No sweat (shop): labor reforms in Cambodia.
Pastor, William
Some US politicians have called for trade agreements to be linked
to labor and environmental standards. Few realize, however, that one
such trade deal already exists. In January 1999, Cambodia and the United
States signed an agreement that allowed Cambodia to export more textiles
only if its factories complied with international labor laws. Five years
later, this unique trade pact has had significant success.
After Cambodia's civil war ended in 1991, foreign investors
began opening garment factories throughout the nation. They were
attracted by cheap labor, low taxes, and the unusual rules governing the
world textile trade--specifically, upper limits that the United States
and other developed nations set on the amount of textiles that they
import from different individual countries. Unable to export more
garments from traditional producers like China, investors jostled for
their share of Cambodia's quota.
Conditions in Cambodia's garment factories were dire. Workers
had to pay fees to middlemen in order to obtain jobs and were then kept
in debt bondage. Forced overtime, illegal pay deductions, and child
labor were commonplace. Additionally, many workers did not earn the
Cambodian minimum wage of US$40 a month. Labor unions not linked to the
ruling Cambodian People's Party (CPP) were stifled.
The Cambodian Labor Code, passed in 1996, was supposed to prevent
all of this, but the law was impossible to enforce. Labor inspectors
were paid miserably low salaries and made their living on bribes
instead. Furthermore, the CPP leadership dominated the industry and had
no incentive to launch crackdowns itself.
In 1999, the United States negotiated its novel trade deal with
Cambodia. Under the agreement, Cambodia's textile export quota
would be increased by up to 14 percent a year (later raised to 18
percent) if it was found to be in "substantial compliance"
with international and Cambodian labor law. The UN-sponsored
International Labor Organization (ILO) would send inspection teams to
factories, interview workers and employers,
and compile the results. The United States would evaluate the
ILO's findings and decide if and how much to raise the quota.
Businessmen feared that Cambodian labor unions would become too
powerful and unruly, and indeed there were large strikes in the summer
of 2000. Tensions waned, however, and textile manufacturers were not
scared off. From 1999 to 2003, garment exports rose from US$600 million
to US$1.5 billion, and the number of garment workers tripled to 235,000.
With Cambodia's real GDP at roughly US$4 billion, this is a
tremendous increase.
Furthermore, the rise of powerful unions is probably a good thing
for Cambodia. Having seen its civil society decimated by the rule of the
Khmer Rouge (1975-1979) and subsequent civil war (1979-1991), unions
could play a key role in the building of democratic institutions.
Although several unions are docile organizations run by CPP cronies,
there is power in numbers: 30,000 Cambodians belong to the Free Trade
Union of the Workers of the Kingdom of Cambodia, a dynamic union with
ties to reformist politician Sam Rainsy. The hope is that unions could
counter the dictatorial CPP in the same way that Lech Walesa's
Solidarity Movement fought Communism in Poland.
Labor leaders were concerned that, while the trade agreement gave
the textile industry as a whole an incentive to comply with labor laws,
individual factories would not be punished for non-compliance. Indeed,
ILO data shows that some companies have not complied with all labor laws
even after repeated inspections and there is evidence that many
infractions are not reported. Still, the ILO claims that there have been
major improvements in wages and working conditions since the signing of
the agreement, and outside journalists and nongovernmental organizations
generally agree. Also, pressure on individual factories has come from an
unexpected source. Multinational companies like Nike and The Gap, wary
of the negative publicity that comes from using sweatshop labor, have
demanded that factories provide them with ILO monitoring reports.
The bilateral US-Cambodian agreement will not last long, however.
In 2005, the entire worldwide system of garment export quotas will be
abolished, and countries will be able to export unlimited quantities of
textiles. Very few countries can produce garments as cheaply as China,
and because of poor infrastructure and corruption, Cambodia is not one
of them. Cambodia is hoping that its reputation for good working
conditions will continue to attract investors. The Cambodian government
is even trying to target Western consumers directly. Some shoppers might
be willing to spend slightly more money for ILO-certified apparel as
they do for "fair-trade coffee" or "dolphin-safe
tuna." The ILO has made clear that it will make no such
certification, but perhaps it should reconsider. If labor standards are
not included in future agreements, such a branding system might be the
best hope for workers in Cambodia and elsewhere.
staff writer
WILLIAM PASTOR
