[Senate Hearing 110-1062]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1062
OVERSEAS SWEATSHOP ABUSES, THEIR IMPACT
ON U.S. WORKERS, AND THE NEED FOR
ANTI-SWEATSHOP LEGISLATION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON INTERSTATE COMMERCE, TRADE, AND TOURISM
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 14, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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0SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Margaret Spring, Democratic General Counsel
Lisa J. Sutherland, Republican Staff Director
Christine D. Kurth, Republican Deputy Staff Director
Kenneth R. Nahigian, Republican Chief Counsel
------
SUBCOMMITTEE ON INTERSTATE COMMERCE, TRADE, AND TOURISM
BYRON L. DORGAN, North Dakota, JIM DeMINT, South Carolina,
Chairman Ranking
JOHN D. ROCKEFELLER IV, West JOHN McCAIN, Arizona
Virginia OLYMPIA J. SNOWE, Maine
JOHN F. KERRY, Massachusetts GORDON H. SMITH, Oregon
BARBARA BOXER, California JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas
CLAIRE McCASKILL, Missouri
C O N T E N T S
----------
Page
Hearing held on February 14, 2007................................ 1
Statement of Senator DeMint...................................... 4
Statement of Senator Dorgan...................................... 1
Prepared statement of William Jones, Chairman, Cummins-
Allison Corp.; Member, Board of Directors, U.S. Business
and Industry Council....................................... 22
Witnesses
English, James D., International Secretary-Treasurer, United
Steelworkers................................................... 32
Prepared statement........................................... 33
Fuentes, Beatriz, President, Sintrasplendor Union, Splendor
Flowers........................................................ 5
Prepared statement........................................... 6
Griswold, Daniel T., Director, Center for Trade Policy Studies,
The Cato Institute............................................. 38
Prepared statement........................................... 40
Jesseph, Steven A., President/CEO, Worldwide Responsible Apparel
Production (WRAP).............................................. 11
Prepared statement........................................... 13
Kernaghan, Charles, Executive Director, National Labor Committee. 25
Prepared statement........................................... 29
Nazma, Sheikh, Founder/Former President, Bangladesh Center for
Worker Solidarity.............................................. 8
Prepared statement........................................... 9
Socolow, Hon. David J., Commissioner, New Jersey Department of
Labor and Workforce Development................................ 35
Prepared statement........................................... 37
Appendix
Athreya, Bama and Ferm, Nora, International Labor Rights Fund
(ILRF), joint prepared statement............................... 56
Snowe, Hon. Olympia J., U.S. Senator from Maine, prepared
statement...................................................... 55
OVERSEAS SWEATSHOP ABUSES, THEIR
IMPACT ON U.S. WORKERS, AND THE NEED FOR ANTI-SWEATSHOP LEGISLATION
----------
WEDNESDAY, FEBRUARY 14, 2007
U.S. Senate,
Subcommittee on Interstate Commerce, Trade, and
Tourism,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:05 a.m. in
room SR-253, Russell Senate Office Building, Hon. Byron L.
Dorgan, Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. I am calling the hearing to order this
morning.
This is a hearing of the Subcommittee of the Commerce
Committee, and I am Chairman of the Interstate Commerce, Trade,
and Tourism Subcommittee. Senator DeMint, who is the Ranking
Member, will be with us shortly. And when he does arrive, I
will recognize him for an opening statement.
We have a hearing today on the issue of overseas sweatshop
abuses, their impact on U.S. workers, and the need for anti-
sweatshop legislation. I have introduced such legislation here
in the U.S. Senate, and today we will examine this issue in
some detail.
The global economy is producing a lot of interesting
results, some quite wonderful and some very beneficial to our
country and others around the world, and some that are not so
wonderful, some that cause very significant problems in our
country. And yesterday's announcement of a trade deficit, for
the last year, of $832 billion is a demonstration of the fact
that our trade policy is far out of balance and needs to be
changed.
When manufacturing plants in foreign countries are able to
grossly mistreat workers with impunity, our own workers will
suffer, as well. We see a movement going on, in the global
economy, of American jobs moving overseas, and some think
that's fine. I don't. It is an opportunity for those that
produce products to circle the globe and find the lowest cost
of production, and, with that lowest cost of production, to
employ foreign workers--in some cases, in countries where you
can pay pennies an hour; in some cases, in countries where if
someone dares talk about organizing workers, they can be sent
to prison; in some cases, in countries where workers have no
rights at all.
I think while there are differences of opinion about these
trade issues, I believe there should be general uniform opinion
on a couple of things. We've already reached a uniform judgment
on the question of whether products that are produced in
foreign prisons--that is, products of prison labor--should be
imported into this country and represented as products that are
engaged in fair competition with our producers. The answer for
our country has been to say no, the product of prison labor is
not acceptable. And so, we do not allow the import of the
product of prison labor.
What about the product of labor that is produced--or of
goods that are produced in sweatshop labor conditions, in
plants in which gross violations of the existing laws in the
existing countries--gross violations of workers' rights, are
routine? Should the product that comes from foreign sweatshops
be allowed into this country? If not, what do we do to try to
prevent the import of goods produced in sweatshop conditions?
I've introduced a piece of legislation to deal with these
problems, S. 367, the Decent Working Conditions and Fair
Competition Act. The bill would do two things. First, the bill
says it is illegal to bring the product of sweatshop factories
to this country. In this bill, a ``sweatshop factory,'' is one
where workers are abused, in violation of their own country's
labor laws. Second, the bill would allow U.S. retailers the
right to sue their competitors for damages in U.S. courts if
their competitors are sourcing their merchandise from sweatshop
factories.
This is a bipartisan bill. I'm grateful that Senator
Lindsey Graham, the Senator from South Carolina, has agreed to
be the lead Republican cosponsor.
And the reason I decided to introduce the bill was the
revelation that there are serious sweatshop abuses in a number
of areas of the country; most recently, discussions about
sweatshop abuses in the country of Jordan. Some witnesses
invited to testify today will speak about this issue.
When our trade negotiators negotiated the Jordan Free Trade
Agreement, in October of 2000, I gave the Clinton
Administration credit for giving some thought to putting labor
provisions in that trade agreement. It is the only trade
agreement in which labor provisions have been included. But
those labor provisions have not been enforced, and the result
is the proliferation of sweatshops in a portion of Jordan.
Examples of workers promised $120 in a month, and hardly paid
at all; one worker, paid $50 for 5 full months of work; a 40-
hour shift in one plant--not a 40-hour week, a 40-hour shift.
In November of 2006, BusinessWeek had a cover story on
sweatshop abuses, titled ``Secrets, Lies, and Sweatshops.'' The
article begins with a description of a Chinese company, called
Ningbo Beifa Group. This Chinese company has made a great deal
of money as a top supplier of pens, mechanical pencils, and
highlighters to Wal-Mart stores and other major retailers.
In 2005, according to the BusinessWeek stories, Wal-Mart
inspected the company's factories. It found that the company in
China was paying its 3,000 workers less than China's minimum
wage, and violating overtime rules. So, they asked the company
to fix the problems. On three successive inspections, it was
clear the Chinese company had failed to do so. Three times,
Wal-Mart told the company it would get another chance. When
Wal-Mart issued a fourth warning, the Chinese turned to another
Chinese company, called the Shanghai Corporate Responsibility
Management & Consulting Company. For a $5,000 fee, the company
promised to send a consultant to take care of the Wal-Mart
problem. That consultant provided advice on how to create fake,
but authentic-looking, payroll records, and the consultant also
told the company that, on the day of the fourth Wal-Mart audit,
they should give the day off to any workers with grievances so
that they would not tell any inconvenient stories. Following
the consultant's advice, the Chinese factory passed the Wal-
Mart audit, even though the China company later admitted it
didn't change--hadn't changed any of its practices.
I don't believe, in this case, Wal-Mart deliberately turned
a blind eye to these practices. There are certainly documented
cases of other companies that sell sweatshop products in the
United States. But I do think that companies that decide to
import products into this country should not be allowed to gain
an unfair advantage by deliberately sourcing from sweatshop
factories that abuse workers abroad.
The bill I've introduced with Senator Graham would address
such abuses by banning the importation or sale of products made
in factories under, quote, ``sweatshop,'' unquote, conditions.
This bill has also been sent to the Finance Committee. I've
written to Chairman Baucus, asking for a hearing in that
committee. It's appropriate for this committee to also hold a
hearing to examine the issue of sweatshops. The import
restrictions on sweatshop goods under this bill would be
administered by the Federal Trade Commission, which falls
within the jurisdiction of this subcommittee.
Today, we're going to hear from a broad range of witnesses
about the issue of overseas sweatshops, and I thank them for
coming. Betty Fuentes is a Colombian worker in a flower
plantation, and, 3 years ago, founded one of the first unions
of flower workers in that country. Sheikh Nazma began working
in a Bangladeshi sweatshop when she was 10 years old, and
eventually organized her co-workers and formed the Bangladesh
Center for Worker Solidarity. Charles Kernaghan is the
executive director of the National Labor Committee, which has
spearheaded a number of investigations into sweatshop abuses
around the world. Jim English is secretary treasurer of the
United Steel Workers, which has been actively involved in the
fight against sweatshop abuses overseas. William Jones is
chairman of the U.S. Business and Industry Council but it is my
understanding that Mr. Jones, because of travel problems in
Chicago, is not able to be with us today. David Socolow, a New
Jersey commissioner of labor, is part of a multistate effort to
fight sweatshop abuses through rules on State government
procurement. Steven Jesseph is the vice chairman of Worldwide
Responsible Apparel Production, a group founded by the American
Apparel and Footwear Association. And Dan Griswold, director of
the Center for Trade Policy Studies at the Cato Institute, a
think tank based in Washington, D.C.
I want to thank all of the witnesses who have come today,
and let me call next, for an opening statement, on my colleague
Senator DeMint.
Senator DeMint?
STATEMENT OF HON. JIM DeMINT,
U.S. SENATOR FROM SOUTH CAROLINA
Senator DeMint. Thank you, Mr. Chairman. I appreciate you
pulling together this hearing. It is important that we have a
comprehensive review of labor conditions that our companies are
doing business with and that our consumers are buying products
from.
I think we all know that trade, on the whole, has done much
around the world to raise the standard of living of many
people. We've also seen that good trade agreements with other
countries not only help to guarantee human rights, but also set
labor standards, which these trade agreements call on for
enforcement.
We're very aware that we still have problems around the
world. Hearings like this can continue to shine the light on
those problems, and, hopefully, we can begin to solve them,
working with our corporate citizens as well as other countries.
We know the media has helped to bring these problems to
light. Most of our companies in this country have demonstrated
a lot of corporate responsibility in how they've dealt with
this. Again, most are good. But we have some examples, as we'll
hear today, where not all is perfect.
One of the best things, I think, that is going on is the
monitoring and certification of plants around the world so that
American customers of these products will know who they're
doing business with, and we can continue to put pressure on
companies abroad.
As we do that, it's important that we don't cause more harm
than good. While there are sweatshops which we need to look at,
Mr. Chairman, certainly many jobs have been provided around the
world by American companies buying products from all over the
world, and we want to make sure that, as we attempt to stamp
out the bad actors, that we don't eliminate jobs for many low-
income workers around the world by creating undue liability and
risk for companies who make products made abroad. A
comprehensive evaluation is important.
And, Mr. Chairman, if it would be acceptable to you, as
part of the first panel, I understand that Steven Jesseph has
some scheduling difficulties, and I may not be able to stay
through the entire second panel, and it would probably provide
good balance, on the first panel, if we could hear from the
problems, but also how monitoring and certification is working.
And unless you object, sir, could Mr. Jesseph possibly be the
third witness on the first panel this morning?
Senator Dorgan. That would be perfectly acceptable if Mr.
Jesseph would be willing to come forward. I understand you have
some scheduling issues, and I expect there are a lot of people
in Washington, D.C., trying to figure out their schedules these
days.
Senator DeMint. Yes.
Senator Dorgan. But let us have you on the first panel, and
we will have you provide your testimony following the first two
witnesses.
Senator DeMint. Thank you, Mr. Chairman.
Senator Dorgan. Of course.
Senator DeMint. And I'll yield back.
Senator Dorgan. Let me introduce the first panel.
First, we have Betty Fuentes, a Colombian worker in a
flower plantation. Three years ago, she founded one of the
first unions of flower workers in that country. Her visit has
been sponsored by the International Labor Rights Fund. Since
Ms. Fuentes speaks very little English, Nora Ferm, of the
International Labor Rights Fund, will serve as an interpreter.
Nora speaks fluent Spanish and has worked in both Colombia and
Ecuador.
Next, we will have Sheikh Nazma--I hope I have pronounced
that correctly. She began working in textile sweatshops in
Bangladesh when she was 10 years old, organized her co-workers,
and formed a Bangladesh Center for Worker Solidarity.
I want to thank both of the witnesses for coming.
Nazma speaks very limited English, and we have an
interpreter with her. And I'll ask the interpreter to identify
herself when we have Ms. Nazma testify.
Let us hear now from Ms. Fuentes.
STATEMENT OF BEATRIZ FUENTES, PRESIDENT, SINTRASPLENDOR UNION,
SPLENDOR FLOWERS
Ms. Fuentes. My name is Beatriz Fuentes. I've been working
in the flower industry in Colombia for 10 years, and I have two
children. Today, on Valentine's Day, I'm here to talk about my
experience in the flower sector.
First, workers face a lot of harassment and retaliation
when we try to form a union, to exercise our right to freedom
of association, and to improve our working conditions. At the
Splendor Flowers Plantation, which is owned by the
multinational company, Dole, my co-workers and I formed a union
in November 2004. The company used many tactics to try to
weaken our union and avoid negotiating a collective bargaining
agreement. The management called up a company union and signed
a collective bargaining agreement with them. Any worker that
joined this company union received approximately $20 as an
incentive. In addition, management lent a company-owned bus to
transport workers to the assembly of this management-sponsored
union during working hours. Management representatives
pressured workers not to join the independent union.
The Colombian Government gave our independent union legal
recognition in 2005. However, despite this recognition, Dole
decided to close the Splendor plantation instead of negotiating
with the facility that now had the strongest independent union
among Dole-owned plantations. There is no proof that Splendor
was a losing enterprise. We fear that Dole will soon declare
the closure of its only other plantation with an independent
union, La Fragancia.
The second thing that worries us is the lack of protection
against occupational health risks. This leads to health
issues--allergies, respiratory complications, and eye problems.
One reason I decided to organize a union was that I saw how
they were simply firing my sick co-workers. If you are sick,
you are simply out of a job.
Another issue in the flower industry is the requirement
that female job applicants submit to questioning regarding
whether or not they are, or plan to become in the near future,
pregnant. As well, they're required to undergo a medical
examination by a company doctor to prove they are not pregnant.
Unfortunately, this is common industry practice.
Aggravating the situation for workers is the inordinately
long time it takes for the Ministry of Labor to resolve worker-
rights cases. For example, in early 2005, my union filed
several complaints before a labor judge regarding occupational
health problems and violations of the right to organize. As I
sit here, not one of these cases has been resolved. In
contrast, there's another decision to be rendered rather
quickly next week. It is one where Splendor Flowers, just 6
weeks ago, asked the Ministry of Labor to approve the mass
firing of all workers at that plantation. Next week, you
Senators will still have your jobs, but my workers may not have
theirs.
In sum, workers in the Colombian flower industry are faced
with low wages, long working hours, and poor and illegal
company practices. All of this adds up to social instability
and the disintegration of families in the flower-growing
region.
Thank you for allowing me to share this testimony, and I
hope you take it into consideration in considering S. 367.
[The prepared statement of Ms. Fuentes follows:]
Prepared Statement of Beatriz Fuentes, President, Sintrasplendor Union,
Splendor Flowers
Introduction
I am the President of the Sintrasplendor union, which was founded
in November 2004 at the Splendor Flowers plantation in Colombia, a farm
belonging the multinational Dole. I have more than 10 years of
experience working in the Colombian cut flower industry. For
Valentine's Day, the day when more Americans buy cut flowers from
Colombia than any other day of the year, I have traveled to the U.S. to
share my testimony about the poor working conditions that exist in many
Colombian flower plantations, and which I have experienced firsthand
over the past decade.
My co-workers and I have witnessed the limitations of Colombian
labor law enforcement, and voluntary initiatives in addressing these
serious labor rights violations. New, enforceable strategies are needed
to effectively guarantee workers' rights in this industry.
Occupational Health and Safety
Flower workers are inadequately protected against occupational
hazards. In the greenhouses, we are exposed on a daily basis to highly
toxic chemicals, without sufficient protection. We are also exposed to
extreme temperatures, and we work long hours doing repetitive tasks.
These conditions cause serious health problems including allergies,
respiratory problems, eye problems, spinal problems, and carpal tunnel
syndrome.
I have had a problem with carpal tunnel syndrome for the past 5
years, due to the fact that I have had to spend 8-10 hours straight
cutting stems with scissors. Most workers are assigned to one job for
several months at a time, frequently causing repetitive motion
injuries. Currently, we must trim 300-400 flowers per hour.
On July 14, 2005, there was a tragic accident on one of the company
buses on which we ride to work every day. On that day, as on most days,
the bus was excessively overloaded. We had asked them to fix this
problem but they hadn't done anything about it. Several workers were
killed or injured. I was on this bus when the accident occurred.
Forced Pregnancy Testing
It is also common for flower plantations to require female job
applicants to take a pregnancy test to demonstrate that they are not
pregnant, which is illegal. Or they ask if we are planning on having
more children, and if we have had an operation. The management does not
do this out of concern that the pregnant women are exposed to the same
toxic pesticides as all of the other workers. They do it because they
don't want to pay the maternity leave or the other benefits legally due
to pregnant workers.
Union Busting
Colombia is the most dangerous country in the world to be a trade
union leader. Compared to other sectors, the cut flower industry
fortunately has not experienced the same extreme level of trade union
violence. Other forms of retaliation against unions remain all too
common, however, and we hope that the violence will not escalate.
My co-workers and I founded a new independent union at Splendor
Flowers, called Sintrasplendor, in November 2004. We were motivated to
form a union because of the worsening conditions at Splendor. The
company began assigning more and more flowerbeds to each worker, making
the workload intolerable. Over the past 10 years, the workload has
doubled from 15-20 flowerbeds up to 30-40 flowerbeds per worker. This
means more backbreaking labor for no more pay. Lately the company has
been firing sick workers and old workers. They also announced that they
would soon turn some jobs over to subcontractors, which means that
those workers will lose the little job stability that they currently
have. The company was writing up its own collective agreements and
making the workers sign them, without even giving them a chance to
voice their opinions. We hoped that a union would enable us to present
a petition to the company, and therefore negotiate improved working
conditions, guaranteed overtime pay, and salary increases.
Sintrasplendor was the first independent union to be successfully
established in a Dole-owned flower company in Colombia. When
Sintrasplendor received its registration from the Ministry of Social
Protection, the company presented a list of objections, asking the
Ministry to revoke the registration. Splendor Flowers used various
forms of persecution against the independent union, including assigning
extra work on days when the Sintrasplendor had planned assemblies and
other union-related activities.
The company invited in another union and signed a collective
bargaining agreement with them almost immediately. The agreement said
that any worker who joined the company union, Sinaltraflor, would be
rewarded with 40,000 pesos (approximately US$20). The company wanted
the majority of workers to join Sinaltraflor, because they could then
negotiate with Sinaltraflor instead of with Sintrasplendor. The company
even lent one of its buses to take workers to a Sinaltraflor meeting,
during working hours. Company representatives pressured workers not to
join Sintrasplendor. When we distributed flyers in the plantation to
explain to workers why we had formed an independent union, the company
prohibited workers from reading them. According to Colombian law, it is
legal to read this kind of flyer inside the workplace, during lunchtime
or a break.
The Colombian government recognized our union as a legal entity in
2005. Nevertheless, the company still has not sat down to negotiate
with us.
On October 12, 2006 Dole announced that it would close the Corzo
farm at Splendor Flowers. We believe that the motivation behind this
closure is that the company did not want to provide basic rights and
decent work conditions to its workers. Clearly, we can not trust our
local laws to protect our labor rights--including our right to
organize--but rather we need new and enforceable international legal
tools to ensure these rights.
Splendor-Corzo will officially close in mid 2007 after the company
completes the necessary legal processes. Corzo is the larger of the two
farms at Splendor Flowers. Dole justifies the closure of Splendor-Corzo
by saying that it has ``historically produced products with limited/
seasonal demand and have high costs''. However, in 2001 Splendor
Flowers was the second most successful flower company in Colombia,
reaching 19 million dollars in sales. Dole has not provided evidence
that Splendor is a losing enterprise. It appears that the plantation
closure is a response to the growing support for Sintrasplendor.
Splendor management has been offering workers compensation to get them
to resign. This past weekend, they fired over 200 workers. Of more than
2000 workers employed at this plantation in 2006, only 150 remain. We
are worried that Dole will soon announce the closure of La Fragancia,
the other plantation where an independent union has successfully been
established.
Lack of Recourse to Labor Authorities
Colombian workers who want to file complaints about labor rights
violations are often discouraged because governmental institutions like
the Ministry of Labor take so long to resolve these cases. For example,
in early 2005, my union filed several complaints before a labor judge,
regarding occupational health problems and violations of the right to
organize. Almost 2 years have passed and none of these cases have been
resolved. Meanwhile, a month and a half ago the company filed a request
with the Ministry of Labor to approve the mass firing of all workers at
Splendor Flowers, so they can close the farm. The decision is expected
to be released next week. Apparently, justice comes faster for
companies than for workers.
Conclusion
Because of the low wages in this sector and the long working hours,
I have very little time to spend with my two young children, and lack
the money to give them a decent education. The realities of the flower
industry have contributed to social instability and disintegration of
many families in the flower-growing region of Colombia.
We need effective legal mechanisms to ensure that these companies
give us safe, healthy, and decent workplaces. Thank you for allowing me
to share this testimony, and I hope you take it into account in the
consideration of S. 367.
Senator Dorgan. Ms. Fuentes, thank you very much for your
testimony.
Next, we'll hear from Ms. Nazma. And will the interpreter
identify herself?
Ms. Iqbal. My name is Sunita Iqbal. I'm a paralegal in New
York, and I was asked to interpret for her. My parents speak
Bengali, and I've been speaking it in the house since I was a
child, so translating, in that sense.
STATEMENT OF SHEIKH NAZMA, FOUNDER/
FORMER PRESIDENT, BANGLADESH CENTER
FOR WORKER SOLIDARITY
Ms. Nazma. My name is Sheikh Nazma. I'm from Bangladesh. I
started working, when I was 12 years old, as a helper in a
garment export factory, and we worked 10 to 14 hours a day, 7
days a week.
In 1993, I helped organize the first major struggle in a
garment factory to win our rights and organize a union. I
started--later on, I started the Bangladesh Center for Worker
Solidarity, and--of which I was president. That is when serious
threats began. Gang members, thugs, sent by management,
constantly harassed and threatened me. On many occasions, I was
assaulted and ruthlessly beaten.
In March 2005, the threats became serious for me, and I had
to come to the United States. In 2006, I applied for asylum. My
colleagues at the Bangladesh Center for Worker Solidarity have
been involved in a 9-month investigation of a large factory
called Harvest Rich, which is located in the Narayarganj
District of Bangladesh, where clothing is sewn for Wal-Mart,
Hanes, JCPenney, Puma, and other European companies.
When the research began, in June, we discovered scores of
children, just 11, 12, and 13 years of age, working at the
Harvest Rich factory; more than three- to four hundred
adolescents, 14, 15, to 16 and 17 years old were also illegally
employed at Harvest Rich. Halima was one of the 11-year-old
workers. She was routinely forced to work 11 to 14 hours, from
8 a.m. to 7 p.m., and most commonly until 10 p.m. She was at
the factory 7 days a week, with an average of just 2 days off a
month.
It was not uncommon for Halima and the other children to be
working at the factory 95 hours a week, but the situation got
even worse. Before clothing shipments had to leave for the
U.S., they were often mandatory 19- to 20-hour shifts, from 8
a.m. to 3-to-4 a.m. The workers would sleep on the factory
floor for the next few hours before getting up for their next
shift in the morning. If they did anything wrong, they were
beaten every day. They were also cursed at. And if they fell
behind in their production goal, they were also beaten. For
this, Halima and the other children were paid 6 cents an hour,
53 cents a day, and $3.20 a week. We estimate that the workers
were cheated for up to half of their wages legally due to them,
and anyone daring to ask for their legal wages would be fired.
Corporate monitoring did not work at the Harvest Rich
factory. The monitors arrived, the children workers were hidden
in the filthy bathrooms or put on the roof. The factory kept
two sets of time records, using the falsified one to show to
the monitors.
Since the campaign has started on Harvest Rich, it has been
largely successful in ending the hiring of children under 13
years of age, though they're not getting their labor rights or
violations--and they're being violated in the factory.
The garment industry is doing very well in Bangladesh, and
this would be good news if the garment workers were getting
their legal rights and they were respected and they earned a
wage that would allow them to live well. Bangladesh is sending
1 billion garments to the U.S. last year, and it would be a
good thing if the workers were being treated fairly and they
were receiving their rights properly.
The demands of the Harvest Rich workers are very modest.
They're willing to work 10 to 12 hours a day, as long as the
overtime is voluntary and paid correctly. They need 1 day off a
week, as they are exhausted. And the beatings must end.
Bangladeshi workers want to be able to work properly, but
they also want their rights respected and the law followed.
Thank you.
[The prepared statement of Ms. Nazma follows:]
Prepared Statement of Sheikh Nazma, Founder/Former President,
Bangladesh Center for Worker Solidarity
My name is Sheikh Nazma and I am from Bangladesh.
I started working when I was 12 years old, as a helper in a garment
export factory called Bay Garments Ltd. At that time, in 1984 we worked
10-14 hours a day and 7 days a week. For this we earned 240 Taka a
month, which comes to 2\1/2\ U.S. cents an hour. I worked for 10 years
in the garment factories, eventually becoming a skilled sewing
operator. But in every factory I worked, the legal rights of the
workers--80 percent of whom were young women--were repressed. Then, in
1993, I helped to organize the first major struggle in a garment
factory to win our rights and organize a union. The factory was called
Comtret Apparels Ltd. It took 6 months of struggle, but eventually we
won.
That was how the Bangladesh Center for Worker Solidarity (BCWS) was
formed, of which I was the president. The AFL-CIO Solidarity Center has
helped us in our struggle.
That is when the serious threats began. Gang members, thugs, sent
by management constantly harassed and threatened us. On many occasions
I was assaulted and ruthlessly beaten.
For years, as we carried out the work of the Bangladesh Center for
Worker Solidarity Center, accompanying and providing support for the
garment workers in their struggle to win their legal rights, the
threats continued.
In March 2005 the threats against my life became very serious and I
had to flee to the United States, where I was granted legal asylum on
2006.
In 1992, there were as many as 100,000 child workers toiling under
unsafe conditions in Bangladesh's booming garment export factories. It
was a huge problem, with children as young as 6, 7, 8 years old, forced
to work 12 or more hours a day, often 7 days a week. Then, largely due
to legislation proposed in the U.S. Senate, the exploitation of child
workers was ended.
But it is starting to come back again, and this is what I want to
focus my testimony on.
My colleagues at the Bangladesh Center for Workers Solidarity have
been involved in a nine-month investigation of a large factory called
Harvest Rich, which is located in the Narayarganj District of
Bangladesh, where clothing is sewn for Wal-Mart, Hanes, J.C. Penney,
Puma and other European companies.
This is what we found. When the research began in June, we
discovered scores of children just 11, 12 and 13 years of age working
at the Harvest Rich factory. More than 300 to 400 adolescents--14, 15,
15 and 17 years old--were also illegally employed at Harvest Rich.
Under Bangladeshi law, factories are strictly prohibited from hiring
anyone under 14 years of age, while adolescent workers between the ages
of 14 and 17 can only be employed under special circumstances, and are
allowed to work just 5 hours a day for a maximum of 30 hours per week.
Also, adolescents may never work at night.
Halima was one of the 11 year-old workers. Routinely, she was
forced to work 11 to 14 hours a day, from 8 a.m. to 7, or more commonly
10 p.m. She was at the factory 7 days a week, with an average of just 2
days off a month. It was not uncommon for Halima and the other children
to be at the factory 95 hours a week.
But it got even worse. Before clothing shipments had to leave for
the U.S., there were often mandatory 19 to 20-hour all-night shifts
from 8 a.m. right through to 3 or 4 a.m. the following day, after which
the workers would sleep on the factory floor for a few hours before
beginning the next shift at 8 a.m. that same morning. Even the child
workers could be forced to work such grueling all-night shifts three or
four times a month. While paying a very rare unannounced visit to the
Harvest Rich factory in November, U.S. company representatives found
dozens of workers at 12:30 a.m. still sewing boys Faded Glory jeans for
Wal-Mart, 16\1/2\ hours into what would have been a 19 to 20-hour shift
had the executives not sent the exhausted workers home.
Halima worked as a helper, just as I did when I started out when I
was 12. A helper's job is to clean the finished garment by cutting off
any loose threads that may remain. Halima was given a mandatory
production goal of cleaning 150 garments an hour--she was working on
Hanes underwear--one every 24 seconds. The pace was relentless.
She was on her feet all day, standing at a high table. Sometimes,
she said, she just fell down or fainted from exhaustion. The factory
was hot and all the workers were sweating.
If Halima or another young worker made a mistake, they were beaten.
This happened every day, the workers said. They would be slapped very
hard by their supervisor, who was always a man, and sometimes the
children cried. They were also cursed at. If they fell behind in their
production goal, they would also be beaten, or if they used the
bathroom without permission. They were only allowed two visits a day,
and the bathroom was filthy, without toilet paper, soap or towels.
For this, Halima and the other children were paid six cents an
hour, 53 cents a day and $3.20 a week. The wages are so low that Halima
and many of the other workers actually brush their teeth with their
fingers and ashes from the fire because they cannot afford a toothbrush
or toothpaste.
Even the skilled sewing operators at the Harvest Rich plant are
being paid a wage of just 17 cents an hour, $1.35 a day and $8.09 a
week. Such wages do not come close to providing even a minimally decent
standard of living.
Overtime was mandatory, but not one worker in the Harvest Rich
factory was paid their correct overtime wages. We estimate that the
workers were cheated of up to half the wages legally due them. Anyone
who objected to working on Friday, which was supposed to be their
weekly holiday, would have 3 days' wages docked as punishment.
Anyone daring to ask for their legal wages would be fired.
The corporate monitoring, even by some of the largest corporations
in America, did not work at the Harvest Rich factory. When the monitors
arrived for their usual announced visits, the child workers were hidden
in the filthy bathrooms or put on the roof. The factory kept two sets
of time records, using the falsified one to show the monitors. All the
workers knew this. But anyone who spoke one word of truth to a
corporate monitor would be fired the minute the monitor walked out the
door.
The workers at the Harvest Rich factory, and in garment factories
all across Bangladesh, are in a trap. Of course our workers need their
jobs--they desperately need these jobs, but without enforcement of
Bangladesh's labor laws, the workers are left without rights and are
actually seeing their wages falling every year.
As I mentioned earlier, the exploitation of child labor in
Bangladesh's garment export industry was wiped out, or greatly
diminished, in 1992. After that, child labor was not a problem. This is
why BCWS had to act quickly when we saw the re-emergence of child labor
at Harvest Rich, as well as in some nearby plants. The campaign focused
on Harvest Rich has been largely successful in ending the hiring of
children under 13 years of age, though many other labor rights
violations continue in the factory. But at least for now, we believe
that the resurgence of child labor in Bangladesh's garment industry has
been blocked.
The garment industry in Bangladesh is booming--Bangladesh sent one
billion garments to the U.S. last year--and this would be great news
for the poor women garment workers if their legal rights were respected
and they earned a wage that would allow them to climb out of misery.
Today, there are 4,220 garment export factories in Bangladesh employing
at least 2.2 million workers.
Yet despite booming exports over the last 12 years, the real wages
of Bangladesh's garment workers have been cut nearly in half as a
cumulative inflation rate of 88 percent has eaten away at the
purchasing power of their wages.
The demands of the Harvest Rich workers are very modest. They are
willing to work 10, 11 or even 12 hours a day, as long as overtime is
voluntary and paid correctly. They need 1 day off a week, as they are
exhausted. The beatings must end. The workers' dream would be to earn
at least 5,000 taka a month, which is just $71.50 a month, $16.50 a
week, or 35 cents an hour.
Surely it is not too much to ask that the great U.S. and European
companies must respect the labor laws of Bangladesh. If this happened,
it would be a great step forward for the over two million garment
workers in Bangladesh, who are some of the hardest working people
anywhere in the world, but also among the poorest.
Senator Dorgan. Ms. Nazma, thank you very much for your
testimony.
And finally, on this panel, we will hear from Ms. Jesseph.
Mr. Jesseph is President and CEO of Worldwide Responsible
Apparel Production.
Mr. Jesseph, you may proceed.
STATEMENT OF STEVEN A. JESSEPH, PRESIDENT/CEO, WORLDWIDE
RESPONSIBLE APPAREL PRODUCTION (WRAP)
Mr. Jesseph. Mr. Chairman, thank you for inviting me here
today to discuss this critically important issue, and for the
opportunity to testify before this committee on the subject of
working conditions in factories around the world.
The views I express today are on behalf of the Worldwide
Responsible Apparel Production Program, best known as WRAP. As
the President and CEO of WRAP, I deal with these issues every
day.
From 1997 to 2000, the American Apparel and Footwear
Association, or the AAFA, funded a task force of outside
consultants and industry experts to examine working conditions
in apparel and textile factories in major apparel-producing
countries. Member companies made a clear commitment that they
did not want to be associated with sweatshop conditions, and
believed the best way to address the challenge was to create an
industrywide global code of conduct enforced through a factory
monitoring and certification program.
In January of 2000, WRAP started operations as an
independent 501(c)(6) nonprofit organization with its own 10-
member board and funding dedicated to ensuring legal, ethical,
and humane working conditions in the manufacture of its own
products. We believe WRAP is the most rigorous code of conduct
for labor-intensive consumer products manufacturing, covering
not only labor and human rights, but addressing environmental
protection, Customs compliance, and security, as well.
WRAP is completely separate from the AAFA; however, we do
enjoy the support of the AAFA and 20 other trade associations
that encourage members to have their factories and their supply
chains certified to the WRAP standard. We have no members, and
we do not rely on government grants. We're funded by
registration fees from applicant factories, training fees, and
monitor accreditation fees only.
Our certification process involves a lengthy application
that must be submitted by the factory. The factory must answer
detailed questions regarding its practices in the areas of age
of workers, working hours, wages and benefits, health and
safety, and more. Then, an independent monitoring firm performs
a rigorous inspection of the factory to determine if the
information they've submitted to us is accurate. Frequently,
factories do not pass on the first inspection. There are some
areas of noncompliance we will not tolerate, such as prison
labor, child labor, serious health-and-safety abuses, and
physical abuse. A certification is generally valid for 1 year.
And it gives companies considering using the factory a
reasonable assurance that the factory's in compliance with
accepted standards. Since the year 2000, over 5,000 factories
have registered with WRAP.
We also created an audit methodology that, in most parts of
the world, is effective in gaining a true understanding of what
goes on inside factories. We regularly conduct unannounced
follow-up audits of certified factories to maintain their
ongoing compliance. If they don't maintain compliance, and if
those noncompliances are sufficiently egregious, we decertify
the factory and advise that factory of its--our actions.
Clearly, there are strong economic incentives for factories to
maintain compliance with WRAP standards.
There are other initiatives similar to WRAP. Their codes of
conduct and audit methodologies might be a little different
than ours, but we're all trying to do essentially the same
thing: eliminate abusive working conditions and protect the
health, safety, and rights of workers through positive force of
economic incentives. Our experience has shown that training and
education are essential to improving working conditions, and
crucial at building capacity at the local level.
In 2000, we received a grant from the U.S. Department of
Labor to conduct factory training in 35 countries around the
world. That grant expired long ago, but our work continues.
In February of 2006, we participated in a USAID-funded
trade capacity-building project related to technical barriers
to trade in Colombia, South America.
For the past 35 years, I've worked in a variety of
government, manufacturing, and consulting environments, and,
for the last 12 years, in the area of code of conduct and
factory monitoring. I've literally visited hundreds of
factories in 44 countries on this planet. I've seen, firsthand,
the good, the bad, and the ugly. Are there bad factories out
there? Yes, there are. But I've also seen a lot of very good
progress in the last 5 years. We still have a lot of work to
do.
We need to help apparel-producing nations strengthen their
rule of law and build expertise within their labor ministries.
And we need to help employees understand their rights under the
laws of their sovereign states. WRAP has been helping to do
this, and we plan to do more.
As we've learned from behavioral psychologists and
economists, the best way to achieve positive and sustainable
change is through market incentives and rewarding positive
behavior. For us, that behavior is being in compliance with
WRAP standards, and we believe we're on the right track.
Mr. Chairman, thank you for your leadership on this issue.
We appreciate the opportunity to submit this testimony and
would be happy to answer any questions you may have.
[The prepared statement of Mr. Jesseph follows:]
Prepared Statement of Steven A. Jesseph, President/CEO,
Worldwide Responsible Apparel Production (WRAP)
Mr. Chairman, thank you for inviting me here today to discuss this
critically important issue and for the opportunity to testify before
this Committee on the subject of working conditions in factories around
the world. The views I express today are mine and represent the
Worldwide Responsible Apparel Production program, best known as WRAP.
My remarks do not represent the views of any trade association,
retailer or branded company. As President and CEO of WRAP, I deal with
these issues every day.
From 1997-2000, the American Apparel & Footwear Association, or the
AAFA, funded a task force of outside consultants and industry experts
to examine working conditions in apparel and textile facilities in the
major apparel producing countries. Member companies made a clear
commitment that it did not want to be associated with ``sweatshops''
and child labor conditions and believed the best way to address the
challenge was to create an industry-wide, global code of conduct
enforced through a factory-based monitoring and certification program.
In January 2000, WRAP started operations as an independent, 501 (c)(6),
non-profit organization with its own 10-member Board of Directors and
funding dedicated to ensuring legal, ethical and humane production of
sewn products. We believe WRAP is the most rigorous and comprehensive
code of conduct for labor-intensive manufacturing of consumer products
covering not only labor and human rights issues, but addressing
environmental protection, customs compliance and security as well.
WRAP is completely separate from the AAFA. However, we do enjoy the
support of the AAFA and 20 other trade associations around the world
that encourage their members to have the factories in their supply
chains certified to the WRAP standard. Last week, Caribbean-Central
America Action, a trade promotion group based in Washington, D.C.,
issued the report of its recent annual meeting in which it encouraged
all apparel and textile factories in the region to become certified by
WRAP.
WRAP has no members and therefore no dues. We do not rely on
government grants to sustain our operations. We are funded by
registration fees from applicant factories, training fees and monitor
accreditation fees.
The WRAP certification process involves a lengthy application that
must be submitted by the factory seeking to be certified. The
application requires the factory to answer detailed questions regarding
its practices in areas such as minimum age of workers, working hours,
regular and overtime wages, and health and safety, and more. When the
application is complete, an independent monitoring firm then performs a
rigorous inspection of the factory to determine if the written
information previously submitted is accurate. Frequently, factories do
not pass on the first inspection. Since our goal is to help them
achieve certification, we advise them of the non-compliances so they
can correct them and receive a certification recommendation during a
subsequent audit.
However, there are some areas of non-compliance that will not be
tolerated such as prison labor, child labor and physical abuse. A
certification is generally valid for 1 year and gives companies
considering using the factory reasonable assurance that the factory is
in compliance with accepted standards. Since 2000, over 5,000 factories
have registered with WRAP and in 2006 we certified factories in 71
countries.
WRAP has created an audit methodology that in most parts of the
world is effective in gaining a true understanding of what goes on
inside factories. We certify factories that are in compliance with the
WRAP standards. We also refuse to certify and decertify factories that
aren't. We regularly conduct unannounced follow-up audits of certified
factories to ensure they maintain on-going compliance. If they don't,
and if those non-compliances are sufficiently egregious, I have no
hesitation to decertify a factory and advise that factory's customers
of our actions. Accordingly, there are strong economic incentives for
factories to maintain compliance with the WRAP standards.
There are other initiatives similar to WRAP. Their codes of conduct
and audit methodologies might be a little different than WRAP but we
are all trying to do essentially the same thing: eliminate abusive
working conditions, and protect the health, safety and rights of the
workers through the positive force of economic incentives.
WRAP is also working with other certification programs, trade
associations, technical training schools and universities to help
develop courses and seminars for factory managers and owners in the
areas of management systems, health & safety, compensation and
benefits, working hours, environmental protection, regulatory
compliance and more. We hope that eventually these courses and will
lead to certifications and degrees in the area of corporate social
responsibility.
WRAP's experience with its factory certification program has
demonstrated to us that positive efforts such as education and training
are essential to improve working conditions. In 2002, WRAP received a
grant from the U.S. Department of Labor to conduct factory training in
35 countries around the world. That grant expired long ago but our
training work continues. February 2006, WRAP participated in a USAID-
funded Trade Capacity Building project related to Technical Barriers to
Trade (TBT) in Colombia. And, WRAP is also participating in a similar
USAID-funded program in Morocco. We believe education and training, at
all levels are crucial to building capacity at the local level.
For the past thirty years, I've worked in a variety of government,
manufacturing and consulting environments, and for the past twelve
years in the areas of codes of conduct and factory monitoring. I've
visited hundreds of factories in 44 different countries on five
continents and have seen first-hand the good, the bad and the ugly. I
understand this industry and its complexities very well. I've seen
tremendous progress in the quality of management and working conditions
in factories, especially in the past 5 years. However, with all the
progress that has been made, there is still much work to do.
We need to help apparel producing nations strengthen the rule of
law and build expertise within labor ministries and with their
inspectors. And, we need to help employees understand their rights
under the laws of their sovereign states. WRAP has been helping do
this, and more.
As we've learned from behavioral psychologists and economists, the
best way to achieve positive and sustainable change is through market
incentives and rewarding positive behavior. For us, that behavior is
being in compliance with WRAP standards. We believe we're on the right
track.
Thank you, Mr. Chairman for your leadership on this issue. We
appreciate the opportunity to submit this testimony. I would be pleased
to answer any questions you might have.
Senator Dorgan. Mr. Jesseph, thank you very much for being
here.
Let me thank all three of you for your testimony today. I
think--as I hear the testimony, Ms. Jesseph, I don't think you
are at odds with--at least your goals are not at odds with--the
testimony of the other two witnesses. You indicate that the
goals of WRAP are to attempt to make certain that factories are
adhering to the local standards and local laws, and that the
industry is not interested in bringing into this country the
product of sweatshop labor. So, the legislation that we will
attempt to move through the Congress should not be at odds with
your goals, in any event.
Let me talk just a little, by virtue of asking questions of
the three of you, and then I'll turn to my colleague Senator
DeMint.
Ms. Nazma, you are describing, in your testimony, a young
woman named Halima, who is an 11-year-old worker. Your
description of that particular plant--you dwelled on that
particular plant. What is the timeframe of the investigation of
that plant? Was that just within the past year or so?
Ms. Nazma. From last June, they started the investigation,
until now.
Senator Dorgan. And that is a plant that produces products
to be shipped to this country. You're describing an 11-year-old
worker named Halima, 11 to 14 hours a day, 7 days a week, and
the scores of children, 11, 12, 13 years of age, working at
that factory. What kind of evidence exists to corroborate that,
Ms. Nazma?
Ms. Nazma. She's saying that they have testimony from them
that there was video taken at the Harvest Rich factory and that
her--and her colleagues were also involved in making--getting
this evidence from the factory workers.
Senator Dorgan. I think most of us would probably agree
that a factory that is producing products with 11-year-old
workers, working 11 to 14 hours a day, 7 days a week, 2 days
off a month--I think almost everyone in this room would agree,
that represents a sweatshop condition that probably is in
violation of the local laws. The question is, Is this just an
aberration, a very unusual circumstance, or is it the kind of
thing that we see frequently in parts of the world where one
can access cheap labor and access labor with no rights, so that
workers really have no legal capability to complain?
Ms. Fuentes, you described workers in Colombia who, in
support of trying to better their situation, formed a labor
union that you indicated was a legal labor union under
Colombian law. The companies then sponsored another labor union
to try to undercut the ability of workers to organize. Can you
describe, in slightly more detail, what happened there?
Ms. Fuentes. One of the main things that I already
mentioned was that they offered money to our union affiliates
so that they would join the other union instead. Also, company
representatives, such as those from human resources, and
supervisors, and company social workers, approached workers
inside the workplace and told them that this was an unethical
union, that they were trying to bankrupt the company, and that
they should not join this union.
They also prohibited us from distributing any materials
that explained what the union was about and what we were trying
to do, and they held meetings inside the workplace, where they
told workers that it was prohibited to read these things or
comment on them. And many workers who belong to the board of
directors of the union were isolated, moved to a different part
of the factory, where they wouldn't be able to talk to other
workers.
Another flower worker who works at another plantation and
is also a union leader was put to peeling potatoes in an
isolated part of the flower plantation, so that she wouldn't be
able to talk to her co-workers.
Senator Dorgan. I'm going to call on Senator DeMint in just
a moment, but I wanted to point out the BusinessWeek farticle,
of November of last year, just 3 months ago entitled ``Secrets,
Lies, and Sweatshops,'' which describes the circumstance around
the country--and in this case, in China, in which there is very
substantial abuse of workers and sweatshops.
Mr. Jesseph, you know, I read your testimony, and I think
it's important that you do the work you do. The question that I
have is, How effective are you? For example, I described the
circumstance of Wal-Mart going in, in a plant in China, on four
occasions, and then, on the last occasion, a consultant
explained to the company how you--how do you hide what you're
doing so that the company can't see it? My understanding is, in
your case, where you issue certifications, that you had
actually issued a certification to the plant that Ms. Nazma
talked about, and had certified it as meeting approval. You
know, I have a picture of the 11-year-old girl, whom I think is
the subject of much of the testimony. This is that young woman
named Halima, working 11, 14 hours a day, 7 days a week.
Clearly, that's violative. And I assume that your organization
would think that is a sweatshop condition, hiring a young child
in contravention of existing laws in Bangladesh. But tell me
what kind of capability do you have, as you go take a look at a
factory like this, which, incidentally, has now been--I believe
the contract for this company has been yanked by the Hanes
company--producing Hanes underwear. And let me just quote: ``We
had audits that did not catch some of the excessive working
hours, did not catch some of the double books. Our first clue
to the double books issue was making a midnight visit to the
plant and finding about 50 employees who were still working.''
So, Hanes yanked their contract from this. But what kind of
capability exists for them to show you enough to allow you to
certify them, when, in fact, they're probably hiring 11-year-
olds?
Mr. Jesseph. Senator, those are great questions, and ones
we struggle with every day, We certified this factory about a
year ago. And one of the challenges we have is, a lot of us
have seen in recent issues with--issues such as Enron and
others--where companies try and purposely deceive and lie to
their auditors, conceal information, create double books, coach
employees, and so forth, as outlined in the BusinessWeek
article; it becomes increasingly challenging for groups like
ours to identify what the specific issues are. I personally
visited the Harvest Rich factory in November--got on a plane,
flew to Dacca, and went through that factory from top to
bottom. I met with representatives, the Bangladesh Committee
Solidarity Workers Groups, along with Robert Wong, with the
U.S. State Department, who's the labor attache there, and
specifically asked the question--and I was looking to meet a
number of the employees who were alleged to have worked in that
factory. The factory told me they could find absolutely no
record of Halima ever having worked in that factory. I asked
the Workers Committee if I could meet with her, because I was
looking for proof and verification. As you pointed out earlier
in your questions, What kind of verification do we have of
these allegations? That's precisely why I went there.
What did we find? We did find there were double books. We
did find there were excessive working hours. And what I found
was a management team that had been specifically working to
subvert the system that we've put in place to try and certify
factories. We were looking for verification of information, not
to make a snap judgment, and not to make an off-the-cuff
judgment, but to look for verified information. And when we
found that information, we decertified the factory. They're out
of the system, period.
Part of that decertification is also notifying customers
that do business in that factory that we no longer certify it.
So, there are some economic incentives. As you saw, Hanes
decided to leave the factory in December. We think some of the
best incentives for factories to maintain compliance are the
economic incentives of retaining business, and, if they're way
out of compliance, they lose business.
Senator Dorgan. That's only to the extent that someone
catches them. And I might suggest that if the managers there
were subverting with respect to double bookings and various
things, you would expect they would subvert on a number of
things, including child labor. But I only make the point that I
think organizations that are attempting to try to clean up this
mess are valuable additions here. My only point is that the
BusinessWeek article suggests that this is rampant, number one;
number two, it's very hard to find and detect, and very hard to
stop.
I have a couple of other questions, but I want to call on
my colleague Senator DeMint, who I know has some time issues.
Senator DeMint?
Senator DeMint. Thank you, Mr. Chairman. I really
appreciate all the testimony.
Mr. Jesseph, I want to focus on you for a minute, because I
do believe, as the Chairman has pointed out, that the goals of
the industry sponsors of your group, as well as his goal, are
basically the same. I think the question here is, What would
really work to improve what's going on? And I think you know,
as I think most media who reported on this, that we are making
a lot of progress. I believe, as you do, that decertifying one
or two plants will send shockwaves around. These folks know not
to do it because they'll lose a lot of business.
But my concern is the legal liability, which Senator
Dorgan's bill would create, and we know--I know, from being in
business for years, you can be set up for these kind of
lawsuits, in this country, for not being handicap accessible or
whatever, and be sued before you have a chance to even know
you've got a problem. I'm concerned, just as a testimony
today--well, I'll just take Colombia, for instance--Ms. Fuentes
says there was pregnancy testing. And I'm sure it's correct,
but it's against the law to do that in Colombia. Dole says they
do not do it. But, under the Chairman's bill, Dole would have
to prove that they didn't do it in a foreign country, and, like
you said, in a situation that could have changed, and it would
be very difficult for companies to defend themselves. Instead
of a lawsuit, in Bangladesh, you have decertified and
accomplished, I think, much of the same goals, and probably
created a warning for a lot of other companies. I'm just
concerned if we're going to come in with a sledgehammer here,
creating a legal playground where companies throughout America
may have bought something from a company that may have been a
sweatshop, that they cannot possibly defend themselves against,
and we've got the same legal problem that we have with our own
companies, here in this country now, with plaintiffs' lawyers
who are just eating them alive.
What do you think would be the effect of--and I don't know
how familiar you are with the Chairman's bill, and I know, with
him here, you've got to be very careful what you say, but what
would be the effect of going in with this system that, I think,
will create a playpen for lawyers?
Mr. Jesseph. Senator, you did ask a loaded question,
especially with Senator Dorgan here. I'm not a lawyer, and I'm
not a legislator, and I am certainly not in a position to
render, I think, a reasonable opinion on this bill. My great-
grandfather was a representative of the State of Washington
legislature, as a Democrat, and he believed less is more. I do
believe that the kinds of market incentives and positive
reinforcing incentives that we're trying to create, the market-
based incentives, to make sure factories are doing the right
thing on behalf of their customers, obeying the law, is the
most effective kind of incentive there is, which is precisely
why we put this into place.
If--and what we would--the question you asked earlier, How
can we make this better?--I think is by having more and more
retailers, brands, factories around the world participating in
programs like WRAP and making a stand, as some companies do, in
saying, ``We're not going to tolerate working in factory--
working with factories that have abusive working conditions. We
are leaving, and we're leaving now.'' If you have multiple and
repeated audits and repeated audits and repeated audits, and
continually reinforce that kind of behavior, that working in
substandard conditions is OK, then I think that becomes a
challenge and a different message for everybody. I think the
answer, for me, is, let's create positive market incentives,
which is what we're trying to do with WRAP, and move everybody
to the same standard. If buyers refuse to buy from factories
with substandard conditions, I think it's the most effective
and quickest way to handle it.
Senator DeMint. Do you think--and I know I'm biased on
this, and I do believe that trade, not aid, is the best way to
improve working conditions, particularly as we have been
insistent, in our country, on labor standards in our
agreements. I'm afraid that if we create liability, that
certain countries, because of their, perhaps, inability to
enforce a lot of laws or to assist us in how we enforce, that
there will be a lot of job loss or economic problems in
countries where American businesses just decide not to buy
from. Do you see a downside do creating a legal liability
system in this country, at all, or--I know you said you weren't
a lawyer, but----
Mr. Jesseph. Well--
Senator DeMint.--we're just trying to figure out the best
way to move forward. It seems like your organization has made
some significant strides, and we're just trying to decide if
creating this legal liability is a good way to move ahead.
Mr. Jesseph. I don't--again, I don't have a firm opinion on
the best way to do that. That--I read, in the papers, like
everybody else, that the court systems are clogged, and it
takes 2 and 3 and 4 years sometimes to get cases to court. This
may be an effective measure. Again, I don't know. We're
focusing on the market side, and, hopefully, on the positive-
enforcement side.
Senator DeMint. Good. That's very helpful.
Thank you, Mr. Chairman.
Senator Dorgan. It appears to me that Senator DeMint may
well be opposed to the legislation, based on his questions.
[Laughter.]
Senator Dorgan. Senator DeMint and I--
Senator DeMint. I'm very open-minded.
Senator Dorgan.--have great respect for each other, but I
would disagree with the central premise of his first statement,
``a lot of progress has been made.'' And that's the purpose of
the hearing and the bipartisan legislation. I don't think
nearly enough progress has been made, I would say to my
colleague, and I would put up the BusinessWeek--and
BusinessWeek, as you know, is a conservative journal of
American business--and they've done their own investigation.
``Secrets, Lies, and Sweatshops: How Chinese Suppliers Hide the
Truth From U.S. Companies''--this only applies to China, but
the fact is I think we have a very serious problem. Yesterday,
there was a $832-billion trade deficit. It's hard for anyone to
argue that that is a success, but embedded deep in the recesses
and the crevices of that policy represents, in my judgment,
substantial failure, because the market system itself--the
market system--will be a persuasive element to try to move the
lowest-cost goods into this country. The lowest-cost goods will
come from a company that you can employ in Bangladesh or in
Northern Jordan, with Chinese textiles and Bangladeshi workers
being jetted in to work in unbelievable conditions. That will
be the lowest-priced products, and perhaps the best way to
compete. But as BusinessWeek says in a document obtained last
year of a Chinese fabric factory--let me just read what
BusinessWeek obtained from a factory--and I don't think this is
unusual, ``If they are going to be audited'' if an auditor
shows up unexplained and unscheduled, ``First, notify the
underage trainees, underage full-time workers, and workers
without identification to leave the workshop through the back
door. Order them not to loiter near the dormitory area. Second,
immediately order the receptionist to gather all relevant
documents and papers.''
I guess Senator DeMint and I will have, I think, a longer
conversation about these issues, and I look forward to working
with him on it. But liability is exactly the point of this
legislation. If you're abusing foreign workers, if you are
producing in sweatshops for the purpose of undercutting
competitors in this country, you ought to be liable. At this
point, you are not. You ought to be liable. That's why Senator
Lindsey Graham and I have introduced the legislation.
So, Senator DeMint, you and I will have, I assume, long and
entertaining conversations about trade and related matters.
Mr. Jesseph, your conversation with this committee, saying
you're interested in trying to track down these companies and
stop these practices, that's not at odds at all with the
legislation that we propose. To the extent that you're
successful, I commend you, but evidence of today indicates
something different. You certified the very plant that we heard
testimony on, that's the Hanes Corporation--Hanes underwear
corporation--subsequently decided to decertify; the fact is, it
has become a game and a practice to try to make certain that
people coming into the plants in some of these foreign
countries are not able to see what's really happening. And I
think all of us in this room would agree, and I expect that my
colleague Senator DeMint would agree, if we see a factory in
which an 11-year-old is working 11 to 14 hours a day 7 days a
week, with 2 days off a month, then, by God, there's something
wrong with that. That is not the product of which we want to
make purchases in this country. That is sweatshop labor. And
there ought to be someone liable and accountable for it.
And so, let me thank the three witnesses. We have another
panel of witnesses. And I understand, Senator DeMint, you have
a commitment, but I appreciate your participation today. And,
as I indicated, Senator DeMint and I will work on a wide range
of trade problems, I assure. Thank you very much for being
here, Senator DeMint.
I would like to, Mr. Jesseph, perhaps submit a couple of
questions to you, but in the interest of time, I want to
proceed, and I hope that this has helped your scheduling
circumstance. And I appreciate your being with us.
Senator Dorgan. I want you to succeed. I don't believe your
work, alone, is sufficient. That's why I've introduced
legislation. But I have great concern about this, and I believe
that Congress needs to pass legislation. You should keep up the
work that you do but understand that they will do for you what
this BusinessWeek article describes they've done for others.
And you'll show up at a plant and come out of there saying,
``Things look fine,'' and the minute you're gone, 11-year-olds
are on the factory floor, producing, and they bring out the
other book of records.
So--
Mr. Jesseph. Well, Senator, what I can tell you, with great
honesty, is that our chairman is a forensic accountant, former
inspector general of the U.S. Department of Labor. Our
investigation techniques and our audit methodologies are
changing rather rapidly, and as we speak, to identify the kinds
of issues brought out in that article, and to make sure that we
don't walk away with bad information, and we get better
information all the time. This is not something static for us.
We're taking some very positive steps in this regard.
Senator Dorgan. Mr. Jesseph, thank you.
Ms. Fuentes and Ms. Nazma, thank you for standing up for
workers. I know you do so at risk to yourselves. It is not easy
to do what you are doing, to stand up for workers' rights and
to speak out publicly, but we owe you a debt of gratitude, and
I appreciate your being here. Thank you very much.
For the next panel, we will call Mr. David Socolow, the
commissioner of the New Jersey Department of Labor and
Workforce; Mr. James English, on behalf of Mr. Leo Gerard, who
is the President of the United Steelworkers; Mr. Charles
Kernaghan, Executive Director of the National Labor Committee;
and Mr. Daniel Griswold, the Director of the Center for Trade
Policy Studies at the Cato Institute.
If you would all please come forward and take a chair, we
would appreciate that.
We will ask that the record include the statement by Mr.
William Jones, who is unable to be with us because of weather-
related travel issues, but we will make that a part of the
record, without objection.
[The prepared statement of Mr. Jones follows:]
Prepared Statement of William Jones, Chairman, Cummins-Allison Corp.;
Member, Board of Directors, U.S. Business and Industry Council
Good afternoon, everyone. I am very grateful to be here today to
provide the perspective of an American manufacturer.
Thank you, Senator Dorgan for inviting me to testify on the problem
of sweatshop labor. This is a critical issue for many corporations
committed to manufacturing in the United States and I applaud you for
your leadership in trying to correct this problem.
My name is William Jones and I am the Chairman of Cummins-Allison
Corp., a privately held Chicago corporation founded in 1887. Today,
Cummins is a manufacturer of security equipment, particularly focused
on the processing of coin and currency at high speeds. We employ
approximately 900 individuals in the U.S. and provide work for another
10,000 Americans employed by our key U.S. suppliers. Ninety-five
percent of the products Cummins sells worldwide are manufactured in
Chicago, Illinois.
Perhaps some Senators are not familiar with the challenges facing
our domestic manufacturers, or the benefits that we bring to the
American economy. Manufacturers are so often the backbones of our
communities--creating wealth, providing decent-paying jobs with good
benefits. Our companies pay taxes, company management pays taxes, and
our employees pay taxes. Those taxes make possible schools, roads,
water treatment plants, first responders, libraries, social services,
and hospitals.
Our Company headquarters and manufacturing are in Mt. Prospect,
Illinois. About 2 years ago, the head of the Mount Prospect, IL school
district called me up and invited me out to lunch. I said sure but why
call on me. He said because you're the largest taxpayer in our town and
we wouldn't have the schools, facilities, and classes we do without
you.
Let me give you my views on sweatshop labor and then turn to some
of the other, broader issues facing domestic American manufacturers.
First and foremost, sweatshop and slave labor are one of the moral
outrages of our time and must be abolished. Something is very, very
wrong when wealthy people and corporations get even wealthier on the
backs of the working poor.
In addition, sweatshop and slave labor can end in economic
catastrophe for us all. This abuse does not create a healthy middle
class of consumers in the sweatshop countries, who in turn embrace
democratic political values to protect what they have gained by the
fruits of their hard labor. It does not advance these countries'
economies more than marginally--with a robust middle class of consumers
driving the economy.
Why not? Because unlike the sweatshops of America's past, today's
sweatshops are found in very low-income countries with towering rates
of un- and underemployment. Whereas the chronic scarcity of labor
throughout American economic history eventually helped our wages rise,
the mammoth glut of labor throughout the developing world is bound to
keep wages at rock bottom for, at least, many decades.
At the same time, sweatshops have sucked much of the life out of
the remaining labor-intensive sectors of American manufacturing--which
remain far and away the best hopes for middle-class lives for our own
poor. If unchecked, these trends will threaten much of our remaining
domestic manufacturing base--a manufacturing base which underpins our
national defense and prosperity. Ultimately, the demise of so much
manufacturing will undermine the entire American economy, which is the
engine of world growth.
The owners of the sweatshops may get rich; the owners of the brand
names may get rich; and the retailers who trade in these goods in the
American market may get rich--but at the expense of American workers
and factory owners. There are those who mistakenly suggest that
sweatshops bolster U.S. living standards by providing cheap goods for
consumers. A first world country raises its living standards on a
sustainable basis by helping workers become employed, genuinely more
productive and earn higher wages, not by helping consumers get cheaper
socks or toasters. I am not aware of any country in history that become
a great power by consuming, rather than by producing.
So I commend you for introducing S. 367, your bipartisan measure to
prohibit the import, export and sale of goods made with sweatshop
labor. My company, Cummins Allison, and the U.S. Business and Industry
Council, of which I am a member, both heartily endorse this bill. A
$10,000 fine for violations combined with the right to sue for damages
for those who produce the goods under fair working conditions is a fair
and balanced approach to solving the scourge of slave and forced labor.
Across the developing world from large countries like China to
smaller competitors like Jordan, slave and forced labor is epidemic.
These nations need to do a better job enforcing their own laws and
commitments on the issue. S. 367 gives them and some of the shady
players that are manufacturing illegitimately, the right incentives to
clean up their acts and improve working conditions for millions of
individuals. Again, I am most appreciative of the spotlight that you
have shone on these horrible practices and look forward to the
enactment of this vital legislation.
Now I want to discuss some of the broader American trade and
international economic policies that are contributing to the demise of
domestic manufacturing.
In the last few years the Governors of four States have contacted
me asking me to move from Illinois to their states. I've politely
declined because no matter what tax breaks they offer me, they can't
change the U.S. trade policies that are killing companies like mine.
Only you in Washington can do that. But in fact over the last three
decades, Washington has taken my tax dollars and used them to try to
put me out of business.
Some corporate leaders would say I should move to Europe, where the
governments would protect me because my creating jobs would mean that
they don't have to carry people on welfare rolls. Most governments
there, of course, provide health care and pension coverage that would
reduce the competitive pressures on my company. Others might say that I
should go to China so my business could survive by paying low wages and
minimal benefits. Some who move their manufacturing to China
subcontract with firms that use forced or penny-wage labor in order to
gain a competitive advantage. That, too, is an available option.
So, I could take the high road and move my manufacturing to Europe
where they have industrial policies to keep their nations competitive,
or I could take the low road and go to a low wage area that would
reduce my production costs. Those are the choices that U.S. trade and
international economic policy force on companies like mine.
But don't worry, I'm not going anywhere. I intend to stay right
here in the USA providing great machines and great jobs, and fighting
to preserve the domestic manufacturing base.
It is clear to me that the Federal Government's trade policies of
the past three decades--through Republican and Democratic
administrations alike--have vastly eroded our domestic manufacturing
base. Three million manufacturing jobs have been lost since 1997--and
believe me, it's not just because American manufacturing has become so
much more efficient and productive, as you often hear from the
globalization cheerleader crowd. No, tens of thousands of companies
have closed their doors for good--not because they got more productive
but because they were put out of business by unfair foreign
competition, whether subsidies, non-tariff barriers, currency
manipulation, dumping, or other anti-competitive practices.
So I hope I'm starting to convince you that we have a lot in common
and we share a certain vision for the American people: work with
dignity, with good wages, and good benefits, healthy families, and
healthy cities and rural areas.
The inequalities brought about by the decline in domestic
manufacturing are profound and far reaching. They affect every segment
and institution in our society, and yet Washington has been asleep at
the switch while our trade deficits soar and the East Asians hold so
much of our public debt. How much longer can the current situation
continue before the dollar collapses and we enter a serious worldwide
economic adjustment?
We must approach trade policy as more than just winning legislative
battles in Washington--Our chief concern must be about helping to put
America's living standards and economic power back on a rising path by
strengthening our economy's ability to produce. We need to restore our
country's ability to earn its way in the world. That's the only way to
create lasting, broadly shared prosperity for the American people, and
ensure our national security.
That's also the only way that we'll be able to preserve a
functioning global economy that can provide expanding opportunity
around the world--because an economically healthy American import
market is central to growth prospects everywhere. Don't ever let anyone
call you a protectionist because you are challenging current trade
policy--what you are doing is to try to restore balance to a world
trading system that is completely out of whack essentially because
foreigners are gaming the system to grab more than their fair share of
the wealth.
Achieving this goal means enacting into law measures that
strengthen in major, concrete ways companies like mine and the tens of
thousands of others like it that create middle-class jobs and anchor
communities. And it means enacting into law concrete measures to help
new companies realize the advantages of starting up and creating jobs
in America.
If our legislative strategies don't seek these results, they will
not save a single existing job or create a single new one. Indeed,
domestic manufacturing and all the employment benefits it creates will
start shrinking faster than ever.
How can Congress help? By strongly supporting new trade policies
that will make much bigger changes than most critics have been talking
about so far.
By all means, let's keep pressing for better labor and
environmental provisions in new trade agreements. Let's use trade with
our market, by far the largest in the world to abolish slave and forced
labor. But let's also realize that actually helping boost production
and employment and wages in the United States will require much more.
The United States Business and Industry Council we will be working
hard for prompt passage of the Ryan-Hunter bill, which would enable
domestic manufacturers to win import relief against Chinese currency
manipulation. It attracted some 170 co-sponsors in the last Congress.
This bill deserves to be a very high priority of yours this session as
well. Let's get it passed in the House quickly--and introduced and
passed in the Senate in short order as well.
In addition, we need to do something about inequalities created for
our domestic producers by the widespread use of Value-Added Taxes by
136 of our trading partners. All of our major trading competitors
rebate all Value-Added taxes on their exports and levy the full VAT on
American imports coming into their markets. This creates, on average, a
30 percent competitive disadvantage with our major trading partners.
Today, the VAT disparity is a huge factor for U.S. producers. The
total yearly VAT penalty paid by American producers of goods and
services is roughly $380 billion. We need to put in a border
equalization tax, so that goods imported into America face the same
hurdle that American goods do going into foreign companies. I know it
is a very technical issue, but $380 million is real money and the
resulting distortions of trade flows have destroyed hundreds of
thousands of American jobs.
We will be working hard to help attract more co-sponsors for the
Trade Balancing Act that Rep. Mike Michaud from Maine introduced in the
House at the end of the last session--and to find Senate co-sponsors to
introduce a companion bill. The Trade Balancing Act makes use of
Article XII of the WTO and puts into place an emergency import
surcharge until major trade imbalances are corrected.
The president has announced that he will seek renewal of Fast Track
authority, which expires in July. We desperately need to block
traditional Fast Track authority, under which all these bad trade deals
have been passed for the last thirty years. Fast Track is an abdication
of the authority that the Constitution gives the Congress. It has
allowed the Executive Branch to mostly ignore the Congress all these
years and the results have been devastating. We need for Congress to
reclaim its trade authority. We need to develop an entirely new way of
negotiating trade agreements.
In fact, we need to announce a moratorium on all further trade
agreements until we figure out what we are doing wrong and how to get
our trade deficit under control--which specifically includes enforcing
the trade agreements we have. Those who support the failed trade
policies of the past maintain that just one more trade agreement will
help us export our way out of the mess we are in. That's nonsense. We
need a set of comprehensive solutions to solve our trade problems--and
piecemeal new trade agreements are not among them.
Finally, anyone genuinely concerned about preserving American jobs
and living standards must help us find ways of protecting American
intellectual property better and preventing dumping of foreign products
in the American market below their cost of manufacture. I know that
there's some resentment surrounding the use of IP trade laws by
American multinational companies. But the very survival of countless
smaller domestic companies like mine heavily depends on strengthened
intellectual property protection. If there have been abuses, let's
correct them. But let's make sure not to do anything that could set
precedents that wind up throwing the baby out with the bath water.
Otherwise, you'll deal a fatal blow to many of our country's best
companies and best employers.
Make no mistake about it. Domestic companies like mine, who are
passionately devoted to keeping their production and their work force
in the United States, are under attack in the world economy. We and our
workers are under attack from high-income countries like Germany and
Japan. We are under attack from low-income countries like China and
India. Foreign governments do what they can, whatever it takes, to
advance their national interests and those of their companies--despite
the negative consequences for other countries and other peoples.
American domestic companies and their workers also deserve policies
from their government that further their interests--not abandon them.
Unfortunately, Washington's priorities have long been elsewhere, but we
live in a democratic system where the ineffective trade policies of the
past can be changed. With enough help from this committee and other
Members of Congress, that's exactly what we can do.
Senator Dorgan. Mr. Kernaghan, I'm going to start with you
today. Mr. Kernaghan, you are the Executive Director of the
National Labor Committee. I know that you have spent some years
investigating these issues, and bringing to the attention of
the American public--and to the Congress, for that matter--
labor abuses and sweatshop conditions around the world. I
personally appreciate the work of your organization. I think it
has been productive and helpful, and I appreciate the fact that
you have come today. And you may proceed.
STATEMENT OF CHARLES KERNAGHAN, EXECUTIVE DIRECTOR, NATIONAL
LABOR COMMITTEE
Mr. Kernaghan. Thank you very much, Mr. Chairman. And it is
an honor to be here to discuss worker-rights standards in the
global economy.
I'd like to just make a quick comment on the Harvest Rich
case, because, after we released our report on the Harvest Rich
factory in Bangladesh, the company sent their monitors back
again, and, I believe, including WRAP. They found no
violations. They told us the factory was excellent. It wasn't
until we invited Hanes, Marks & Spencer, and Tesco to return to
Bangladesh, and we set up a meeting with the workers, and the
workers themselves said to the Hanes representative, ``You must
go to the factory tonight. You'll see workers working. You'll
see them working at midnight, and past midnight''--It was only
when Hanes did that, and paid a rare unannounced visit at
night, and marched into the factory, they found dozens of
workers making Faded Glory jeans for Wal-Mart. They were 16\1/
2\ hours into their 19-hour shift. It was only at that moment
that Hanes said they understood that they were being misled by
the factory.
So, they didn't catch it on their own. They only caught it
because the workers themselves had the courage to meet with
them, tell them the truth, and tell them to go to the factory.
That's the only reason that that factory was decertified. It
did not happen under the normal monitoring programs.
Well, I want to quickly address the Jordan issue, and
China.
The U.S./Jordan Free Trade Agreement was initiated in
December of 2001. And it looked miraculous, because, within the
next 5 years, apparel exports from Jordan to the U.S. soared by
2,300 percent. They went from $52.1 million to $1.2 billion in
2006. But, unfortunately, the Jordan Free Trade Agreement
quickly descended into human trafficking of guest workers from
Bangladesh, China, Sri Lanka, India--36,100 guest workers were
trafficked to Jordan to work in 114 factories, producing
clothing for the United States. Ninety percent of those
factories were foreign-owned, mostly Asian-owned. In those
factories, the workers were stripped of their passports, not
given their identity residency permits, so they couldn't even
go out on the street. Once they were trapped in those
factories, stripped of their passports, and held under
conditions involuntary servitude--for example, in the Al
Shahaed factory, 115 Bangladesh workers found themselves
working 15 hours a day, 38 hours a day, 48 hours a day--or 48-
hour shifts, and 72-hour shifts. They actually worked 3 days in
a row without sleep. They would go 2 or 3 days at work without
sleep. When the workers passed out at the factory, they were
beaten with sticks to wake them. The workers were supposed to
be paid $250 a month with overtime. They got 2 cents an hour.
They got $2.31 for 98 hours of work. When they complained about
their wages, they were imprisoned in Jordan for 3 days without
food. When the workers finally demanded their wages, they were
beaten and forcibly deported back to Bangladesh without any of
the back wages owed them. At the Western garment factory, which
made fleece jackets for Wal-Mart, there were 14- and 15-year-
old kids in that factory, working 16 to 20 hours a day. They'd
work from 8 o'clock in the morning until midnight or until 4
a.m. They did this 7 days a week. They didn't get paid at all.
For the first 4 months of 2006, they did not receive one cent
in wages. They were working as slave labor. They had not any
wages. And when they passed out, they were hit with rulers.
When they passed out from exhaustion, they were struck with
rulers to wake them up. There were four girls in the factory
who were raped by management, one of them, a 16-year-old girl.
These were the conditions in these factories.
In the Al Safa factory, which made clothing for Gloria
Vanderbilt, a young woman--we believe, about 20 years old--a
young Bangladesh woman hung herself in the bathroom, committed
suicide, after she was raped by a manager. Such terrible
feelings, such humiliation, she hung herself. And they kept her
body in Jordan for many months before it was even sent back to
Bangladesh.
After we put out our report, in July 2006, the Trade
Minister of Jordan admitted, bravely, that their inspection
regime may have failed them. And he said, ``may have failed
them miserably,'' which was, of course, the case.
Jordan had 88 labor inspectors for 98,000 businesses in the
country. The labor inspectors were really just there to hand
out work permits to the guest workers. There was no monitoring
of the factories. There were no--there was absolutely no
oversight. And the situation deteriorated into human
trafficking.
I must say, under pressure, there has been a positive
response on the part of the Jordanian Government. And today,
because they've started to implement their own law, under
pressure, we think that the major--the major direct-contract
factories in Jordan, the larger factories--there's 59 of them--
that those factories largely now adhere to Jordanian law. Those
workers have received their passports back. They're working 11
hours, not 15 hours. They're getting at least the minimum wage.
However, in the smaller subcontract factories, of which there
are 55, violations continue. At the Classic factory in
Bangladesh, workers are working 14 hours a day, 7 days a week,
today--and collapsing of exhaustion.
In the Hussein Jordan factory, workers have not received
their passports back. If they come to work 1 minute late,
they're beaten.
So, there are still problems. But the good news is that the
Jordanian Government, under pressure, is moving definitely in
the right direction. In fact, they've closed about a dozen
factories and relocated 1,000 workers to better factories. So,
they're acknowledging these very, very terrible conditions.
Regarding China, we did a recent investigation of a factory
called Kaisi, which has 700 to 800 workers making furniture
parts for export to the U.S. And, in fact, one company in the
United States, based in Michigan, Knape & Vogt, imported $10.4
million worth of furniture parts from this factory in a recent
3-month period. In this factory, workers are working 14 and a
half to 15 hours a day, forced overtime, 8 o'clock in the
morning until 10:30 or 11:30 at night. The workers are working
7 days a week. They're routinely working 80 hours a week.
They're often at the factory 100 hours a week. The workers are
cheated of their minimum wage. This is going on in broad
daylight. They're not paid their minimum wage, they're not paid
any overtime premium. Our estimate is they're cheated of half
the wages that they're legally owed under China's law.
It gets even worse. The factories are a dangerous place to
work, and management in the factory has set these wildly
excessive production goals. All the workers are paid by a piece
rate. And management has actually set production goals of 7,800
pieces a day to 11,800 pieces a day. That means workers are
getting--they have to produce a piece every 4 to 6 seconds, and
they pay them six-hundredths of a cent for each operation they
do. So, the workers are frantically going through this pace all
day long, they're doing this 14\1/2\ to 15\1/2\ a day, and
they're doing it under dangerous conditions.
So, a 24-year-old, Dai Kehong, working at a stamp molding
machine in the factory, 9 o'clock at night, 13 and a half hours
into a shift that was going go on to 10:30 at night, both of
his hands were crushed in the molding machine, and his right
hand was completely mangled and deformed. He lost all the
fingers, except his thumb and his forefinger, which are frozen
in place and just jutting out. He can't use the hand. His left
hand was crushed into a claw grip. He can't open it. He can't
move the fingers. He has no use of either hand now. He needs an
artificial limb. The factory is not paying for it, they're not
helping him at all.
On September 29, 2006, a worker by the name of Zhao
Chengquang was working on furniture parts for export to Knapp &
Vogt in Michigan, and his stool slipped out from under him, and
his left hand got stuck in the machine and crushed it. He lost
the whole left side of his hand. His fingers, his knuckles, and
a large part of his left hand is gone.
That September--September, 2006, five workers were injured
at the factory, seriously. We estimate that six fingers were
severed in that 1 month. You know, there's an estimate, in the
Pearl River Delta area of factories, that 40,000 fingers a year
are severed in China. They don't have workman's comp. They have
workman's comp, as a law, but the factories just ignore it
completely, so they don't have work injury insurance for the
workers. So, when the workers are injured, they're basically
just abandoned with nothing.
Living conditions are abysmal. Workers are housed in
dormitories, six to eight workers to a room. Double-level
bunkbeds line the wall. Workers hang plastic over the openings
for a little bit of privacy. They're fed food that the workers
describe as absolutely horrible. There's no hot water; so, when
they want to bathe in the wintertime, they actually have to
walk down four flights of stairs, get a little plastic bucket,
get hot water, and walk it back up to their room and do a
sponge bath with it. The conditions are off the charts.
This is a dangerous factory, where every single labor right
in China is violated, every single labor right, and every
single internationally recognized worker-rights standard is
violated in broad daylight.
The U.S. companies would never tolerate a similar treatment
for their products. In this very factory, the U.S. companies
worked with the Kaisi management to bring their factories up to
international standards for their packaging, because they
demanded their products reach the United States unharmed. So,
they worked for a year with management to bring them up to
speed with international standards--packing standards, so that
their goods would arrive in the United States safely. They
never uttered one word about the young workers in the factory
who are being seriously injured and maimed for life--whose
lives are now destroyed. They never said a word about the low
payment of the minimum wage. They never said a word about no
overtime payment. They never said a word about the miserable
primitive living conditions. But they protected their products.
I believe that the legislation which you and your
colleagues have introduced, the Decent Working Conditions and
Fair Competition Act, is the single most important action that
can be taken in today's global economy to end the sweatshop
abuse and to end the race to the bottom. This legislation would
favor U.S. companies that try to live up to the law, that
strive to live up to the law. And it would also have the impact
of raising worker-rights standards in China and in Bangladesh,
and in countless other countries across the world. And it would
lift tens of millions of workers up to improved conditions.
It's wrong----
Senator Dorgan. I want you to summarize, if you would. I
didn't want to interrupt you, until you had----
Mr. Kernaghan. Yes.
Senator Dorgan.--properly supported the legislation I had
introduced.
[Laughter.]
Mr. Kernaghan. But----
Senator Dorgan. But----
Mr. Kernaghan. It----
Senator Dorgan. But I need to have you summarize it, if
you----
Mr. Kernaghan. I think the legislation is the single most
important thing to end sweatshop abuse in the United States and
around the world.
[The prepared statement of Mr. Kernaghan follows:]
Prepared Statement of Charles Kernaghan, Executive Director,
National Labor Committee
Mr. Chairman, members of the Committee, I appreciate the
opportunity to testify at this very important hearing regarding worker
rights standards in the global economy.
The U.S.-Jordan Free Trade Agreement went into effect in December,
2001. Over the next 5 years, apparel exports from Jordan to the U.S.
soared by 2,300 percent, growing from $52.1 million in 2000 to $1.2
billion in 2006.
The U.S.-Jordan Free Trade Agreement was reported to be a model
agreement, since for the first time, worker rights standards and
environmental protections were included in the core of the agreement.
Yet something went terribly wrong, as the U.S.-Jordan Free Trade
Agreement quickly descended into Human Trafficking and involuntary
servitude. At least 36,149 foreign guest workers are employed in
Jordan's 114 garment factories, at least 90 percent of which are
foreign-owned, mostly by Asian investors. The guest workers come from
Bangladesh, China, Sri Lanka and India.
Bangladeshi guest workers had to pay $1,000 to $3,000 each to
unscrupulous manpower agencies in Bangladesh to purchase a two-to-
three-year contract to work in Jordan. This is an enormous amount of
money in Bangladesh, and as poor workers, they had to borrow the money
on the informal market at exorbitant interest rates of five to 10
percent per month.
From the minute they took the loans, these workers were in a trap,
and a race against time to pay off their large debts. But the workers
were promised that they would be able to earn $134.28 a month for
regular hours and up to $250 a month with overtime. All housing, food
and medical care would be free. The workers were told they would live
well, ``like they do in the West.'' They would get at least 1 day off a
week, sick days, vacation time and national holidays.
But there was a catch: The contract tied the guest workers to just
one factory, prohibiting them from working elsewhere.
One hundred and fifteen workers from Bangladesh purchased contracts
to work at the Al Shahaed Garment factory in Irbid, Jordan.
Upon their arrival at the airport, management immediately
confiscated their passports. Nor were the workers provided with
residency permits, without which they could not go out on the street
without fear of being detained by the police for lack of the proper
papers.
Once in the Al Shahaed factory, the workers found themselves forced
to work shifts of 15, 38, 48 and even 72 hours straight, often going
two or 3 days without sleep. They worked 7 days a week. Workers who
fell asleep at their sewing machines would be slapped and punched.
Instead of being paid the $250 a month that the ad promised, the
workers earned two cents an hour, or $2.31 for a 98-hour workweek.
Workers who asked for their legal wages could be imprisoned up to 3
days without food. Workers who criticized the food the company provided
were beaten with sticks and belts. Twenty-eight workers had to share
one small 12-by-12-foot dorm room, which had access to running water
only every third day. These workers sewed clothing for Wal-Mart.
When, in desperation, the workers demanded their legal wages, they
were forcibly deported and returned to Bangladesh without their back
wages. Many of these workers are now hiding in Dhaka City and peddling
bicycle rickshaws to survive. They cannot return to their home villages
because they have no possible way to pay off the mounting debt they
incurred to go to Jordan in the first place.
At the Western factory, also in Irbid and producing clothing for
Wal-Mart, Bangladeshi guest workers who were trafficked to Jordan faced
much the same fate. They too were stripped of their passports and
forced to work 16 to 20 hours a day, 7 days a week. Despite working 109
hours a week, the workers routinely went for months without being paid.
In the first 4 months of 2006, the Western workers were not paid a
single cent in wages. There are also credible of reports of sexual
abuse, including the rape of a sixteen year-old girl. Workers who asked
for their wages would be beaten and threatened with forcible
deportation.
At the Al Safa factory in the Al Hassan Industrial Estate, a young
Bangladeshi woman no more than 20 years of age hung herself after being
raped by a factory manager. This happened in February 2005. She hang
herself in a bathroom using her scarf. Her body was not immediately
returned to Bangladesh, but rather, remained at the local morgue for
several months. In this factory, they sewed clothing for the Gloria
Vanderbilt label.
The National Labor Committee released our report on Jordan in May
2006. By July 2006, Jordan's Trade Minister at the time, Mr. Sharif Al
Zuibi, declared: ``Our inspection regime may have failed us and may
have failed us miserably.'' Jordan's labor department had just 88 labor
inspectors to oversee 98,000 business operations. The primary role of
the labor department inspectors was to issue work permits to foreign
guest workers. By law, Jordan's unions were not permitted to organize
foreign workers.
Acting quickly, the Jordanian Government to date has closed at
least ten of the worst garment factories and relocated over 1,000
workers to better factories. Across Jordan, especially in the 59 larger
direct contract factories, conditions have improved. Guest workers
passports have been returned and most workers now have their necessary
residency permit. At most, workers are toiling 11 hours a day and not
the 15-plus-hour shifts that were routine in the past. Most workers are
being paid at least the legal minimum wage. Factory conditions and
treatment have improved.
However, problems continue in some of the 55 smaller subcontract
factories in Jordan.
In the Concord Garment factory in Cyber City Industrial Park near
Irbid, 350 workers have not been paid for the last 3 months, despite
the fact that they are forced to work 15 to 16 hours a day, from 8 a.m.
to 11 p.m. or 12 midnight, 7 days a week. Women workers report being
cursed at, slapped and punched by factory managers. There is no heat or
hot water in the dorm, and even the toilets lack running water several
days a week. Many of the workers are falling ill. If any worker asks
for their legal rights, they will be immediately attacked, beaten and
deported. Nor has management returned the workers' passports or issued
their necessary work permits.
At the Classic Fashion factory in Jordan, 500 workers are required
to work 7 days a week, putting in routine 14-hour shifts from 7:30 a.m.
to 9:30 p.m. As a result, the workers are sick and exhausted There are
no sick days and management provides no medical care. This factory
produces for Jones Apparel, the Gloria Vanderbilt label.
At the Hussein Jordan Garment factory in the Al Hassan Industrial
City, the workers are being forced to work 10 regular hours rather than
the legal 8 hours. If workers arrive 1 minute late to the factory, they
are beaten. Nor have these workers received their passports and
residency permits. They are being paid below the legal minimum wage and
the factory is illegally charging workers for food and medical care.
All overtime is obligatory and sick days and national holidays are not
respected. The Hussein Jordan factory produces for Victoria's Secret.
On balance however, much has improved in Jordan's garment industry,
and the government is seriously responding to reports of continued
violations. But must remains still to be done. The guest workers are
still denied the freedom of association and the right to organize.
We do not know of a single prosecution of factory owners for human
trafficking and holding tens of thousands of workers under conditions
of involuntary servitude.
Nor do we know of any case where the foreign guest workers were
paid the outstanding back wages legally due them. But there is hope
that the significant improvements will continue.
A second concrete example I want to raise is that of the Kaisi
Metals factory in Guangzhou in the south of China, where 600 to 700
workers toil under dangerous and illegal conditions producing furniture
parts for export to U.S. companies. Among those companies is the Knape
& Vogt Manufacturing Company--located in Grand Rapids, Michigan--which
imported $10.4 million-worth of goods from the Kaisi factory in a
recent three-month period. Every single labor law in China is routinely
violated at the Kaisi factory, along with the International Labor
Organization's core worker rights standards, while the U.S. companies
sourcing production there say and do nothing.
Grueling, exhausting, numbing, dangerous and poorly paid would be
the only way to describe the workday at the Kaisi Metals factory. Kaisi
workers are routinely forced to toil 14 \1/2\ to 15 \1/2\ hours a day,
from 8 a.m. to 10:30 or 11:30 p.m., often 7 days a week. It is not
uncommon for the workers to be at the factory 100 hours a week, while
toiling 80 or more hours.
Workers are paid on a piece rate basis. It is standard for
management to arbitrarily set wildly excessive production goals
requiring workers to complete 7,780 to 11,830 pieces in a day, which is
640 to 980 operations an hour--or one piece every four to 6 seconds--
for which they are paid an astounding six-hundredths of a cent per
piece. The work pace is brutal, relentless and dangerous.
Workers are paid below the legal minimum wage and cheated of their
overtime premium, earning less than half of what they are legally owed.
Workers are paid just $24.33 for a 77-hour work week, and 32 cents an
hour. The workers should be earning at least $52.56. The current
minimum wage is 58 cents an hour.
It is a dreary life for the 600 to 700 workers at the Kaisi
factory, who are housed in primitive over-crowded company dorms located
on the seventh floor of the factory. Each room measures 11 feet by 24
feet and its walls are lined with double-level metal bunk beds. There
is no other furniture, not even a bureau, a table or chair. Six to
eight workers share each room. For privacy, the workers drape old
sheets and plastic over the openings to their bunks. There is a tiny
bathroom, which the workers say is filthy. There is no hot water and
any workers who want to bathe during the winter must walk down four
flights of stairs to fetch hot water in a small plastic bucket and
return to their dorm room for a sponge bath. The dorms are very over-
crowded and the air reeks of perspiration and sweaty feet.
Married couples must live ``off campus'' under equally deplorable
conditions, since they are able to afford only the smallest, most
primitive one-room apartments. Zhu Shenghong, who lost three fingers at
the Kaisi factory, lives in a single room with his wife. Their only
furniture consists of a bed, which is broken, a few primitive wooden
tables and three tiny chairs Zhu made himself before he was injured,
using scraps of wood he picked up on the street. They cannot afford a
television. The toilet is an outhouse, and the kitchen is in a hallway
partitioned with some planks of wood. Zhu and his wife often cook with
wood, largely subsisting on turnips. This is all that two people, both
working in export factories, can afford.
Much worse still is the fact that the Kaisi factory is a dangerous
place to work, where scores of young people have been seriously
injured, and some maimed for life.
Dai Kehong was just 24 years old when both his hands were crushed
while working on a punch press molding machine producing furniture
parts for export to U.S. companies. It happened at 9 p.m. when Dai was
13 hours into his routine 15 \1/2\ hour shift. Dai's right hand is
mangled and deformed, with only the thumb and forefinger remaining, but
frozen in place. His left hand was also crushed and frozen into a claw,
as he is unable to bend or straighten any of his fingers. He has no
ability to use either hand and will need an artificial limb.
On September 29, 2006, Zhao Chengquang's left hand was crushed
while he was working on an order for the U.S. Knape & Vogt company. His
stool suddenly slid out from under him leaving his left hand caught in
the machine. His hand was crushed, severing two fingers with the
knuckles and a large part of his left hand.
In September 2006 alone, five Kaisi factory workers were seriously
injured, resulting in the loss of at least six fingers.
In direct violation of China's laws, the Kaisi factory failed to
inscribe its workers in the mandatory national work injury insurance
program, which is China's equivalent of Worker Compensation. Kaisi
management also failed to report these serious work injuries to the
local authorities. The Kaisi factory refused to pay anywhere near the
full compensation these injured workers were legally owed. Management
is even refusing to pay for Dai Kehong's artificial limb.
U.S. companies could never tolerate such abusive treatment of their
products and have gone out of their way to work with the Kaisi factory
to bring their contractor into compliance with international packing
specs so that their products will not be damaged en route to the U.S.
Knape & Vogt spent 1 year working with its contractors in China
spelling out acceptable criteria that its packing must meet and
demanding that each package pass rigorous tests before shipment.
At the same time, the U.S. companies stood by and did not say a
word as scores of young workers were injured and maimed due to
dangerous working conditions. Nor did the companies sourcing production
at the Kaisi factory utter a single word to protest the 7-day, 80-hour
work weeks, or the fact that workers were being paid below the legal
minimum wage and cheated of their overtime premium while working on
their goods. Nothing was done to bring the primitive dorm conditions up
to a level of acceptable decency.
In fact, the companies give every indication that they care much
more about their products than about the human beings in China who make
them.
This is just one example--and there are hundreds--of how easily the
paper-thin labor laws in China are flaunted by the multinational
corporations with complete impunity. Here too, the voluntary corporate
codes of conduct and private monitoring schemes have failed
completely--and with such tragic results for the workers.
Senator Dorgan, I believe that the Decent Working Conditions and
Fair Competition Act, which you and your colleagues recently introduced
in the U.S. Senate, is the single most important action that can be
taken to end the race to the bottom in the global economy. Once passed,
this legislation will reward decent U.S. companies which are striving
to adhere to the law. Worker rights standards in China, Bangladesh and
other countries across the world will be raised, improving conditions
for tens of millions of working people. Your legislation will for the
first time also create a level playing field for American workers to
compete fairly in the global economy.
Thank you for allowing me the opportunity to testify on this
critical issue, of raising standards in the global economy rather than
lowering them.
Senator Dorgan. We have your entire statement as a part of
the record, and you've included a great deal of the
information, some of which you've noted today, Mr. Kernaghan.
And thank you. Thank you very much for your work and your
testimony.
Mr. English is the person who's here on behalf of the
United Steelworkers, representing the president, Leo Gerard,
who was not able to be with us today.
Mr. English, thank you for being with us. You may proceed.
STATEMENT OF JAMES D. ENGLISH, INTERNATIONAL SECRETARY-
TREASURER, UNITED STEELWORKERS
Mr. English. Thank you, Senator Dorgan.
My name is Jim English, and I'm the Secretary-Treasurer of
the United Steelworkers of America, and I'm here in support,
today, of Senate bill 367.
Senator I would thank you for introducing the bill, thank
you for having this hearing. And I'd also thank you for ``Take
This Job and Ship It.'' It's a book that we've distributed
widely among our union members. I would note that there's a
special piece in there on George Becker, the former president
of the United Steelworkers. Mr. Becker was buried, this past
Friday. He died after a long bout with cancer. He had served on
the China Commission. He had really been a spokesman on behalf
of fair trade in this country, and I appreciate the fact that
you recognized that fact in your book.
With me today--well, in your book, you also make reference
to the shutdown of the Pennsylvania House furniture plant in
Pennsylvania--with me today--and I'd ask them to stand briefly
to be recognized--are Tom Riegle and Leroy Reagle. Their last
names are spelled--are pronounced the same, but they're spelled
differently. They're both men that have family--had family
supportive jobs at making high-end quality wood furniture at a
factory owned by Pennsylvania House, in Lewisburg,
Pennsylvania. Both Tom and Leroy were long-time woodcraftsmen
who permanent lost their jobs on December the 28th of 2004,
along with 425 other USWA-represented employees at Pennsylvania
House. The corporate owner of Pennsylvania House decided to
close the Lewisburg factory and move production to China, where
labor costs and working conditions are easily exploited. Today,
Pennsylvania House furniture products are largely made in
China.
It is not unusual for elected officials, when dealing with
the question of trade, to say that American workers are the
most productive in the world, and that they can--given a level
playing field, they can compete with anyone. The problem is
that we don't have a level playing field in the global economy
today. You can't have a level playing field when American
workers are being asked to compete against forced labor. You
can't have a level playing field when American workers are
being asked to compete against persons who are required to work
long hours without getting paid. You can't have a level playing
field when workers are jailed for trying to form an independent
union. You can't have a level playing field when workers in the
United States are forced to compete against workers in other
countries who are required to work at subsurvival wages.
This legislation would be a good step in the direction of
trying to create that level playing field. And I applaud you,
Senator, for introducing it, because I think it is a--it's a
good, strong step in that direction. But, more important than
that, it is a statement to the world that this country stands
strong in favor of a moral principle that people who work for a
living should get a decent wage, should be able to work in
conditions that are tolerable, that they should be able to have
the right to organize, have the right to bargain collectively.
On behalf of the Steelworkers, I've had the privilege of
visiting Mexico on a number of occasions with George Becker,
people who work for the Steelworkers have visited China, have
visited Jordan. And it is a appalling to look at the conditions
in which people are forced to live because of the poverty wages
that they are paid. And I think that this bill is a good first
step in trying to correct that condition. Until we correct that
condition, we cannot truly say that we have a global economy
that works for all people.
So, I thank you for the legislation, and indicate to you
our strong support for it.
[The prepared statement of Mr. English follows:]
Prepared Statement of James D. English, International Secretary-
Treasurer, United Steelworkers
Mr. Chairman, members of the Committee, on behalf of the 1.2
million working and retired Steelworkers in the United States and
Canada, I appreciate this opportunity to testify in support of Senate
Bill 367, The Decent Working Conditions and Fair Competition Act. I
applaud you for your leadership in authoring this important
legislation. And I applaud as well Senator Graham from South Carolina
who is a primary co-sponsor on the bill. All too frequently,
policymakers have ignored the dark side of increased globalization and
its impact on workers both domestically and around the globe. Your
actions suggest a growing bi-partisan awareness that new measures are
needed to establish effective standards to defend the most vulnerable
among us if the promise of expanded international trade is to be
realized.
For far too long, the United States Government's trade agenda has
focused on corporate protections while ignoring the lives of human
beings toiling within the global economy. One result is that products
reaching American soil often come with the taint of being produced in
inhumane conditions. Many workers making products destined for the
United States do not have the option of rejecting forced labor, unsafe
conditions, indecent pay, discrimination, or other violations of their
rights. Instead, because of their poverty and desperation, they are the
victims of a global trading system that allows, if not encourages,
horrendous working conditions to swell corporate bottom lines.
The recent period of trade liberalization has not been kind to
working Americans. Despite the negotiation of a series of so-called
free trade agreements over the last dozen years, real income and wages
in the U.S. are stagnating or falling, inequality is growing, more
people are in poverty, debt is growing faster than income, and millions
of decent, good paying manufacturing jobs have disappeared. Unfair
trade policies, and the massive and ultimately unsustainable trade
deficits that have resulted, are a key contributing factor to the job
loss, destroyed communities, and falling wages and benefits that
American workers are facing today.
These problems are not limited to U.S. workers. Indeed, for workers
in the countries of many of our trading partners, the situation is
considerably worse. In export processing zones alone, hundreds of
thousands, if not millions of workers are trafficked to work in
sweatshops, making products for export to the U.S. Many of these
workers have their passports confiscated and are forced to work
inhumane hours for pittance wages, sometimes going months without a
paycheck. These workers are often denied their basic human rights at
the workplace, especially the right to organize and bargain
collectively, even while they make products for some of the largest and
richest corporations in the world. If corporations can demand and win
strong, enforceable laws, backed by sanctions to protect their products
and intellectual property, certainly workers should demand and achieve
laws to protect the rights of workers who make those products. The
enactment of S. 367 would be a significant step forward in bringing
some balance to the global economy.
The Decent Working Conditions and Fair Competition Act simply
states that if products are made in sweatshop conditions, they are not
welcome in our markets. A product is considered a sweatshop good if it
is produced under conditions that do not meet core labor standards.
Those standards include the right to associate, organize and bargain
collectively, a prohibition on forced or child labor, and basic
conditions of work including wages, safety and health protections, and
hours of work.
The idea of linking conditions of work to trade is not new. It has
been present in our national dialogue on international economic affairs
for more than 100 years. The McKinley Tariff of 1890 included a
provision banning the import of prison made goods. In 1912, the U.S.
banned the import of white phosphorous matches because of health
hazards associated, not with their use, but with their production. The
Administrations of President Eisenhower, President Nixon, President
Reagan, the first President Bush, and President Clinton all sought to
include worker rights and standards in multilateral trade agreements.
Their collective reasoning was perhaps best expressed 20 years ago in a
1987 letter to the House Ways and Means Committee from President
Reagan's Labor Secretary Bill Brock who wrote:
``Those countries which are flooding world markets with goods
made by children, or by workers who can't form free trade
unions or bargain collectively, or who are denied even the most
minimum standards of safety and health are doing more harm to
the principle of free and fair trade than any protectionist
group I can think of.''
While sadly little progress has been made at the multilateral
level, Congress has over the last 20 years introduced the concept of
linking worker rights to trade in a variety of U.S. laws. The Caribbean
Basin Initiative, the Generalized System of Preferences, the Andean
Trade Preference Act, the Overseas Private Investment Corporation, and
Section 301 of the 1988 Trade Act, to name just a few, all contain some
form of worker rights conditionality. While all well intentioned,
enforcement of their worker rights provisions has been lacking.
It is in this context that The Decent Working Conditions and Fair
Competition Act holds the most promise. In assigning enforcement
responsibilities to both the Customs Service and the Federal Trade
Commission, the bill sends a clear message that abusive labor
conditions in trade will no longer be tolerated. Perhaps more
importantly, by creating a private right of action, the indifference or
passivity on the part of the Executive Branch will no longer be able to
block needed action. I would suggest however, that the section of the
bill that deals with who has the standing to sue, be amended to include
workers and their unions. Workers are on the front lines of unfair and
abusive trade and need to have the ability to seek redress in the same
manner as companies or investors.
The Decent Working Conditions and Fair Competition Act seeks to
address one of the questions that need to be answered as our Nation
confronts an expanding global economy. This is not about free trade or
protectionism, but rather what are the rules that should be in place to
insure just and fair competition. For workers, the overriding issue in
discussions on international trade is not free trade or protection,
open markets or closed markets, or more investment or less. Rather, the
debate for us is over how the gains of economic activity are to be
distributed and who has a say in making that determination. If the
growing internationalization of the U.S. economy results in economic
growth, we are concerned with who will benefit--the tiny number of
people on the top rungs of the economic ladder--or the vast numbers on
the bottom and middle rungs. And we certainly do not believe that the
only choice is between autarky and an unrestrained free market.
History teaches that there is no reason to expect that an
unregulated free market will bring sustained equitable economic growth
and progress. For trade unionists, most of the historic achievements of
our movement, the establishment of a minimum wage, the abolition of
child labor, the development of workplace health and safety laws, as
well as the establishment of collective bargaining were intended to
temper and restrain some of the most brutal effects of the free market.
We now have to extend our domestic experience into the
international arena. By setting a floor on labor rights and standards,
The Decent Working Conditions and Fair Competition Act does exactly
that. Consumers have a right to know the products they purchase are not
produced in sweatshop conditions. Businesses have the right to compete
fairly, and not with companies that engage in worker abuses.
Shareholders have the right to invest with the knowledge that they are
not supporting sweatshop practices. And, most importantly, workers
around the globe have the right to earn a living without the
degradation of toiling in inhumane conditions.
Senator Dorgan. Mr. English, thank you very much.
Let me make a note about Pennsylvania House furniture. One
of the things that struck me about that is that it was a high-
end furniture company. The furniture, made by craftsmen and
women, who cared a lot about their jobs. Those jobs went to
China. And the Pennsylvania wood is actually shipped to China
and then put together in China, sent back to our country, still
as Pennsylvania House furniture. Apparently the skilled
workers, the craftsmen at Pennsylvania House furniture, turned
over the last piece of furniture coming off the line at
Pennsylvania House furniture, as it came off the line, and
decided they would all sign their names on the bottom of the
last piece of American domestic-made Pennsylvania House
furniture. Some customer somewhere purchased something that has
the proud signature of craftsmen who cared about their work,
and did good work, who signed the bottom of that piece of
furniture. But they can't compete with 20- and 30-cent-an-hour
labor. And that labor is sufficient to even allow the shipment
of the wood to China to be produced and to then be shipped back
to American consumers.
I think it is a compelling story, and one that deserves the
attention of Congress as we consider this issue of
globalization and its impact on this country.
Mr. Socolow is the Commissioner of the New Jersey
Department of Labor and Workforce.
Mr. Socolow, we appreciate your being here today, and you
may proceed.
STATEMENT OF HON. DAVID J. SOCOLOW, COMMISSIONER, NEW JERSEY
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT
Mr. Socolow. Senator Dorgan, thank you very much for
holding this important hearing, and thank you for the
invitation to testify about what States like New Jersey are
doing to help stop workers from being abused in sweatshop
conditions.
We are using the purchasing power of State government to
counteract sweatshop labor practices. And we've recognized
that, rather than buying goods based solely on the lowest
possible price, we ought to include, in our procurement
policies, a recognition of the true cost of the apparel and
other goods that we buy.
Over the past 2 years, New Jersey State government agencies
purchased nearly $7 million worth of apparel for uniformed
staff, employees, and individuals for whom the State provides
clothing and linens in our State correctional and developmental
institutions. And it's estimated that all State governments
purchase something on the order of $400 million a year worth of
those types of apparel items.
In 2002, our State government took a historic step forward
to address sweatshop abuses by implementing Executive Order 20,
which requires that all apparel purchased by the State of New
Jersey be manufactured in the United States under fair labor
conditions. And this procurement policy is making a real
impact, Mr. Chairman, in protecting workers. We have avoided
buying goods that were not manufactured in accordance with our
required labor practices. And there are specific examples of
that in my written testimony, which I've submitted for the
record. What all of those examples show is that we're often
alerted to these potential abuses by competitors of the
contractors and bidders during the procurement process. And
that is, of course, a market-based mechanism whereby one bidder
would notify us that another bidder might be attempting to
supply us with goods produced under abhorrent labor conditions.
And that way, we can keep sweatshops out of our State supply
chain while minimizing the cost to State government.
It is worth paying a small premium--typically around 20
percent--to avoid supporting sweatshops with our residents' tax
dollars in order to uphold the values of the people of New
Jersey.
And now, Governor Corzine of New Jersey has acted to take
the next step toward ending worldwide sweatshop conditions.
Last September, New Jersey joined a State and local consortium
of governments, which was proposed originally by Governor
Baldacci of Maine, with the goal of ending the use of State
taxpayer funds to purchase apparel manufactured in sweatshops.
The inaugural meeting of this consortium is planned for next
month with representatives from the States of Maine, New
Jersey, and Pennsylvania. And what we're going to do is
establish standards for production of apparel, we're going to
implement monitoring to investigate factories around the world,
to root out sweatshop conditions and abuses. But, most of all,
we're going to combine our purchasing power to try to create a
market niche for fairly produced products.
Working together, State and local governments can strike
with even greater force against sweatshop conditions. With the
buying power of these many entities joined in a national
consortium, we hope that global manufacturers will recognize
the value of producing goods for our market while meeting basic
workplace requirements, paying living wages, offering fixed
working hours, putting an end to the use of child labor,
ensuring the right to collective bargaining, and protecting
worker health and safety.
Mr. Chairman, a single State, town, or university cannot,
on its own, end the global exploitation of sweatshop workers,
but each of us can take steps to combat the economic incentives
that give rise to sweatshop abuses.
So, thank you for the opportunity to testify. I appreciate
the opportunity to answer your questions.
[The prepared statement of Mr. Socolow follows:]
Prepared Statement of Hon. David J. Socolow, Commissioner, New Jersey
Department of Labor and Workforce Development
State Initiatives to Prevent Abusive Sweatshop Labor Conditions
Chairman Dorgan, members of the Subcommittee, thank you for this
opportunity to come before you to discuss what states like New Jersey
are doing to help stop workers from being abused in sweatshops. I am
David Socolow, and I serve as the Commissioner of the New Jersey
Department of Labor and Workforce Development.
As this committee has heard from the compelling personal stories of
witnesses at today's hearing, workers continue to be exposed to
sweatshop conditions around the world, leading to horrendous child
labor abuses, dangerous working conditions and unconscionably low wage
levels, as global manufacturers produce low-cost apparel for the
world's most affluent nations.
Here in the United States, governments at both the State and
Federal levels have worked for almost a century to eliminate these
terrible working conditions from our economic landscape. As state labor
commissioner, I lead an agency whose daily mission is to ensure that
the workers of New Jersey are paid fair wages and are provided safe
workplaces. However, now that much of the apparel in the global
marketplace is manufactured overseas, we must not turn a blind eye to
sweatshop abuses elsewhere that we would not tolerate in our own
backyard.
We can do our part by using the State's purchasing power to
counteract sweatshop labor practices. Rather than buying goods based
solely on the lowest possible price, we should include in our
procurement policies a recognition of the real cost of the apparel we
buy. Such enlightened procurement policies take into account the harm
that sweatshop conditions cause, not only to those workers exploited in
overseas factories, but also to American workers and manufacturers who
cannot compete against unscrupulous contractors paying poverty wages
while ignoring workplace health and safety.
New Jersey's Apparel Procurement Executive Order
In my home state of New Jersey, over the past 2 years, State
governmental agencies purchased more than $7 million worth of apparel
for uniformed staff, employees and individuals for whom the State
provides clothing, and linens in our State correctional and
developmental institutions.
In 2002, our State government took an historic step toward
addressing sweatshop abuses by implementing Executive Order 20, which
requires that all apparel purchased by the State of New Jersey be
manufactured in the United States under fair labor conditions.
Moreover, this Order requires contractors providing apparel to the
state to provide the names and locations of all subcontractors involved
in the manufacture of that apparel and to sign Affidavits certifying
that: their workers are paid a ``non-poverty wage''; workers are
afforded a mechanism to resolve employer-employee disputes; the
employer is committed to neutrality in regard to union organizing
efforts; and that workers are afforded a safe and healthy work
environment free from discrimination.
This policy is making a real impact in protecting workers. In one
recent example, a winning bidder swore in an affidavit to supply the
State with domestically manufactured apparel at a cost lower than three
other bidders who offered non-domestic product. When we found in an
audit that the company had supplied a mix of both domestic and imported
products, we gave them a choice: give up the contract, or provide only
linens manufactured according to the State's anti-sweatshop standards.
The company agreed to provide sweat-free products and this was
confirmed in subsequent audits.
In another case, a losing bidder challenged the recommended award
of an apparel contract to another vendor. In responding to the protest,
the winning bidder withdrew their affidavit, stating that they could
not supply the domestically made apparel at the prices they bid. After
a re-bid, the original winning bidder made a new offer to supply
domestically produced apparel at a price 20 percent higher than the
lowest bid for imported product. New Jersey has found that this is the
typical price differential required to avoid purchasing products made
in sweatshops. It is worth paying this small premium with our
residents' tax dollars to uphold the values of the people of our state.
In implementing the State's Apparel Procurement Executive Order, we
have been alerted to potential abuses by competitors of contractors or
bidders during the procurement process. This market-based mechanism is
vital to enforcing New Jersey's apparel procurement standards while
minimizing the cost to State government. In this way, the State can
work for the best interests of the people we represent.
National Initiative: State and Local Government ``Sweat-Free''
Consortium
While our Apparel Procurement Executive Order has provided New
Jersey with a useful tool to avoid purchasing sweatshop-produced
apparel, Governor Corzine has acted to take the next step toward ending
worldwide sweatshop conditions. Last September, Governor Corzine
announced that New Jersey would join a State and Local government
consortium proposed by Governor Baldacci of Maine, with the goal of
ending the use of State taxpayer funds to purchase apparel manufactured
in sweatshops. The inaugural meeting of this consortium is planned for
next month with representatives from the states of Maine, New Jersey
and Pennsylvania, and we are currently recruiting other state and local
governments to join this effort.
This consortium initiative will be modeled on the efforts of more
than 160 colleges and universities that have banded together to end
sweatshop production for collegiate apparel under the Workers Rights
Consortium (WRC). The WRC sets high standards for the production of
collegiate apparel and investigates factories around the world to root
out sweatshop conditions and abuses.
As with colleges and universities, state and local governments are
a group of buyers with the common interest of avoiding sweatshop-
produced goods. To date, more than 170 state and local jurisdictions
across America have adopted procurement policies aimed at eliminating
sweatshops from their supply chain. Now, working together, State and
local governments can strike with even greater force against sweatshop
conditions.
With the buying power of all of these entities joined in a national
consortium, global manufacturers will recognize the value of producing
goods for this market while meeting basic workplace requirements,
including paying living wages, offering fixed working hours, putting an
end to the use of child labor, ensuring the right to collective
bargaining and protecting worker health and safety.
A single state, town or university cannot end the global
exploitation of sweatshop workers. But each of us can take steps to
combat the economic incentives that give rise to sweatshop abuses.
Thank you again for the opportunity to testify today. I look
forward to responding to your questions.
Senator Dorgan. Mr. Socolow, thank you very much. That is
an interesting approach, and one that gives me comfort, to see
that there is activity at the State level on these issues.
Mr. Griswold is the director of the Center for Trade Policy
Studies at the Cato Institute. We've had occasion at previous
times, to discuss trade.
Mr. Griswold, welcome, and you may proceed.
STATEMENT OF DANIEL T. GRISWOLD, DIRECTOR, CENTER FOR TRADE
POLICY STUDIES, THE CATO INSTITUTE
Mr. Griswold. Chairman Dorgan and members of the
Subcommittee, thank you for inviting the Cato Institute to
testify today on global working conditions.
First, we should reject any notion that American workers
are pitted in zero-sum competition with workers in poor
countries. There is no race to the bottom in labor standards.
Global incomes and working conditions can rise for workers in
all countries that participate in the global economy. As
America has become more globalized in the last 25 years,
American workers and their families have enjoyed significant
increases in real compensation, disposable incomes, and wealth.
Nor has trade with developed countries undermined America's
manufacturing base. Output of America's factories last year was
more than 50 percent higher than it was in the early 1990s,
before we joined NAFTA and the World Trade Organization.
American factories are producing more aircraft and
pharmaceuticals, more sophisticated machinery and
semiconductors, more chemicals, and even passenger vehicles and
parts, than 15 years ago. We can produce more with fewer
workers, because manufacturing productivity has been growing so
rapidly.
When U.S. multinational companies invest abroad, their
primary motivation is not a search for low wages and low
standards. More than low costs, they seek wealthy consumers,
skilled workers, an infrastructure that works, the rule of law,
political stability, and the freedom to trade and repatriate
profits. That is why more than 80 percent of U.S. outward
manufacturing direct investment flows to other high-income,
high-standard economies, such as the European Union, Canada,
and Australia. Trade and globalization are lifting wages and
working conditions for hundreds of millions of people in
developing countries. The pay and working conditions in
foreign-owned factories and export industries are usually much
better than in the local domestic economy. Those jobs offer
poor workers, especially young women, their best opportunity at
financial independence and the simple pleasures and dignities
of life that we take for granted.
According to the World Bank, the share of the world's
population living in absolute poverty has been cut in half
since 1981, from 40 percent to 19 percent, and poverty has
fallen most rapidly in those areas of the world that have
embraced globalization the most aggressively, including China.
By raising incomes in poor countries, free trade and
globalization have helped pull millions of kids out of the work
force and helped them enroll in school, where they belong.
The International Labor Organization recently reported that
the number of children in the world, ages 10 to 14, who are
working rather than attending school, has dropped by 11 percent
since their previous report in 2002. There are 20 million fewer
Halimas today than there were just 4 or 5 years ago. And it's
not because of a legislative billy club, it's because of trade
and growth in developing countries. The number working in the
most hazardous jobs has dropped even more steeply, 26 percent.
Parents in poor countries love their children just as much as
we love our own. When they rise above a subsistence income, the
first thing they do is remove their children from the work
force and put them in school. Studies confirm that labor-force
participation rates by children decline sharply with rising per
capita GNP.
The overwhelming majority of child laborers toiling in poor
countries work in sectors far removed from the global economy.
More than 80 percent work without pay, usually for their
family, and typically on subsistence farming. I notice we don't
have any representative from a rural farming area, where most
poor people live in the world, and most child laborers toil.
Most others work for small-scale domestic enterprises,
typically nontraded services, such as shoe-shining, newspaper
delivery, and domestic service.
So-called sweatshop conditions persist in poor countries
today, not because of globalization, which is a relatively new
phenomenon, but because of poverty, poverty perpetuated by
their own governments' failed policies of protectionism,
inflation, corruption, hostility to foreign investment, and
lack of legally defined property rights. Globalization is not
the cause of bad working conditions, but the best hope for
improving them.
Withholding trade benefits because of alleged sweatshops
would, in effect, punish poor countries for being poor. Trade
sanctions would eliminate the very export-oriented jobs that
are pulling standards upwards, forcing workers into informal
domestic sectors, where wages and working conditions and labor-
rights protections are worse. Lower wages paid to parents would
make it more difficult for families on marginal incomes to keep
their children in school and out of factories or fields.
If Members of Congress want to encourage higher labor
standards abroad, they should support free trade and investment
flows so that less-developed countries can grow more rapidly
and make more progress against poverty. Congress should seek a
more robust International Labor Organization that could
systematically monitor and report on enforcement of labor
rights in member countries. Civil-society organizations can
wage campaigns of education and put a spotlights on abusive
situations, while importers can cater to consumer preferences
for higher standards through labeling and other promotions.
If members of this committee want to see fewer sweatshops
and child workers in the world--and I believe you do--then I
recommend you support more open trade and investment ties with
workers in developing countries.
Thank you very much, and I look forward to your questions.
[The prepared statement of Mr. Griswold follows:]
Prepared Statement of Daniel T. Griswold, Director, Center for Trade
Policy Studies, The Cato Institute
Mr. Chairman and members of the Subcommittee, thank you for
inviting the Cato Institute to testify today at this hearing on U.S.
trade policy and global labor standards. My name is Dan Griswold, and I
am Director of the Institute's Center for Trade Policy Studies.
The Cato Institute is a non-profit, non-partisan, voluntarily
funded education institution. Through research and public events, we
have worked for three decades now to broaden the parameters of public
policy debate to allow consideration of the traditional American
principles of limited government, individual liberty, free markets and
peace among nations.
The constituents you represent have no reason to fear America's
growing trade with people around the world, including trade with
workers in developing countries. Expanding trade with developing
countries not only promotes more U.S. exports, but just as importantly
it provides a wider array of affordable products for American
consumers--such as shoes, clothing, toys, and sporting goods. Tens of
millions of American families benefit from more vigorous price
competition in goods that make our lives better everyday at home and
the office. Lower prices and more choice translate directly into higher
real compensation and living standards for American workers.
There Is No ``Race to the Bottom''
American workers are not pitted in zero-sum competition with
workers in poor countries. There is no global ``race to the bottom'' on
labor standards. Through specialization, global incomes and working
conditions can rise for workers in all countries that participate in
the global economy. American workers can compete profitably in world
markets because we are so much more productive. Because of our
education, infrastructure, efficient domestic markets, the rule of law,
political stability, and a generally open economy, American workers
compete and prosper in a broad range of sectors. As our country has
become more globalized in the past 25 years, American workers and their
families have enjoyed significant increases in real incomes,
compensation, and wealth.
Nor has trade with developing countries undermined America's
manufacturing base. According to the latest figures from the Federal
Reserve Board, the output of America's factories in 2006 was more than
50 percent higher than in the early 1990s before NAFTA and the World
Trade Organization came into being. American factories are producing
more aircraft and pharmaceuticals, more sophisticated machinery and
semiconductors, more chemicals and even more passenger vehicles and
parts than 15 years ago. It is true that output of clothing, shoes and
other low-tech goods has been declining, but those are not the
industries of the future for the world's most sophisticated economy.
U.S. factories can produce more with fewer workers because
manufacturing productivity has been growing so rapidly.
If there were a ``race to the bottom,'' then the lower wages and
labor standards in less developed countries should be attracting large
shares of global investment. Of course, developing countries attract
foreign investment in those sectors in which they enjoy a comparative
advantage, such as light manufacturing, but in fact, the large majority
of manufacturing foreign direct investment (FDI) flows between rich
countries. \1\
---------------------------------------------------------------------------
\1\ For a more detailed critique of the ``race to the bottom''
thesis, see Daniel Griswold, ``Trade, Labor, and the Environment: How
Blue and Green Sanctions Threaten Higher Standards,'' Cato Trade Policy
Analysis no. 15, August 2, 2001.
---------------------------------------------------------------------------
When U.S. multinational companies look to invest abroad, their
primary motivation is not a search for low wages and low standards. Far
more important than lower costs are access to wealthy consumers, a
skilled work force, modern infrastructure, rule of law, political
stability, and freedom to trade and repatriate profits. That is why
most outward U.S. FDI flows to other high-income, high standard
countries. Between 2003 and 2005, more than 80 percent of U.S. direct
manufacturing abroad flowed to the European Union, Canada, Japan, South
Korea, Taiwan, and Singapore. \2\
---------------------------------------------------------------------------
\2\ U.S. Department of Commerce, Survey of Current Business, Bureau
of Economic Analysis, September 2006.
---------------------------------------------------------------------------
Openness to trade and investment leads to faster growth, which
leads to higher wages and labor standards, including so-called core
worker rights. That is why the world's most developed economies, which
account for most of the world's trade and attract most of its foreign
direct investment, also pay the highest wages, and maintain the highest
labor standards related to freedom of association, discrimination,
forced labor, and child labor.
Trade and Globalization Are Raising Labor Standards in Developing
Countries
Trade and globalization are lifting wages and working conditions
for hundreds of millions of people in developing countries. The pay and
conditions offered in foreign-owned factories are almost always far
higher than those offered in the domestic economy. In fact, working for
multinational companies that export are almost invariably the best jobs
available in poor countries. Those jobs offer poor workers, especially
young women, their best opportunity at financial independence and the
simple pleasures and dignities of life we take for granted.
For example, apparel jobs are among the lowest paying manufacturing
jobs in our country, but they are among the best paying in poor
countries. A recent study from San Jose University found that the
apparel industry actually pays its foreign workers well enough for them
to rise above the poverty line in the countries where they invest. In
Honduras, for example, where college protestors have targeted its
alleged ``sweatshops,'' the average apparel worker earns $13 per day,
compared to the $2 a day or less earned by 44 percent of the country's
population. \3\
---------------------------------------------------------------------------
\3\ Benjamin Powell and David Skarbek, ``Sweatshops and Third World
Living Standards: Are the Jobs Worth the Sweat?'' Journal of Labor
Research, 2006, Volume 27, Issue 2, pp. 263-274.
---------------------------------------------------------------------------
Rising levels of global trade have lifted hundreds of millions of
people out of the worst kind of poverty and working conditions.
According to the World Bank, the share of the world's population living
in absolute poverty, defined as an income equivalent to one U.S. dollar
per day or less, has been cut in half since 1981, from 40.4 percent to
19.4 percent. \4\ Poverty has fallen the most rapidly in those areas of
the world that have globalized the most rapidly, especially China. It
has fallen the least or actually increased in those regions that are
the least touched by globalization, in particular sub-Saharan Africa.
---------------------------------------------------------------------------
\4\ World Bank, World Development Indicators, 2006, available at
devdata.worldbank.org/wdi2006/contents/Section2.htm.
---------------------------------------------------------------------------
Openness to trade and the growth it brings exert a positive impact
on the welfare of children in less developed countries by reducing
rates of child labor. The International Labor Organization recently
reported that the number of children in the work force rather than in
school worldwide has dropped by 11 percent since its last report in
2002, to about 200 million. The number working in the most hazardous
jobs has dropped even more steeply, by 26 percent. \5\
---------------------------------------------------------------------------
\5\ International Labor Organization, ``The End of Child Labor:
Within Reach,'' Geneva, 2006.
---------------------------------------------------------------------------
Globalization is a major reason for the positive trend in child
labor. As household incomes rise in developing countries, especially
wages paid to adult females, fewer families face the economic necessity
of sending their children to work. Studies confirm that labor force
participation rates by children aged 10 to 14 decline significantly
with rising GNP per capita. \6\
---------------------------------------------------------------------------
\6\ Keith E. Maskus, ``Should Core Labor Standards Be Imposed
Through International Trade Policy?'' Policy Research Working paper no.
1817, The World Bank, August 1997, p. 14.
---------------------------------------------------------------------------
The overwhelming majority of child laborers toiling in poor
countries work in sectors far removed from the global economy. More
than 80 percent work without pay, usually for their parents or other
family members and typically in subsistence farming. \7\ Most other
child laborers work for small-scale domestic enterprises, typically
non-traded services such as shoe shining, newspaper delivery, and
domestic service. \8\ A report by the U.S. Department of Labor found,
``Only a very small percentage of all child workers, probably less than
5 percent, are employed in export industries in manufacturing and
mining. And they are not commonly found in large enterprises; but
rather in small and medium-sized firms and in neighborhood and home
settings.'' \9\
---------------------------------------------------------------------------
\7\ ILO, p. 8
\8\ ``Breaking the Labor-Trade Deadlock,'' Carnegie Endowment for
International Peace, Inter-American Dialogue, Working Papers 17,
February 2001, p. 17.
\9\ U.S. Department of Labor, ``By the Sweat & Toil of Children
(Volume I): The Use of Child Labor in U.S. Manufactured and Mined
Imports,'' 1994, p. 2.
---------------------------------------------------------------------------
Parents in poor countries do not love their children any less than
we love our own. When they succeed in rising above a subsistence
income, the first thing they typically do is remove their children from
working on the farm, domestic service, or factory and enroll them in
school. By raising incomes in poor countries, free trade and
globalization have helped to pull millions of kids out of the work
force and put them in school where they belong.
In Central America, trade liberalization and other reforms of the
past two decades have spurred not only growth in incomes but also
measurable social progress. According to the World Bank, literacy rates
for men and women 15 and older have risen significantly in every one of
the six DR-CAFTA countries since 1980. In fact, between 1980 and 2001,
the average literacy rate in the region has increased from 67 percent
to above 80 percent. At the same time, the percentage of children aged
10 to 14 who are in the work force has been steadily declining in all
six countries. The average share of children in the labor force across
the six countries has dropped from 17.4 percent in 1980 to 10.0 percent
in 2002. \10\ Expanding trade with the United States will likely
accelerate those positive trends.
---------------------------------------------------------------------------
\10\ The World Bank, World Development Indicators.
---------------------------------------------------------------------------
It is certainly true that working conditions in less developed
countries can strike Western observers as unacceptable if not
appalling. But two points need to be considered. First, wages and
working conditions are likely to be even worse in non-trade-oriented
sectors, such as services and subsistence agriculture, sectors that
have been largely untouched by globalization. Second, poor working
conditions in those countries are not a new development but have always
been a chronic fact of life. ``Sweatshop'' conditions persist today not
because of globalization, a relatively new phenomenon, but because of
previous decades of protectionism, inflation, economic mismanagement,
hostility to foreign investment, and a lack of legally defined property
rights. Globalization is not the cause of bad working conditions but
the best hope for improving them.
Punitive Tariffs Aimed At Sweatshops Will Only Hurt the People We Are
Trying to Help
Perversely, withholding trade benefits because of allegedly low
standards would in effect punish those countries for being poor. It
would deprive them of the expanded market access that offers the best
hope to raise incomes and standards. The use of trade sanctions would
target the very export industries that typically pay the highest wages
and maintain highest standards in those countries.
The effect of sanctions would be to shrink the more globally
integrated sectors that are pulling standards upwards, forcing workers
into informal, domestic sectors where wages, working conditions, and
labor-rights protections are much lower. Lower wages paid to parents
would make it more difficult for families on marginal incomes to keep
children in school and out of fields or factories. ``Tough'' sanctions
to allegedly enforce higher standards would be tough only on the
poorest people in the world.
Demanding that poor countries eliminate child labor under threat of
trade sanctions can easily backfire. In 1993, Congress seemed poised to
pass the U.S. Child Labor Deterrence Act, which would have banned
imports of textiles made by child workers. Anticipating its passage,
the Bangladeshi textile industry dismissed 50,000 children from
factories. Most of those children did not end up in school but instead
fell into prostitution and other ``occupations'' far more degrading
than weaving cloth in a factory. \11\
---------------------------------------------------------------------------
\11\ Jagdish Bhagwati, In Defense of Globalization (New York:
Oxford University Press, 2004), p. 71.
---------------------------------------------------------------------------
America's trade policy is already biased against workers in poor
countries without making it more so through ``anti-sweatshop''
legislation. The United States and other rich countries currently
impose their highest trade barriers against products of most importance
to poor countries: clothing, textiles, and agricultural products. In
fact, our average tariff imposed on imports from poor countries is
about four times higher than those imposed on imports from other rich
countries.
Our regressive tariff system imposes punitive tariffs on workers in
some of the poorest countries in the world. According to the
Progressive Policy Institute, the U.S. Government collects more tariff
revenue on the $2 billion in mostly hats and t-shirts we import from
Bangladesh in a year than on the $30 billion in planes, computers,
medicines and wine we import from France. Imports from Cambodia face an
average tariff of 16, ten times higher than the average 1.6 percent we
impose on all imports. \12\
---------------------------------------------------------------------------
\12\ Edward Gresser, Testimony before the Senate Subcommittee on
International Trade, October 27, 2005.
---------------------------------------------------------------------------
Our trade policies also hurt the world's poorest farmers and their
children. A 2002 study for the National Bureau of Economic Research
found that higher rice prices in Vietnam were associated with
significant declines in child labor rates. Specifically, a 30 percent
increase in rice prices accounted for a decrease of children in the
work force of 1 million, or 9 percent. The drop was most pronounced
among girls aged 14 and 15. As the incomes of rice-growing families
rose, they chose to use their additional resources to remove their
children from work in the field and send them to school. \13\ If U.S.
rice subsidies are indeed depressing global rice prices, as evidence
confirms, then those same programs are plausibly responsible for
keeping tens of thousands of young girls in Vietnam and other poor
countries in the labor force rather than school.
---------------------------------------------------------------------------
\13\ Eric Edmonds and Nina Pavcnik, ``Does Globalization Increase
Child Labor? Evidence from Vietnam,'' NBER Working Paper no. 8760, July
2002.)
---------------------------------------------------------------------------
Attempts to ``enforce'' labor and environmental standards through
trade sanctions are not only unnecessary but also counterproductive.
Sanctions deprive poor countries of the international trade and
investment opportunities they need to raise overall living standards.
Sanctions tend to strike at the very export industries in less
developed countries that typically pay the highest wages and follow the
highest standards, forcing production and employment into less-
globalized sectors where wages and standards are almost always lower.
The end result of sanctions is the very opposite of what their
advocates claim to seek.
If Members of Congress want to encourage higher labor standards
abroad, they should support policies that encourage free trade and
investment flows so that less developed nations can grow more rapidly.
As a complementary policy, Congress could seek a more robust
International Labor Organization that could systematically monitor and
report on enforcement of labor rights in member countries. Meanwhile,
civil society organizations are free to raise public awareness through
campaigns and boycotts, while importers can cater to consumer
preferences for higher standards through labeling and other promotions.
The demand for trade sanctions as a tool to enforce labor standards
confronts Americans with a false choice. In reality, the best policy
for promoting economic growth at home and abroad--an economy open to
global trade and investment--is also the best policy for promoting
higher labor standards.
Senator Dorgan. Mr. Griswold, thank you very much.
First, let me ask you, Mr. Griswold--you have a couple of
people sitting behind you that lost their jobs because
businesses now ship Pennsylvania furniture to China. You
indicated that that, generally, is not a search for cheaper
labor. Do you really believe that La-Z-Boy didn't close down a
Pennsylvania plant and ship those jobs to China in order to
create a piece of furniture and ship the furniture back here
for sale. Do you really believe that they did that for reasons
other than cheap labor?
Mr. Griswold. No, I think labor costs were an important
driver there. My point is, that isn't the primary driver for
most investment decisions made by U.S. companies. Eighty
percent or more of our investment goes to Europe, Japan and
Australia and countries like that where, if anything, the labor
standards are higher. I'm just saying it's one factor of many.
There are some industries where labor is particularly
important, labor-intensive industries--the apparel industry,
the footwear industry. Obviously, those are going to go to
less-developed countries. It's all about comparative advantage.
Their comparative advantage is lower labor cost, and that is
important in labor-intensive industries.
Senator Dorgan. I--you know, I wonder if Ricardo wouldn't
be rolling in his grave at your definition of ``comparative
advantage.'' The doctrine of comparative advantage had nothing
to do with all of this. That was country to country, before
corporations existed, and the doctrine of comparative advantage
has nothing to do with what I call a--an advantage created by
the Chinese, for example, for their workers. I'll give you the
names of Chinese workers who are in prison because they wanted
to organize workers. I can give you examples of the plants in
China where they're having kids work. That's not a comparative
advantage, some sort of natural comparative advantage, that is
a political advantage that is created by a Chinese Government
that doesn't enforce labor laws and environmental laws and so
on.
But let me try to understand where we are on this. I think
you're saying--and I'll give you a chance to respond to this--I
think you're saying, and some others have said, ``Look, things
are going pretty well, dramatic improvement, fewer kids
working, fewer sweatshops, and so on. The market system will
deal with this.''
Mr. Kernaghan, you're saying, ``That's not true at all.
There are substantial sweatshop abuses. In fact, the market
system probably won't even detect them. And, to the extent the
market system is at work here, the companies try to get the
cheapest goods into this marketplace and have a competitive
advantage by employing people in sweatshops.''
So, reconcile that. Mr. Kernaghan, you first.
Mr. Kernaghan. Mr. Chairman, this speaks a thousand words,
that the U.S. corporations would never allow voluntary codes of
conduct and private monitoring schemes to defend their
intellectual property rights or their labels or their
trademarks. In other words, they want laws, enforceable laws,
backed up by sanctions. It's only when you say to the
companies, ``Excuse me, but can we have similar laws to protect
the rights of the 14-year-old girls in Bangladesh who made this
garment?'' And the companies frequently say, ``No, that would
be an impediment to free trade.'' So, there are laws to protect
the label and the trademark, but no laws to protect the human
being. This is something companies themselves would never
accept.
We did reach a 232-and-a-half-billion dollar trade deficit
with China, just this year. The figures just came out. Foreign
investment's pouring into China, and the companies themselves
are saying, ``U.S. wages and benefits are no longer competitive
in the global economy.'' And this is Wall Street talking.
We see what's happening. We see the conditions in China.
The workers at the Kaisi factory making that furniture were
getting 32 cents an hour, and being maimed and cheated of their
wages. And, by the way, after we put out our report, the
factory agreed that they were violating the law. I don't know
why they did it, but they came out and told Associated Press
that, ``Yes, we have been violating the laws, but we're going
to do our best to clean up the factory.''
Right now, it's a race to the bottom, where workers are
pitted against each other over who will take the lowest wages,
the least benefits, and the most miserable living and working
conditions. This is what workers are experiencing. They need
the right to organize. They don't need patronizing. They need
the right to organize to fight for their legal rights.
Senator Dorgan. All right. Now, Mr. Griswold, I think what
you have said, generally, is, ``Third World workers are better
off--even with sweatshops, because they have a job--than not
having a job.'' And I guess I'd ask you to answer the question
that might be a reflection of the impact on Third World
workers: What about the impact on American workers? Because
we're talking, here, about policy in one of the most advanced
countries in the world. Alan Blinder, Former Vice Chairman of
the Federal Reserve Board, has written that there are about 42
to 56 million American jobs that are so-called tradable or
outsourceable. Not all of them will be outsourced, he says, but
even those that remain will have downward pressure on their
income, because of the global economy.
So, what about that group of Americans? What about American
policy, when you talk about Third World workers being
advantaged by at least having a job, even if it's in a
sweatshop?
Mr. Griswold. Well, first, I think there's a huge amount of
evidence that American workers are better off today than we
were 10, 20, 30 years ago, by virtually every measure. We are
living better. We are living longer. Our wealth is greater. Our
disposable income is greater. And globalization has played a
role in that.
Yes, some workers are put out of work because of trade. And
there are some in this room. Three-hundred thousand Americans
line up every week for unemployment insurance. The churn in the
job market is a natural, healthy feature of a dynamic market
economy like ours. Far more Americans are put out of work each
year because of technology. You know, Kodak has laid off 30,000
workers because of digital cameras that you and I own. Are we
going to tax digital cameras to save those jobs? No. We're
going to let the marketplace sort it out. There's things we can
do to help people retrain, to offer unemployment insurance, to
soften the transition. But to throw up walls and say, ``We're
going to stop change from happening,'' is not the right policy.
It's going to leave America a poorer, more isolated country.
Senator Dorgan. I'm wondering, though: My impression of
this economy is that it has produced about 5 and a half million
people, added to the poverty rolls in the last 6 or 7 years.
Wages and salaries are the method by which most workers get
their income; they are the lowest percent of GDP since they
started keeping score in 1947. And so, I always hear these
things about averages. And you would, perhaps, say ``on
average,'' are the numbers. I think of the story about nine
guys sitting in a bar, nine working guys sitting in a bar, and
Bill Gates walks in. Now, on average, all ten are wealthy.
Nothing has changed in the lives of the other nine; it's just,
on average, all ten are wealthy.
We'll have a longer discussion, perhaps, about the plight
of the American worker trying to face competition from low-wage
workers elsewhere and from companies that want to access low-
wage workers, to produce a product to ship back to this
country. For the purpose of providing a less-expensive product
for consumers? Maybe. But, more importantly, for the purpose of
expanding profits. And that's the kind of economy we have. The
question that I have is--having built, over a century, basic
standards that don't exist in many other parts of the world--
fair labor standards, minimum wage, safe workplace, child
labor, and so on--are we seeing those standards diminished by
virtue of the so-called global economy and the presence of
sweatshops? I think the compelling evidence is yes.
I'll give you a chance to answer that in just a moment, if
you'll hold that thought.
Mr. Socolow, how extensive are the States involved in this?
You've mentioned your Governor and others. It gives me some
good feelings to understand that you are developing policies
that really care about conditions under which these products
are produced. So, how extensive is it?
Mr. Socolow. Well, right now, we'll be starting our first
meeting with just three States, although we are--we appreciate
this opportunity to expand our outreach to all of the
Governors. And we are actively seeking other State governments,
as well as local governments. You know, cities, by virtue of
having police forces and other needs, buy a lot of apparel, as
well as State governments, by virtue of, you know, all of our
corrections institutions and others. So, there's a lot--there's
a big market, that could be as big as a billion dollars
annually, of apparel procurement, just by government.
Senator Dorgan. And your three States are New Jersey,
Maine----
Mr. Socolow. New Jersey, Maine, and Pennsylvania. The--
Governor Baldacci, of Maine, Governor Rendell, of Pennsylvania,
and, of course, my own Governor, Governor Corzine, your former
colleague here in the Senate, who are leading the way on this.
And so, we're hopeful that we can really create a consortium
that includes a number of different governments, so we get as
many of them as possible, all agreeing to create a market niche
for buying fairly produced domestic apparel and linens.
Senator Dorgan. Mr. English, Mr. Griswold calls the
legislation a ``billy club,'' I think. Respond to that. You
apparently support the legislation that I and Lindsey Graham
have introduced. He says it's a ``billy club.'' You respond to
that, if you would, and then I'll ask Mr. Griswold to respond.
Mr. English. Well, I think, if you look back at the
development of labor laws in this country, we created labor
laws to help allow workers to organize and bargain
collectively. We didn't go to corporations and say, ``Be nice,
and treat people nice.'' We created a ``billy club,'' if you
will. We created a measure of compulsion, because we felt
that--the people that passed the Wagner Act felt that
compulsion was necessary. And I think any fair evaluation of
the global trading system and of the tremendous incentive of
companies to exploit the poverty around the world, would lead
one to the conclusion that we need a measure of compulsion
here, as well. And I think that's what this piece of
legislation does.
Senator Dorgan. Mr. Griswold, in the 1930s, FDR pushed the
Fair Labor Standards Act. We have since passed child labor
laws, safe workplaces, and so on. My guess is--I shouldn't
ascribe this to it--my guess is that you might have come to
testify against all of those. Certainly, American business, in
most cases, took positions against all of those kinds of
initiatives that raised standards in this country. I think,
looking back, in most cases, they're pretty generally accepted
to have done something important for America. But would you--
looking back at these things that we have done to raise
American standards, would you think you would have supported
them as they were proposed over the period of time, or would
you have come in to say, ``You know what? Let the market system
decide that. This is the `billy club' of the Federal Government
trying to tell a factory, `Here are the records you have to
keep, here is where you have to pay overtime,' '' and so on?
Give me where that extension of your philosophy might lead.
Mr. Griswold. I don't know how I would have testified back
then. It was a different time, a different era. I do know that
our overall living standards have risen, not because of
legislation Congress has passed, but because of rising
productivity in our economy, because we have the resources. You
can legislate all you want. India has labor laws that are
comparable to ours, in terms of controlling the ability of
employers to fire workers, and setting minimum wages, and all
that; and yet, they're still a very poor country. And so, laws
themselves do not lift people out of poverty; they're lifted
out of poverty by increasing production and wealth.
The other difference is, we didn't have some foreign power
waving that billy club over us. It was a decision we made about
our own laws. Here, you are trying to dictate and legislate
conditions in other countries. And I think that creates
resentment at a time when American policies are creating enough
resentment around the world the way it is.
Senator Dorgan. The legislation is not an attempt to do
anything to other countries; it is an attempt to say to
companies that want to produce in foreign sweatshops, ``You
can't sell that product in America, because it doesn't meet the
basic standards of fairness and decency and humanity that we
have spent a century building.'' So, we're not in the business
of enforcing something in foreign countries. We are talking
about the conditions under which those products could be sold
to the United States.
I might mention one other issue. Recently, I guess it's
been about a year or 2 now, the President of the Philippines
announced that she thought there should be an increase in the
minimum wage in the Philippines. And a well-known American
corporation that is doing business in the Philippines by hiring
people in the Philippines immediately, the very next day, said,
``You increase the minimum wage in the Philippines, we are
gone.'' My point is, the same naysayers in this country, over a
century, when we built the standards--and, by most accounts,
have dramatically improved standards of work in this country--
the same naysayers who opposed that every step of the way do
the same with respect to conditions in China, conditions in the
Philippines and elsewhere. By and large, I think that they are
there to access cheap labor. And anything that would in any way
dramatically increase, or incrementally increase, labor costs
abroad, they will resist. Do you disagree with that?
Mr. Griswold. I guess we disagree on how humans progress. I
think it's through--largely through market and rising creation
of wealth, and that allows these standards to rise. But let's
just look at the example of China. There are 400 million fewer
people living in absolute poverty in China today than 25 years
ago. Is it because of legislation that this committee, or
Congress, passed? Is it because of legislative labor laws
passed by the Chinese Government? No. It's because of rising
trade, globalization, and markets being allowed to work. Yes,
you need a framework of the rule of law. Yes, there needs to be
laws against abusive child labor and slave labor and that sort
of thing. I'm all for those. But I'm afraid that some of the
ideas being talked about in Congress would interfere with those
forces that are bringing about these advantages that I talked
about in declining global poverty and child labor.
Senator Dorgan. At least a part of the experience you
describe in China, with about--is it 1.3 billion people?--so
400 million would leave another 900 million in a different
situation--at least part of their progress, I suppose, is jobs
that are producing Huffy bicycles, Radio Flyer little red
wagons, Pennsylvania House furniture, Levis, Fruit of the Loom,
among many others. And I could go on for about 20 minutes. It
might well be nice that the Chinese have those jobs. It would
be much nicer, in my judgment, if those jobs were in Trenton,
New Jersey, and Philadelphia, and places in this country.
However, having said all that, that's a different
discussion--whether the global economy, which produced, last
year, an $832 billion trade deficit with this country, is
beneficial to this country. I think free trade is not much more
than a chant. I think fair trade is an essential ingredient for
the way we should view trade agreements. Trade agreements
should be mutually beneficial between us and those with whom we
have agreements. And, in my judgment, that has not been the
case.
Let me ask a couple of additional questions, getting back
to the basic issue of sweatshops.
Mr. Kernaghan, you support the legislation that we have
introduced. Mr. Griswold--and I think some others, and my
colleague Senator DeMint--have concern about it. Senator DeMint
talks about the liability side of it. Mr. Griswold talks about
the ``billy club'' side. You describe it differently. You
describe it as giving rights to American business that are
being injured by this practice. Go through that again for me,
if you would.
Mr. Kernaghan. Companies in the United States that are
trying to do the right thing and live up to the law are being
undercut by companies which are blatantly violating the law.
So, for example, we have workman's compensation in New York
State. The workers at the Kaisi factory in China had no
workman's compensation, even though they were supposed to have
it by law. We have a minimum wage. They have a minimum wage in
China, but the minimum wage is violated. They have overtime
laws. Overtime laws are violated. They have right-to-organize
laws. They're violated. Companies that want to do the right
thing in the global economy are having their legs cut out from
under them by unscrupulous companies and--and countries, for
that matter--that want to abuse worker rights.
Having gone--probably have spoken to more workers in the
world than anybody I've met--workers don't want to work in a
sweatshop. No worker has ever said to me, ``Oh, we need more
sweatshops in our country. This is exactly what we need.''
Every single worker wants a job. Every person wants a job. But
there's an--even if they don't know the laws of the land, they
know that their legal rights--they know that there's basic
human rights that should be respected. And that's what they
want. They want their legal rights respected. And yes, they
want the right to organize so that they can stand up and
collectively bargain and have some sort of a democratic voice
on the shop floor.
I think that workers--frankly, the hundreds of millions of
workers around the world, when they hear of this legislation,
will endorse it, because this is a ticket for them to raise
worker-rights standards in their country, and legal standards
in their country, which will then lift tens and tens of
millions of workers out of misery, and at least into poverty.
And I think it would be the single most important act that
could be taken to end this race to the bottom and put a floor
on it, that there are certain standards beneath which you
cannot go in the global economy.
Senator Dorgan. Mr. William Jones, who is the Chairman of
Cummins-Allison Corporation in Chicago, was to be a witness
here today. He was not able to be here, because of travel
problems. But I want to read three sentences from his
testimony.
This is a CEO of a significant corporation: ``Sweatshops
have sucked much of the life out of remaining labor-intensive
sectors of American manufacturing, which remain, far and away,
the best hope for the middle class and for our own poor. If
unchecked, these trends will threaten much of our remaining
domestic manufacturing base, a manufacturing base which
underpins our national defense and prosperity. Ultimately, the
demise of so much manufacturing will undermine the entire
American economy, which is the engine of world growth.''
Let me thank all four of the witnesses today for being
here. I'd be happy to entertain any additional thoughts you
have before we close this hearing.
This is the first hearing on legislation of this type. I
recognize that the legislation will be resisted by some,
supported by others, including support from people in the
business community who believe they are disadvantaged by being
told they have to compete with others that are willing to hire
children in conditions of--sweatshop conditions abroad in order
to drive down the price of their product here at home. I
recognize that this can be controversial.
I don't think there's a disagreement among us that trade
can be beneficial. I believe in trade. I believe in plenty of
trade. But I also believe in rules of trade that are fair to
us, and I think that has been sadly lacking in our trade
policy.
Mr. Griswold, you and I have previously discussed all of
these issues, and we have a disagreement about them. I think we
want the same thing for our country. We just have different
views of how to achieve those things.
Mr. Socolow, you have described to me something I wasn't
aware of, and that is an effort by several States, which I both
commend and think makes a great deal of sense.
Mr. English, your discussion of the steelworkers who lost
their jobs and the Pennsylvania House furniture is another
example of what is happening with the inevitable pull of good-
paying jobs, which has expanded the middle class in this
country, to get those jobs moving to parts of the world where
you can pay a fraction of the price that you now pay in this
country.
And, Mr. Kernaghan, your organization has done a lot of
work over a long period of time, and I know that, without your
work, much of the disclosure that has existed would still be
undisclosed, and we would still have abuses in those areas
where you have described them and where you have been
successful in trying to shut them down.
So, I want to thank all of you. Anybody have any final
comments you wish to make today?
Mr. Griswold?
Mr. Griswold. Just two quick points, Senator.
Senator Dorgan. Yes.
Mr. Griswold. First, this isn't a choice of whether we have
a manufacturing base in this country or not, it's about what we
manufacture. And I will be the first to point out that we're
producing less furniture and fewer shoes and T-shirts than we
were, and that they're producing more in China. But our overall
manufacturing output is up 50 percent. Our manufacturing
capacity has continued to increase because of rising
productivity. We are producing more semiconductors, chemicals,
sophisticated machinery, pharmaceuticals, even passenger
vehicles and parts. This is trade in action. We're specializing
in the higher-end parts.
Let me make one other point. This is also a consumer issue.
You know, my friend to the right here, he pointed out that the
State of New Jersey is happy to pay a 20-percent premium. And
that's fine. The State of New Jersey can just pass the costs on
to the taxpayers, and they may not even know. But if you're a
middle-class or poor family in North Dakota, a 20-percent-
higher bill for your expenses is real money, and that
translates into lower real wages and a lower standard of
living.
Senator Dorgan. Since you raised it, Mr. Griswold, let me
ask you, as a consumer: if you knew that a product that was
coming from the work of an 11-year-old working 11 to 14 hours a
day, 7 days a week, in a sweatshop--if you knew that, would you
prefer to pay a premium for a product--identical product that
was produced in circumstances that were not coming from a
sweatshop from an 11-year-old child?
Mr. Griswold. Well----
Senator Dorgan. Would you make that choice, as a consumer?
Mr. Griswold. I would ask myself, Would that child--would
her family be better off if I did not buy that product? And I'm
not sure. You know, we had an experience in the early 1990s
when Congress was considering quite stringent legislation aimed
at child labor abroad. In Bangladesh, they laid off 50,000
child workers, rapidly, to avoid coming under that law. It
never became law, but just the threat of it displaced 50,000
workers. The ILO, UNICEF, and Bangladeshi labor activists went
and investigated, and they found that most of those 50,000 kids
did not go to school, they either were unemployed and their
families were worse off, or many of them ended up in
occupations that were even less acceptable than a garment
factory--stone crushing, street hustling, some of them even
ended up in prostitution. So, I buy products from poor workers
in poor countries, and I make no apologies.
Senator Dorgan. There's been a separate study since that
time that debunks the study you described, so we can put both
studies in the record. *
---------------------------------------------------------------------------
* The information referred to has been retained in Committee files
and can be found at http://www.unicef.org/sowc97/download/sow1of2.pdf.
and http://www.ilo.org/public/english/standards/ipec/publ/download/
2001_syn_bgmea_en.pdf.
---------------------------------------------------------------------------
Senator Dorgan. But I think--your answer, kind of, stuns
me, because your answer suggests that an 11-year-old, and the
family of an 11-year-old, would be better off having that 11-
year-old in a sweatshop, working 11 to 14 hours a day, 7 days a
week, and, therefore, you would not have any moral objections
to either buying the product or suggesting that the presence of
that sweatshop is not in any way objectionable to you. I----
Mr. Griswold. It is.
Senator Dorgan.--I find it personally and morally
objectionable that anyone would put children in these
circumstances. Are their parents better off having them earn an
income? Well, I don't know. But I--but is this about money to
parents while we abuse children? In my judgment, there's a
pretty clear moral demarcation here where you and I differ.
Mr. Griswold. It's about survival, for many of these
families, unfortunately,. That's the moral objection. Why are
so many people living in poverty? It's because of the failed
policies of their governments--protectionism, corruption----
Senator Dorgan. But----
Mr. Griswold.--the long list.
Senator Dorgan. But abusing children for the purpose of
survival is--I mean, that's the very purpose of this hearing, I
guess, and I think we've penetrated to the roots of some of the
disagreement.
Mr. Kernaghan?
Mr. Kernaghan. Senator, if I may, when the children were
removed from the garment factories in Bangladesh, the industry,
since that time, has grown from 800,000 workers to 2.2 million
workers, because the factories had to hire their older brothers
and sisters and the parents, and couldn't hire children
anymore. So, it was a victory. They didn't need children. They
wanted them because you could pay them less and you can exploit
them more. The industry has boomed. But it's boomed now with
older children and--their older brothers and sisters.
I'd also like to point out that we run a $37-billion trade
deficit with China on advanced technology goods, that five out
of six ships that come from China to the United States return
to China empty, and that one ship that goes back off and
carries trash and garbage to be recycled. We have a big
problem. It's not just in manufacturing. It's also in advanced
technology and engineering and so on.
Senator Dorgan. Mr. English?
Mr. English. I would point one other evil out about child
labor. When that child is in the factory, working to try to
help his family make a living, that child is not in school. And
that means that we continue the cycle of poverty that exists as
a result of that. We've got to break the cycle. And I think
this piece of legislation is a good start in trying to break
that cycle, because it says to the world, ``We are not going to
allow sweatshop-made goods into this country, and we're not
going to allow it to be made here in this country, either.
We're going to stand up for the rights of workers around the
world.''
Senator Dorgan. Let me, just as a final point, say we don't
have to look abroad to find sweatshops. You can find them in
the history--the dark history of this country, and a century
and a half ago, you could find them in children going into coal
mines. And we've changed that. I mean, we, I think, have made
great progress. But when I hear, as I have, stories of very
young children working on the looms in carpet factories having
their fingers scarred by putting sulfur on the top of their
fingertips, setting them on fire to create burns to create
scars so that, as they use the needles with these rugs, they're
not going to stick themselves and hurt themselves and bleed on
the rugs--when I hear those kinds of stories, I ask myself,
Isn't that the sort of thing that we decided, as a country,
long, long ago, that we were not going to tolerate? Why should
we, as a global economy, tolerate it? We should not. The global
economy is simply a definition that has been created and
branded by some to suggest that we should accept that which we
long ago decided we would not tolerate.
The issue of sweatshops and the conditions under which
products are imported into this country is a very important
issue for this country. We've already decided that the product
of prison labor is unfair and should not come to this country.
You cannot go to a big-box retailer and buy a pair of tube
socks made in a foreign prison. It's illegal. The question is,
Should you be able to go to a big-box retailer, or to some
other store, and purchase those same products if they are made
under conditions of sweatshop labor in which children are
abused? The answer, in my judgment, should be no. And I believe
those companies in America who are having to compete with
companies that are importing the product from that circumstance
ought to have a remedy. And that would be a market remedy,
rather than a billy club, Mr. Griswold--a market remedy by
which other companies would begin to work to enforce this by
disclosing and exposing the unfair shipment of products from
sweatshop labor into our market.
This has been an interesting discussion. Mr. Griswold, I
assume we'll have you back, given the disagreement Senator
DeMint and I have about trade. We will have other trade
hearings because this is a very important issue. Yesterday's
$832-billion trade deficit demonstrates dramatic failure, in my
judgment, of our trade policy. So, we're going to have trade
hearings in this subcommittee, and my colleague and I will make
certain that, Mr. Griswold, you and others who take your
position will be invited. We think debate is good and important
in order to hear different viewpoints.
So, I want to thank all of the witnesses who have come
today and who have given us their evaluation of a very
important piece of legislation.
This hearing is adjourned.
[Whereupon, at 12 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
Mr. Chairman, thank you for calling this meeting. Although I have
just joined the Subcommittee on Interstate Commerce, Trade and Tourism
this year, the issue we discuss here today is by no means new to me.
The scourge of foreign sweatshops and its impact on U.S. workers is,
indeed, distressingly familiar to me as a Mainer and a long-time member
of the Senate Committee on Finance, which oversees trade policy.
Early in the twentieth century, the mills flanking the falls of the
Androscoggin River in my hometown of Lewiston-Auburn produced one
quarter of the Nation's textiles. Today, those mills--which supported
my family and thousands like it--are silent. A bellwether of what was
to befall other American manufacturing sectors, the U.S. textile
industry is nearly extinct--the domestic jobs it once supplied now
almost all overseas.
It would be one thing if so total a shift in production could be
attributed to honest means of securing a comparative advantage--if, for
example, foreign factories were more efficient or its workers more
skilled, both of which are demonstrably untrue. It is quite another,
however, where advantage is gained by market-distorting, immoral means
of reducing costs long outlawed and vigorously policed in the United
States.
That is why I was particularly troubled by reports that emerged
last May of labor abuses in Jordanian factories that made goods
destined for the U.S. market. These claims of forced labor and human
trafficking would be horrifying no matter where they took place--but in
this case, such inhumane practices were taking place in a country with
which the United States already had a Free Trade Agreement!
During its subsequent consideration of the Oman Free Trade
Agreement this past May, I was heartened to see the Senate Committee on
Finance fulfill its duty under the procedures set forth in the Trade
Promotion Authority to carefully consider each negotiated agreement, by
unanimously passing an amendment to the agreement that would deny its
benefits to goods made with the use of forced labor. Therefore, like
the other members of that committee, I was extremely disappointed to
find that the Administration has refused to reflect the Finance
Committee's amendment in the implementing legislation it later
officially submitted to Congress in June.
The unanimous will of that committee to improve the labor
provisions of the Oman FTA in light of nearly identical agreements'
obvious failure to adequately protect workers should not have been
dismissed so lightly. Lacking the necessary labor protections, such
agreements will put U.S. workers and businesses- which must adhere to
our robust labor laws--at risk from unfair competition by overseas
producers who willfully exploit workers in their facilities. It is
vital that we continue to seek such protections not only in all our
present and future trade agreements, but in our domestic laws as well.
That is why Senator Rockefeller and I introduced the Trade
Complaint and Litigation Accountability Improvement Measures Act--also
called the Trade CLAIM Act--in January of this year. That act would
give U.S. businesses and workers a greater say in whether, when, and
how U.S. trade rights are enforced by amending Section 301 of the Trade
Act of 1974--the statute setting forth general procedures for the
enforcement of U.S. trade rights--to limit the U.S. Trade
Representative's ability to decline an interested party's petition to
take formal action against unfair foreign trade practices, and make
those determinations reviewable by the U.S. Court of International
Trade.
With U.S. exporters supporting over 12 million jobs and paying an
average of 18 percent higher wages, the U.S. Government has an
obligation to create and consistently use enforcement mechanisms to
protect them from the unfair or underhanded trade practices of foreign
governments and businesses, especially those as vile as labor
exploitation.
Thank you.
______
Joint Prepared Statement of Bama Athreya and Nora Ferm,
International Labor Rights Fund (ILRF)
Introduction
The International Labor Rights Fund (ILRF) has since its inception
fought to end the scourge of sweatshops around the world. Over the past
two decades, we have witnessed the limitations of current legislative
and voluntary strategies. During this period, while we have observed
some gains for workers in some industries, we have also seen the much
more widescale flight of domestic production in virtually all sectors
to low-wage countries with unsafe and exploitative working conditions.
We are not an organization that opposes global trade, per se, but we
cannot ignore the fact that the flight of these industries is driven by
the ``race to the bottom.'' Multinational corporations seek out
production destinations where there is little or no regulation of labor
or environmental conditions; they find such destinations in the
developing world.
In this statement we seek to provide an assessment of anti-
sweatshop initiatives to date, to highlight the cut flower sector as an
example of the sweatshop problem in today's global economy, and to make
the case for why new and binding legislative efforts are needed to
regulate workers' rights in global supply chains.
History of ``CSR'' Initiatives
There have been numerous exposes of child labor, forced overtime,
and inhumane wages and working conditions in factories overseas
producing garments, shoes, and toys for the U.S. market. The typical
response of companies or industries exposed by the media is to adopt
and publicize voluntary codes of conduct as a non-binding promise to
consumers that the problems will be corrected. This is a device we see
used, for example, by Wal-Mart today to explain why binding regulations
are not needed to correct human rights abuses. Collectively the various
codes and monitoring initiatives that have emerged over the past two
decades are referred to under the broader rubric of ``Corporate Social
Responsibility,'' or CSR.
Interestingly enough, if we look back to the early history of the
codes of conduct trend, we find an excellent case for the need for U.S.
regulation to bind the behavior of US-based multinational corporations
overseas. In the 1970s, revelations of the involvement of International
Telephone and Telegraph and other U.S. corporations in the bloody coup
against the Allende government in Chile in 1973, and of huge bribes
paid by the Lockheed Corporation to Japanese political figures to gain
military contracts in 1975, led to a movement by non-governmental
organizations (NGO's) and governments of developing countries to demand
greater corporate accountability. In 1975, the United Nations created a
Commission on Transnational Corporations which set out to negotiate a
U.N. Code of Conduct on Transnational Corporations. However, during the
1980s, the U.N. Commission found it impossible to develop any
mechanisms to make this code relevant, or even to research the level of
compliance by companies or countries with the terms of the codes. By
the end of the decade, the Commission itself was virtually without
funds and unable to carry out even a fraction of its original mandate.
Thankfully at that time U.S. Congress did not leave the matter in
the hands of voluntary initiatives, but enacted strong Federal
legislation, the Foreign Corrupt Practices Act (FCPA). We will return
to a discussion of the FCPA later in this testimony.
We would like to mention two additional multilateral voluntary
initiatives and their weaknesses, in order to put to rest the notion
that human rights and labor standards can be safely trusted to
multilateral organizations or to voluntary changes in corporate
behavior. We have now had thirty years to witness the progress of such
initiatives and it should be clear that they have failed. In 1976, the
Organization of Economic Cooperation and Development (OECD) passed
guidelines on multinational corporations that, on paper, uphold the
basic core rights of workers. To date, while a number of complaints
have been brought, there has not been a single instance of actual
enforcement of the OECD code. In 1977, the International Labour
Organization (ILO) adopted a Tripartite Declaration of Principles
Concerning Multinational Enterprises and Social Policy, a code which
encompasses a broad range of rights and principles, and which includes
a detailed complaint procedure which allows for an ILO Standing
Committee on Multinational Enterprises to investigate a company's
practices. However, this code has no sanctions or other enforcement
mechanisms, and the Standing Committee has been unable even to launch
investigations. For example, in 1993 the committee received a request
to review labor practices at a PepsiCo bottling facility in Guatemala
following severe harassment and intimidation of trade union members
there. \1\ The employer representatives on the ILO Standing Committee
blocked the request and the case ended at that. These examples are,
arguably, the strongest and most developed of the CSR initiatives;
their limitations provide a compelling argument for the need for
legally binding and enforceable alternatives.
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\1\ Correspondence from the International Union of Food,
Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers'
Associations to the International Labor Rights Fund, on file at ILRF.
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Case Study: The Cut Flower Sector
What, exactly, is the problem? We will use a description of the cut
flower sector to illustrate conditions in industry after industry
producing goods for U.S. consumers today. The cut flower sector is far
from the most egregious of sectors in terms of labor rights violations;
it is precisely the fact that the violations we are about to describe
are so routine, so mundane, in so many sectors that make this an
appropriate illustrative case.
Consumers of cut flowers associate roses, daisies and other flowers
with beauty and romance. Unfortunately the reality for the workers who
produce those flowers is not so lovely. A mere 10 years ago, most of
the cut flowers retailed by U.S. florists were produced in the United
States. In a decade, thanks to the expansion of global trade agreements
and preferential access to the U.S. market, the flower industry has
changed entirely, consolidating distribution in the hands of a few very
powerful corporations and relocating most flower production onto
plantations in South America.
It is particularly appropriate that we focus on this industry
today, as Valentine's Day is the most important retail day in the
United States for cut flowers. Most of the flowers we will buy for
loved ones today are imported from greenhouses in Colombia and Ecuador.
The U.S. buys a third of Ecuador's yearly production just for one
holiday: Valentine's Day. \2\
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\2\ ``Ecuador Fears Valentine's Flower War,'' BBC News, January 29,
2003.
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We mentioned the consolidation of the cut flower industry. No
longer are small cultivators selling to ``mom and pop'' florists. Today
cut flowers are a concentrated and lucrative business for a small
handful of multinational corporations. Colombia exports 85 percent of
its cut flowers (approximately $600 million) to the United States. \3\
In 2005, the Colombian flower industry provided 111,000 jobs directly,
and an additional 94,000 indirectly. US-based Dole Fresh Flowers, a
subsidiary of the Dole Food Company, is the largest flower plantation
owner and exporter in Colombia, and the biggest exporter of flowers
from Latin America.
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\3\ Asocolflores 2006.
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Ecuador exports 70 percent of its cut flowers to the U.S. market.
Flowers are Ecuador's 5th largest export. The flower industry employs
nearly 40,000 workers directly and another 15,000 jobs are created
indirectly. \4\
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\4\ FUNDESS.
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Poverty-level Wages
The majority of Colombian flower workers receive no more than the
minimum wage, $180 per month, which covers less than half of what a
family needs to meet basic human needs. \5\ A similar situation exists
in Ecuador, where the minimum wage is $160 a month.
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\5\ DANE. ``Encuesta Nacional de Hogares,'' 2001.
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Obligatory and unpaid overtime is common. The Colombian non-
governmental organization CACTUS produced a report covering the period
of January 2000 through June 2004, which found that the most common
reason for Colombian flower workers to seek legal advice was failure to
pay salaries, including unpaid overtime. The second most common reason
was unfair dismissal, which leads to a high turnover rate within the
industry.
Child Labor
Child labor is common in the cut flower plantations of Ecuador. The
International Labor Organization's 2000 Rapid Assessment estimated that
there were at least 12,000 15- to 18-year olds hired by Ecuadorian
flower plantations. This work is considered one of the worst forms of
child labor, because of the risks posed by intensive and repetitive
work, injuries from thorns, use of sharp tools, prolonged exposure to
heat, cold, and sun, and exposure to toxic pesticides. \6\ The IPEC
project found that 45.8 percent of surveyed children working in the
flower industry had suffered some kind of occupational accident or
illness, including respiratory problems, wounds, lesions, and digestive
tract problems (2003).
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\6\ IPEC Aug 2003 Project Document.
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Discrimination and Sexual Harassment
In a poll of almost 1400 Colombian flower workers, CACTUS found
that 84.8 percent of female workers had been required to undergo a
pregnancy test as a prerequisite for employment. CACTUS also reports
that an average of two flower workers arrive at their office daily
after being fired as a result of pregnancy, in violation of national
labor laws.
Obligatory pregnancy testing is also routine in Ecuador. An
Ecuadorian woman interviewed by ILRF in late 2006 recounted: ``I have
been working in flowers for a total of 7 years. I was working in a
small plantation for almost a year when I got pregnant. They saw that
my pregnancy became quite advanced. I was 8 months pregnant. The new
supervisor wanted me to do the same work, and I told him no, because in
my condition I couldn't do the same things. One has to work bending
over and it is dangerous. The supervisor told me: ``If you want to keep
working here, you have to do all of the work, and if not, you can just
leave . . . the truth is I don't want to have problems, the truth is I
don't want pregnant women here,'' he told me. They fired me. In July
they didn't pay me, or compensate me for the months I worked before
they fired me.''
A 2005 study by the International Labor Rights Fund and Ecuadorian
researchers found that over 55 percent of Ecuadorian flower workers
have been the victims of some kind of sexual harassment. \7\ is was
higher for 20-24 year old workers (71 percent). Many women also said
that they had been asked out by their bosses or supervisors, who
offered to improve their jobs in exchange. Alarmingly, we also found
that 19 percent of flower workers have been forced to have sex with a
coworker or superior and 10 percent have been sexually assaulted on the
job. Workers on flower plantations have no recourse to any sort of
grievance or complaints process to address this serious problem.
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\7\ Study by ILRF, Norma Mena (IEDECA), and Silvia Proano (INNFA),
2005.
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Violation of the Right to Associate
The Latin American flower industry is characterized by a lack of
respect for core worker rights, reflected primarily in the industry's
failure to address freedom of association, the right to organize and
the right to bargain. This industry has a long history of vigorous and
effective opposition to the formation of independent democratic unions,
using a variety of tactics to block union organizing, including illegal
firings, threats to close plantations where workers are organizing,
anti-union discrimination, and bringing in company-favored unions.
In Ecuador, only two plantations, out of a total of about 380, have
unions. In Colombia, to date, independent flower unions have been
unable to win a single collective bargaining agreement despite nearly
two decades of organizing efforts. \8\
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\8\ US/LEAP, February 2007.
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In late 2004, workers founded a new independent union,
Sintrasplendor. This was the first independent union that had been
successfully established in a Dole-owned flower company in Colombia.
When Sintrasplendor received its registration from the Ministry of
Social Protection, the company presented a list of objections, asking
the Ministry to revoke the registration. Splendor Flowers used various
forms of persecution against Sintrasplendor, including threats that
union affiliates will be fired; assigning extra work on days when the
union has planned assemblies and other activities; hostility, including
via the presence of members of the Armed Forces and police at union
activities held off company property.
The company successfully convinced the Ministry to revoke the
union's registration, but after a lengthy appeal the workers reinstated
the union.
Dole has also used a variety of ploys to deny Sintrasplendor its
right to a collective bargaining agreement, such as signing a different
collective bargaining agreement with the company-backed union, and
refusing to support a fair process to determine union representation at
the company.
On October 12, 2006 Dole announced that it is closing the Corzo
farm at Splendor Flowers.
Health Impacts
Consumers of bouquets from Latin America may be interested to note
the range of chemicals applied to the flowers before they bring a
bouquet to their noses. A study of 8,000 Colombian flower workers found
that they were exposed to 127 different pesticides, three of which are
considered extremely toxic by the World Health Organization. In
addition, 20 percent of these pesticides are either banned or
unregistered for use in the U.S. because they are extremely toxic and
carcinogenic. To make matters worse, greenhouses are not always
completely cleared of people before fumigation begins. Doctors in the
floricultural regions of Colombia report up to five cases of acute
poisoning each day. A survey by the International Labor Organization
(ILO) found that only 22 percent of Ecuadorian flower companies trained
their workers in the proper use of chemicals. Two-thirds of Colombian
and Ecuadorian flower workers suffer from work-related health problems,
according to the Victoria International Development Education
Association (VIDEA).
According to CACTUS, when entirely unprotected workers are exposed
to the toxic pesticides regularly used on flower plantations, reactions
including headaches, vomiting, and fainting can be felt immediately.
Other short term effects include rashes, impaired vision, and skin
discoloration. Repeated exposure to these chemicals can lead to asthma
and neurological problems.
Women workers suffer particular health problems as a result of
pesticide exposure, including miscarriages and stillbirths.
Furthermore, a 1990 study by the Colombian National Institute of Health
found that 17 percent of children born to former flower workers had
congenital malformations. Almost 80 percent of Ecuadorian flower
workers and 70 percent of Colombian flower workers are women.
Other health problems often result from the intensive, repetitive
work, and long working hours. In 2006, a Colombian woman told ILRF
about her problems with carpal tunnel syndrome: ``I had been working at
this plantation for 4 years when my hands started to fall asleep. I
would work from 6 am until 5 or 6 pm, using clippers all day long. The
pain went all the way up to my shoulder. I have had surgery on my right
hand three times. I feel like I am going to lose this finger. It is
really hard to bend it or move it. I get to work at 6 am, and by 8:30
am my hands hurt so much I can't stand it. They didn't give me enough
time to recover from the surgery before sending me back to work. I
haven't recovered, and every day my hand hurts more.''
Voluntary CSR Initiatives in the Cut Flower Sector
All of the abuses described above exist despite the industry's
participation in two voluntary CSR initiatives, Florverde and Social
Accountability International.
In 1996, the Colombian cut flower industry, in the form of the
Association of Colombian Flower Exporters (ASOCOLFLORES), developed its
own voluntary response to forestall consumer pressure to end labor
rights abuses. This program, Florverde, was essentially a better
business practices association that evolved into a certification
system. The Florverde program is ``based on the principle of self-
management . . . aiming at gradual but continuous progress''. \9\ It
requires signed work contracts with employees, trainings on first aid
and pesticide use, adequate and clean toilets and other facilities. It
also monitors issues regarding salary, bonuses, overtime, disciplinary
measures, and health care. Florverde has remained resistant, however,
to adopting the right to free association and collective bargaining as
part of its certification standards, even though this is one of the
ILO's fundamental labor conventions.
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\9\ Asocolflores 1999, cited in ``On Export Rivalry and the
Greening of Agriculture--The Role of Eco-Labels.''
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As for Dole Fresh Flowers, which has a lion's share of distribution
of South American cut flowers for the U.S. market, its parent company
Dole also responds to all criticism of its abuse of workers by pointing
to its membership in a weak and unenforceable voluntary CSR initiative,
the Social Accountability International program. However, its
membership in SAI has not prevented it from violating key labor rights,
including freedom of association, and even ignoring SAI's direct
encouragement to comply with these standards. The NGO US/LEAP worked
with SAI in 2005 to pressure Dole to recognize and negotiate a
collective bargaining agreement with the legally established union
Sintrasplendor at its plantations Splendor Flowers in Colombia. On
September 15, 2005, Dole agreed to sit down and negotiate with
Sintrasplendor in good faith. SAI assisted in negotiating the agreement
with Dole and promised to help ensure that the agreement was fully and
promptly implemented. US/LEAP, Dole, SAI, and a Sintrasplendor member
met on September 20, 2005 to begin discussing next steps toward
carrying out the agreement. By October 2005 it was clear that Dole was
not honoring these new agreements with SAI and with US/LEAP. A year
later, Dole still had not sat down at the negotiating table with
Sinatrasplendor, and in October 2006, Dole announced it would close
Splendor Flowers in 2007. As a voluntary initiative, SAI did not have
the power to help Sintrasplendor workers get any response from Dole
except to cut and run.
New Strategies to End Sweatshops
Surely we can do better than to leave these horrific abuses to the
market to address through such weak and voluntary efforts. None of the
systems noted above contain any truly meaningful sanction for bad
behavior. The need for voluntary CSR initiatives to continue a business
relationship with participating corporations has compromised their real
ability to expose problems. Consumers need and deserve an independent
watchdog rather than the current ``fox guarding the henhouse''
programs.
Nor can we simply rely on the enforcement of domestic laws in most
developing countries. Just as employers' interests are the determining
factor in the voluntary CSR systems, so too do employers exercise much
greater influence than workers in the political landscape of countries
such as Colombia and Ecuador. As we have seen first-hand in our current
case against Wal-Mart, retailers who have played such a strong role in
the development of voluntary systems are usually loath to see such
systems assist in holding the companies themselves legally liable for
non-compliance with local labor laws. This alone is evidence enough
that local law enforcement is not the answer.
Corporate behavior generally is hardly on the upswing, despite many
years of exposes by human rights advocates; ILRF's recent investigative
work has uncovered cases of brutal exploitation of child workers,
continued instances of forced labor, and torture and murder of trade
unionists. Multinational corporations continue to be heavily implicated
in such practices, despite the supposed world consensus that these acts
constitute fundamental human rights violations. Apparently corporations
can only be convinced to respond to such abuses when there is a real
threat of sanctions.
That is why we are so grateful for the initiative of Senator Byron
Dorgan and Senator Lindsey Graham to promote a new legislative remedy
for worker rights abuses in the global supply chains that bring
consumer goods to the United States. It is truly a pleasure to find
ourselves in a political moment where the debate is no longer, is
binding legislation necessary? but rather, what shape should such
legislation take. There are sufficient precedents in U.S. legislation
already to begin to move toward the long-term goal of ending the trade
in sweatshop-made goods. We will summarize some important precedents
below, and look forward to a lively, substantive exchange on the
contribution the S. 367 Bill to amend the Tariff Act of 1930 to
prohibit the import, export, and sale of goods made with sweatshop
labor will add to the efforts that have gone before.
There is ample precedent in U.S. law to support the new steps now
proposed in S. 367. The U.S. Government has long defined the repression
of the right to organize as an unfair trade practice, through Section
301 of the Trade Act of 1974. However, this section of the Trade Act
has never been effectively enforced. Current ILRF work includes
representation of workers who have been severely harassed, detained,
`disappeared' and tortured by paramilitaries in Central America for
attempting to organize unions. It is high time the sweatshop movement
take on such cases and argue publicly that U.S. tradeofficials treat
the torture and murder of workers as at least as serious a problem as
dumping. We believe the public arguments can be effectively made, and
that companies benefiting from extreme repression of trade unionists
can and should be penalized both under current trade rules and through
new legislation.
The Tariff Act of 1930 itself has long contained a prohibition
against the importation of prison-made goods; in the late 1990s, that
language was amended by then-Representative (now Senator) Bernie
Sanders and Senator Tom Harkin to include prohibitions against the
importation of goods made by forced child labor. Again, the language of
this act provides for a potential mechanism to sanction offending
corporations directly, by designating their imports as ``hot'' goods;
however, to date enforcement of this act has been weak. Sweatshop
advocates working specifically on cases of child labor or forced labor
should, however, continue to push the process created under this act as
it raises at least the possibility of real sanctions against offenders.
In recent years, additional legislation with a broader scope than
thes acts has been proposed, though never passed. As early as 1991, the
U.S. Congress attempted to legislate a code of conduct for U.S.
corporations doing business in China. The code would have required an
annual review of the practices of all corporations in China, and would
have provided for some sanction to those companies that failed to
implement the code. The initiative has been revived a number of times
over the past decade, and at different moments was passed by both the
House of Representatives and the U.S. Senate. During the debate over
whether to grant Permanent Normal Trade Relations status for China in
1999, a new version was circulated, allowing for public review of
corporate behavior, and sanctioning non-compliant corporations by
prohibiting them from access to any commercial support from the U.S.
Government. The legislation was not adopted. A parallel initiative was
taken by the European Parliament, which passed a resolution calling for
EU-based corporations to abide by a set of human rights principles in
their operations worldwide. However, while the European Parliament may
be empowered to review corporate behavior, it is unable to impose
sanctions on violators.
Finally, we note again the tremendous example set by the U.S.
Foreign Corrupt Practices Act (FCPA) and request that Congress look to
the moral example set by Senator Frank Church and that bill's
supporters in the 1970s as a model for the way forward today. The FCPA
empowers Federal authorities to launch investigations and to sanction
offending corporations. This power exists in U.S. law today and
therefore provides an important, and workable, precedent for the
proposed S. 367 bill. The FCPA demonstrates that laws governing
corporate accountability globally can be enforced. Countries around the
world have seen the FCPA as a model and it has been a shining example
of moral leadership by the United States on the critical global issue
of corruption.
We need more such examples of moral leadership by the United States
today. We extend once again our gratitude to Senators Dorgan and
Graham, and the co-sponsors of S. 367, for blazing a path forward for
workers' rights around the world.