May 2000,

Dear friends,

Last may a roundtable meeting was organized in Hong Kong by the American Friends Service Committee, bringing together mainly US and Asian participants. Please find below the introduction to the report, the full text can be found at http://www.afsc.org/intl/asia/eastasia.htm
a PDF version can be downloaded here

Order hard copies from:

John Feffer and Karin Lee
American Friends Service Committee
4-8-19 Mita Minato-ku
Tokyo 108 Japan
tel/fax: 81-3-3452-5715
Johnfeffer@aol.com

Addressing Corporate Conduct

A Roundtable Exploring Initiatives at the Workplace, National, and Multilateral Levels

May 24 - May 25, 2000 YMCA International House, Hong Kong

Contents

• Introduction
• At the multilateral level
• Labor standards
• At the national level
• Export processing zones (EPZs)
• Codes of conduct
• Monitoring
• Case study: the Ethical Trade Initiative
• Unions and NGOs
• Conclusions

Appendices
Evaluation
Participants
Resources

Introduction

According to the traditional tripartite scenario, governments establish and enforce national labor laws, companies build factories and make profits, and unions promote the rights of workers. The new global economy has altered this scenario. There are now global institutions that regulate - or attempt to regulate - trade, labor standards, and the macroeconomic policies of countries. Meanwhile, a range of non-governmental organizations (NGOs), and grassroots organizations have sprung up to address labor issues and corporate conduct, sometimes alongside unions, sometimes in conflict with them.

At the same time, the structure of global corporations has changed dramatically. Transnational corporations (TNCs), with sales of $4.8 trillion, have a greater share of world trade and now control roughly one-third of the productive assets in the world. Increasingly, these TNCs parcel out their production work - the actual creation of things - to independent contractors. The assembly line, which was once housed entirely in one building, has been globalized, with subcontractors in different countries adding different components before the final product is marketed by the parent company. In an attempt to attract links in this global chain of production, countries have created export-processing zones (EPZs) that are investment-friendly and many of which have low (or no) environmental and labor standards. The workers that are drawn to these zones are often "contingent:" short-term or part-time workers. The majority of this contingent workforce are women.

While globalization has undeniably created economic growth, this growth has not been equal. Competition has too often produced a "race to the bottom" in which countries, corporations, and subcontractors whittle away at social and environmental standards to attract contracts and foreign investment. This new globalized environment poses several challenges for those who are concerned with preserving, and indeed raising, these standards. .

• How can multilateral institutions ensure a "level playing field" in the arena of trade and labor standards when the forces of globalization have only widened the "development gap" between the global haves and have-nots?
• How can governments in the developed world insist on better working conditions in the developing world without merely protecting jobs and industries back home? At the same time, how can the needs of workers in developed countries be addressed?
• How can unions, NGOs, and consumers demand that a transnational corporation adhere to labor standards when the bulk of its workers are not its workers, but instead are employed by subcontractors?
• How can legal protections be guaranteed when much of the production takes place in a legal vacuum?
• On whose behalf are international NGOs working: consumers in their own countries or workers in developing countries?
• How can unions defend the rights of workers in areas where organizing is either illegal or, because of the contingent nature of the workforce, very difficult? How can other organizations succeed where unions are ineffective?

A group of activists and academics interested in these questions gathered in Hong Kong in May 2000 to evaluate some of the latest approaches to improving labor standards and improving corporate conduct. The two-day Roundtable explored this question at several levels, from multilateral institutions such as the International Labor Organization (ILO) down to the factory floor.

Consensus on goals was not difficult. Roundtable participants all agreed that we should be working for the alleviation of poverty, the improvement of working conditions, the close coupling of economic and social development, and a closing of the "development gap" between rich and poor countries. But the difficulties lay in the details: how can the various actors work together equally and in an atmosphere of trust to achieve these goals? On whose behalf is each group working? How does an NGO from the US or the EU work effectively with NGOs in Asia?

A fundamental difference of opinion that emerged from the discussions concerned strategy, the best way of getting from here to there. Some participants favored focusing their efforts at one level to raise labor standards, for instance by organizing workers by factory or sector. Other participants advanced a strategy of interlocking relationships. According to such a scenario, the ILO promotes universal labor standards, national governments translate these standards into law, workers organize to defend their rights according to these standards and laws, NGOs put forward voluntary initiatives that support and complement the standards, and consumers use their purchasing power as leverage to encourage socially responsible corporations.

Each of the actors in this scenario, however, has potential weaknesses. The multilateral organizations establish standards that are frequently ignored. National governments pass laws that are not implemented at the factory level. Trade unions sometimes ignore the plight of contingent labor and do not expend much effort to organize in the export-processing zones. International NGOs and corporations jointly establish codes of conduct, but these sometimes amount to little more than public relations campaigns. Consumers often base their ethical purchases on minimal or incorrect information about the real working conditions in the factories.

Roundtable participants grappled with the challenge of identifying how to bring greater coherence to the workings of all these actors and simultaneously ensure greater implementation of the words on paper.

One overarching problem has been the line dividing the "developed" from the "developing" worlds. At the inter-governmental level, for instance in the World Trade Organization (WTO), developing countries have demanded access to northern markets while fearing opening their own markets too quickly to foreign control. Developing countries often view codes or clauses or legislation designed to improve labor and environmental standards as efforts by the developed world to protect their own industries and work forces.

The line of division between the "global north" and the "global south" runs through the non-governmental world as well. Some NGOs in the developed world have supported private voluntary initiatives (PVIs) as a method of improving corporate conduct. These initiatives, which are varied in scope, content and structure, have engendered some skepticism, particularly in the global south. Are these initiatives a substitute for labor law and for labor organizing? Are NGOs putting themselves forward as an alternative to unions, their work with corporations an alternative to traditional industrial relations? Some participants at the Roundtable also voiced criticism about the effectiveness of the PVIs, particularly codes of conduct, which were the focus of our discussion.. Are the codes simply promoting a "culture of minimalism" in which corporations make the most minor adjustments to meet standards? Do the codes apply equally through the whole supply chain to all the subcontractors? How effective are the monitoring systems? Who is allowed to be monitors and gain access to factories? As one participant asked, "If a manager breaks the code of conduct, who does the worker call? What use is the code if there is no accountability?"

As the Roundtable discussion progressed, it became clear that codes of conduct were not a panacea. Rather, they were useful in certain circumstances and in certain areas. They should not be put forward as a substitute for labor laws or labor organizing. Rather, they could be used in areas where labor laws are not being implemented and where trade unions are not working - for instance in export-processing zones and among contingent workers. Perhaps more importantly, a new kind of code of conduct is emerging that is as much a set of relationships as a list of standards. According to this kind of code, northern NGOs work in partnership with southern NGOs and unions in creating a space for worker empowerment - a multi-stakeholder approach. The goal of this process is to shift power from the north to the south, so that the local actors have ownership over the implementation and monitoring of the codes. Participants evaluated the Ethical Trade Initiative as an example of this new means of prompting change.

In this regard, the issue of China posed certain key challenges, given the lack of NGOs and the inability of workers to organize independent unions there. One intriguing suggestion was for outside organizations to join with Chinese workers in pressing for workers' health and safety committees at the factory level, which would combine monitoring of standards with worker education and empowerment.

Codes of conduct remain largely experimental. No one is certain how to make them sustainable financially. Or how workers will use the codes to empower themselves. The larger question - will corporations take the codes seriously - remains difficult to answer. As one participant put it, "Are Nike and McDonalds prepared to make less profit in order to improve workers' conditions?" Even if the large TNCs are willing to make less profit, are the smaller and more vulnerable subcontractors willing or able to follow suit? Participants agreed that codes of conduct can't solve all the problems of economic injustice. But they can provide a space, an opening, and an opportunity to improve the standard of living for many workers in the globalized economy.

Alongside the conversation on codes of conduct, Roundtable participants discussed the relationship between NGOs and unions. Unions and NGOs have frequently found themselves fighting on the same side to improve working conditions in the new globalized factories. In some cases, NGOs have been able to work in areas that unions have been unable or reluctant to address - contingent workers and women workers or on social issues such as sexual harassment that are not "workplace" issues. In some cases, this complementary work has gone smoothly. However, unions and NGOs have also faced certain "turf" issues and these disputes have also colored the way codes of conduct have been received in specific locales.

The discussion of the union-NGO relationship covered a number of issues. Workers in developing countries want to protect their own rights, and seek the best means to do so - sometimes through their own unions or grassroots organizations, sometimes through multilateral institutions such as the ILO, sometimes in concert with international unions or international NGOs. Participants noted that for most workers job preservation is a top priority, and the strategies of other actors, when not well-coordinated with the workers themselves, can jeopardize jobs. Meanwhile, in developed countries, unions are motivated to improve the condition of workers world wide, but also have legitimate concerns about risking the jobs of their own members.

Roundtable participants were in consensus about the need for more communication about what is actually taking place at the factory level. They also urged more coherence among multilateral organizations concerning labor standards. Some participants held up the ILO's definition of core labor standards as a model that other institutions should adopt. Another point of agreement concerned the importance of gender analysis. Given that the majority of workers in EPZs are women, it is critically important that all institutions - from individual unions to the WTO - recognize the specific needs and demands of women workers.

The workshop was a discussion rather than a set of presentations. There were lively disagreements on a range of issues. As a group we came to consensus on a few issues, outlined here and explained in more depth in the following report. But the disagreements were at least as interesting as the agreements, so they have been preserved in this report. Instead of identifying participants by name, this report will quote without attribution. Some confidential material has been left out.