rb
Dropped Stitches:
A Trade Deal Helps
Cambodian Workers,
But Payoff Is Withheld
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U.S. Commitment to Raise
Apparel Import Quotas
Is Unraveled by a Union
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Empty-Handed in Seattle
By Helene Cooper
02/28/2000
The Wall Street Journal
Page A1
(Copyright (c) 2000, Dow Jones & Company, Inc.)
PHNOM PENH, Cambodia -- On a hot January morning, 300 women from the Eternal Way apparel factory here marched two miles to the Cambodian National Assembly and demanded early payment of their salaries to help them celebrate the Chinese New Year.
The Cambodian labor code, the protesters argued, requires employers to pay wages in advance when payday falls on a national holiday. They were on shaky legal ground; Chinese New Year isn't a national holiday in Cambodia. Nonetheless, "we negotiated with them," says Commerce Minister Cham Prasidh, and they got half their pay ahead of time.
Cambodian apparel workers say they have Uncle Sam to thank for that. Not so long ago, the government "could give us the runaround," says Katja Hemmerich, staff organizer of Cambodia's Free Trade Union. "Now, we can say, `if you don't do this, we're going to tell the American unions, and they're really going to get p at you, and they'll hurt you.'"
It's a new day in the Cambodian garment industry. Two years ago, anyone who walked off the job here probably wouldn't have been allowed back. But now, a different attitude prevails, largely because of a little-noticed agreement Cambodia signed with the U.S. in January 1999. Cambodia
committed itself to improving working conditions and enforcing its own labor codes. In return, the U.S. promised an eventual 14% increase in the volume of apparel Cambodia may export to the American market, an increase valued at roughly $50 million a year. It was an unusual deal, and a test
case for those who argue that global trade rules ought to take labor standards into account.
Run almost into the ground 15 years ago when the Khmer Rouge annihilated almost a third of the population, this poor Southeast Asian nation would seem an unlikely proving ground for organized labor's vision of how globalization should work. There is, after all, not much work to be found here: young men spend their days leaning against their rickety moped taxis,trolling for passengers.
Women, by the hundreds, show up at Phnom Penh apparel-factory gates, seeking employment. Children chase after foreigners offering lukewarm cans of soda. For the 15,000 turned out by Cambodia's school system each year, there are only about 1,500 new jobs.
But here, far away from the crowds of protesters that shut down the Seattle meeting of the World Trade Organization last year, an answer is taking shape to the question that has so divided the foes and supporters of globalization: Can trade policy be used to improve the lives of workers in poor countries?
So far, the data are inconclusive. The trade deal clearly has made a difference in the lives of the thousands of women who make knit shirts for the Limited and blue jeans for the Gap. But the story
doesn't stop there. It's a far more complicated tale that raises questions not only about the best means of helping poor nations, but also about the motives of those in the U.S. who advocate labor
rights abroad. As yet, the Cambodians haven't gotten any increase in their apparel quota. Despite the improved conditions, American labor unions have blocked any quota change.
Foreign textile firms started setting up shop in Phnom Penh about four years ago, just as the United Nations was pulling out, after having sponsored the country's first free elections since the rise and fall of Khmer Rouge strongman Pol Pot. The companies came to Cambodia for the same reason they once went to Thailand, Indonesia and Malaysia: cheap labor. People were pouring into Phnom Penh in search of work, fleeing a countryside ravaged by land mines. Asian apparel companies, most of
them headquartered in China, Taiwan, Singapore or Thailand, took advantage of that wave of eager workers. Shortly afterward, American clothing companies such as Gap Inc. followed, and began buying from Cambodian factories.
Prodded by American labor unions worried about competition from cheap imports made by ill-treated workers, the U.S. offered Cambodia an unusual deal, which officials from other developing countries advised it not to accept. For years, developing countries have been fighting any
policy link between international trade and labor practices, fearing the U.S. would exploit such a measure to keep their products out of its market. The U.S. was only able to propose the deal to Cambodia because Cambodia doesn't belong to the WTO, whose rules bar the linkage of trade and labor practices.
"We knew we were setting a precedent," says Cambodia's Mr. Cham. "But we didn't want foreign factories taking advantage of our workers either. And we wanted that quota increase -- how else would we grow our economy?"
So, Cambodia signed the pact and began closely monitoring working conditions in its garment industry. It set a minimum wage for apparel workers of $40 a month, paltry by Western standards,
but double the $20 that Cambodian university professors earn and well above the $180 annual per-capita income. Apparel workers were allowed to unionize and to vote for worker representatives in each factory. They were granted 19 days of paid vacation, along with 22 national
holidays. The Cambodian government also came up with an export-license system to punish factories with poor labor standards. In the past year, it has twice denied export licenses to plants that didn't measure up.
Eager for a piece of the U.S. market, more factories set up shop in Phnom Penh last year, and more women found jobs in the factories. Last May, Indonesian businessman H.M. Mahtani built a huge, state-of-the-art garment plant, complete with medical clinic, cafeteria, and air conditioning. He hired 1,100 women to sew, embroider and knit. "We came here on the promise of a 14% U.S. quota," he says.
Posted on the walls of Mr. Mahtani's factory is the same labor code that all such factories must now display. Written in the Cambodian language, Khmer, it enumerates workers' rights.
Down the road is the Suntex factory, where 1,500 women sew tops for the Gap and Abercrombie & Fitch. Em Vandeun, 20 years old, started working there in August 1998, fresh off the bus from Prey Veng province. A shy, quiet woman, she started off making $30 a month. Now, she earns base
pay of $50 a month; a few months it reaches $70 with overtime.
That isn't much when you consider that she sends her family back in Prey Veng $25 a month. But she has managed to save almost $300. "Ten years from now, I want to be a businesswoman," she says.
Of course, such apparel jobs are no picnic. The young women who hold them work 10 hours a day, six days a week, churning out one garment after another. Their home lives, often far away from their families, are equally unglamourous. To make ends meet, most live with five or six other women in
rooms that have no electricity or running water.
Sometimes, it is a fight just to get paid. At Kingsland Garment factory, manager Huang Li seems perplexed as to why his workers would strike after not being paid on time. Kingsland, which is
based in Hong Kong, delayed monthly salaries by a week this past December because of upper-management mistakes; its 500 workers promptly went on strike. "This was unexpected," Mr. Huang says.
Such delays are particularly painful since the women only get paid once a month. Factory owners "should have enough management skills to pay people on time," says Ms. Hemmerich, the union organizer. "When you're struggling to make ends meet, you can't afford to wait an extra day to get paid."
Still, both U.S. Trade Representative Charlene Barshefsky and her textile negotiator, Don Johnson, say there isn't any question that labor conditions in Cambodia have improved. Indeed, at first glance,
it would appear that the U.S. got exactly what it said it wanted. "The agreement led to important improvements, and in a relatively short period of time," Ms. Barshefsky says in an interview. "We have never before seen this degree of improvement this rapidly."
But American labor unions weren't satisfied. UNITE, the Union of Needletrades, Industrial and Textile Employees, sent a letter to Mr. Johnson on Nov. 23, in which its chief, Jay Mazur,
complained that "significant violations of Cambodian labor law and internationally recognized core labor standards have occurred and are occurring in the Cambodian textile and apparel sector." To
support its claim, UNITE included a report completed four months earlier by a Dutch labor group that found violations in five factories.
The input from UNITE was just about the only outside view Clinton administration officials considered when making their quota decision. They didn't weigh any comparisons to conditions in other countries, and they didn't ask for a report from the International Labor Organization, which
monitors labor standards around the world. The U.S. Labor Department sent one bureaucrat to Cambodia last year to study the country's progress, and U.S. Embassy officials in Phnom Penh visited 15 out of 181 factories.
Some labor critics question why the views of UNITE, which has dedicated a lot of energy to fighting textile imports, would be given so much weight. But U.S. trade law provides for any affected industry to weigh in. Moreover, with a fight looming over China's accession to the WTO, which U.S. unions oppose, administration officials have been at pains to appear sensitive to labor's concerns.
Still, Mr. Cham, the Cambodian commerce minister, came to the Seattle trade summit in December expecting the U.S. to deliver on its promise. On Dec. 1, he met in a Japanese restaurant with Mr. Johnson, the textile negotiator, who delivered the U.S. verdict: Cambodia hadn't made enough
progress. There would be no 14% quota increase.
Outside, thousands of protesters were venting their ire about poor labor standards in many parts of the globe. Inside the restaurant, Mr. Cham was already feeling the repercussions.
Mr. Johnson said it was "not clear" that all Cambodian factories were enforcing the minimum wage. There was "some uncertainty," he added, that all workers were being given the right to collective
bargaining. And finally, Mr. Johnson said, U.S. unions had heard reports of forced overtime.
Mr. Cham promptly lost his appetite. "We went beyond what was required by the agreement," Mr. Cham argued. "Is a clear sky with one or two clouds still not a fine day?" he asked.
But Mr. Johnson said the U.S. was prepared to give no more than a 5% increase, and that only if Cambodia signed another labor pact, this one with the ILO, which would provide for independent international monitors. "A virtual carrot," Mr. Cham called it; a "mirage," U.S. importers said.
Because its agreement with the ILO is still pending, Cambodia has yet to receive its 5% quota increase.
"Everybody laughed at us when we signed" the trade deal, says Roland Eng, Cambodia's ambassador to the U.S. "They all said, `The Americans will not give you that increase, no matter what you do.' But we thought differently." Now, he says, "we know better."
The 14% quota increase would have translated into 18,000 more jobs in Cambodia, says Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia. Instead, since the U.S. decision in December, 18 plants here have shut down.
"We turn away 100 to 150 people every week," says Roger Tan, head of Thai-Pore Garment Manufacturing.
Surya In is one of those trying to get in. An 18-year-old from Prey Veng, she came to Phnom Penh six months ago looking for work. The oldest of seven children, she says she desperately needs to make money to help her family, who are tenants farmers. "People help me with food," she says. "But my little brother was sick when I left, and I have to send money."
Steve Walton, executive director of WingTai Asia, is more direct: "Had the 14% been applied in Cambodia, WingTai would be employing 200 more people. The bottom line is, the less quota, the less output. The less output, well, you don't have to be a genius to know what's going to happen, do you?" ____________________