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=C2=A9=20Fr?= =?utf-8?Q?iedrich-Ebert-Stiftung?= Date: Wed, 7 May 2025 14:01:28 +0200 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----MultipartBoundary--31Gg6xiCCqBukmXqCegUl8Ao0yFiAqgwEjUk57qSuR----" ------MultipartBoundary--31Gg6xiCCqBukmXqCegUl8Ao0yFiAqgwEjUk57qSuR---- Content-Type: text/html Content-ID: Content-Transfer-Encoding: quoted-printable Content-Location: https://library.fes.de/fulltext/bueros/usa/00943.htm Social and ecological sustainability in the globalized economy : proceeding= s of a conference sponsored by the Friedrich Ebert Foundation, New York, He= lmsley Hotel, Wednesday, April 21, 1999. - [Electronic ed.]. - New York, [1= 999]. - 21 Bl. =3D 60 Kb, Text <br>Electronic ed.: Bonn : FES Library, 2001 <br><br><font size=3D-1><i>=A9 Friedrich-Ebert-Stif= tung</i></font>
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Social and ecological sustainability in the globalized economy : proceeding= s of a conference sponsored by the Friedrich Ebert Foundation, New York, He= lmsley Hotel, Wednesday, April 21, 1999. - [Electronic ed.]. - New York, [1= 999]. - 21 Bl. =3D 60 Kb, Text
Electronic ed.: Bonn : FES Library, 2001

=A9 Friedrich-Ebert-Stiftung

=3D"CONTENTS"



I. Introduction

Two decades ago, the process of the growing integration of markets for = goods, services and finance =96 the phenomenon now known as globalization = =96 held the promise of producing a rising tide of wealth that would lift h= umanity=92s collective boat.

Today, the promise remains unfulfilled. As the UNDP=92s 1997 Human = Development Report concluded, =84some boats are more seaworthy than others;= the yachts and ocean liners are indeed rising in response to new opportuni= ties, but the rafts and rowboats are taking on water and some are sinking f= ast."

The widening inequality gap and grinding poverty that afflict a sta= rtlingly high percentage of the world population have led to a stark reappr= aisal of globalized production patterns. Was the original promise of globa= lization a false one? Can globalization be reshaped, reconfigured, or reinv= ented so that it will benefit not just the yachting set, but those who ride= rafts and rowboats?

This reappraisal is taking place among all sectors of society and f= rom all corners of the globe.

  • In Asia, economic crises have turned the tide in many developing countr= ies against further liberalization. So far, this reversal of sentiment is = mostly directed toward financial flows. However, as prices for low-skill m= anufacturing plunge, many developing countries are beginning to question th= e development model of export-driven growth.
  • In industrialized countries, experts are engaged in a raging debat= e over globalization and the benefits of trade liberalization. Critics cha= rge that economic interdependence is undermining democracy and threatening = systems of social security.
  • For the mostly female workforce in export processing zones (EPZs),= the benefits of higher wages in manufacturing enterprises are often offset= by higher costs of living in newly urbanized areas, health dangers due to = poor working conditions, and environmental degradation.
  • Consumers are undertaking =96 with greater frequency =96 successfu= l campaigns to focus attention on exploitative conditions under which many = goods are produced. Some companies have been singled out for boycotts.

Against this backdrop, the Friedrich Ebert Foundation organized a confer= ence to discuss problems that have arisen from globalized production patter= ns, especially with regard to export-oriented industrialization in developi= ng countries.

The goal was to assess the feasibility of different policy approache= s to regulate export industries, while bearing in mind the general desirabi= lity of an international division of labor and the necessity for developing= countries to earn hard currencies by securing trade balance surpluses.

The key questions before conference participants were: Which form of= governance is most likely to achieve the double feat of continued politica= l support for trade liberalization in the North and South, while at the sam= e time guaranteeing an equitable distribution of its gains among all the st= akeholders? What sort of institutions or regimes need to be created in ord= er to make global production patterns sustainable, particularly in developi= ng countries?

The Friedrich Ebert Foundation invited international experts in the= fields of sustainable development, human rights, the environment and labor= to explore these issues at a daylong conference titled =84Global Productio= n and Sustainable Development" in New York City on April 21, 1999. The eve= nt took place during the seventh session of the United Nations=92 Commissio= n on Sustainable Development (CSD 7). One of the overarching issues that t= he commission deals with in its work is the sustainability of consumption a= nd production patterns. The conference aimed at linking this important iss= ue to development policy, by discussing the effects of development strategi= es based on export driven growth on social and environmental sustainability= . =20

The conference was held in advance of the UN Commission on Sustaina= ble Development=92s annual conference, held in New York April 19-30.

The issues were tackled by three panels made up of experts in the fi= elds of sustainable development, human rights, the environment, and labor. = The first panel looked at social and environmental consequences of global = production, the second focused on good governance and human rights, and the= third examined new initiatives toward sustainable global production.

The opinions expressed by speakers were as diverse and wide ranging= as their backgrounds. However, they reached a clear consensus: the system= is not working, and it must be fixed.

The solutions ranged from those at the micro level to those at the m= acro level. On banana plantations and coffee fields in Central America, sm= all-scale farmers and agricultural workers are receiving fair prices for th= eir products and labor through the efforts of the Fairtrade Labelling Organ= izations International. In New York, the Council on Economic Priorities Ac= creditation Agency is urging corporations to adopt a new set of workplace s= tandards. Other speakers argued on behalf of systemic changes in the ways t= hat governments, global governance regimes, and the corporate world functio= n.=20

II. Proceedings of the Conference

Panel I: The Consequences of Global Production

Chair:

Franklyn Lisk, Director, UN Liaison Office=20
International Labour Organization (ILO)

Panelists:

Bradford Gentry, Co-Director, Yale/UNDP Public-Partnership Progra= m
Yale University, School of Forestry and Environmental Studies

Indira Saxena, Commonwealth Trade Union Confederation (CTUC) = of India

David Schilling, Director, Global Corporate Accountability Pr= ograms,
Interfaith Center for Corporate Responsibility (ICCR)

Franklyn Lisk
=84The Role of the ILO in Global Production and Sustainable Devel= opment"

For the ILO, the debate over global production and sustainable developm= ent involves three key issues: risks for workers; challenges for policymak= ers; and the role of international organizations such as the ILO.

The ILO has a strong social mandate. This social mandate has been = reinforced in recent years perhaps most importantly by the Declaration from= the World Conference on Sustainable Development, as well as the ILO=92s de= cision to get involved in issues of trade liberalization from the point of = view of social dimensions. It is in this context that the ILO has been wor= king on behalf of the social dimensions of the liberalization of internatio= nal trade.

Turning to the three key issues, the ILO=92s commitment to worker ri= ghts is well known. This commitment was enshrined in the annual conference= of June of last year by the adoption of the new ILO Declaration on Fundame= ntal Principles and Rights at Work.

For the ILO therefore, globalization, or any process which puts the= rights of workers and their well-being at risk, is a concern of the ILO. = And not only from the point of view of lowering standards. For the ILO, = the =84race to the bottom" is an issue of crucial importance because inter= national labor standards have a major role to play in ensuring a more equit= able process of globalization, a process which =96 to use a clich=E9 =96 ne= eds a human face.

=20

One of the areas of globalization that the ILO is investigating is t= hat of EPZs. While EPZs provide investment promotion opportunities, they a= lso are the source of serious violations of national and international labo= r standards.

The challenges to policymakers can be narrowed to three issues: tra= de, finance and debt. The essential challenge is how to manage the process= of globalization so that its impact on growth will be positive and the man= ner in which economies are integrated into the global economy is not disadv= antaged. There is also the need to ensure that growth and benefits that em= erge from the process of globalization contribute substantially to objectiv= es having to do with employment and equity =96 especially gender equity, an= area of particular interest to the ILO.

Active labor market policies are an important part of the mix. It is= imperative that these policies grow out of a social dialogue and that they= provide at least some measure of a social safety net, when necessary.

In developing countries, and particularly the least developed count= ries, policymakers will have to pay attention, in the context of globalizat= ion, to the need to strengthen their domestic administrative and technical = capacities so that they can form policies and implement programs which ensu= re that integration into the global economy generates sufficient jobs. And= not just jobs that are productive, but jobs that are socially satisfying.

Lastly, the ILO, sees a number of opportunities for international or= ganizations in the debate over globalization and its impact on our member s= tates. The United Nations has emphasized the importance of coordination of= these activities within the system, so that the ILO and UN may work in the= same direction.

The ILO is going through a major transition in ways that deal direc= tly with the subject of this conference. The new director-general, Juan So= mavia, the former Chilean ambassador, is a well-known UN diplomat and inter= nationalist. Mr. Somavia has identified =84four pillars" for the ILO: empl= oyment; international labor standards; social dialogue; and social protecti= on, towards which all work of the ILO will be geared in the future. In add= tion, Mr. Somavia has identified gender issues and development as main, cro= ss-country issues for the ILO.

The ILO will devote a substantial amount of its resources and energ= y toward promoting the Declaration on Fundamental Principles and Rights at = Work. This document is significant in that it is not intended to be curativ= e, but rather promotional. The ILO=92s aim in this regard is to provide to= member states with the right type of technical support so that they can fu= lfill their legal and constitutional obligations through the implementation= of appropriate labor standards.

Further, there are strong indications that Mr. Somavia will bring th= e ILO much closer to the UN system than it has been in the past. This will= mean that the ILO will work more closely with the international financial = institutions. For example, the ILO next week will be part of the UN delega= tion attending the meeting of the Bretton Woods Institutions.

Bradford Gentry
=84Foreign Direct Investment and the Environment: Boon or Bane?"<= /i>

Is FDI good or bad for the environment? Is it a boon or = a bane?

According to Mr. Gentry, it depends on the investor and the level of= enforcement. It also depends on whom you ask. The =91baners=92 argue that= FDI leads to higher levels of pollution, consumption and environmentally u= nsound development. The =91booners=92 respond that FDI improves the enviro= nment because it brings higher levels of technological and managerial resou= rces to bear on environmental concerns.

A better question may be whether developing countries can use FDI to= promote sustainable growth and environmental goals at the same time. Mr. = Gentry believes the answer is yes. In fact, he said, FDI is probably the b= est vehicle available to integrate sound environmental and investment goals= . If FDI has the potential to harm the environment, how is that possible?

First of all, sustainable development will require massive injecti= ons of private investment. Of all types of international private capital f= lows, FDI is the more desirable. It is comparatively stable and promotes e= conomic growth more broadly than other types of capital. It also brings ac= cess to knowledge and production methods.

Secondly, foreign direct investors generally do not pick locations = based on environmental considerations. Labor costs are much more important= . That means that host country governments can integrate environmental pol= icy into their investment promotion frameworks, without fear of driving awa= y investors.

Host country governments can shape their own markets in a va= riety of ways, Mr. Gentry said. They can determine ground rules and set pri= ces for the use of environmental resources. They can make deals to establis= h training programs on environmental management systems. With more and mor= e portfolio investors seeking to prove links between good environmental and= good financial performance, foreign direct investors may come along willin= gly, Gentry said.

=84The implication, at least within the environmental community, is= that both those who think FDI is a boon and those who think it is a bane c= an be working within a common framework for action. The =91baners=92 can f= ocus on the establishment and implementation of regulatory frameworks. Thi= s gives host country governments a room ot maneuver, to put in place clear = and predictable frameworks that require certain environmental behaviors."

The =91booners,=92 meanwhile, should encourage host country governm= ents to seek out progressive foreign direct investors, for example those th= at fund primary education on the environment or sponsor training programs f= or small- and medium-sized enterprises. However, these regulatory function= s can not be undertaken by host country governments alone, Mr. Gentry empha= sized. The role of local governments is shifting from that of =91doers=92 = to that of =91enablers=92 who put frameworks in place and oversee how those= frameworks are implemented.

=84But it=92s not enough to have these stringent environmental laws = on the books. There need to be vehicles for implementation, and that=92s w= here NGOs and other sorts of people need to be involved, in a variety of in= formal and formal ways, locally and internationally."

In response to questions from the audience, Mr. Gentry explored area= s in which NGOs and other non-state actors could in the short-term encourag= e industries to improve their environmental performances.

=84The easiest place to start would be to say, =91What have compani= es been telling their shareholders and their customers about their investme= nts in EPZs? How great are they as environmental actors? Are they living = up to their self-proclaimed standards everywhere they operate? If they are= , how do we use them to help bring the rest of the industry up to that stan= dard. If they are not, how can we instrumentalize that knowledge to embarr= ass them into doing what they already say they=92re doing?"

Mr.Gentry also suggested that non-state actors build coalitions wit= h multinational corporations that have good environmental records in EPZs t= o pressure governments to enforce environmental regulations against compani= es that with poor environmental records.

Indira Saxena
=84Globalization: Opportunity or Threat for Employment and Devel= opment?"

In theory, host countries reap tremendous financial rewards from EPZs. = Sadly, the theoretical promise has remained largely unfilled in practise, = Ms. Saxena said. Jobs pay poorly and work conditions are oppressive, explo= itative and dangerous. In many cases, the cost of imports exceeds the gain= s from exports.

Women, who account for the vast majority of EPZ workers, suffer the= most, she said. =20

=84In India, there are more than 80,000 workers directly involved i= n EPZs, and 90 percent of them are women. Countless numbers of these worke= rs are invalidly involved in these EPZs. Many names of employees are not l= isted: officially, they are =91not there.=92 They work without social secu= rity and in highly unsafe conditions, with a constant threat of job loss. = They are denied their rights to freedom of association."

=20

Investors, meanwhile, are faring well. EPZs offer lucrative packag= es to attract foreign capital. These packages promise cheap labor and infr= astructure, duty-free imports, and easy access to markets. =84Despite all = these privileges, EPZs serve no good to a country=92s development. An audi= tor general=92s report in India concluded that the amount of money they use= to pay for imports is much higher than they earn from exports," Ms. Saxena= said.

Was there no =84trickle down" effect from EPZs, an audience member = asked. Ms. Saxena conceded that there are limited cases in which EPZs have= improved working conditions and raised workers=92 wages in response to ris= ing production. However, these cases are few in number.

Ms. Saxena recalled the case of a female EPZ worker in India who qui= t her job because of unsafe and inhumane conditions. When her employer ref= used to pay for work already done, the woman turned to Saxena=92s CTUC, whi= ch intervened on her behalf. The result was disappointing. The employer de= nied that the worker had ever been on the payroll. =84These workers have n= o union rights," Ms. Saxena said.

What strategies are being used by groups such as Saxena=92s to organ= ize women EPZ workers? What problems are they encountering as they take com= panies to task for violations of worker rights?

EPZ workers in India have no right to associate. However, some trad= e unions have succeeded with organization efforts. The obstacles, however,= make it nearly impossible for them to do so, she added. =84The moment the = employer finds you are going to visit the office of a woman activist or uni= on, they immediately sack you without even one day=92s wages. Workers are = scared. They do not want to lose even one day=92s wages. So, they stick t= o their sweaty conditions. They even die there."

In light of these problems, the key question facing policymakers exp= erimenting with globalization has been how to remove barriers and distortio= ns posed by tariffs and subsidy policies with reasonable speed, without cre= ating further dislocations and distortions in the functioning of the market= economy.

=84This has become a very, very big issue which is affecting workers= ," Ms. Saxena said.

David Schilling
=84Beyond Job Creation: The Social Impact of Export Processing Z= ones"

Many developing countries look to EPZs as a springboard to sustainable = development. Can EPZs really fulfill that function? So far, they are not, M= r. Schilling concluded.

=84A case could be made that in the first wave 15 years ago, there = were some countries that were able to use EPZs as a means by which to gener= ate the development of domestic industry. I don=92t think that=92s happeni= ng now. The kinds of industries that are set up in these zones =96 textile= s, apparel, electronics, some automobile assembly =96 are low-wage, low-ski= lled operations. What is the potential for that to be the first step towar= d sustainable development?"

For the individual worker, Schilling=92s organization has found tha= t EPZs rarely serve as a stepping stone for employers trying to lift themse= lves up by their bootstraps. An EPZ expert in Bangladesh who has interview= ed thousands of female EPZ workers reported that none stayed on the job mor= e than five years. =84That=92s it, they=92re out. It=92s not like it=92s a = platform for further development," Schilling said.

Another disappointing finding is that EPZs do not appear to promote= community development, Schilling said. =84We talk about this as =91pass-t= hrough development=92 instead of sustainable development. One of the chara= cteristics of EPZs is that the benefits accrue elsewhere. If the owner of t= he factory comes from Taiwan, Hong Kong or South Korea, some of the profits= from the contract go back to the those countries."

=84The producer, whether it=92s Walmart or the Gap, sells the produc= t in the consuming country and value accrues certainly to the company and t= he shareholders of the company. But with the exception of the wages of the= workers, very little accrues to the community. That=92s a huge concern," = Schilling said.

International financial arrangements force governments into export-o= riented economies. =84Once that happens, it=92s hard to know where that wi= ll lead. In order to get that investment, do you really have to lower your= labor standards? Do you really have to lower the enforcement of your labo= r code? If that=92s the price for doing business, we really have to examin= e where this globalization process is going. In the end, we do not want th= at process to be marginalizing people and to contribute to the disparity be= tween the wealthy few and the poor many. I think we can do better," Schilli= ng said.

In some cases, groups such as Schilling=92s are successfully pressin= g companies to do the right thing by their workers. Schilling recounted th= e case of Margarita del Angel, a General Motors factory worker in Mexico. = Under Mexican law, workers are entitled to share in 10 percent of company p= rofits. In the year in question, the GM plant had done well financially. = Workers, however, received a $50 bonus with their Christmas paychecks.

The ICCR held shares in GM. Schilling arranged a meeting between de= l Angel and then-CEO Roger Smith. =84Mr. Smith looked into it and ended up= dispensing more profit-sharing." The salient point, Mr. Schilling said, i= s that workers need to be able to organize so that they can protect their o= wn rights.

The idea that the corporate sector is becoming more socially respons= ible is one that is increasingly advanced today. Is such an argument valid= , an audience member asked. And, is it possible to measure corporate socia= l responsibility?

Mr. Schilling=92s group comprises 275 religious institutions with sh= ares in hundreds of companies, and who are trying to use their role as shar= eholders to bring effective change. =84We started in 1971 and, at that tim= e, corporate social responsibility was not on the screen at all at most cou= ntries."

=84I think we have to say there is a tremendous upsurge in interest = and, to some degree, commitment toward corporate social responsibility. Bu= t we have to clarify what that means. There are some companies that see= themselves to be socially responsible, and have begun to put out the a= ppropriate policy statements. The question is, what resources are being us= ed, what kinds of training programs are there, what kind of outreach is the= re to the communities where they are operating? If a company has a code of= conduct, is it being implemented? Is there internal training? What kind = of monitoring is going on?"

There are ways to measure corporate social responsibility, but it is= easier to measure quantitative rather than qualitative areas. =84For exam= ple, we believe companies, particularly those operating in the free trade z= ones, have to have clear statements around women=92s rights. There are som= e ways to measure that. If you give pregnancy tests, as a condition of emp= loyment, that=92s clearly wrong."

It is also important to find out whether corporate social responsibi= lity is a mandate from top management, or a project of a company=92s commun= ications or public relations arm. =84We have very different discussions wi= th companies where the top management has sat down and worked out its value= s and code statements, versus when it comes from the public relations depar= tment," Mr. Schilling said.

Panel II: Human Rights and Economic Development

Mark Barenberg
=84International Regimes: Sufficient to Fill the Global Governan= ce Void?"

Professor Barenberg outlined four key points relating to transnational = global governance regimes, paying particular attention to regimes affecting= labor and social conditions.

While some see a =84global governance gap," Professor Barenberg inst= ead finds transnational governance regimes to be pervasive =96 but highly p= roblematic. First of all, they are systematically biased toward wealth cre= ation =96 or, at least, ideologies of wealth creation =96 rather than the r= edistribution of wealth-creating capacity (another way of saying sustainabl= e development). These governance regimes also are biased in favor of econo= mic power. Political power globally aligns itself with economic power and = affluent states, to the exclusion of states and individuals lacking power a= nd wealth.

Regimes are also highly fragmented. Vertically, they are fragmented= into local, state, regional and international regimes. China, for example= , has 175 official export processing zones. Unofficially, Ch= ina has more than 2,000 EPZs, many of them =84self-declared." Horizontally= , regimes are fragmented by subject area. These subject areas are technica= lly outside of labor and social conditions, but bear heavily on these areas= . Some even affect labor and social conditions to a greater degree than do= es direct labor regulation. Examples include the International Monetary Fu= nd and World Bank regimes (and the conditionality attached to their public = loans), and regulations over global capital markets, hot capital, internati= onal banking, and efforts at multilateral liberalization and regulation of = long-term capital flows and the Multilateral Agreement on Investment (MAI).

Trade-related regimes (WTO, NAFTA, bilateral treaties and unilateral= trade sanctions embodied in domestic law) have a tremendous indirect, but = perhaps more powerful, effect on social conditions than ILO standards or di= rect labor regulation.

Another powerful regime is that of immigration law, which remains an= area of sovereign authority that, in a quiet way, has survived globalizati= on. It is not hyperbolic, Professor Barenberg asserted, to say that our wo= rld is one of global apartheid. Immigration laws keep workers territoriall= y trapped. The great pools of underemployed labor in low wage countries do= not have equal access to the accumulated physical and human capital of hig= h-wage countries. =20

Labor markets and production chains, through which wealth-creating c= apacity is created, destroyed or redistributed, also are complex and fragme= nted. Professor Barenberg identified five categories of labor, each of whi= ch poses distinct problems of governance.

  • Workers in domestic markets and workplaces not directly linked to globa= l trade, production or finance, especially the vast pools of rural workers = and urban, informal sector workers.
  • Workers in transterritorial circuits of migration. These workers,= whether they be in New York City=92s Chinatown or China=92s Fukien Provinc= e, move through transterritorial circuits of underground labor recruitment,= transportation and supervision. These underground networks themselves pro= vide a kind of governance structure. They are beneath the state, but heavil= y shaped by surrounding official regimes.
  • Workers in different countries who make products that compete in i= nternational export markets, and workers in different countries who compete= among themselves for FDI. =84This is the simplest form of the race to the= bottom =96 workers in export processing zones," Professor Barenberg notes.= =20
  • Workers in different countries but in workplaces with production a= nd distribution chains linked contractually across borders.
  • Workers performing services for multinational corporations, linked= or aggregated under a single administrative hierarchy.

These classifications are more than =84arid taxonomy," said Professor Ba= renberg. Legal strategies for protecting labor standards and labor rights = within transnational corporations are different from those aimed at product= ion and distribution chains that are contractually linked. Consider, for e= xample, labor standards embodied in multinational codes of conduct, whether= they are unilateral or multilateral, public or private, voluntary or manda= tory. If multinational codes are applicable exclusively to workplace condi= tions within transnational corporations, they may not reach similar labor a= buses in cross-border enterprises that are linked contractually through sub= contracting chains or even-more indirect multiple chains of contractual rel= ations.

What comes to mind immediately for Professor Barenberg is the questi= on of China=92s integration into the world economy. China has a workforce = of 600 million, but many of those workers would not be reached by a multina= tional code. A similar disjuncture occurs when a country tries to apply it= s domestic law outside its borders. The United States=92 anti-discriminati= on law, Title VII, for example, applies to subsidiaries of U.S. multination= als, but it does not reach subcontractors or any other workplaces not owned= or controlled by U.S. multinationals.

Solutions will require local action and creative thinking, according= to Professor Barenberg. Universal rights, he emphasized, are meaningful a= nd effective only if they are put into local context by local worker organi= zations on the ground," he said. These organizations must specify, particul= arize and interpret rights, monitor violations, and participate in dispute = resolution processes.

Creativity is needed in the development of mechanisms to redistribut= e wealth from rich to poor countries, and within rich countries, to =84avoi= d the recurring nightmare of economic dualism, polarization and uneven deve= lopment." One example is drawn from the European Union, where structural f= unds automatically redistribute public capital from countries with above-av= erage standards of living to those with below-average standards of living.

=84We expected to see races to the bottom as a result of economic in= tegration in Europe, but we were pleasantly surprised by a few races to the= top," Professor Barenberg noted. =84What seems to be crucial is that the = governance structure created a central deliberative body that was charged w= ith a mandate of looking at best practices throughout the EU, and then requ= iring a harmonization upward toward best practice."=20

Ronald Blackwell
=84Corporate Global Sourcing and Labor Rights Violations"=

Are global governance regimes as pervasive as Professor Barenberg claim= ed? Mr. Blackwell holds the alternative view, that we are living in an =84u= ngoverned economic space" in which workers are forced to surrender their fu= ndamental freedoms in order to put food on the table.

=20

Mr. Blackwell described a disturbing disjuncture between societal et= hics and the ethical structure under which the world economy is expected to= function. He drew a historical parallel to slavery in the United States.

=84Slavery is unjust because it violates the most fundamental norms = of human rights. However, the way you organize an economy, the way you pri= ce slaves, and the products they produce, and the costs to raise them, that= can motivate human institutions, both public and private, to support slave= ry," Mr. Blackwell noted.=20

The world economy today is organized in a way that supports indecen= t wages and working conditions. Mr. Blackwell pointed to New York City=92s= Chinatown. =84Not only are those circumstances horrible and unacceptable,= but there=92s nothing in those sweatshops that can change those circumstan= ces. Because in that sweatshop, the power is not even in the contractor th= at owns the sweatshop, or the apparel company that buys from that contracto= r. The power is not in the apparel industry. The dynamic under which it i= s moving has nothing to do with Chinatown. The dynamic under which it is m= oving is international."

=84What the retailers say when they estimate a price-point is, =91M= ake this price and we=92ll buy it. If you can=92t make that price, we won= =92t buy it.=92 That price can=92t legally be made in the United States. = The choice to the manufacturer is to go out of business, to leave the count= ry, or to go underground. This explains why sweatshops are back in the Uni= ted States, and they=92re back with a vengeance," Mr. Blackwell said.

Even a medium-sized chain such as Nordstrom has thousands of suppli= ers worldwide. =84A large percentage of them change every year, and they wi= ll claim they have no responsibility, no knowledge of how (products) are ac= tually produced. That kind of sourcing strategy is exactly (responsible) f= or the kind of exploitation, oppression and abuse that is so rampant in the= world today," he said.

=20

The fundamental problem with regulatory structures, Mr. Blackwell = said, is that our economy is international, while the structures remain lar= gely national and local, which renders them ineffective for the purposes fo= r which they were designed.

States have no incentives to pass progressive labor legislation bec= ause if they do so, they will lose jobs or fail to attract them in the firs= t place. Workers have no incentive to demand their rights because to do so = will cost them their jobs. =84Do I want my rights, or do I want a job? No = worker should have to make that choice, but the current disjuncture in our = governance structure requires workers to make that choice, and that=92s wha= t we have to straighten out," Mr. Blackwell said.

Solutions must encompass the public and private spheres. On the pu= blic side, Mr. Blackwell suggested that states condition trade and investme= nt on respect for fundamental labor rights. In the United States, 10,000 w= orkers a year are fired for activities protected under freedom of speech an= d association, Mr. Blackwell said. It is worse in developing countries, wh= ere EPZs are set up to avoid unionization. Mr. Blackwell learned first-hand= how the system works during a tour of an EPZ in the Dominican Republic: = =84We went in representing the Amalgamated Clothing Co. of New York. It wa= s carefully explained to us, =91You will never have to deal with a trade un= ion in this zone. You will get all the labor you want, at the right price,= fully loaded, and much better than you would get anywhere else in the Cari= bbean.=92 This was proven to be true when we unsuccessfully tried to enter= the same facilities several days later with representatives of local union= s. The armed guards made sure that nobody could enter the facilities witho= ut special permission from management."

Government protection of fundamental freedoms in the workplace will= open the door to the creation of workers organizations. These organizatio= ns will constitute one mechanism to redistribute the value created by corpo= rations. =84If we had this kind of mechanism, we would eliminate the perver= se incentive for oppressing workers to gain an advantage in attracting capi= tal in order to provide employment."

In the private sphere, the governing structure of corporations must= be changed so that they no longer are run primarily for the private benefi= t of shareholders. =84The social responsibility of corporations is to crea= te wealth for society, that=92s why national laws suffer the existence of c= orporations. Yet we have laws that regulate the way they=92re owned, the w= ay they=92re governed, and the way they=92re financed in such a way that th= ey are for the exclusive benefit of only one of the constituents of the cor= poration =96 the shareholder."

=84Now, shareholders are very important. Because they bear residua= l risks, they deserve residual control rights, a place in the governance of= companies, and a large claim on the residual income that results from the = successful activities of the company. But they=92re not the only party in = a corporation that bears residual risks. When working people contribute fi= rst-specific knowledge, they too invest in that company."

=84If you leave in place the current structure of lack of enforceme= nt of fundamental worker rights, social and environmental standards, and yo= u let corporations run for the private benefit of shareholders only, there = is nothing after that you=92re going to be able to do to constrain them."

Clarence Dias
=84Economic and Social Rights as Human Rights"

Is the world witnessing the twilight of human rights? Mr. Dias fears the= answer is yes. Five years ago, then-UN Secretary-General Boutros Boutros-G= hali spoke of human rights as the =84spirit of our age and the reality of o= ur times." Today, Mr. Dias sees a =84global pandemic of neoliberal economi= cs threatening to erase 50 years of painstaking protection and realization.= "

The gap between rich and poor countries is growing at a staggering r= ate. Quoting from John Gray=92s False Dawn: The Delusions of Global Capital= ism, Mr. Dias predicted that the =84ultimate effects of the emancipation of= market forces from social and political control will ensure that the age o= f globalization will be remembered as another turn in the history of servit= ude." And no segment of society is hurt more by globalization than women, = Mr. Dias asserted. Globalization is resulting in the =84economic enslaveme= nt of women and the re-enslavement of once-liberated women."

Human rights instruments =96 particularly economic, social and cultu= ral rights =96 are a tool to bring market forces under social and political= control. To be effective, these rights must be taken seriously. Mr. Dias= outlined a strategy for tackling this problem.

Economic, social and cultural rights are not just aspirations, they= are rights under law. But these rights lost ground during the Cold War. = Civil and political rights were emphasized, to the detriment of economic, s= ocial and cultural rights. Individual rights took precedence over group an= d collective rights. Rights against the state overshadows rights claimed a= gainst non-state actors. =84And what about the role of empowerment from be= low, in securing one=92s human rights, in asserting and claiming one=92s hu= man rights collectively, rather than passively waiting for the state to pro= tect one=92s human rights?"

Mr. Dias turned for an answer to the International Covenant on Econ= omic, Social and Cultural Rights. The ICESCR contains 31 articles. Enshri= ned in these articles, however, are just four economic rights. Briefly sta= ted, they are the right to work, the right to an adequate standard of livin= g, the right to health, and the right to education. Two more articles deal= with social rights. One lays out the fundamental importance of the family= and the right to protection of the family, the other deals with the right = to social security and social insurance. One article deals with cultural r= ights =96 the right to take part in cultural life, the right to a cultural = identity, the right to pluralism and diversity in societies, and the rights= not to be dominated by majoritarian or minority ethnic politics.

The obligation to respect these rights, that is to say, to not viol= ate these rights, is owed by all entities =96 state and nonstate, individua= l and collective. Obligations to promote and fulfill these rights are subj= ects for negotiation between actors in the public and private sectors. =84= It=92s imperative that we take economic, social and cultural rights serious= ly by attempting to enforce them at every level =96 local, regional, nation= al, and international," Ms. Dias said.

Keynote Address:
H.E. Mr. Kamalesh Sharma

Ambassador Extraordinary and Plenipotentiary
Permanent Representative, Permanent Mission of India to the United Nati= ons

=84Trade Policy and Sustainable Development =96 A View from the S= outh"

=84Poverty is the biggest polluter." Prime Minister Indira = Gandhi=92s words remain as true today as when she uttered them in 1972, acc= ording to Ambassador Sharma. =84Without the eradication of poverty, any ot= her measures will be ineffective or transitory at best, as poverty creates = unremitting pressure on the environment. The linkage of poverty eradication= with sustainable development is, therefore, a central one."

The South believes that the WTO has an important role to play in co= ordinating trade and environmental policies in a mutually supportive way. A= n open, non-discriminatory and equitable multilateral trading system will c= reate a more efficient allocation and use of resources, and contribute to a= n increase in production and incomes, and to lessening demands on the envir= onment.

With respect to the interface between trade and the environment, th= e South generally believes that the existing provisions of the 1984 GATT ar= e adequate to deal with trade measures taken pursuant to legitimate environ= mental objectives contained in existing MEAs, and that trade measures pursu= ant to future MEAs should keep in mind the provisions of multilateral tradi= ng systems.

=20

However, much more needs to be done by developed-country WTO members= toward full implementation of existing agreements and achieving an enlight= ened view of equitable global trade expansion. =84This has become particula= rly urgent in the era of globalization," the Ambassador stated, =84because = globalization is an opportunity for some, but a grave threat to others."

=84Let me tell you a metaphor, which I thought was very pertinent i= n the high noon of Reaganomics, of the neoliberal, freewheeling market. It= was said that the American society was a society of opportunity, which eve= ryone could access. This was to say that if poverty exists, what you have = to examine is not the economic system, but the poor themselves. So, the wh= ole spotlight would focus on people, who, for a variety of reasons =96 soci= ological or educational =96 were not in a position to join the society of o= pportunity."

=84To transpose this argument into the global argument was largely = unspoken, but very much evident in all policy formulation," the Ambassador = continued. =84That this is a world of opportunity, and this world of opport= unity can be created along the free market system, and if many societies ha= ve not been able to plug into this world of opportunity, it was the fault o= f their statism, state control, lack or empresarial encouragement, corrupti= on, or mismanagement of public resources."

=84The Washington Consensus was based on the belief that whatever t= he IMF or the Worldbank does is basically the correct way to proceed in pro= ducing the kind of world to which I have been referring, with some course c= orrection from time to time, but no structural change or revolution in view= point. The belief was that nothing is broken, so we don=92t have to fix it= ."

But the recent series of economic collapses around the world have re= sulted in two important realizations, the Ambassador stated. One is that s= omething is broken, and it needs to be fixed. The other realization is tha= t the consequences of economic failure in the developing world are not econ= omic, but rather social and political, the Ambassador said. That, the Amba= ssador added, is the =84human face" of globalization.

Panel III: Making Global Production Sustainable

Chair:

Stephen P. Marks, Director, United Nations Studies Program
Columbia University

Panelists:

Mark Barenberg, Professor
Columbia Law School

Ronald Blackwell, Director, Department of Corporate Affairs
American Federation of Labor =96 Congress of Industrial Organisations

Clarence Dias, Director
International Center for Law in Development

Chair:

Rainer Braun, Program Officer
Friedrich Ebert Foundation

Panelists:

Judith Gearhart, Project Director
Council on Economic Priorities Accreditation Agency (CEPAA)

Julie Pereira, Executive Secretary
Fairtrade Labelling Organizations International (FLO)

Matthew Quinlan, Manager, Coffee & Agroforestry Program
Conservation International

Judith Gearhart
=84Corporate Initiatives for =91Better=92 Business in Developing = Countries"

Companies compete for business on the basis of price, quality and style= . Why not also compete on the basis of social accountability? That=92s one= of the goals toward which Ms. Gearhart is working on, as part of the CEPAA= =92s efforts to promote better workplace conditions worldwide. A growing n= umber of transnational companies are beginning to see workplace conditions = as an important dimension of their routine quality control, not only= because it affects product quality, but also because it affects the compan= y=92s reputation among concerned consumers. =20

One example of companies engaged in positive competition is Nike and= Reebok=92s response to the crisis in Indonesia. After Suharto fell, infla= tion rates were rising in Indonesia, so the government mandated a minimum w= age increase of 15 percent. Several months later, Reebok increased wages a= n additional 20 percent and in October of 1998, Nike announced a wage incre= ase of 25%. The press quoted Nike saying it was prompted to this increase = after surveying workers, however, it was significant that Reebok had preced= ed them with a wage increase. =20

Were these increases sufficient? According to a Sweatshop Watch wa= ge survey, a greater increase was needed. It is difficult to pin down what= exactly is a decent wage, but it is even more difficult to make a signific= ant increase in wages when other companies in a sector do not. This exampl= e signals that companies are starting to realize that decent wages and work= conditions make good business sense. The pay-off comes in terms of a more= secure reputation, stable relations with suppliers and improved productivi= ty.

One of many tools available to a company seeking to improve its soci= al image is CEPAA=92s auditable standard for workplace conditions, Social A= ccountability 8000 (SA 8000). The standard is based on principles enshrine= d in ILO conventions and human rights treaties, and covers eight areas =96 = working hours, compensation, free association and collective bargaining, fo= rced labor, child labor, health and safety, discrimination and discipline. = One of its more controversial elements is a wage component. =84Some of our= critics say that=92s aspirational, but we think it is an essential part of= the debate on workplace conditions. In the auditing process, compensation= issues often go hand in hand with problems in free association and collect= ive bargaining. Similarly, health and safety problems can reflect an abuse= of overtime hours, or vice versa." Ms. Gearhart said.

The standard was born out of a growing realization in the 1990s that= individual corporate codes of conduct were frequently ineffective, inconsi= stent, unenforced and failed to include even basic labor rights such as fre= edom of association and collective bargaining, Ms. Gearhart said.

What SA8000 does is take international norms and write them up in v= ery practical ways, in effect =91translating=92 them into management langua= ge so they can be used in the workplace setting. When you are talking to f= actory managers, you need to put directives into terms that are very specif= ic. For example; the company: shall not engage in or support the use of chi= ld labor; shall ensure that workers=92 representatives have access to their= members in the workplace; and shall ensure workers always have one day off= in every seven-day period.

Once more companies understand that socially responsible policies m= ake them both more efficient and more competitive in the marketplace, count= ries will have less incentive to compete to offer lower wages and more flex= ible labor regulations. =84I participated in a conference in Peru in Decem= ber, where local NGOs are still trying to bring the human rights debate int= o the mainstream. One strategy is to show companies that respect for human= rights is also becoming a business issue, and lack thereof will make it in= creasingly difficult to compete for multinationals=92 business. One of the= interesting things these NGOs were saying to Peruvian companies was: =91Lo= ok, international standards like SA8000 are in increasing demand among U.S.= and W.European multi-nationals. Central American factories are already im= plementing them and Peru will fall behind the curve if you don=92t realize = your company=92s image is linked to its social image.=92 =20

Countries face a similar dilemma to most of the companies wanting to= improve workplace conditions and pay better wages; they face the challenge= of attracting investment while also promoting human development.

Julie Pereira
=84Trade as a Win-Win Situation: The Example of Fairtrade"

How does a small-scale coffee grower stay in business when his bag of b= eans brings less at market than it cost to produce? Some simply give up. = Others stay in the black with the help of retail schemes such as the one of= fered by Fairtrade Labelling Organizations International, the international= umbrella organisation of Transfair and Max Havelaar initiatives worldwide.= Fairtrade products cost a little more at the check-out stand so that prod= ucers can get a fair return on their labor.

=84What we=92re trying to do with Fairtrade is actually link produc= ers and consumers much more closely. It=92s a niche market. There are peo= ple out there who are willing to pay more for a product because they unders= tand there is a problem with bargaining power in trade. Out of that, a lot = of people are getting a lot of benefit," Ms. Pereira said.

The Fairtrade concept dates to the 1950s with the establishment of E= uropean =84charity shops" specializing in products from the South. =84The = idea was borne out of frustration of the development agencies of not being = able to move beyond traditional aid. It really became one of the more sust= ainable kinds of aid."

A decade ago, Fairtrade entered the mainstream retail market. Good= s bearing the Fairtrade label started appearing on supermarket shelves thro= ughout Europe. Today, the 17 foundations which together own the Fairtrade = label market 7 products =96 coffee, tea, honey, sugar, bananas, cocoa, and = chocolate =96 with a retail value of about $300 million a year. Fairtrade = coffee sales account for 2 percent of the world market. In Switzerland alo= ne, Fairtrade controls about 15 percent of the banana market. In the Nether= lands, 89 percent of consumers recognize the Fairtrade name.

Why is a retail scheme such as Fairtrade necessary? Pereira blames= the formidable power of transnational corporations, as well as trade liber= alization policies in developing countries. =84Take the example of coffee.= Prices are set on the New York Stock Exchange, and they fluctuate daily. = Obviously, a small-scale farmer has very little impact on those prices, wh= ich are below the cost of production. So, very quickly, a farmer gets into= a cycle of debt. The cost of credit can be very high. In Central America= , for example, interest rates can go up to 50 percent around harvest time."

=84We believe that trade is very important for development, but we = feel that it=92s necessary to take care that trade doesn=92t just strengthe= n the stock in the trading relationship. Fairtrade is an opportunity for p= roducers to trade at prices they would normally trade at if they came in at= a level playing field and had similar bargaining power as the import buyer= s of their products," Ms. Pereira said.

The difference between the Fairtrade label and codes of conducts is= frequently misunderstood. =84When you buy a pair of shoes made by a compa= ny that has a code of conduct that is thoroughly monitored, you know that t= hose shoes were made by somebody working in certain conditions. When you b= uy a Fairtrade packet of coffee, you are making an economic transfer to tha= t producer. That producer is earning more for that product than another pr= oducer would. So it=92s quite different."

Fairtrade and similarly structured programs are no solution to trad= e inequality, Pereira conceded. To stay in business, Fairtrade is able to = label only mass-market products, and contracts only with producers capable = of meeting stringent quality and delivery criteria. =84That means we=92re = not targeting the weakest or the most disadvantaged producers around the wo= rld. We=92ll never be able to help the women basket weavers at home. Neve= rtheless, it is an exciting concept, and it does many, many good things," M= s. Pereira said.

Despite its limitations, Fairtrade=92s market and products are expa= nding. Fairtrade is currently preparing to launch sales in the United Stat= es and market its first manufactured goods.

Matthew Quinlan
=84Sustainable Economic Opportunities in a Globalized Environment= "

El hambre habla mucho m=E1s fuerte que la ecolog=EDa. Hunger sp= eaks much louder than ecology. That=92s how a Latin American coffee grower= responded when Mr. Quinlan tried to convince him of the benefits of good l= and stewardship.

The point was not lost on Mr. Quinlan, who has witnessed first hand= the devastating consequences of highly intensified coffee production on sm= all-scale farmers in Latin America.

=84Transnationals got heavily involved, especially in indigenous co= mmunities, which ended up turning traditional systems of labor exchange and= redistribution of wealth into very unique and beneficial mechanisms for as= suring crop at low cost. This transformation created a movement from a sys= tem of high biological and economic diversity to one in which you have one = product highly dependent on a volatile market," Mr. Quinlan said.

The impact on biodiversity is evident to even the casual observer. = Forested coffee fields that at one time supported 75 percent of the specie= s found in neighboring forests now only support 20 percent. =84Farmers are= very aware of it. One of them said to me, =91I remember when my grandfath= er used to count 10 of these rare parrots every day. Now I=92m lucky if I = see one in 10 years." Producers experienced soil loss, hybrid burnout, and = lower quality.

There has also been a great social cost. =84To have indigenous sys= tems that were once self-regulators of a community=92s conduct turned into = mechanisms of exploitation has deep impacts that last generations. It mean= s kids leave and go to the city because they see no future in a system that= their own parents couldn=92t get out of."

What about solutions? Mr. Quinlan pointed to several possibilities.

  • Collective bargaining with the buying houses. Small-scale producers ne= ed to organize themselves so that they negotiate better terms. =84We worke= d with three producers who have been selling to the local market in Chiapas= (Mexico). They organized and together they were able to get 300 percent m= ore just by bringing all their coffee in together, instead of individually = trickling in. Now, they=92re exporting to the international market."
  • Quality control. The only way to get a quality price is by sellin= g a quality product.
  • Technical assistance. Small-scale producers need to find alternat= ives to agrochemicals, which are no longer available or priced out of their= range. The best alternatives are those which require nothing more than la= bor and natural materials.
  • Organizational development. Small-scale producers and co-ops need= to learn how to take advantage of economies of scale and how to supply a c= onsistent product.
  • Credit. Small-scale farmers and co-ops can=92t bring a product to = market unless they can pay off intermediaries first.
  • Outside pressure. =84How do we get somebody like Proctor & Ga= mbel to incorporate these concepts? First of all, they=92re going to need c= ustomers to tell them to do it, and pressure from governments and aid agenc= ies."
=A9 Friedrich Ebert Stiftung | techn= ical support | net edition=20 fes-library | September 2000
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