the Clinton campaign's criticism of the Bush administration for disregarding human rights as it promoted U.S. business interests, commercial diplomacy quickly became paramount in Clinton foreign policy, particularly in its approach to the developing world.

The Big Emerging Markets (BEMS) policy was announced early in the watershed year of 1994 by Jeffrey E. Garten, in another of his speeches to the Foreign Policy Association. He listed the ten BEMS the administration had identified as offering "enormous" commercial potential: the Chinese Economic Area (including China, Hong Kong and Taiwan), India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey and the Association of Southeast Asian Nations (ASEAN), including Indonesia, Brunei, Malaysia, Singapore, Thailand, the Philippines and Vietnam. But again, he noted, there would be "complications," saying,

"Indeed, the coming great surplus in world labor will be located in large part in these Big Emerging Markets. That means that either these would-be workers will offer themselves to world markets at well below market rates, or they will not find work and they will seek to move to where the work is, causing the tensions associated with migration issues. In either case, pressure on workers in the industrialized countries seems inevitable."

In other words, as the U.S. government promotes the interests of business, expect worker incomes to be suppressed on both ends of the global system. But with such great opportunities for corporate profits, that will just have to be part of the bargain.

U.S. commercial diplomacy converges perfectly with the model of Third World economic development endorsed by the World Bank. The model is laid out in detail in The East Asian Miracle, a World Bank study commissioned by Lawrence H. Summers when he was the bank's chief economist. Summers later became Clinton's Secretary of the Treasury in the second Clinton term.

In The East Asian Miracle, the World Bank team of economists hails the "High Performing Asian Economies (HPAEs)" and endorses the suppression of worker rights as a key component of their success. There has been no effort to conceal this study; indeed, it was prominently featured on the World Bank's web site. In Chapter 4, the study embraces what it calls the "Labor Trade-Off,"

"In Japan, Korea, Singapore, Taiwan and China (and to a lesser extent Malaysia), governments restructured the labor sector to suppress radical activity in an effort to ensure political stability. Governments abolished trade-based labor unions and pushed the creation of company- or enterprise based unions

"Labor movements in Indonesia and Thailand, while not subjected to systematic restructuring, were nonetheless routinely suppressed

"Singapore courted foreign investment in labor-intensive manufacturing by suppressing independent unions and assuring investors industrial peace."

The World Bank team then underlines one of the key advantages derived from the suppression of labor -- namely, that it frees government bureaucracies to implement the economic austerity measures and wrenching structural adjustments that open the doors to private investment. This benefit is referred to as "Insulating the Economic Technocracy." The study says,

"While leaders have been authoritarian or paternalistic, they have been willing to grant a voice and genuine authority to a technocratic elite and key leaders of the private sector

The study goes on to say that 'insulation,' which enables technocrats to operate without interference from 'politicians and interest groups,' has been achieved in the field of labor as follows:

"Reorganization of labor from industry-wide unions into company unionshas similarly reduced the marginal benefit and increased the marginal cost of collective action. Thus, in contrast with workers in many other developing economies, workers in the HPAEs are more likely to refrain from work stoppages and other disruptions and from lobbying the government for mandated wage increases. Because employers faced fewer demands from labor they, too, have had less incentive to press demands on the technocracy."

Finally, the World Bank team embraces the obvious, stating that the principal benefit of wage suppression is "higher profits" for private firms. The East Asian Miracle credits more than 50 members of the World Bank staff, as well as about two dozen economists from universities and think tanks around the world, for carrying out and commenting on the study.
So, there we have the core of the reigning orthodoxy for economic growth through global marketization in the developing world: anti-democratic, anti-labor regimes suppressing wages to benefit private business and foreign investors. Call it market authoritarianism. It is a system in which people, their political and civil rights denied, are treated as inhabitants of global markets rather than citizens of nations. Former Chinese leader Deng Xiaoping pointed the way almost two decades ago when he told the Chinese people in a speech:

"Ordinary people need not say too much; they should just keep their heads down and work hard."

In China today, workers are under the control of Communist Party cadres. As one Boeing plant manager said to William Greider, "If you want something done, you go to the party member and it's done -- like that." Some 17 million Chinese people now work in factories funded by foreign investments in the burgeoning industrial zones along China's southeastern coast. Labor analysts Anita Chan and Robert A. Senser have done extensive research in this region and described the conditions in Foreign Affairs (March/April 1997):

"The most repugnant abuse is physical punishment, including beatings inflicted by supervisors or private guards, some carrying electric batonsprohibitions against getting pregnant, married, or even engagedWorkplace health and safety in such enterprises is often scandalousBecause turnover rates are on the rise in southern China, many factories have become more reliant on a kind of bonded labor to retain workers."

Describing shoe factories in Guangdong province, a Beijing-based executive of a national leather manufacturing association said to Chan and Senser, "It's super-exploitation down there. That's how they burn people alive."

Since 1995 investigators from the Asia Monitor Resource Centre and the Hong Kong Christian Industrial Committee have regularly researched worker rights and conditions in numerous sports-shoe factories in Guangdong province, including plants where Nikes, Reeboks and other brands are produced. Nike and Reebok argue that conditions in the factories have improved. However, the two monitoring groups have concluded, based on their most recent research from May to July 1997, that "conditions have not improved, and in some cases are even worse."

To briefly summarize just one example, workers at the Nority Shoe Factory in 1997 were forced to work overtime beyond the limits of China's labor law and were not paid the legal minimum wage (the equivalent of $1.93 a day) or the legal wage for overtime pay. Working conditions were "clearly hazardous to the workers' health." A number of workers reported that they had been beaten by security guards, and that workers could be fired for becoming pregnant. Upon being hired workers had to pay one month's deposit (illegal under Chinese law), which would be forfeited if the workers quit or were fired. This is the type of bonded labor that researchers Chan and Senser referred to above, what José Benqoa, the United Nations Human Rights Commission special rapporteur on economic, social and cultural rights, describes as "new forms of slavery."

The Nority factory is Taiwanese-owned and produced shoes for Reebok. The Asian rights monitors concluded that the entire operation was in "flagrant violation" of Reebok's code of conduct, which they found, "overwhelmingly, the workers in Nority knew nothing about." In response, Doug Cahn, director of human rights programs at Reebok, said to The Journal of Commerce that the account by the widely respected Asian monitors -- one of which, the Asia Monitor Resource Centre, has been researching labor conditions in East Asia for more than twenty years -- "doesn't reflect current reality" in China.


"China is the only cheaper labor force in the world."

Angelica Ayala Muller, president of the Western Maquiladora Association of Mexico, quoted in El Financiero International, 25-31 March 1996

Market authoritarianism reached an apogee in Latin America under former Mexican president Carlos Salinas (1988-1994). Salinas, as a technocrat skilled in the ways of structural adjustment and a politician presiding over a state-party system, embodied the two elements of the model all in one person. As a result of his free-market crusade, first as minister of planning and budget under his predecessor, Miguel de la Madrid, then as president, Mexican workers' real earning power shrank by nearly 70 percent. For his performance, Salinas was given a seat on the board of Dow Jones and presented with the highest award given by the pro-business, corporation-funded American Enterprise Institute in Washington. He also was a leading contender-the Clinton Administration's first choice-to run the World Trade Organization (WTO). That is until it was revealed that his government had been astonishingly corrupt, even by traditional Mexican standards.

One of the, let us say, complications of "insulating technocrats" is that it leaves them accountable to no one. The fact that so many of them become crooks, their much- touted skills developed into the crony capitalism which defines the elite-driven politics of Latin America and Asia, led in no small part to the collapse of the Mexican peso in 1994 and the ongoing crisis in Asia.

Ernesto Zedillo, Mexico's former president, adhered to Salinas' low-wage, export strategy. He had little choice, because that was part of the terms of the 1995 IMF bailout of Mexico, whose principal architect was none other than U.S. Deputy Secretary of the Treasury Lawrence H. Summers. Yes, Zedillo allowed electoral reforms that led to unprecedented losses for his ruling party in 1997 and the 2000 victory by Vincente Fox. But he continued to play rough to satisfy foreign capital's appetite for cheap docile labor.
Since the peso's collapse, independent Mexican unions have been risking life and limb trying to organize workers in foreign-owned plants and striking for better wages in the public sector. In response, Mexico became increasingly militarized -- shades of Indonesia -- and human rights violations, including torture and disappearances, have soared. When former President Clinton made his first trip to Mexico, the Zedillo government set up military and police cordons throughout Mexico City. Standing with Zedillo, Clinton said,

"No two countries are working together on more important issues with a more direct effect on the lives of their people, than Mexico and the United States."

The most direct effect on people that day was the arrest of scores of labor unionists who were planning to protest against the North American Free Trade Agreement (NAFTA) and U.S. influence over Mexico's economic policies, but instead found themselves in jails on the outskirts of the city.

There are now close to one million workers, mostly women, toiling in more than three thousand factories in Mexico's maquiladora, or export-processing, sector. The assembly-for-export sector has nearly doubled in size since 1994 as the MNEs have swarmed in to exploit tumbling wages and safety rules that exist mostly on paper. While a majority of the maquiladoras are found along the border with the U.S., the past Zedillo government promoted their expansion throughout Mexico. As of December 1997 it could brag to foreign investors that, as in Indonesia, not one factory had been organized by an independent union. Such is the Mexican miracle.



"As Nike goes, so we go, and the last couple of years have been excellent."

Peter Nickerson, director of Hong Kong-based Growth-Link Overseas Co., which makes Nike-brand shoes at joint ventures in China's southeastern Fujian province, quoted in The Journal of Commerce, 10 December 1997

According to the reigning model of market globalization, Nike has done everything right, and it shows on the bottom line. Nike may have been stung in the media in recent years, but Phil Knight could boast in the 1998 annual report of $9.2 billion in sales, more than double Nike's revenues just two years ago, and a 44 percent increase in profits. According to Forbes, Knight's personal net worth is several billion dollars.

Nike has now been declared a model-within-the-model by Jardine Fleming, one of the biggest investment firms in Hong Kong. In a report called "Tracking Nike's Footprints Across Asia," issued in early 1997, the firm attributed Nike's success to choosing factory sites in countries with the cheapest labor and the most authoritarian governments. Nike first used plants in Japan in the 1960s. When labor costs there climbed a decade later, it moved to Taiwan and South Korea which were largely under military rule and where wages were suppressed. When those countries began to democratize and labor unions gained strength in the late-'80s, Nike shifted production to Indonesia, which has been in the grip of the quasi-military Suharto regime since 1967, and Communist-controlled China. Nike avoided the Philippines, where democracy of sorts has existed since the late 1980s, and downgraded production in Thailand when that country's democracy movement gathered strength in 1992.

Recently, with wage pressures and labor protests increasing in Indonesia, followed by stepped-up military repression, Nike has been setting up shop in Communist-ruled Vietnam. In April 1997, the Indonesian government raised the minimum wage from $2.25 a day to $2.46, which by the government's own standards still falls short of bare subsistence for a single adult. Nevertheless, Nike was displeased. Nike spokesperson Jim Small said to Reuters, "there's concern what that does to the market-whether or not Indonesia could bepricing itself out of the market."

A month later, Nike paid $200 million for the exclusive endorsement rights to the Brazilian national soccer team. Nike President Thomas Clarke told Business Week, "You never overpay for things that are good." Part of those costs now can now be defrayed thanks to the economic upheaval in Asia. The region's currency crisis dragged down the Indonesian rupiah by more than 55 percent between July and December 1997. That meant that the legal minimum wage dropped from the equivalent of $2.46 to about $1.20. As of December, the rupiah continued to plummet. Named in January 1997 by Business Week as one of America best corporate managers, Phil Knight is without doubt already exploiting this windfall. Journalist Donald Katz, in his book about Nike, Just Do It, described the regime in factories where Nike shoes are made as, "Management by terror and browbeating." Rather than excoriate Katz (as the company has done to most critics) for such observations, Phil Knight adopted it as sort of a corporate biography.



"Everything changed after the Wall fell in November 1989. That same month, Lawrence Eagleburger, a secretary of state under President Bush, issued a 'Bill of Rights for U.S. Business.' It told foreign-service officers what businesspeople could demand from themwhen the Clinton administration took over, it redoubled the business thrust."

Greg Steinmetz and Robert S. Greenberger, staff reporters of The Wall Street Journal, "U.S. Embassies Give American Companies More Help Overseas," 21 January 1997

Commercial diplomacy now dominates U.S. foreign policy, to ensure that U.S. business maximizes opportunities for profit provided by the new global model. On June 21, 1996, The Journal of Commerce, an avidly pro-free trade daily, editorialized against a report that called for using trade sanctions to promote human rights. In the course of their argument, the editors said the following:

"The report, compiled by the New York-based Lawyers Committee for Human Rights, is correct in implying the Clinton administration has put the 'unfettered pursuit of commerce' above all else in its foreign policy. This approach has reduced cabinet secretaries to salesmen and state visits to sales missions. With planeloads of corporate brass in tow, the late Commerce Secretary Ron Brown traveled far and wide in search of deals. He measured his statesmanship in the number of contract pledges he had obtained."

Rarely, however, are we given an on-ground look out how U.S. commercial diplomacy is carried out. Bama Athreya, who wrote her doctoral dissertation on women workers in Indonesia, was a junior economic officer in the U.S. Embassy in Jakarta, Indonesia from 1992 through August 1994. The U.S. Ambassador at the time was Robert Barry, a career foreign service officer. Ambassador Barry, in an address to the Asia Society in New York, said his job was to double U.S. business activity in Indonesia during his tour. Athreya saw from the inside how that worked.
Under Ambassador Barry, staff meetings were increased from one to two times a week. The second was held under the rubric of the "Commercial Action Team," and every staff member -- all the way down to the consular office -- was required to report what they were doing to support U.S. business in Indonesia. Moreover, all were required to dig up and send leads to the U.S. Foreign Commercial Service. They also were required to send these messages by e-mail, so that there would be a record of their performance. That dovetails with the report by Steinmetz and Greenberger in the Wall Street Journal article cited above:

"The U.S. has long had foreign-service officers dedicated to economic and commercial affairs, but their jobs were seen as dead ends. Now, they are the fast track to promotion. Washington considers what an officer has done for American companies."

During her tour Athreya saw that U.S. executives had virtual run of the embassy, able to show up and get an audience with the Ambassador without an appointment. One of them was Lou Clinton, chief of Louisiana-based mining giant Freeport-McMoRan, a company that has fouled the environment around the world, particularly in Indonesia's province of Irain Jaya ("West Papua", to those fighting the land-grab of former President Suharto). Independent investigators have found, too, that the company's workers have been severely disciplined by an armed private security force.

Athreya was assigned to escort a delegation from the Overseas Private Investment Corporation (OPIC), a U.S.-government agency that provides financing and project insurance to promote U.S. exports. The delegation was looking into allegations that Freeport-McMoRan was not abiding by OPIC rules which require respect for labor rights and protection of the environment. According to Athreya, when Lou Clinton got wind of that he asked for and was granted "immediately" a meeting with Ambassador Barry. Athreya was called in by the Ambassador to give Clinton and his chief environmental engineer a detailed account of all the OPIC delegation's meetings. When Athreya reported that a Deputy Minister for the Environment in the Indonesian government had expressed concerns about the effects of Freeport's operation on the environment, the Freeport environmental engineer seemed surprised, turned to Clinton, and said, "I thought we'd taken care of him."

The Embassy sided with Freeport and pressed OPIC not to lift the company's privileges. Environmental conditions at the Freeport installation in Irian Jaya were so poor, however, OPIC saw no way around suspending the company's privileges. But following continued lobbying by the embassy and Freeport's own team of high-priced flacks in Washington, the company's OPIC benefits were soon restored.

In early 1994, a U.S. Trade Representative (USTR) delegation arrived in Jakarta to continue what was then an already two-year review of labor rights violations in Indonesia. The Generalized System of Preferences (GSP) allows the U.S. to give preferred trading privileges to developing countries, but under GSP law it is barred from doing so if countries do not show improvement in providing acceptable conditions for workers, guaranteeing the right of workers to form independent unions and allowing them to bargain collectively.

Indonesia failed miserably on every count. Labor law enforcement has been practically nil as factory owners or managers are almost never legally sanctioned. Independent union organizers were subject to arbitrary arrest and prison terms on vague charges of "inciting to riot" and "subversion," the latter of which can carry a death sentence.

But the U.S. Embassy in Jakarta, heavily lobbied by the phalanx of U.S. companies doing business in Indonesia, sided with the Indonesian government, which was trying to sell cosmetic changes to its labor laws as proof that it was committed to labor rights. According to Athreya, in communications between the U.S. Embassy in Jakarta and the USTR, the Embassy acknowledged that the Indonesian government's case was very weak, but argued that if GSP privileges were taken away, it would hurt U.S. business. In other words, the needs of U.S. business override U.S. law.

The USTR delegation was feted at a reception held by the American Chamber of Commerce in Indonesia, and a number of heads of Indonesian companies were on hand. Athreya participated in a conversation in which the head of one Indonesian conglomerate said straight out to members of the delegation:

"Yes, we know the workers suffer, but we have to keep them weak. If the workers get out of control, it is not the United States or the Indonesian government that will get hurt, it is we who will be killed."

Athreya says other embassy officials quickly went into a damage-control mode and moved the conversation in another direction. But the USTR delegation had heard perfectly what the man had said and there could have been no clearer indication that the plight of Indonesian workers was not about to improve.
It did not matter. Soon after, with plans underway for President Clinton's trip to Jakarta later that year, Mickey Kantor, the U.S. Trade Representative at the time, suspended the GSP review and Indonesia retained its trading privileges. Kantor justified it by pointing to a memorandum of understanding the Indonesian government had agreed to regarding improvements in respect for labor rights. Greg Talcott, now retired from the foreign service, was also with the U.S. Embassy in Jakarta at the time, charged with overseeing labor rights monitoring. On November 3, 1996 he was quoted by Merrill Goozner in The Chicago Tribune:

"Our guys were just looking for any movement to allow them off the hook. Everyone knew how the negotiations would turn out."

The memorandum of understanding was just window-dressing. Within weeks of its signing, the government threw independent labor leader Muchtar Pakpahan in jail. Following the 1996 U.S. elections, there were allegations that the Clinton administration had allowed Indonesia to keep its GSP privileges in exchange for campaign contributions from two wealthy Indonesian families, both linked to the Lippo Group conglomerate. But Sidney Jones of Human Rights Watch/Asia had it right when she expressed doubt that any foreign contributors played a role in the White House's decision. Quoted by David E. Sanger in The New York Times on October 17, 1996, Jones said:

"They didn't have to, because the Fortune 500 did it for them. American companies were afraid that there would be retaliation, and that big contracts would go to the Europeans and the Japanese. And that's how you really get this Administration's attention."

In November 1994, three months after Bama Athreya had finished her tour and resigned from the foreign service, President Clinton arrived in Jakarta. At the same time that he was reportedly chiding Indonesian President Suharto on human rights, Commerce Secretary Ron Brown was witnessing the signing of 15 mega-deals for U.S. business in Indonesia.
As reported by Elaine Sciolino of The New York Times, President Clinton was "stone-faced" during his photo session with Suharto, the same face he would wear during Chinese President Jiang Zemin's gala state visit to the U.S. in 1997. It is doubtful that Suharto was in any way moved. He, as well as every other autocrat and Big Emerging Market leader in the world, were far more impressed by the White House's decision the previous May to de-link human rights from trade issues and retain trade privileges for China. As Amnesty International said in a statement prior to President Clinton's arrival in Jakarta:

"The message to China and the world was that human rights will be the sacrificial lamb to trade."

As if to underscore that very point, President Clinton, right after his meeting with Suharto, addressed a gathering of U.S. business executives and, according to The New York Times, "did not disguise his glee at the news of the business deals." The President told them, to great applause:

"I know that there is increasing wealth in Indonesia and throughout Asia, but where I come from $40 billion is still real money - and we're grateful for the business."


"We're going to work very hard for fast-track. We're also going to work very hard for labor standards."

U.S. Secretary of Labor Robert Reich, The Journal of Commerce, 29 August 1996


The Clinton administration's officials worked hard to give the appearance that human rights and labor issues somehow remained a part of the U.S. foreign policy agenda. For example, Jeffrey E. Garten, the garrulous former Under Secretary of Commerce, said in an address to the New York Chamber of Commerce on December 2, 1994, a month after President Clinton went to Indonesia:

"Let me say a special word about human rights, because they do loom so large in our values as a nation and in our foreign policy. Perhaps the best example of the dilemmas we face are to be found in China, where our human rights goals and our commercial goals are both so important and receive equal priority."

Equal priority? Only months before Garten spoke, a Clinton administration official described quite clearly how policy actually functioned after the White House had de-linked trade and human rights:

"When we met with the Chinese before, human rights was first on the agenda and business second. Now it's business first, business second and human rights if we have time."

The quote was carried by UPI, which reported that the official, not surprisingly, was speaking on the condition of anonymity. The quote later appeared in Reputation Management (January/February 1995), a public relations trade publication.
The Clinton administration maintained that the use of economic sanctions was counterproductive in moving countries to respect labor rights. But it had no qualms about using sanctions on behalf of U.S. business. The White House slapped trade sanctions on China when the intellectual property rights of U.S. enterprises were threatened by Chinese knock-offs of American video-tapes and compact disks. The U.S. Department of Commerce then wielded the same club in getting Indonesia to agree to copyright protection for U.S.-manufactured music cassettes. On the day sanctions were to be applied every pirated cassette disappeared from stores throughout Indonesia.

Applying pressure gets results. Based on performance, however, it is clear that Washington is willing to turn the screws only on behalf of U.S. business interests. It is a policy which gives priority to private property over the legal rights of people and conforms exactly to the orthodoxy which holds that the law of supply and demand supersedes the laws made by men and women, that markets override morality, that markets in the end are morality.

In July 1996 Cicih Sukaesih, an Indonesia worker fired along with 23 others from a Nike plant for demanding that they be paid the minimum wage, came to Washington D.C. for a week to tell her story. Secretary of Labor Robert Reich declined to meet with her and John Shattuck, Assistant Secretary of State for Humanitarian Affairs, said he had "no time." Shattuck, moreover, was in the Indonesian city of Surabaya at the time when Indonesian labor activist Dita Sari's trial was being held there, and did not even make an appearance during the proceedings which culminated in Sari's six-year sentence for "subversion."
In August 1997 Secretary Reich vowed that the U.S. would take a strong stand on labor rights at the meeting of the World Trade Organization (WTO) in Singapore. At the meeting -- held in Singapore in December 1996 -- U.S. Trade Representative Charlene Barshefsky made a tough-sounding speech on the need to incorporate into the WTO basic labor standards, such as the right to organize unions and bargain collectively. But, as Robert Kuttner reported in his column in Business Week:

"word was leaked immediately that this was not a serious U.S. negotiating priority. Barshefsky might as well have said: 'Treat this as merely a bone we need to throw the AFL-CIO.'"

In the end, the WTO adopted an empty resolution which stated that trade liberalization would in itself promote labor rights-echoing the White House line-and that labor standards must not be used to question the comparative advantage of low-wage countries. All of which meant that labor issues would remain confined to the International Labor Organization (ILO), which investigates labor rights abuses but has no authority to impose sanctions for violations. The former ILO Director-General Michel Hansenne was even denied the opportunity to address the WTO. After the meeting, U.S. officials claimed Washington would continue to press in the WTO on labor rights. Hansenne, in turn, said to The Journal of Commerce that those who think trade and labor rights will be linked at the WTO "are still dreaming."

On the day the WTO resolution was signed Muchtar Pakpahan, already jailed in Indonesia, went on trial for "subversion," a charge which carries a possible death penalty.

Washington weighed in again on behalf of business in 1997, this time on the domestic side. In July, the Securities and Exchange Commission (SEC) issued a no-action letter which allowed Nike to omit a shareholder resolution on sweatshops from the company's 1997 proxy statement. It was the first time the SEC had allowed a company to omit such a statement. It was a clear victory for business as anti-sweatshop activists increasingly have turned to shareholder meetings to try and force improvements in labor conditions at shoe and apparel factories.

Later that year, the SEC proposed a package of rule changes which would prevent socially-conscious investor groups from bringing to the attention of management and other shareholders important social issues relevant to companies. Timothy Smith of the Interfaith Center on Corporate Responsibility, which represents 275 religious organizations with about $80 billion to invest, said to The Washington Post in October, "We are very concerned that these new rules will be a crippling blow to shareholder advocates."


"We have an oversight system that works."

Nike CEO Phil Knight, in a letter to The New York Times, 21 June 1996

Thanks to the "Washington Consensus" on global marketization and the commercial diplomacy of the Bush, Clinton and Bush II administrations, U.S. business has had its way in the world with little or no interference, at least until the sweatshop issue came to the fore. The principal response from U.S. companies has been various public relations gambits that usually revolve around the adoption of codes of conduct. It is clear by now that companies are far more interested in promoting rather than applying their codes. Much like the White House's rhetoric on labor rights, these efforts can be filed under reputation management.

The article cited earlier from the January/February 1995 issue of Reputation Management, the sister publication of Inside PR, was called, "China's Growing Market is a Temptation, but a Troubling One." The magazine was concerned that human rights issues could undermine the ability of its readers/clients to capitalize on investing in China. It encouraged U.S. business leaders to think about adopting codes of conduct, maybe even consider a code similar to the Sullivan principles which were applied during the apartheid regime in South Africa. What emerged from the magazine's interviews with business executives was their dismissal and disdain for codes and an attitude which indicated they believed that, anyway, they were untouchable.

Robert McNeill, for example, executive vice chairman of the Emergency Committee for American Trade, which represented business in lobbying for maintaining China's Most Favored Nation status, said, "The danger with codes of conduct that are initially voluntary is that they can become statutory." In other words, codes could deprive us of the impunity to do whatever we want.

Robert Kapp, president of the U.S.-China Business Council said that a code of conduct "simply gives credence that business is morally responsible for the human rights situation in China," and that critics of China's rights record are "trying to impose their values on others, basically interfering with national sovereignty." Sovereignty, of course, is the card readily played by all autocrats, who in reality are not defending their nations' sovereignty, but their own sovereignty within them. Kapp not only denies business's responsibility on human rights, he goes a step further and flacks for a regime that represses them.

Similarly, Zhuang Nanbin, public affairs director for AT&T China said that Beijing would perceive codes of conduct as interference in their internal affairs and therefore "would be detrimental to U.S. business." Norman Givant, a Shanghai-based U.S. corporate lawyer, sought to make his case on cultural grounds, saying that the issue "reminds me of American missionaries in the 19th century preaching to the Polynesians to wear clothes." In 1997 Jeffrey E. Garten, now Dean of the Yale University School of Management, also brought out the culture card to argue that U.S. business was not responsible for rights violations in countries such as China and Indonesia:

"In many cases we're going to have to basically swallow hard, because we're dealing in cultures that will have rhythms that are very uncomfortable for us. They're uncomfortable in terms of the way people are treated or the environment is treated"

In making that statement Garten, like Mr. Kapp, finds himself performing public relations for Asian autocrats who hide not only behind sovereignty, but justify their anti-democratic rule with the idea that "Asian values" make them exempt from the Universal Declaration of Human Rights. Garten's words also lend greater resonance to a statement by former President Clinton, which was prominently featured on the "Big Emerging Markets" page of the U.S. Department of Commerce web site:

"Places like China and Indonesia, Mexico and Brazilwe have unashamedly been an active partner in helping our business enterprises to win contracts abroad."

It is therefore no surprise that companies like Nike, Reebok, Mattel, Disney, Wal-Mart and all the others who exploit and abuse cheap labor abroad are irritated by the criticism they are receiving. After all, they have simply followed the playbook. But as marketers of high-profile consumer goods, the spotlight has fallen on them. So, at the urging of their public relations specialists, most have taken the code-of-conduct route.
When report after report by independent investigators proves that these codes are generally ignored in practice, companies respond in different ways. Reebok, for example, continues to give out five $50,000 human rights prizes each year and keeps promising to do better. Disney, on the other hand, either stonewalls or denies, as when Disney spokesperson John Dreyer said to The Journal of Commerce in February 1997, contrary to all available evidence, "We don't use sweatshops. Why focus on us?" Dreyer went on to claim that Disney is criticized only because the company has a high profile.

The case of Nike is particularly instructive. Nike, much to the benefit of the anti-sweatshop cause, has led with its chin from the outset, every arrogant denial laid to waste by another detailed report about its subcontractor's factories. Nike once hired Andrew Young, former civil rights leader and ambassador to the United Nations, to investigate conditions in its plants in Indonesia, China and Vietnam. Young's report, exposed as a whitewash by human rights specialists far and wide, proved once and for all that Nike cannot be trusted to enforce its code of conduct, and that in reality it has no intention of complying with even the most minimal labor standards.

Young did not even address wages, the most fundamental issue, which put him squarely on the side of the writers of The East Asian Miracle and the other proponents of unfettered market globalization. Nor did Young even speak with many of the experts listed in the appendix of his report whom he claimed to have consulted. The World Bank is now saying that it is concerned about labor issues, and one of the experts Young said he spoke with was Maniza Naqvi, a child labor expert at the bank. According to Stephen Glass, who wrote a devastating critique of the Young report for The New Republic, Naqvi told him that she did not even know she was listed in the appendix until Glass called her. "My only connection to Nike is that I wear their shoes for running," said the World Bank's labor advocate.

Nike also has provided overwhelming proof that hiring accounting firms to monitor compliance with codes of conduct is no remedy. For a number of years Nike has employed Ernst & Young, saying that the firm subjects Nike subcontractors to "systematic, unannounced evaluation." Nike, Reebok and the other companies which are members of the Fair Labor Association say such monitoring, with little or no public disclosure of violations, is sufficient to enforce the watered-down standards the task force agreed to in April 1997.
In November 1997 a confidential report prepared for Nike the previous January by Ernst & Young was leaked. The report concerned conditions at the Tae Kwang Vina factory in Ho Chi Minh City. It stated that workers were subject to compulsory overtime far exceeding the limits prescribed by Vietnamese law and were paid just $10 dollars per week. It also said that workers were exposed to carcinogens that exceeded Vietnamese legal standards by 177 times in parts of the plant and that 77 percent of the employees suffered from respiratory problems. Nike publicly touts Tae Kwang Vina as one of its most modern, technologically advanced subcontractors.

Ernst & Young's findings alone put paid to Andrew Young's conclusion that Nike was generally doing a "good job" in treating its workers. Amazingly, Ernst & Young concluded in its confidential report that Nike's code of conduct was being complied with in the Tae Kwang Vina plant and that most workers there were happy with the wages and the conditions.

The leaked report was provided by Dara O'Rourke, an environmental consultant for the United Nations Industrial Development Organization and a research associate at the San Francisco-based Transnational Resource and Action Center. O'Rourke has conducted research in more than 50 Vietnamese factories and investigated the Tae Kwang Vina plant three times as part of his United Nations duties. The last time was in October 1997, when he found that conditions were no better than when Ernst & Young gave its internal report to Nike the previous January. In November 1997, almost a year after the accounting firm had presented its findings, Tien Nguyen, Nike's labor practices manager in Vietnam, admitted to reporter Steven Greenhouse of The New York Times that Nike still had done no measurements to determine whether chemical levels were low enough to meet legal standards.

This series of events underscores Nike's systematic dissembling and duplicity. Nike employs an accounting firm whose confidential reports show that conditions in Nike plants are indeed horrendous. At the same time Nike hires the no less duplicitous Andrew Young to conduct a whitewash which Nike then spends millions of dollars to promote. This is the public-relations equivalent of double-bookkeeping.
Moreover, O'Rourke, in a detailed report entitled "Smoke from a Hired Gun," has shown that the methodology of Ernst & Young, notwithstanding its withering assessment of the Tae Kwang Vina plant, ignores most accepted standards of labor and environmental auditing.

For example, the Ernst & Young gathered most of its data from management sources and ignored key issues of concern, including: physical and verbal abuse of workers, sexual harassment and negative repercussions for attempts to organize. The reason is because Ernst & Young did not perform an "independent" audit, but rather simply followed Nike's orders. As Ernst & Young stated in its report, "the procedures we have performed were those that you [Nike] specifically instructed us to perform."
O'Rourke also found that Ernst & Young mistakenly certified that the Tae Kwang Vina plant was in compliance with Vietnamese minimum wage laws, when in reality workers were being paid 20 percent below minimum. Finally, O'Rourke found that workers were scared to speak their mind to Ernst & Young auditors because they identified them-for obvious reasons-as part of management. That accounts for Ernst & Young's false determination that Tae Kwang Vina employees were happy with their wages and working conditions.

Nike is one of the most vocal industry members of the Fair Labor Association. On its web site, Nike claims that "When Nike leads, others follow. We're the leader -- always have been always will be." What Nike's leadership on sweatshop monitoring has proven is that business cannot be trusted and that accounting firms such as Ernst & Young do not have the necessary independence or trust of workers, nor do they employ the proper methodology, to conduct thorough, unbiased audits of working conditions. As Jay Mazur, a White House task force member who is president of the Union of Needletrade, Industrial and Textile Employees (UNITE), said to The New York Times on November 21, 1997:

"The fox cannot watch the chickensif they want the monitoring to be independent, it can't be controlled by the companies."



Thanks to the determined work of a widening array of labor activists and non-governmental organizations, the sweatshop issue has put a dent in the once seemingly impregnable global marketization machine. The principal manufacturers of name-brand consumer goods are spending far more time and resources on reputation management and damage control than they ever imagined. But on the fundamental issues of labor rights, wages and independent monitoring of factory conditions, they will continue to fight tooth-and-nail, employing every underhanded method they can come up with to avoid being held accountable.

As for the Asian countries, the reigning globalization model only encourages them to try to export their way out of the crisis, again to the detriment of workers. The ever greater emphasis on low-wage export policies in the wake of currency crises is already on display in Mexico, as was discussed earlier. As in Mexico, expect greater use of repression in response to mounting worker discontent. Jeffrey E. Garten, as always, provides a resonant quote for the occasion. In The Wall Street Journal on December 8, 1997, he hailed the currency crisis in Asia as "a triumph of Wall Street," meaning that the pressures of global capital markets have finally succeeded in prying open closed Asian financial systems. The downside, or as he used to have it, the "complication," is this:

"The emerging markets are heading through a long, dark tunnel. There's a light at the other end, but there is going to be a lot of social turmoil before they come out of it."


"We are trying to organize the workers, to educate them on their rights-to make them aware that they could be strong if they come togetherIt is only through experience that they learn they must take their destiny in their own hands."

Indera Nababan, leader of Urban Community Mission, an Indonesian, church-supported social foundation, quoted in William Greider, One World, Ready or Not: The Manic Logic of Global Capitalism

From the standpoint of the labor rights activists, the situation calls for a global civic movement of unions and NGOs to hold multinational corporations accountable for the gross exploitation of workers and the environment. Multinational corporations now dominate people's lives worldwide as national governments increasingly have ceded their authority to exercise control over commerce and finance. The new global system mocks the assumption of shared political and social values that supposedly unite people in a nation-state. The response therefore must be global, too, uniting activists across borders which corporations now have the power to ignore.

It is noteworthy that in a recently published book, Global Public Policy: Governing Without Government, a mainstream analyst has recognized that national responses to economic globalization are inadequate. The author, Wolfgang H. Reinicke, is a fellow at the Brookings Institution and the World Economic Forum in Switzerland. He calls for states, corporations, labor and other NGOs, regional and international organizations to cooperate in a new form of global management.

For the moment, there is not much reason to believe that either governments or corporations would be willing to give labor or other NGOs a true voice in what Reinicke envisions as "networks of governance." The World Bank already seems intent on throttling NGOs in the global landscape. In a little known initiative, the bank has quietly prepared for governments a draft handbook on laws relating to NGOs. In the introduction, the World Bank appears to recognize "important NGO contributions," but following is more than a hundred pages of proposed regulations that threaten the right of free association, privacy and freedom of speech.

Still, the preparation of this handbook, and the World Bank's recent concession to engage groups critical of its operations such as the Washington-based Development GAP, indicate that the world's dominant institutions grudgingly have begun to acknowledge that NGOs are a force to be reckoned with. That lends credence to the idea that Reinicke seems to be pointing toward, namely, the development of a global civil society. Although Reinicke does not necessarily frame it this way, a vibrant global civic movement is what is needed to tame the unfettered rule of markets and secure the rights of ordinary citizens and workers.

Another notable proposition has been put forth by Douglass Cassel, executive director of the International Human Rights Law Institute and a professor at Northwestern University. In an article in the Fordham International Law Journal, Cassel suggested that the recent adoption of codes of conduct by some multinational corporations might herald a "Second Human Rights Revolution." Governments, he notes, "accepted international human rights responsibilities in the U.N. Charter and other treaties," and some corporations, he believes, now seem ready to assume human rights responsibilities as well.

Cassel accurately notes that there is a wide range in the current practice of "corporate social responsibility." He finds that Royal Dutch Shell, for instance, accepts no responsibility whatsoever for human rights violations in Nigeria and may actually have been complicit in the government execution of author Ken Saro-Wiwa and eight other environmental activists. In contrast, Cassel points out that The Gap made a unique commitment to allow truly independent monitoring of one of its factories in El Salvador by religious, human rights and labor groups. But he notes, too, that The Gap only relented in the face of a concerted public campaign by these very same groups cooperating across the borders of North and Central America.

The ongoing anti-sweatshop effort has clearly begun to resonate among consumers as well as editors and producers in the mainstream media. Skeptics may think that all that can be hoped for is the occasional, isolated victory, as in the case of the Gap. But these campaigns are a foundation that can be built upon, the type of civic actions which, if expanded and integrated globally, hold out the promise of a movement strong enough to actually alter the disastrous course of the global market machine.
To develop such a movement means expanding efforts already underway, drawing in new allies and utilizing new strategies and techniques to be able to fight more effectively. Following is a brief outline of what can be done.


Making Connections - Expanding Current Efforts

Seek enhanced cooperation with Amnesty International, Human Rights Watch and make better and greater use of their reports. These groups are increasingly focused on labor rights and holding corporations accountable.

Establish and enhance global NGO links in the anti-sweatshop cause. For example there should be cooperation between U.S., European and Indonesian women's organizations, lawyers' associations, legal assistance groups, and other NGOs involved in rights issues.

Provide the emerging pro-worker rights movement on university campuses with the analysis and resources necessary to expose and combat the virtual sale of athletic departments to Nike and other footwear and apparel companies. Establish or enhance links with graduate teaching assistants, maintenance and clerical workers on this issue.

Document the procurement policies of the Smithsonian Institute, the Pentagon and all other U.S. government agencies or institutions that buy from companies that may exploit workers. Establish or enhance links with unionized workers employed in these government agencies and institutions.
Go after U.S. government departments which are the primary instruments of commercial diplomacy, especially the Departments of Commerce, State and Treasury and the office of the U.S. Trade Representative. Put pressure on human and labor rights officers at U.S. Embassies, as well as commercial attaches. Commercial sections should be asked to provide lists of local subcontractors that multinational corporations source from. In general, demand transparency to expose the gulf between official rhetoric on labor rights and actual policy. For example, just as the Freedom of Information Act (FOIA) can be used to make public CIA and Pentagon documents, it should be used to get at the cable traffic between U.S. embassies abroad and Washington, field reports and other documents involving trade and labor rights. These efforts can be used to pressure the White House to make U.S. embassies do their mandated jobs on monitoring and promoting human and labor rights, instead of acting simply as the "Commercial Action Teams" that they have become.

Apply pressure and demand accountability from the International Labor Affairs Bureau of the U.S. Department of Labor. Is it working to enforce U.S. laws on recognizing labor rights abroad, or has it been undermined by the dominance of commercial diplomacy?

Research and analyze U.S. government grants. For example, what percentage of USAID funding goes to pro-business programs? Have U.S. aid programs simply become an arm of U.S. commercial diplomacy? How much, if any, of the budget for the USAID "Rule of Law" program is allocated to establishment and enforcement of fair labor laws? Demand that international, taxpayer-funded agencies such as the World Bank, the International Monetary Fund and the United Nations declassify all materials regarding trade, labor and human rights. Given the paramount influence these agencies have over people's lives, workers should not be kept in the dark about statistics, analyses and policy papers which pertain to them.

Survey and expose the ethics curricula, textbooks and teaching approaches at business schools in the U.S and abroad-for example, the Yale School of Management, where Jeffrey E. Garten is currently the Dean. Are labor and human rights even included? If so, are they taken seriously, or considered simply "complications." Survey leading experts on business ethics and pressure them on labor rights and the behavior of multinational corporations. Establish cooperative links with those business schools that are carrying out serious programs on corporate responsibility, for example, at Erasmus University in Rotterdam.

Help give greater prominence to the few mainstream economists such as Dani Roderick, author of the recently published Openness and Has Globalization Gone Too Far? (1996), and Ethan Kapstein who have begun to question the unfettered market globalization model.

Combat the plethora of corporate-financed think tanks and academic programs by a) establishing labor education centers with sustained outreach capability into schools and communities, and b) finding greater resources for the small think tanks and NGOs providing reliable information and analysis on labor issues. The global economy has advanced to such a degree that the Wharton School of Business is now offering a full set of courses in Chinese Management Practices so that tomorrow's business leaders will be better able to address issues related to workplaces that are quite literally "foreign" to them. While the international workers' rights movement struggles to take advantage of the concerns of consumers for "sweat-free" apparel, there is an urgent need to match what the business community is doing at Wharton and other business schools. Being able to see factory work through the eyes of the workers themselves is a critical preparatory step for the human rights community as it attempts to monitor corporate behavior.
Make better and more concerted public-relations use of visiting trade unionists from abroad and those who have received labor or human rights awards. The business media is constantly highlighting "best corporate managers," "biggest money-makers," etc. Labor activists deserve at least the chance to compete for equal attention. Campus-based activists should be a "natural" network.

Direct cooperation between U.S. unions and their counterparts abroad. Some unions are doing this individually in Mexico and a few other countries, but labor has a long way to go to catch up with the internationalization of corporate business.

Concerted use of participatory action research, a sociological approach that thus far has been vastly under-utilized but has proven effective in raising worker consciousness and spreading self-organizational skills in both the developed and developing worlds. This approach can be particularly useful in Asian countries such as China and Indonesia where labor rights are so greatly repressed. Practitioners of participatory action research can be found in a number of countries, but their efforts need to be enlisted and coordinated in a global way.


Jeff Ballinger is Director of Press for Change, a consumer information organization monitoring labor rights issues in developing nations.


Post-script: What about Nike's "Global Alliance"?

Our perspective on a report issued February 22 by The Global Alliance and a 46-page "Remediation Plan" released by Nike that accompanied the report:

We have the utmost respect for faculty members at Atma Jaya University and have no reason to doubt the integrity of the scholars from Atma Jaya that worked with the Global Alliance. We offer the following critique in the spirit of solidarity with their sisters and brothers at the factories, as an attempt to work with Indonesian groups to develop an approach to "remediation" that has as the main goal empowering workers. These workers have made courageous efforts to combat the cheating and abuses at Nike contract factories for over twelve years; those who have organized the protests often lost their jobs. (See chronology:

Our strategy of making common cause with the workers, unions and NGOs that are striving to improve conditions for shoe and apparel workers in Indonesia has a mixed record. While we have been unable to get the contractors to deal in dignity with representatives chosen by the workers themselves, the focus on Nike workers' legitimate wage protests did succeed - at least ­ in embarrassing the New Order regime. As a result, the minimum wage was increased by 300% over the period 1989 to 1996. (Nike's statement about the last minimum wage increase before the 1997 "Crash": "Indonesians may be pricing themselves out of the market.") n.1 Assoc. Press, April 27, 1997

For all these years, Nike has characterized this cross-border solidarity work as misguided altruism:

"It saddens me," says Nike VP for corporate responsibility Dusty Kidd. "I think one day the students will wake up and realize they've been used by their mentors in the union movement." n.2 Newsweek 3/12/01

And mock their efforts to raise awareness.

"[Nike's Vada] Manager says his political polling and intelligence tell him the students are a "marginal" group who arouse little sympathy from peers or consumers." n.3 Newsweek 3/12/01


"A Nike official immediately criticized the [students'] report, and said it points up the shortcomings of the consortium's monitoring approach, which is based on responding to worker complaints.

"'It's just parachuting into a country, conducting a few interviews, and writing a report in a few days,' said Vada O.Manager, director of global issues management for Nike."
n.4 The Chronicle of Higher Education 1/26/01

At the same time, company officials have expressed slanderous opinions about the brave workers who have led protests.

"But Manager alleged that Sukaesih's dismissal was in response to a 'disruption in the facility' and did not pertain to anti-factory complaints."
n.5 Arizona Daily Wildcat 5/4/99

(Sadisah) "had actually been fired, Nike officials contended, for destroying documents."

n.6. "Just Do It" by Donald Katz (Random House, NY, NY 1994)

This is really the crux of the problem. Nike has nothing but scorn for the idea that workers should band together to defend their rights. Admitting that there is, substantially, nothing new about abusive practices in the Global Alliance report (n.7), the remediation plan explains years of Nike inaction by saying that protests by workers and activists presented the information "in an adversarial manner." Only through the Global Alliance, we are told, will the workers' voice be heard:

"These actions [agreeing to survey] reflect a serious commitment on the part of Nike and its contract-factory managers to improve workers' lives." --
Rick Little
n.8 Jakarta Post 3/2/01

This is entire monitoring-as-representation enterprise seriously undermines the key
International Labor Organization principles: Freedom of Association and Right to Collectively Bargain. The shoe industry lobby (APRISINDO) has issued dire warnings about increased worker activism (several examples below @ n.9) in Indonesia and there is evidence that political leaders are responding to these threats (see n.10, below).

How should we proceed to map out a plan for meaningful change, building on the years of cross-border cooperation already behind us? We feel that is imperative for the Atma Jaya community to look carefully, first, at Nike's remediation plan. It is most regrettable that Nike offers no restitution to those workers who lost their jobs for leading protests against law-breaking contractors. Scores of workers won cases in the P4D and P4P (Labor Disputes Panels), yet they were not fairly compensated for lost wages. Hundreds more workers were similarly dismissed but, having no faith whatsoever in the system of labor dispute resolution, refused entreaties by the Indonesian Legal Aid Foundation (LBH) to file cases.

In the most notorious case - which went all the way to the Indonesian Supreme Court - the tycoon Bob Hasan offered a mere $400 each to the 23 workers who had lost seven years' pay (while he was donating $18,000 a month the Indonesian Wrestling Federation).

"Nike shrugs off its Suharto connection [Bob Hasan] as irrelevant. 'That's the way it works in Indonesia,' said Dusty Kidd, manager of Nike's labor practices department."

n.11 Oregonian 11/11/97

Most of the courageous worker activists that pursued "illegal discharge" cases can be found and Nike should be required to pay $250,000 into an escrow account so that these individuals may be located and be compensated -- at least for lost wages.

Next, an examination must be carried out into the well-documented wage cheating that went on for years. Restitution is called for here, too. Nike contractors paid an illegal "training wage" to an estimated 160,000 workers over the period 1988-1997. Since the amount lost by each worker was around $30, it is reasonable to suggest that Nike contractors establish a fund of about $6.5 million to find and compensate the victims of this cynical lawlessness.

Finally, we find it insulting and grossly inadequate for Nike to suggest ill-defined partnerships with some Indonesian women's groups as a means to address the widespread sexual abuse of women workers. While there may be no adequate compensation for such egregious mistreatment, it is instructive to look at how such cases are treated in countries where legal remedies are available. Mitsubishi, for example, settled a sexual harassment case brought by 28 U.S. women for $9.5 million. But, this was not the end of it. The company was later forced to pay a penalty of $34 million to the U.S. Equal Employment Opportunity Commission; this benefited hundreds more women.-- n.12 Washington Post 6/27/98

Unfortunately, law in this area is not well-developed in Indonesia, so managers operate with virtual impunity. At a minimum, Nike and its contractors should underwrite a series of ten-to-fifteen visits to Indonesia by fact-finding teams from Korean and Taiwanese women's and legal-aid groups.


Even with a "corporate responsibility" team of 95!
Can Nike Still Do It?
Business Week, 21/2/00 (n.13) Nike has found itself unable to extricate itself from the "sweatshop" controversy. As suggested above, the company has refused to send a clear and unequivocal message to contractors in Indonesia to sit down with workers in dignity and bargain about the necessary changes. Indeed, Nike has concocted all manner of means to avoid doing that. It is our suspicion that the Global Alliance differs little from past efforts, which include:


Code of Conduct & "Memorandum of Understanding" (1992)

Ernst & Young "social audits" (1994-6)

Report to shareholders by Prof. Jill Ker Conway (1996)

White House-backed "Apparel Industry Partnership" (1996)

Evaluation by Ambassador Andrew Young (1997)

National Press Club speech by Nike CEO, Phil Knight (1998)

More "social audits" -- PricewaterhouseCoopers (1999-present)

Vietnam and Indonesia wage/purchasing power studies with Amos Tuck School of
Business (Dartmouth) (1999)

Visits to Asian production sites by U.S. business school students (2000)

"Transparency 101" -- N. American production facilities (2000-present)


"The Global Alliance" (1999-present) came together as a joint initiative of Nike and Mattel with some non-profit partners - none of whom had experience in the fight against sweatshop working conditions. Mattel has since departed and the GAP apparel company joined. At first, activities of The Global Alliance (TGA) were limited to training and micro-enterprise loan programs intended to benefit workers in Nike factories in Vietnam, Thailand and Indonesia.

While it may be difficult to find fault with these efforts, some activists argued that Nike was using an NGO-type project to enhance their corporate image. It was clear to many that Nike would resist forcing contractors to pay decent wages and address workers' long-standing demands to bargain over issues like forced overtime, increased production quotas and abusive supervisors. In early-2000, TGA began to do worker-survey activities under the dubious guise of collecting information about workers' "aspirations" so that the NGO-type projects could be improved.

Questions are raised by the press release included with TGA's annual report in September (2000): this report represented the "first chance for workers themselves to have a say" in the debate on Nike's labor practices and offered the opinion that workers were basically satisfied with their pay and conditions. (In fact, the "workers themselves" have frequently been heard "in the debate on Nike's labor practices." Press for Change, Community Aid Abroad, Christian Aid [UK], Center for Development and Peace and several Indonesian groups - and newspapers -- have published reports directly from Nike-worker interviews. To suggest that this is the first time workers are really being heard is a self-serving and contemptible lie.)

After the report on Thai factories, the Clean Clothes Campaign undertook to evaluate the TGA methodology. The reports' author, Junya Yimprasert (Lek) of the Thai Labour Campaign, interviewed workers from the Lian Thai factory, one of TGA's factory partners. According to Lek, workers were introduced to the Alliance's researchers by factory personnel and had to write their names on the questionnaire. As a result, they were afraid that if they spoke honestly about conditions in the factory they might lose their jobs.

More troubling still, TGA's survey work was immediately put to use by Nike's "public relations" department to rebut charges of worker abuse in both Vietnam and Thailand. Workers felt that they were fairly treated and adequately compensated, Nike officials said repeatedly - citing TGA "research."

A U.S. press report (Baltimore Sun, 11/30/00) Thai workers protesting at Bangkok appearance of Tiger Woods: "The Nike spokesman also noted that a 3,800-person survey conducted this summer by Global Alliance showed a 'high degree of worker satisfaction in Thailand and Vietnam factories.'

It was, of course, predictable that Nike would use TGA to fend off claims that workers were still being mistreated. In fact, there is ample evidence that TGA's founder, Rick Little (President of TGA's "parent", the International Youth Foundation) saw this potential "use" of TGA from the beginning. At a Harvard University conference on youth employment (September 1999), Little said there needed to be "more emphasis on development and working with global companies instead of policing them."
Later that month, Little introduced Nike "Corporate Responsibility" chief, Dusty Kidd, to an IYF gathering in the Philippines (from the IYF web-site):

"Rick further explained the concept of corporate "outsourcing." Increasingly, global companies have chosen to contract a portion of their corporate responsibility for children and youth to IYF, as opposed to devoting the human and financial resources necessary to building internal capacity in this area. IYF is working to help such companies invest in youth issues in more strategic ways to achieve greater impact."

"Outsourcing" of "corporate responsibility" by two tech giants (Lucent and Nokia) brought $17 million to IYF last year. While these companies have not been the targets of anti-sweat campaigners, most Lucent and Nokia production is sourced from Asia. While $17 million may seem like a lot of money to struggling non-profits, Rick Little's IYF got nearly five times that amount from the Kellogg Foundation (set up by the founder of the company that markets "Frosted Flakes" and "Cocoa Krispies" to children). Shortly after the Kellogg Foundation quit funding IYF, the new "outsourcing of corporate responsibility" funding strategy was developed.

Isn't "outsourcing" what got Nike into trouble in the first place? Shoe companies like Bata -- which still control factories where Bata shoes are made -- treat workers better in Indonesia than Nike contractors do.

(See Press for Change research, published December 1999):

The Bata managers do this without paying $7million to TGA; they do this because there is a different "corporate culture" at Bata. This corporate culture explains why there is a 65-page union contract at the Bata factory (the first one was negotiated nearly thirty years ago). Workers making Nike shoes and apparel, on the other hand, are still waiting for Nike contractors to sit down with them in dignity.



Note 9: "Anton [Supit - director of Aprisindo] warns of problems over minimum wages" -- headline

"...investing in the country is considered unsafe because of the rampant violent labor strikes," he said. Jakarta Post, 14/3/00

"Aprisindo seeks fair remuneration system" -- headline

"Labor-intensive footwear companies called on the government on Wednesday to do away with minimum wages." Jakarta Post, 21/9/00

"Korean investors doubt overall situation in Indonesia" -- headline

"South Korean investors will not spend their money in Indonesia unless the government improves the current condition of law and order in the country (and) helps settle labor disputes" -- Anton Supit - he is also Secretary General of Indonesia-Korea Economic Cooperation Committee (Inkorecom) Jakarta Post, 1/11/00

"Buyers of Indonesian shoes shift orders to China" -- headline

"Many importers of Indonesian shoes have shifted their orders to other
countries such as China and Vietnam due to uncertainty in the security
situation in the country, according to the Association of Indonesian
Footwear Producers (Aprisindo)." Jakarta Post, 10/12/01

Note 10: After a meeting with leading US investors yesterday in NYC -- many
of whom complained about what they perceive as the negative impact of
growing labor unrest -- Wahid made a point of stressing that the Indonesian
government was planning "to crack down on labor strikes instigated from
outside the work place" -- which is interpreted as the pretext for
repression of organizing activities by labor unions. Wahid gave the
impression that any strike the government claims is fomented by 'outsiders'
will be stopped by force, if necessary -- report from observer, June 15,

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