[See Analysis in Part 1 and News stories in Part 3.]

SWEATSHOP AGREEMENT

PART 2: DOCUMENTS

* Commentary from UNITE on AIP "Preliminary Agreement" * Statement from UNITE * Statement from Interfaith Center on Corporate Responsibility * Joint statement by Lenore Miller (Retail, Wholesale and Department Store Union), Jay Mazur (UNITE) and John J. Sweeney (AFL-CIO) * Memorandum from the AIP sub-group which produced the "Preliminary Agreement"

"We are...concerned that this agreement will reinforce the tendency to view voluntary corporate codes of conduct as a substitute for the enforcement of existing laws and the adoption of legislation and trade agreements designed to protect the rights of workers in the global economy. While such codes can in some circumstances supplement the rule of law in protecting workers rights, they are a step backward when they undercut the demands and actions of the anti-sweatshop movement and allow corporations to carry on business as usual." - UNITE

"The agreement...does not commit participating companies to pay a sustainable living wage in apparel and footwear plants around the world. A factory may be clean, well organized and monitored, but unless the workers are paid a sustainable living wage, it is still a sweatshop." - Rev. David M. Schilling, Interfaith Center on Corporate Responsibility

"We are pleased that the Workplace Code includes respect for the right of workers to freely associate and bargain collectively. However, the Agreement does not spell out what companies need to do in countries where this internationally-recognized right is denied. Independent unions, controlled by workers, are an important element in the struggle to eliminate sweatshops." - Sister Dolores Brooks, OP, Co-Chair of the Global Corporate Accountability Issue Group of the Interfaith Center on Corporate Responsibility

1. The Governance structure is ostensibly fairly balanced, with half companies, half labor/NGOs and a neutral chair. In practice, it gives any three companies the power of veto on key questions requiring "supermajority" vote, such as amending the code and bylaws, selection of a chair and executive director, changes in caps on annual assessments for companies, adoption and modification of accreditation criteria for monitors, changes in the percentage of company facilities subject to inspection and declaring a company no longer in compliance with the code. Note that the decision to certify a company is by a simple majority vote, which means a company can be certified despite all the non-company members voting against but cannot be decertified even if all the non-company members and half the company members vote to decertify. This is a formula biased toward approval of compliance and in those instances when three non-company members assert their veto an invitation to deadlock. Either option perpetuates the status quo in the industry.
2. The participation criteria for companies is minimal, essentially requiring a statement of the company's intention to adhere to the rules and the payment of an assessment inadequate to fund the organization at a level capable of enforcing the code. Participation also allows the company and Association to announce publicly that the company is seeking certification for specific brands, as distinct form already have such certification. This distinction is not one that the typical consumer is likely to notice, thus creating a false impression for a long as three years that the company is in compliance.
3. Companies are free to choose the same accounting firms as monitors that they have always employed for that purpose, including firms that perform other services for the company. Restrictions on such conflicts of interest are fraught with loopholes and broad discretionary language, such as the Association's right to waive the application of certain provisions on "good faith" showing of "ethical walls" between employees of accounting firms that also engage in monitoring.
4. On the basis of as few as 10% of a company's facilities subject to an annual inspection in an initial three-year implementation period and as few as 5% a year thereafter (the percentages are even lower taking into consideration De Minimis facilities excluded from the total count) a company could be declared in compliance with the code.
5. In addition to selecting and paying the monitors, companies will also choose the facilities to be inspected. While the Executive Director of the Association has the authority to modify the inspection list proposed by the company, the procedure assures that the company will always have foreknowledge of which plants will be inspected and that "there shall be a general assumption in favor of the Participating Company's suggested list of Applicable Facilities."
6. Companies will be reimbursed by the Association for monitoring costs. To the extent that this project is supported by public funds, and we are told that the government commitments have been made, this means that firms like NIKE will receive a government subsidy to conduct company controlled inspections of its production facilities that will allow the company to declare it is in compliance with the code. This is a blatant and totally unacceptable step toward the privatization of enforcing labor standards.
7. The Association's annual public report on the company will be based exclusively on information provided by the company and its monitor's own reporting and assessment of findings regarding non-compliance and remedial actions and will not identify the specific factories that have been inspected. In the event of a company being placed on an indefinite "special review" status for non-compliance with various criteria, the public will not be notified of such a determination nor informed of the reasons for such a determination. In the case of ongoing inspection reports filed with the company by monitors, the Association will not be informed of their results for 60 days and the reports will contain specific information only on "significant and/or persistent patterns of non-compliance or instances of serous non-compliance."
8. The proposed Department of Labor Wage Study will establish official poverty levels as the "basic needs" standard now in the code. Furthermore, neither here nor anywhere else in the agreement odes the Association take responsibility to determine prevailing wages in the industry, thus rendering inoperative the provision in the code that obligates companies to pay prevailing wages when they are higher than legal minimums. Finally, by dropping language in the labor/NGO proposal requiring the Association to "establish a process that examines workers' basic needs, minimum and prevailing wages, and the extent to which the latter meet the former," this agreement takes a giant step backward on the right of workers to be paid a living wage.
9. The watered-down version of Special Country Guidelines is virtually a license for companies to produce in any country regardless of the legal and practical prohibitions on freedom of association, the right to organize and bargain collectively. Almost all of the specific provisions in the labor/NGO proposal have been throw out and replaced with generalities and high-sounding principles. The only specific restriction is that factory owners "not affirmatively seek the assistance of state authorities to prevent workers from exercising these rights." This presumably means you can let the army in the door but you can't call them. Compare this with the codes and restrictions placed on multinational corporations in apartheid South Africa and the hollowness of this provision becomes clear.
10. The Third Party Complaint Procedure is a laudable attempt to introduce a necessary degree of public accountability into this sealed system. However, the multiple qualifications for lodging such complaints, the lack of any public notification of such complaints and their determination, and the authority of the company and its monitor to verify and evaluate their accuracy is more likely to conceal wrongdoing than expose it.
11. As noted above, the absurdly low assessment caps on participating companies (a billion dollar company would apparently only have to pay $10,000, though this is necessarily extrapolated from a formula that is not explained) assures a chronically underfunded Association without the capability of carrying out its responsibilities.

Despite high hopes and a shared sense of urgency, UNITE cannot continue to participate in the Apparel Industry Partnership on the basis of the agreement recently reached by some company and NGO members of the Partnership.

No voluntary corporate code of conduct can assure the enforcement of workers rights and the elimination of sweatshops. For such a code to be helpful in reaching these objectives, it must have standards that permit workers to live and work with dignity and effective enforcement mechanisms for those standards.

This agreement fails to meet this threshold on several counts. It takes no meaningful step toward a living wage; it does not effectively address the problem of protecting the right to organize in countries where that right is systematically denied; it allows companies to pick the factories that will be inspected by monitors chosen and paid by the company and excludes up to 95% of a company's production facilities from inspection; and it creates multiple barriers to public access to information. These are fatal flaws in a code already diluted by previous compromises.

We are also concerned that this agreement will reinforce the tendency to view voluntary corporate codes of conduct as a substitute for the enforcement of existing laws and the adoption of legislation and trade agreements designed to protect the rights of workers in the global economy.

While such codes can in some circumstances supplement the rule of law in protecting workers rights, they are a step backward when they undercut the demands and actions of the anti-sweatshop movement and allow corporations to carry on business as usual.

UNITE remains committed to continue working with employers, government and concerned organizations to develop mechanisms that raise the standards of competition in the apparel industry and assure consumers that the clothes they buy are not produced by oppressed, exploited and abused workers anywhere.

Religious Investor Coalition Declines To Endorse Apparel Industry Partnership Agreement

Thursday, November 5, 1998 - Charging the agreement fails to guarantee payment of a sustainable living wage and establish effective independent monitoring by local non-governmental organizations, the Interfaith Center on Corporate Responsibility announced today it was not able to endorse an agreement reached by companies and human rights groups in the White House Apparel Industry Partnership. ICCR has been a member of the Partnership since its inception in 1996. The agreement was released on Tuesday, November 3, 1998 by the U.S. Department of Labor.

"Key principles, such as payment of a sustainable living wage to employees, and credible independent monitoring, are not sufficiently addressed," explained ICCR Executive Director Timothy Smith. "The agreement does take several important steps by establishing a Fair Labor Association and a process for monitoring factories worldwide, but without these key principles, we cannot sign on at this time." Mr. Smith added: "ICCR will continue our decades-old campaign to eliminate sweatshop as we will also work with the Partnership toward the mutual goal of eliminating sweatshops worldwide.

ICCR is an association of 275 Protestant, Roman Catholic and Jewish denominations, religious communities, pension funds, hospital corporations, foundations with over $90 billion in combined portfolio worth. ICCR members have been calling for just wages since 1975 when they challenged Gulf + Western to raise wages and improve working conditions on its sugar plantations in the Dominican Republic.

"The agreement provides for a study of wages," said Rev. David M. Schilling, who represented ICCR on the Partnership. "But it does not commit participating companies to pay a sustainable living wage in apparel and footwear plants around the world. A factory may be clean, well organized and monitored, but unless the workers are paid a sustainable living wage, it is still a sweatshop."

A key criticism of religious groups is that the Agreement does not provide for a process to determine what is a living wage. While the Agreement calls for a Department of Labor wage study to compile existing wage data, the Fair Labor Association is not empowered to do the purchasing power studies necessary to determine whether or not wages are sufficient to meet a worker's basic needs and provide some discretionary income, according to Rev. Schilling.

"Independent monitoring of factories using local human rights, religious and other non-governmental organizations (NGOs) is also crucial to establishing a credible anti-sweatshop program," explained Dr. Ruth Rosenbaum, co-chair of ICCR's Global Corporate Accountability Issue Group. "As it is, this Agreement would set up a monitoring norm where only 10% of a company's supplier factories would be independently monitored each year. In addition, we are concerned that large auditing firms will become the Association's 'independent monitors,' marginalizing participation by NGOs who know the local context and are more likely to have the trust of workers." Dr. Rosenbaum is the director of the Center for Reflection Education and Action of Hartford, Connecticut.

Sister Dolores Brooks, OP, Co-Chair of ICCR's Global Corporate Accountability Issue Group, added: "We are pleased that the Workplace Code includes respect for the right of workers to freely associate and bargain collectively. However, the Agreement does not spell out what companies need to do in countries where this internationally-recognized right is denied. Independent unions, controlled by workers, are an important element in the struggle to eliminate sweatshops." Sr. Brooks is a member of the investment committee of the Sinsinawa Dominicans.

According to ICCR representatives, positive elements of the Agreement include: acceptance of both internal and independent external monitoring, a third party complaint procedure and a pledge by the companies in the agreement to work in partnership with others to address questions critical to the elimination of sweatshop practices.

"As we carefully follow the implementation of the Agreement," stated Mr. Smith, "we plan to keep the door open to endorsement of a future strengthened Agreement."

Joint statement on the Apparel Industry Partnership by Lenore Miller (Retail, Wholesale and Department Store Union), Jay Mazur (UNITE) and John J. Sweeney (AFL-CIO) November 4, 1998

The initiative of President Clinton in establishing the White House Apparel Industry Partnership could not have been more important or timely. President Clinton's commitment to bring together major apparel companies, labor unions, human rights and consumer groups to find solutions to the industry's sweatshop problems was exactly right. All the parties concerned with the industry's problems need to work together to raise the standards of competition in one of the most globalized of all industries.

Participants in the partnership deliberated for two years, sharing their different perspectives, exploring solutions together and negotiating sometimes very difficult issues to find solutions to common problems without fundamentally compromising legitimate differences of interest. The American labor movement participated actively in this process form the beginning and was represented there by Jay Mazur of the Union of Needletrades, Industrial and Textile Workers and Lenore Miller of the Retail, Whole and Department Store Union.

Despite the seriousness of these deliberations - and the good faith in which we believe the negotiations were conducted - the labor movement has concluded that signing on to an agreement with the participating companies is not possible at this time and is, therefore, not participating in the tentative agreement that was signed by the companies and some of the participating NGOs earlier this week.

American unions are committed more than ever to the essential work of eliminating sweated labor from the American workplace and from the products which American consumers buy. We will continue to raise the standards of competition in the apparel industry and assure American consumers that the apparel they buy is not produced by oppressed, exploited and abused workers anywhere.

to: All Members of the Apparel Industry Partnership

from: Business for Social Responsibility, International Labor Rights Fund, Lawyers Committee for Human Rights, Liz Claiborne, National Consumers League, Nike, Phillips Van Heusen, Reebok, Robert F. Kennedy Memorial Center for Human Rights

subject: Preliminary Agreement

date: November 2, 1998

As all of you know, our group has been meeting informally since the summer in an effort to address unresolved issues in our negotiating process and to help forge an agreement. Several weeks ago we met in New York and reached a preliminary agreement on a draft Charter, a copy of which is enclosed. All of us view this agreement as an important step forward in the effort to address violations of labor rights in the apparel and footwear industries worldwide. It will enable us to create a new entity, the Fair Labor Association, through which we can address worker rights issues going forward. It will also allow us to educate consumers about our efforts, thereby making it easier for them to make informed purchasing decisions.

This agreement is the product of an arduous negotiating process. Each of our organizations has made compromises to reach this agreement. But we all feel that, viewed in its totality, the agreement creates a solid foundation for providing essential safeguards to workers. We believe that we have reached a stronger, more credible agreement precisely because over the last two years the real parties at interest have been so closely involved in the negotiating process.

Each of the nine organizations that have been participating in this informal process is committed to moving forward on the basis of this agreement, and using it to encourage the participation of a broad segment of members of the apparel and footwear industries, unions and ngos. We hope that the eight remaining members of the AIP will join us in supporting the agreement, which contains these key provisions:

1. The creation of a new non-profit organization, the Fair Labor Association, governed by an equal number of company representatives and representatives of labor, consumer, human rights, labor rights, religious and other public interest organizations that work on issues related to fair labor standards.
2. A monitoring process that requires companies to develop and undertake comprehensive internal monitoring and to submit a significant number of their facilities to independent external monitoring.
3. A fair and rigorous process for the Fair Labor Association to accredit independent external monitors.
4. A reporting system that will provide the Fair Labor Association with the information it needs to determine whether participating companies are in compliance with the Workplace Code of Conduct and monitoring principles.
5. Regular reports to the public that will provide consumers with credible information on the performance of individual companies with respect to the Workplace Code of Conduct, information that can help consumers make better informed choices.
6. New provisions on the issues of wages and freedom of association that build on the language contained in the Workplace Code of Conduct. These new provisions take account of our differences on these issues and offer practical steps that will enable the Fair Labor Association to address them constructively.

Finally, we want to thank each of you for your invaluable participation in this historic effort. As we move forward to implement this agreement, we hope that you will join with us to make the Fair Labor Association an effective entity that will contribute to the protection of workers rights.

If you have questions or wish to join us in support of this agreement, please contact either of our two co-chairs, Linda Golodner at [phone number deleted by CLR] or Roberta Karp at [deleted]. We look forward to hearing from you.

[See Analysis in Part 1 and News stories in Part 3.]