on Jul 9th, 2007FAIR TRADE – An Academic Argument
Discussions with South African Students relating to the Clothing Industry
By: Renato Palmi
A preliminary research study relating to ethical fashion with South African students had a positive outcome where just over seventy percent of the respondents said they would be prepared to pay a little extra for fair and ethical clothing.
Invitation to Global Community
The author of this study is inviting fashion organisations, design colleges and fashion designers working within the environment of fair and ethical clothing to write to him about their work and if they think ethical fashion is sustainable within the context of the global clothing industrial economy as part of a larger research study he is undertaking.
Introduction
Although the ideals of fair trade and the ethical clothing are based on similar arguments, ethical clothing is focused on placing pressure on retailers to change their buying behaviour and to educate consumers about the labour conditions of specific clothing factories. Where the two merge is the desire to provide opportunities for co-ops, and provide consumers with alternative products that have been made in a fair and un-repressive environment.
A focus group of twenty-two first year business students from the University of KwaZulu-Natal, South Africa were interviewed about the concept of fair and ethical trade within the context of the global clothing industries. A set of five questions were posed to the students after they viewed a presentation on fair trade by the author of this report.
The ideal of fair trade is defined by supporters as “a trading partnership based on dialogue, transparency and respect that seeks greater equity in international trade†(King Baudouin Foundation), or “an alternative livelihood for small producers, generating a new source of income and employment†(Oxfam Fair Trade).
Fair trade is further defined as a concept of:
Paying as much as possible rather than as little as possible [for products] … with the emphasis [of trade] being on social responsibility, where careful consideration is given to how business transactions will affect issues including natural resources, cultural traditions, working conditions, worker income and business sustainability.
(Littrell and Dickson, 1999 cited in Carpenter, 2000:8)
Furthermore, fair trade is considered as a mechanism in ensuring that women’s work is properly valued and rewarded by providing them:
Space for making women’s contributions visible, through recognition that income security and support [is] necessary for pulling them and their families out of poverty (IUCN – The World Conservation Union).
In the body of research on the topic of fair trade, there is argument from those who favour free trade, that the concept of “fairness†itself, which advocates for better employment conditions and wages - especially in developing countries trying to enter the global market or retain their market share in the global economy - will have an adverse effect on growth, not only for the workers but for the country as a whole.
It is claimed that such improvements might lead to local companies in these countries losing their global trade advantage, as the cost of production increases due to higher wages, with the result that trans-national companies would seek cheaper production facilities in other, less “fair-minded†countries. These concerns are emphasised by Barrientos when she says:
A dilemma for many developing countries is that to remain competitive labour costs have to be reduced, compounding a downward spiral in labour conditions, and increasing the problems of the working poor.
(Barrientos, 1999: 5).
The concern that international fair labour practice could have an adverse effect on workers in developing countries is reiterated by workers themselves, who “resist the idea that global enforcement of labour standards will serve the interests of the workers in the Third World†(Kabeer,2004: 4).
Conversely, proponents of fair trade argue that workers in the developing world are being exploited by international companies which seek the lowest labour costs possible in order to increase their profit margins - “poor working conditions, lack of social benefits and safety measures are aimed at maximising profits†(Sengenberger and Campbell, 1994, cited in Barrientos, 1999: 8).
Fair trade supporters claim that workers have the right to share in the gains of globalisation enjoyed by their employers, and that to reduce the social mindset and the notion of human capital to the maxim of “any job is better than none†is degrading, divisive and defeating and “optimizing profits to the detriment of workers is unethical†(Grimes, 2005: 239).
The literature covering fair vs. free trade is highly polarised (Kabeer,2004:4), with authors on the latter end of the spectrum arguing that free trade has given individuals in developing countries some opportunity of employment, allowing them to leave rural villages and work in factories located in cities, thereby breaking the cycle of poverty.
Over eighty percent of the students in the focus group said they felt that the concept of fair trade could operate in a free market economy if proper procedures were put in place that were internationally recognised and monitored by independent researchers and observers. In reference to the current trade rules that “forbid governments to distinguish and judge products based on processes and methods of production,” the respondents said this was a major flaw in international law as it allowed retailers to continue with their sourcing activities without the threat of any repercussions.
The issue of “non-discrimination” is one of the most fundamental issues fair trade activists and NGOs are trying to address as under this principal a shirt, a pair of trousers are to be recognised as the same no matter the conditions in which they were made (SweatFree Communities).
Over ninety percent of the students felt that the argument of “a job is a job” no matter the conditions of that job was unfair. They expanded on this argument saying that all humans throughout the world had the rights to a fair and safe working environment.
It is claimed - and substantiated with figures of employment growth - that free trade enables women to become independent, and to improve their lives, by taking up the work opportunities afforded by free trade. According to research by Nadvi, access to global markets has “provided important avenues of employment for low-skilled especially women workers … [providing] potential for generating poverty-reducing employment and incomes†(Nadvi, 2004: 22).
Those who argue for fair trade practices say that the employment opportunities lauded by free trade supporters are precarious and unsustainable, as international retail procurement companies do not underwrite their engagement with developing economies. Because they continually search out cheaper labour in the supply chain, moving from region to region to secure cost savings in the production of their goods, the “corporate ideology continues to promise the end of poverty, while enacting policies that undermine social welfare [and] workers rights†(Starr,2000:17).
The literature supporting fair trade tends to centre on the observation that there is no social responsibility clause in many of these employment structures, or employer accountability for the conditions in which workers are expected to provide their services especially in Export Processing Zones (Basu, 2003).
Furthermore, fair trade supporters argue that developing countries have to compete with each other to gain entry and sustain their presence in the global economy by lowering the cost of employment in labour intensive production such as the apparel market. Brown expands on this thinking:
Proponents of international co-ordination of core labour standards argue that, in the absence of co-ordination, each country might lower its own standard in an attempt to be more attractive to foreign investment.
(Brown, 2001:100)
The available literature indicates that there is no discernible way forward that would offer a balanced solution, as the various role-players - governments, international companies, global bodies such as the IMF and WTO, and factory-owners reliant on the abundance of cheap labour - have failed to find common ground in addressing the rights of workers in the international supply chain.
It is possible, then, that the end-user of manufactured goods could play an important role – as a morally conscious consumer - in supporting workers’ rights, and in so doing, contribute to local economic growth by purchasing commodities that are made in fair employment conditions (Wick, 2003: 242).
Over twenty-five percent of the students said they would not be prepared to pay a little extra for fair trade/ ethical clothing. They said they looked at the affordability and the design of the clothing and do not care how or where the clothes were made as long as they “were cool and trendy.”
Consumers though, do have the power and influence to force retailers to insure that their manufacturers abide by fair labour practice. Fashion trends can “engineer social practices”, (McKendrick, 1982). When it comes to fashion and what designs or labels become successful is totally dependent on consumers and if consumers began to question and seek answers or even boycott certain labels because of where they have been made will and can have a positive effect on the supply-chains of the retailers.
However, herein lies the problem: the debate would not be useful unless a clear and common definition of what constitutes “fair†could be agreed upon. The idealism of Western consumers, whose buying power and range of options are much greater than those living in developing economies, might well create enough groundswell for transformation through boycotting products made in or by exploitative corporate environments.
Yet workers in developing countries are caught between a rock and a hard place: a glimpsed opportunity of some improvement in life for them and their families - however transient the job might be, however low the levels of compensation, and however arduous the physical working conditions - is better than no work at all. Sustainable work within an ethos of fair labour and trade, whether at the level of the workplace or in the wider national and global economy, would be much harder to hope for.
The argument for fair trade
The fair trade movement can be defined as a global market of individuals, corporations and NGOs that seek to find an equitable means of trading by forming “partnerships based on dialogue, transparency and respect … offering better trading conditions†(Trends in Fair Trade, 2003).
Fair trade is further defined as “a free trading regime with some agreements between trading partners on wage standards and social regulations†(Hudson, 2003: 2). Some literature explains fair trade as an ideology of paying “as much as possible rather than as little as possible†(Littrell and Dickson, 1999: 5), or relaying a message to the consumer reflecting that their purchase of fair trade products helps a community and the environment, (Brown, 1993: 158), the emphasis being that the ethical or concerned consumer can individually assist “those in greater need†(Tiffen and Zadek, 1998: 164).
The concept of fair trade may sound ethical and make consumers feel good, but there are numerous questions to be asked in relation to economic realities. Can one demonstrate empirically that, where fair trade has been implemented, tangible progress has been made in improving the lives of the workers targeted by such strategies? Does and can fair trade have a positive impact in the globalised world of free trade, or does it impact negatively on beneficiary communities and pro-fair trade companies by further distancing them from the large global procurement companies, thereby stifling any potential for growth?
Moreover, whose growth would be enabled – that of the companies that increase their profit margins through exploitation of cheap labour, or the growth of the workers who earn fair living wages to support their development in terms of access to better food, shelter, education and amenities?
Every fair trade organisation reviewed in this literature search reflects in its manifesto the realistic observation that such trade is but a minuscule percentage compared to the global exchange of commodities conducted under the auspices of free trade. According to the WTO 2004 statistics, the value of world merchandise trade for 2004 was in the region of $8.88 trillion and world commercial services $2.10 trillion.
The Fair Trade Federation’s 2003 Report reflects that in North America, sales in 2002 amounted to $180 million - an increase of 44% compared to 2001 sales. Sales in the Pacific Rim amounted to $70.6 million, representing an escalation of 23%. It would seem safe to assume that with this discernible growth in sales, there would be some positive impact for those working within the system. Sales figures for fair trade products in Europe reached two billion€ in 2006.
The 1999 United Nations Human Development Report states:
In a space of a few years, the fair trade movement and the promotion of fairly traded goods have gone from the margin to the mainstream in promoting labour rights, and retail sales of fairly traded goods are worth more than US$250 million in Europe alone.
The Fair Trade movement reflects that sales of fair-trade products in UK Oxfam shops grew from 2.4 million Pounds Sterling in 2003 to 2.9 million Pounds Sterling in 2004 - a growth of 20 percent.
One could feasibly project that by extending these sales globally, and by augmenting the number of companies subscribing to the fair trade concept, favourable global economic growth through the application of the philosophy of fair trade could be advanced.
That being said, there are two fundamental elements in the universal system of trade that prohibit the globalisation of fair trade. One is the argument around labour as it relates to free or fair trade, and the other is ethical labelling.
The question of labour and fair trade
The literature covering labour rights is complex, and tends to be divided between positions advocating for international “core standards†(Brown, 2001:92) with which all countries should abide, and those that oppose the idea of international labour regulations, suggesting that the issue of working conditions is an internal one that should remain in the “domain of domestic policy†(Brown, 2001:89).
Countries in the developing world rely on their cheap labour-forces to acquire entry into the global market, and were the costs of such labour to be increased, these producers might be priced out of the market. An alternative for such producers to attain some level of labour rights within a context of free trade would involve, rather than a focus on minimum wages, the betterment of the conditions in and under which labourers work, and within this context, a global standard could be set.
Such policy changes could eradicate, or at least substantially reduce, sweatshop conditions, and preclude exploitation through child labour; these, and other improvements, would provide positive practical examples of the ideological framework of fair and ethical trade, the aim of which is to ensure that labour standards within the workplace and value-chain are observed. This argument of enhancing workplace conditions, particularly in factory environments within the developing world, is supported by Kabeer (2004:27) who discusses women workers as being less concerned about low wages than they are about the conditions in which they work. This scenario is also comprehensively documented by Oxfam International.
The available research shows that by ensuring that workplace conditions meet international human rights standards, higher productivity and efficiency can be achieved (Gibb, 2003). There has been massive growth within labour-intensive manufacturing in developing countries - such as the clothing and textile industries in China - which relies on an abundance of cheap labour and relaxed labour laws to export their manufactured commodities. However, there is a paradox here: job creation profiles in developing countries also show that jobs are lost as unskilled, or less-skilled, workers in developed countries find their jobs under threat, due to the inability of local companies to compete in price against the developing countries (Kabeer: 2004).
The utilisation of cheap labour by developing countries to grow their economies and export markets not only has detrimental consequences for other countries trying to sustain their labour-intensive markets, but leads to developing countries competing amongst themselves in the “race to the bottom†with regard to wages and labour conditions (Chan and Ross, 2003: 1023).
Product labelling
Within the framework of fair trade, the concept of labelling is discussed by numerous researchers, the argument being that labels on end-products should indicate to consumers the manufacturer’s country of origin (detailing all the participant value-chain countries) and information about the conditions under which the products are manufactured.
Since corporations are not legally obliged to conform to any labelling requirements, such dissemination of production information is purely voluntary on the part of manufacturers. In fact, the WTO’s rules prohibit any differentiation between products on the basis of their means of production or process, as cited in the WTO’s process or production methods (PPM) clause (King Baudouin Foundation, 2003). Without the endorsement of the WTO, it would be extremely difficult for organisations promoting fair trade to induce compliance with “fair trade labelling†by multinational corporations. For this reason, these organisations have sought alternative means to raise consumer awareness of the conditions under which products are made.
In response to the issue of labelling relating to the clothing industries seventy percent of the students agreed that there should be more information on the labels reflecting all the participant value-chain countries and details of the factories where the clothes have been made. When they were asked if such labelling would change consumer behaviour fifty per cent said yes it could or at least make consumers more aware of the issues relating to fair and ethical trade.
Expanding on the discussion relating to labelling the respondents said that the big retailers (in South Africa) should be more transparent in their codes of conduct. They said that it would give such credibility to a retailer if they were open to external, independent and non-partial evaluation of their supply-chains by researchers or NGOs. They said by advocating such transparency would be a marketing coup for the retailer.
Organisations such as The Clean Clothes Campaign pressurise companies to take responsibility for ensuring that their products are made in favourable working conditions by keeping the consumer informed through educational material, civil protests, and public campaigns revolving around “naming and shamingâ€. Due to campaigns such as The Clean Clothes Campaign and Ethical Trade Initiative, many trans-national corporations are “concerned about the adverse labour conditions in their supply chains†even though monitoring such systems can be difficult (Barrientos, 1999:3). Current reports indicate that such tactics are effective. Global corporations such as Nike and Gap have, after years of denying any wrongdoing, recently committed themselves to improving the conditions within their factories in developing countries (Frith and Stevenson, 2005).
Nonetheless, promoters of fair trade and correct labelling face the daunting challenges of competition with multinational corporations that display little or no social conscience. Some of the latter rely on consumer ignorance and gullibility, and go so far as to promote their products with falsified labelling information, touting ethical origins and conditions; by extension, such products are erroneously viewed as products of fair trade (Hudson, 2003:4).
Conclusion
This review of available literature on the merits of fair trade has shown that the global economy, run on a free trade basis, has benefited some workers in developing countries, even if their working conditions do not accord with the standards enjoyed in the developed world. Research has shown that it is often women who suffer the harshest working conditions in Export Processing Zones, where there is much “flexibility†in labour laws (Rama, 2003:16). Even though “wages and working conditions are far superior to those in the rest of the export industry and indeed in the rest of the economy†(Kabeer, 2004: 15), Kabeer notes that there is gender discrimination with women complaining of sexual harassment, discrimination in wages between men and women, and lack of respect for women workers from “supervisors and managers†(Kabeer, 2004: 17).
Workers in the global value-chain of labour-intensive production in countries such as China, Vietnam and Bangladesh have been given the opportunity to improve their quality of life, due to international corporations or buyers forcing producers to meet standards of “health, safety, quality management and labour practices†(Nadvi,2004: 22); such pressure to meet the required standards demanded by these corporations and buyers places pressure on producers at the lower end of the global value chain to find ways to save on costs incurred due to these demands. The one alternative for them leads to an increase in the “casualisation of labour, excessive hours of work to save on wages†(Nadvi, 2004: 25).
Even with excessive hours and hard work women, who are found to be employed mostly in the garment industries, state that working in these industries provides them with the space to become more independent (Nadvi, 2004), and that these opportunities “gave them [women] a sense of self-reliance, of standing on their own feet†(Kabeer, 2004: 18).
The literature that promotes fair trade does not deny these facts, i.e. that globalisation provides work to those who might never be employed were it not for free trade, but these authors argue that the social costs to workers of such employment and the degradation of their human rights should be factored in, and so should the violation of children’s rights through child labour, which, according to ILO 2002 estimates, amounts to some 186 million child labourers in the world (Basu, 2003).
However, Basu reflects that it is poverty that forces households to send their children to work, and that a possible means for eradicating child labour might be an increase in wages for adults (Basu, 2003: 15). Chan and Ross (2003:1017) hold that job creation gains in developing countries through free trade do not equate to fair labour practice, nor do these become “translated to higher wagesâ€.
The ideology of fair trade resides in the premise that, ultimately, trans-national corporations - in their unfettered pursuit of the lowest production costs - induce developing countries, fearful of falling out of the global economy, to surrender their workforces to inhuman levels of compensation and working contexts, so as to meet corporate demands for cheap labour (Starr, 2000:166).
Proponents of fair trade place great emphasis on the consumer’s role in pressurising corporations that do not comply with ethical labour conditions, and they maintain that the private sector should value the rights of workers. The advent and growth of cause-related marketing, ethical shopping and general demand for fair trade are reflected in the global annual increases in fair trade sales (Grimes, 2005: 249; Callinicos, 2003: 75; Bakan, 2004:166)
However, until all roleplayers - international bodies, governments, corporations and civil society - coalesce to find equitable provisions for their variant needs and resources, the debate around the proposition that “any job is better than none†will reverberate into the coming decades, and the exploitation of workers throughout the developing world will continue.
My hypothesis in regard to the merits and future sustainability of fair trade is that it is consumers, as potentially ethical shoppers, who should be regarded as the fulcrum of this debate. Without the base of consumers wanting to support the ideals of fair trade through their purchasing of fair trade products the international market for fair trade products could not exist or compete with the progress of international free trade.
This paper was compiled by Renato Palmi
Durban, South Africa, June 2007
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Renato Palmi
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