GENDER,
TRADE AND THE WTO
Contents:
The Informal Working Group on Gender and Trade
Executive Summary of the Ghana Case Study:
· Gendered production and gendered markets
· Few benefits from trade
· Interaction between reproduction and trade
· Women's participation in trade decision-making
· Conclusions
A Preliminary Note highlighting the Conceptual and Policy
Links Between Gender and Trade:
· Gender-Trade Myths
· Gender-Trade Facts
Trade Interconnections/policy implications
What
does the phase out of the MFA quota system mean for garment workers?
The
Informal Working Group on Gender and Trade
Women Working Worldwide was instrumental in setting up the women's caucus
at the first Ministerial Conference of the World Trade Organisation in
Singapore in 1996. This has now become the informal working group on gender
and trade (IWGGT) - and comprises representatives from development non-governmental
organisations worldwide and from the international trade union movement.
They share a common concern about the impact of trade liberalisation on
women and wish to ensure that a gender analysis is built into trade policy-making
and associated decision-making, procedures and organisations.
The IWGGT is currently administered by the International Coalition for
Development Action (ICDA).
Needing to find a way in which a gender analysis might be brought into
trade discussions and the WTO , the IWGGT chose to explore the country
reports produced by the Trade Policy Revue Mechanism (TPRM) of the WTO.
From the outset it became clear that the WTO's TPRM had little capacity
or political will to raise gender issues.
The IWGGT therefore decided to offer an analysis that can be used in the
trade policy revue (TPR) process, and to do this through a concrete case
study from a country that will be under review in the near future. Ghana
was chosen since a second TPR report is due in 1999 and there is information
about the WTO and trade policy in civil society and social movements in
Ghana
Executive
Summary of the Ghana Case Study
Decision-making on trade policies and in the World Trade Organisation
(WTO) is mostly based on macro-economic free trade theory, technical arguments
or specific commercial interests.
So far, gender concerns have not been taken into account in trade policies
and practices, and no official analysis has been made of the gender impact
of WTO rules. This contradicts the commitment made at the United Nations
World Conference on Women in Beijing (1995) to incorporate a gender perspective
in macro-economic policies.
The gender blindness of trade policies and WTO rules ignores men and women's'
different roles at work, at home and in society, and that women face discrimination
which restricts their engagement in economic activities. This results
in trade and its impact being different between men and women.
The Informal Working Group on Gender and Trade (IWGGT), a world-wide network
representing organisations concerned with gender issues, commissioned
this case study on gender, trade and the WTO in Ghana. The aim is to further
develop the gender analysis of trade and the WTO as well as to raise the
awareness and debate about the need for a gender perspective in trade
policies and WTO rules. This case study also explores some policy measures
and how to introduce gender issues at the political level. It is targeted
at the members of the IWGGT worldwide, non-governmental organisations
(NGOs), social and civil groups, officials, politicians and academia.
This case study focuses on where trade and trade rules negatively affect
women, in order to counter the current assumptions that trade is gender
neutral and to avoid further hardship on poor and marginalised women who
constitute 70% of the world's poor.
The
gender and trade analysis used in this case study looks at four aspects:
1. identifying how gender inequalities constrain trade policies, WTO rules
and trade activities to benefit women and improve women's income, rights
and well-being;
2. analysing how trade, trade policies and WTO rules contribute to, or
diminish, gender inequalities, gendered markets, female poverty and discrimination
against women and girls;
3. analysing how gender relations at the household level and women's reproductive
tasks interact with trade and trade related activities and vice versa;
4. identifying the power of women in decision-making on trade at different
levels, and how trade and WTO rules impact on decision-making especially
that in favour of women.
A case study of Ghana was chosen in order to provide more concrete insight
into the gender dimensions of trade and WTO rules, and to explore whether
the WTO Trade Policy Review of Ghana which is due in 1999 might provide
a way of introducing gender perspectives into WTO proceedings.
Owing to limited resources, this case study cannot be considered as a
full gender analysis of trade and the WTO in Ghana. Instead it aims at
being a building block. Starting with the general socio-economic and political
context, the case study looks at some sectors where a trade and gender
analysis is relevant: agriculture, trade, industry and mining. It was
not possible to research important areas such as trade in services, trade-related
intellectual property rights (TRIPs) and investment measures (TRIMs),
and the environment.
The
following summarised findings from the four questions above provide interesting
insights into how trade and WTO rules are not gender neutral.
1. Gendered production and gendered markets
· Women's engagement in economic and trade activities in Ghana
is often inhibited by inequalities such as unequal access to land and
credit, lower levels of education and a much higher burden of reproductive
tasks and providing an income than men. These inequalities have divided
production along gender lines.
· The most striking finding was that women in Ghana have traditionally
dominated domestic trading, marketing and regulating the markets but women's
participation in international trade seems to be small, limited to importing
consumer goods from neighbouring countries or overseas. Inequalities as
well as the gendered production of export products (cocoa, gold, timber)
have resulted in gendered import and export markets.
· In the agricultural sector, export corps and their earnings are
mainly controlled by men. Women's production is mostly limited to food
for the family and the domestic market.
· In export-oriented industry, a case study of the export processing
zone (EPZ) reveals that women work mostly in the lowest jobs and have
little bargaining power. This also applies to women in the exporting mining
sector.
2.
Few benefits from trade
· The export of male-dominated cocoa has resulted in lower levels
of extension services, credit and marketing support for women's food crops
whose production is then pushed to marginalised land.
· Domestic trade liberalisation and WTO rules make under-resourced
women compete with subsidised food imports, while access to Northern food
markets is still limited.
· Liberalised global trade has resulted in tougher competition
among women international and domestic traders; more resources and skills
are needed to compete, leaving fewer opportunities for women who are poor
and disadvantaged and/or have a high burden of reproductive tasks.
· In the industrial sector, EPZ factories have created jobs and
seem to guarantee basic gender rights (e.g. employment after giving birth)
but trade competition pressures lower labour standards and result in very
poor working conditions and wages.
· Export of minerals has increased male jobs but undermined income-generating
activities by women while also affecting women's health.
3.
Interaction between reproduction and trade
· Ghanaian women still bear the major responsibility for household
and other reproductive tasks, and the financing of the household. Less
income due to trade affects spending e.g. on girl's schooling.
· The WTO's market orientation of agricultural trade can lead to
price increases and decreases, especially in foodstuffs, that affect women's
purchasing and spending powers.
· Poor women traders report that reproductive tasks and income-generating
pressures hamper the efficiency of their trading activities.
· Women working in the EPZ factories experienced an increase in
work burden as their reproductive tasks at home are not shared by their
husbands. Moreover, they spend more of their income on the household than
men.
4.
Women's participation in trade decision-making
Women's concerns are not incorporated in trade policies, the WTO and the
trading sector. Interviewed trading women complained that they could not
raise their concerns in trade policy, even though a few women were identified
at the highest policy decision-making level. The WTO rules in the agreement
on agriculture do not provide enough instruments to protect and improve
the women's food sector.
Conclusions
The findings indicate that trade and WTO rules are not as beneficial to
all as the free trade macro-economic theory assumes.
This means that incorporating a gender analysis into trade policy-making
would increase the effectiveness in making trade beneficial to all and
prevent women from sliding further into poverty, which has many repercussions
on society at large.
In order for trade to respect women's rights and dignity, a thorough reorientation
of the current trade regime is necessary. There are, however, concrete
steps that can be taken in the short-term, by the WTO and national governments
in cooperation with specialised agencies, to immediately start making
improvements:
· Trade decision-makers could start to take account of gendered
production and gendered markets, and ensure that adequate disaggregated
information is collected and used. National governments, the WTO and other
agencies could commit themselves to additional resources to further develop
a gender and trade/WTO analysis.
· The WTO's Trade Policy Review reports could incorporate a gender
analysis. The renegotiation of WTO agreements such as the Agreement on
Agriculture could incorporate 'non-trade' concerns such as gender, food
security and rural development.
· Analysts and civil groups could use a gender perspective in their
analysis of trade and WTO rules and discussions with trade negotiators.
A gender and trade checklist is appended as a tool for those wishing to
consider what a gender analysis of trade, trade policy and the WTO implies.
A
Preliminary Note highlighting the Conceptual and Policy Links Between
Gender and Trade.
( Prepared for the Informal Working Group on Gender and the WTO)
Gender-Trade
Myths
The reduction of trade and capital mobility barriers as required by the
Uruguay Round Agreements and regional trade and production blocs such
as the EU, NAFTA and Mercosur would at first glance appear to be gender
neutral.
How could reducing or eliminating tariffs and quotas or eliminating restrictions
on foreign investment have different impact on women as opposed to men?
How could opening up the domestic economy to foreign banks and foreign
insurance companies affect women differently than men? Are not these simply
technical processes that affect everyone the same? Women have no special
stake in these processes.
These are some of the myths that underlie trade policy discussions in
most all settings: at the level of bilateral and multi-lateral negotiations
among governments, at regional trade bloc negotiations, and surprisingly,
among and within development, trade and environmental NGO's. Raise the
question of gender and people raise their eyebrows and grimace or stare
blankly at you. Subtext: women have no place here--gender is a philosophical
discussion. It has not place at the table of trade negotiations.
But of course that is not true. Trade, investment and competition policies,
like macroeconomic fiscal and monetary policies are neither gender blind
nor gender neutral in their impact on the lives of women. Rather they
are male biased and male centred and thus have tremendous implications
for women's employment, women's poverty and women's social burden, and
ultimately women's overall well-being.
Drawing on current research on the relationship between gender and trade,
the rest of this note presents in outline fashion the "stylized"
facts of the gender trade nexus. It is presented as a point for discussion
and elucidation. It is neither conclusive nor exhaustive since the work
on gender and trade is still at a nascent stage.
Gender-Trade
Facts
Fact #1. The gender division of labour within the household and the community
continues to be a fundamental dividing line between men and women.
It is women who are primarily responsible for the care and reproduction
of society. This contribution is unpaid and unrecognised. Trade policies
are made on the assumption that women will continue to do this. So the
burden of the adjustment cost associated with trade liberalisation whether
in terms of higher import cost or lower price will have tremendous effect
on women's social burden. When governments re-distribute economic resources
toward the trade sector, or give tax advantages or receive less revenue
from the elimination of tariffs and etc., it is usually the social services
that are sacrificed. Yet the demand for these services remain the same
or may even have increased. Who must shoulder this (additional) responsibility?
Women. There is no neutrality. There is no gender blindness. It is assumed
that women will extend greater efforts to provide water and food for their
families, to nurse the sick who cannot find reasonable health care, and
to take care of the children who have no day care facilities.
According to UNDP 1995 Human Development Report, in 1993 women contributed
over $11 trillion worth of household work to the world economy. This is
in addition to their contribution to subsistence agriculture, informal
sector activities and subcontracting production of multinational corporations.
In most OECD countries women's work burden is about 7-28 % more than men.
In most LDC's it averages 20% more (in rural areas). In both developed
and developing countries about 2/3 of women's work goes un-recorded, compared
to only about 1/3 (1/4 in LDC's) of men's .
Trade
Interconnections/policy implications:
1. Trade policies that are not gender aware and gender sensitive may adversely
impact women's well being. Most often as in the case of export processing
zones and in the clothing textiles and light manufacturing industries
the expansion of trade is based on access to low wage female labour. This
is often accompanied by inadequate protection for women's health and safety.
Furthermore, women must continue to shoulder the double burden of childcare
and housework. Minimum wage laws and other labour rights do not address
these concerns.
2. Trade policies can affect the ability of governments to finance social
sector expenditures by altering the revenue base (Sen 1996). Thereby shifting
the burden to the household sector--into women's laps.
3. Trade policy should not ignore women's unpaid work in social reproduction.
Therefore it is crucially important that gender impact analysis and gender
perspective be integrated into the design, implementation and review of
trade policies and programs. Social development must also be a crucial
cornerstone of trade policy.
Fact
#2. Women and men have different access to economic resources: property,
credit, skills training programs and technical assistance programs for
business and agriculture.
Gender inequality in care and reproduction of the community is not the
only obstacle that women face. They must also deal with institutionalised
sexism and biases that blocks women's access to land and credit. In some
countries women are working on lands that is not theirs and which legally
they cannot, buy, sell or inherit. Additionally, the ability to obtain
loans to make the necessary productivity enhancing improvements are blocked
by biases that them prevent women from full access to bank loans from
financial institutions. This creates bottlenecks and inefficiency in production
of food and other basic necessity. It may also work against export promotion
schemes if traditions constrains women's participation in the labour market.
Trade interconnections/Trade policy implications
1. Trade policies and trade agreements may tend to either reproduce this
situation or may in the worst case introduce new forms of inequality and
biases. As pointed out by Sen (1996), "trade liberalisation is not
inherently welfare producing; it can produce and re-produce inequality,
social disparities and poverty at the same time as it expands wealth."
2. Existing gender inequality and gender biases may adversely affect the
outcome of trade policies.
Fact #3. Women and men operated in segmented labour market that is unfavourable
to women.
In the labour market gender bias continues to perpetuate the existence
of segmented labour market where inequality in wages, promotion and condition
of work is pervasive.
Trade
Interconnections/Trade Policy Implications
1. Trade liberalisation may further the segmentation of the labour market
along gender lines. Historically, trade liberalisation in some countries
have tended to increase women's employment in labour intensive industries.
See for example, the maquiladoras in Mexico and the other export processing
zones in other parts of the world.
2. Generally investment occurs in the paid labour market. In some areas
of Africa women would not necessarily benefit from more trade or greater
investment since these would only marginally affect women's domain: food
production. As a result there is very little technological improvements
or innovation in women's domain. Furthermore, when trade barriers are
reduced goods produced by women may not be able to compete with foreign
produced goods. Rarely is there investment to make food production or
housework less time consume and more efficient.
3. Trade liberalisation may 'alter the bargaining position of workers
vis a vis wages and social benefits.' Given the current male centred approach
of trade unions, this can mean greater pay inequality and increasingly
hazardous working conditions for women workers.
4. It is therefore important that governments and the multi-lateral trade
institutions, such as the WTO and UNCTAD:
· a. Undertake gender impact assessment of the impact of trade
policy on
· women workers.
· b. Collect gender disaggregated data in review of trade policy.
· c. Ensure the incorporation of national equal opportunities and
non
· discrimination laws into trade policy and trade agreements.
Fact #4. Trade policy is closely intertwined with domestic fiscal, monetary
and labour market policies. This intertwine can have a reinforcingly positive
or negative effect on women's social and economic status
Given the prevalence of trade blocs and the expansion of WTO into services,
trade related investment and intellectual property rights there is even
greater integration and subordination of national social and economic
policies to trade imperatives. As a result, we can no longer focus 'on
the social and economic status of men and women at the national level';
but must be looked also at the intersection of national and international
economic policy levels.
Trade
Interconnections/Trade Policy Implications
1. Trade liberalisation engenders "new forms of regulation, coordination
and economic management which may transform the relationship between states
and societies." This will affect not just medium and large firms
but will have important impacts on community and social institutions at
the meso and micro level. It cannot be assumed that this transformation
will be unambiguously beneficial to women.
For example, in some African countries export promotion may shift resources
from women's own account activity towards the exporter. This include land,
tax grants and etc. Export subsidies may adversely affect women income,
trading and employment position (Vander Stichele 1997)
2. Trade liberalisation may improve or erode the tax base which have implication
for the provision of public service.
3. Trade liberalisation which opens up domestic credit market or changes
bank/financial regulations may further constraint women's access to credit.
4. Trade Institutions such as WTO must begin now to develop statistical
data baselines on specific aspects of women' well being that can be followed
over a number of years (Sen 1996).
Fact #5. Trade policy is not isolated from other Macro level policies
(such as development, aid, structural adjustment, debt). Gender must play
an important role in the formulation of all such policies.
If the objective of trade policy is the reduction of poverty and improvement
in the standard of living of citizens then it must be examined in the
context of all other macro level policies. For example, trade policies
for African countries must be developed in the context of the already
existing SPA process which aims at poverty eradication. It must consider
the challenge of the external debt services burden as a limiting factor
on LLDC's ability to participate in the trade liberalisation process.
The ability to compete effectively in global trade depends on the ability
to improve the skill mix and composition of the labour force, to undertaking
technical upgrading and to build the necessary infrastructure for production
and marketing.
This
point to the need for human development and capacity building of which
education, health and technical training is essential. Obviously a constraint
on this is the debt services that are drained from the economy into the
international financial and capital markets.
But an even more fundamental constraint is the relationship between men
and women in society. As pointed out above, unequal gender relationship
cripples women ability to be efficient producers in agriculture and food
production. Likewise, biases that result in the under or non education
of girls prevents women from contributing their full talent to the labour
market. Reliance on cheap and exploit low wage female workers can only
get an economy but so far. Ultimately, real transformation requires the
full utilisation of all of the talents of the men and women in society.
Women's role in society is crucial to the issues of equality, efficiency,
productivity that underlies macro policies. This is because gender relations
" influences the distribution of work, income, wealth and productive
inputs and the behaviour of agents' (Çatagay 1996). As pointed
out by Çatagay (1996), women spend greater portion of income on
productive improving consumption: health, nutrition, education. Improvement
in these factors are correlated with increased levels of productivity
and hence economic growth.
Trade Interconnections/Policy Implications
1. Comprehensive approach to restructure economic incentives and disincentives
so as not to constrain women's ability and access to economic resources.
2. Ensure that gender biases and inequality do not undermine the allocative
efficiency of trade and macro policies by removing barriers to the mobility
of resources, especially labour resources within and between economies.
3. Ensure adequate flow of information and technological transfer between
north and south and between men and women.
3b. Gender aware and sensitive technical assistance that promotes technological
and skill upgrading of exports.
3c. More opportunity for skill acquisition by women (Sen 1996).
Bibliography
Bakker, Isa. 1994. The Strategic Silence: Gender and Economic Policy Zed
Çatagay, Nilufer. 1996. "Gender, Trade and the WTO" Unpublished.
Sen, Gita. 1996. "Gender, Markets and State: A Selected Review and
Research Agenda." World Development, vol. 24, no 5 pp. 821-829.
Vander Stichele, Myrium. 1997. Gender Mapping the European Union Trade
Policy, WIDE.
Williams M. 1997. "The Roots of Trade Policy" in Vander Stichele's
Gender Mapping The European Union Trade Policy, WIDE.
Williams, M. 1996. "Trade Liberalisation Society and the Environment"
Ecumenical Review vol. 48, no.3.
What
does the phase out of the MFA quota system mean for garment workers?
Angela Hale and Jennifer Hurley. (Women Working Worldwide)
The
Multi Fibre Agreement is being phased out to bring world trade in textiles
and garments in line with WTO rules. This is seen as benefiting developing
countries and any criticism focuses on the manner in which the USA and
Europe are holding up the process. However, looked at from the point of
view of workers rather than countries a different picture emerges. The
TNCs who increasingly control the garment industry benefit from open markets
and associated competition between global suppliers. For workers North
and South this means constant insecurity and deteriorating conditions
of work. The ATC could thus become another mechanism through which companies
are able to use the free trade agenda at the expense of workers.
The ATC is an international agreement to bring trade in textile and clothing
in line with WTO rules. (see appendix) It is part of the global process
of trade liberalisation. However, unlike most liberalisation measures,
it is seen as working in the interests of poor countries of the South,
increasing their access to previously protected Northern markets. Critical
analysis has focused not on the Agreement itself but on the manner in
which Europe and North America have controlled its implementation. The
demand is for full and fair implementation which is assumed to be beneficial.
But who exactly is going to benefit? Those predictions that are being
made suggest that although some Southern countries will gain others are
likely to lose. Few questions are raised about what this means for workers.
Yet major relocation of garment production means massive job losses. And
what are the implications for labour standards in the countries which
gain? Trade liberalisation in general is widely recognised as having a
negative impact on conditions of employment. Will the ATC be any different?
It is important to examine what the phase out means not only for different
countries but also for companies who control the industry and the millions
of women and men who depend on it for their livelihood.
Management
of the phase out
The ATC provides a framework for phasing out the Multi Fibre Arrangement.
The MFA has dominated trade in textiles and garments since it was firs
established in 1974. It operates a system of quotas which have been thebasis
on which industrialised countries have been able to restrict importsfrom
the South. Special measures were seen as necessary because the labourintensive
nature of the industries meant that it was becoming relatively easy for
developing countries to compete. However such protectionist policies cannot
be sustained within the framework of the free trade agenda established
at the GATT Uruguay Round. The removal of the MFA was seen by many developing
countries as one of the few gains of this new agenda and was one of the
reasons for signing up to other GATT agreements.
The phase out of the MFA is taking place over a ten year period between
1995 and 2005. So far the impact on developing countries has been minimal.
The USA and Europe have been strongly criticised for deliberately holding
back on the process. This has been done by adding additional items to
the MFA list and by liberalising items not strategically important such
as dolls clothes, parachutes and seat belts (Baughman and all, 1997).
The USA has published product details for the whole period and the intention
is clearly to "end-load" the process so that most items of significance
are only included in the final stage. At the same time other protective
measures have been used to hold up the process. This includes transitional
safeguards, anti-dumping measures, and rules of origin. ( see appendix)
The manner in which the phase out is being managed and the readiness of
industrialised countries to use protective measures calls into question
the whole ATC process. Firstly, the phase out was planned over ten years
to prevent major disruptions to industry. Yet important sectors are being
left until the very end of the agreement so that major adjustments will
be necessary during the last few years. Secondly it is debatable the extent
to which changes in market access will really take place. Given the history
of protectionist interests in the textile and clothing industry, will
it be allowed to liberalise overnight, or will some new emergency measure
be introduced. According to the EU the phase out will occur on time and
no extensions will be given. However it would appear that in Britain at
least, the intention is to make greater use of anti-dumping legislation.
The spirit of the ATC has not been honoured so far and there is a very
real chance that industrialised countries will find ways of introducing
new forms of protectionism in 2005.
Major
garment companies and the ATC
But how significant is the MFA phase out anyway to the economies of rich
countries in the North? The MFA was drawn up in the interests of Northern
companies at a time when clothing was produced by relatively small manufactures
and sold to local and national retailers. Since then garment production
has been dramatically restructured. The industry is now largely controlled
by big retailers and brand based companies. The power of these companies
is based on their control over design and marketing. Typically they own
no production facilities themselves, but now manage a global network of
suppliers. Significant players are the familiar names of high street shops
and designer labels ; Nike, Levi's, The Gap, Wal-Mart, Marks and Spencer.
Large manufacturing companies, such as UK owned Coates Viyella, have themselves
increasingly located production in low wage economies. New technology
and the increased flexibility of capital enable rapid relocation in the
interests of higher profit margins.
These global players can now control the industry without government protection
and they clearly benefit from the free movement of the global market.
With international restructuring it became more advantageous to abandon
the MFA than to continue supporting it. Sartoris, Director or the German
Clothing Federation announced in 1996 that the motto of the German clothing
industry was "no customs, no quotas" ( Textile Outlook International
July 1996) According to Underhill the MFA phase out was therefore a process
through which powerful companies and their Governments were able "to
get something for nothing". (Underhill, 1998). They no longer wanted
the MFA, but they used the offer of removing it as an important incentive
to encourage countries in the South to support other GATT agreements around
intellectual property, investment and services. Increased access to developing
countries markets is also built into the ATC phase out process itself
and is being used as a bargaining tool to persuade countries such as India
and Pakistan to lower their tariff barriers.
More
open markets benefit companies not workers
The MFA phase out may suit major business interests in Europe and North
America but this doesn't mean that it is in the interests of Northern
workers, or even small local manufacturers. With a more open market workers
in Europe and North America will increasingly compete for their jobs with
workers in low wage economies. This process has been well underway even
before the phase out period. It is reported that even the UK retailer
Marks & Spencer recently retracted its "buy British" policy,
ordering its suppliers to cut costs by sourcing elsewhere. Thousands of
UK workers have lost their jobs as a result. For those who remain in work
in industrialised countries, increased international competition means
driving down labour conditions. Marceline White who works with Asian and
Mexican immigrant women in the USA believes that dropping the MFA will
accelerate the dislocation that garment workers have been experiencing
over the past decade. Workers complain of a big decline in conditions
including low pay and extremely long hours. Some have been active in campaigns
against overwork, where workers were forced to work in excess of 100 hours
a week without overtime pay, with increased physical injury and stress
( Gender and Trade Electronic Conference).
In the USA this threat to workers jobs and conditions is partly attributed
to NAFTA, which is an example of a trade agreement based on quota free
access to a large Northern importer. Garment production has moved from
the US to Mexico, which is the only developing country in the agreement.
Mexico has seen its deficit of US$229 million in textile and clothing
trade with Canada and America rise to a surplus of US$1.54 billion, between
1992 and 1996. (Textile International Outlook, May 1997). However this
has been achieved only at the expense of workers basic rights. "NAFTA
represents nothing but the "maquilisation" of the whole region.
This means a faster working pace, longer hours of work, lower wages, reduction
in health and compensation costs, as well as weak enforcement of labour
laws. In this way multinationals can obtain huge profits that return intact
to their countries of origin"( Carmen Valadez, 1995).
Nike is a well known example of a powerful company using international
differences in wages and conditions to increase its profits. All Nike
shoes and 70% of its apparel are sourced in the Asia, mainly Indonesia,
China and Vietnam. Nike claim that their subcontractors are obliged to
pay "full cash minimum wages". However low wages are typically
maintained through the use of low piece rates and impossible production
targets. In a firm in China Sunday leave and the annual Christmas holiday
were cancelled once they began supplying Nike and their standard working
week was increased to 60-80 hours. Meanwhile Nike is the fourth most profitable
clothing company in the world. (Clean Clothes Campaign International Forum,
1998).
However Nike is not untypical. Subcontractors to Wal-Mart, the largest
retailer in the US, the sixth largest company in the world and the largest
single importer into the US, don't pay their Bangladeshi workers the legal
minimum wage. Workers earn 40-70% below the minimum wage for an 80 hour
working week . In effect, some of the world's poorest people are being
robbed of $20 per week. They work in unhealthy conditions with restricted
toilet breaks and are denied their statutory rights such as maternity
leave. In 1998 Wal-Mart's revenue was $137.6 billion, 36 times greater
than Bangladesh's revenue of $3.872 billion. Wal-Mart's financial success
is not based only on the exploitation of Southern workers; half of its
720,000 US retail employees qualify for federal assistance under the food
stamp project (National Labour Committee, 1999)
Global sourcing by retailers has weakened the position of high cost Northern
producers. Coats Viyella is the largest garment manufacturer in Europe.
In an effort to increase profits it cut its UK workforce by 11% between
1992 and 1995, while its overseas workforce increased by 30%. In 1996,
it again restructured the company and reduced the number of garments made
in UK by 50%, which resulted in 1,300 redundancies in the UK. Much of
the remaining production was for Marks and Spencer, their biggest customer,
but now even Marks and Spencer is demanding an increase in international
sourcing. The UK union KFAT now reports a loss of 1800 jobs a month from
UK manufacturers (KFAT News 1999). Coats Viyella is typical of how large
manufacturing companies now operate, combining increased outsourcing with
continued investment in their downsized domestic bases, where quick response
times compensate for labour costs.
The MFA phase out will enable transnational companies to become even more
flexible, with less constraints governing their movement between countries
and suppliers. Companies will become even freer to seek out greater financial
advantages where ever they can find them; cheap raw materials, low wages,
lack of trade union rights, government subsidies. They can use potential
savings as threats to undermine job security in both the North and the
South, threatening to move to countries with cheaper resources to keep
employees in line and working in sub-standard conditions. The reality
is therefore is that the greatest benefits of more open markets go to
TNCs, whilst workers in both the North and the South are threatened with
insecurity and lowering of standards.
Relocation
of garment production under the ATC
The ATC will cause major relocation of garment production. The South as
a whole is likely to gain a greater share of the industry. However this
is likely to be concentrated in a few low cost locations. The MFA quota
system, although operating against the South as a whole, did have the
effect of guaranteeing a Northern market to a large number of poor countries.
With a more open system producers will have to compete in a global market.
Poor countries will need to invest meagre resources to make their industries
attractive to foreign companies. However not all will succeed and weaker
producers are likely to lose their entire export industry. Millions of
workers will be displaced. Even countries that succeed will lose much
of the potential income to transnational companies who can use more open
trading systems to their advantage. For example they
can manipulate their accounts so that they pay their taxes in the countries
that have the lowest tax bands. The countries that succeed are likely
to have the "advantage" of efficient but low cost labour, in
other words places where workers are not disruptive and paid low wages.
Since the ATC is likely to displace many workers it would seem important
to make appropriate preparations. However one of the problems is that
it is not easy to predict exactly which countries will ultimately benefit
or lose. Variables are changing rapidly and it is impossible to determine
what the criteria will be in 2005. Cheap labour is not the only important
factor. Other variables include the skill level and flexibility of the
workforce, the nature of the countries financial system and sources of
capital, flexible production processes, attitudes to technology as well
as the transport and communications infrastructure. Proximity to the market
is significant but does not necessarily imply quick
deliveries, sourcing cheap materials is more important than transit costs
(Mehta, 1997; Kelegama, 1997). Beyond these factors lies the issue of
bilateral and regional trade agreements that will still be in force beyond
2005 and will play a significant role in determining which countries will
have the greatest export opportunities. According to Munir Ahmad of the
International Textile and Clothing Bureau ( Interview1999), it is more
difficult than most people think to predict what the outcome will be.
It is not just a question of international policy decisions but also how
national Governments respond to new opportunities.
Implications
for workers in different countries
In spite of the difficulties of making accurate predictions, it is important
to consider the possible scenario at the end of the phase out period.
This can be done by looking at the current position of some significant
countries and regions.
In general Asia is expected to benefit, with something like a 6% increase
in trade. China and India are likely to gain most followed by Pakistan
and Korea. (Majmudar 1996, Yang 1994). All have access to domestically
produced fabrics. Labour costs are higher in Korea but it will benefit
from having moved to the more capital intensive end of the industry. China's
textile industry needs upgrading but it will benefit from Hong Kong's
well established financial and marketing expertise as well as low labour
costs.
China
China is already emerging as a dominant supplier in spite of high quota
restrictions and other forms of protectionism. China's exports to the
United States were cut from 4.4 per cent to 0 per cent in 1994 due to
changes in the rules of origin specifically designed to curb its rapid
expansion into the US market (Cline, 1995) Despite this, in the first
quarter of 1997, American imports of Chinese textiles and clothing soared
by 61% in volume, with an increase of 50 per cent in value, over the same
period in 1996. (Textile International Outlook, May 1997). Although China
is well placed to benefit the outcome will be largely determined by whether
or not they becomes part of the WTO. Only then will China become entitled
to the liberalising provision of the ATC. The US is championing China's
accession to theWTO, backed by major corporations such as Boeing and Motorola.
This is in spite of the fact that an independent study by the International
Trade Commission predicts job losses by US garment workers. Concern is
expressed about human rights in China , but in the event this is unlikely
to prevent them joining if it is seen as benefiting major business interests.
Some are predicting that China's accession to the WTO will mean they will
become the major world supplier of goods at the lower end of the market.
Clearly one reason for this is the seemingly endless supply of cheap labour.
The adoption of neoliberal policies, including "labour flexibility"
by China's ruling elite has meant the loss of worker protection and massive
unemployment. It has also further weakened workers capacity to take collective
action to defend their rights. In foreign-invested factories and joint
ventures it is normal that a strict regime of discipline is incorporated
into workers contracts and notices are posted in
factories listing fines and physical punishment for such offences as speaking
or drinking water during working hours, sitting or resting and going to
the toilet too often. (China labour and Information Centre). Women garment
workers typically work 10-14 hours a day, seven days a week and gross
neglect of industrial safety has resulted in numerous factory fires. China
may gain from joining the WTO and being included in the ATC, but what
sort of gains are these for workers?
Bangladesh
For some countries the uncertainty that surrounds the future of the ATC
has huge implications. Bangladesh in particular is largely dependent on
the garment industry for its economic survival. In 1997/1998 the garment
industry represented 73.3% of Bangladesh's total export industry. This
has come about largely because of Bangladesh's trade advantages under
the MFA and EC GSP scheme. Export quotas are only imposed on Bangladesh
by two of the nine signatories to the MFA, the US and Canada, and in those
countries only on selected items. In a quota free environment it will
be difficult for Bangladesh to compete. According to Anisul Haque, chairman
of the leading Mohammadi Group (ATA Journal, June/July 1999), buyers only
place orders with Bangladeshi firms when they have used up the quota allocations
of other countries. In other words it is not the buyers first choice.
When it no longer has a quota-free advantage it may receive even less
orders. Other obstacles include its dependency on foreign design, technology
repairs and even textiles and its lack of
ability to respond quickly. The Bangladeshi industry is concentrated in
lower end of the market. It has no support industries because the spinning,
weaving, dying industries are very weak, so it has to import almost all
raw materials which means that the value added to the economy is only
25%, the rest of the profits flow to other countries (ATA Journal June/July
1999). It now also faces stiff competition from countries which have become
cheaper as a result of currency devaluations after the Asian Crisis.
However Munir Ahmad of International Textile and Clothing Bureau believes
that Bangladesh could remain competitive if other trade measures remain
in place, such as tariff advantages in the European market. This will
depend on the Government ability to overcome existing limitations and
upgrade the industry. A plan has been prepared which is calling for huge
amounts of external investment in the textile industry. There are proposals
for increased training for employees in the garment industry to offset
the low productivity rate ( Centre for Policy Dialogue 1999). The Bangladesh
Garment Manufacturers and Exporters Association also has proposals to
cut the lead time from 120-150 days to 60-90 days.
The future for the thousands of garment workers in Bangladesh is therefore
extremely uncertain. If current disadvantages are not overcome there are
likely to be massive jobs losses. Thousands of women have migrated from
poorer rural areas to seek jobs in garment factories. They work long hours
in unacceptable conditions, but can at least support themselves and have
gained some measure of personal freedom (Kibria, 1995). When the jobs
go, what will happen to these women? It is questionable whether they will
be able to reintegrate back into their villages. Their lives in the factories
go beyond the bounds of what is traditionally acceptable for a future
wife. How will they survive in the city? And what will be the result for
working class urban families where the women's income is vital for the
family's survival? On the other hand, if successful initiatives are taken
to upgrade the industry there could be benefits for women workers in terms
of increased training and better working conditions. However experience
has shown that if work becomes more skill intensive there is no guarantee
that it will remain women workers who are hired and trained. Also proposals
to cut lead times implies increased intensity of work in an industry where
the workforce already work an average of 10 hour a day. Whatever the scenario
there is likely to be serious dislocation for which workers are ill prepared.
Europe
The response from industrialised nations to the ATC has been to try to
get manufacturers to focus on value-added products based on technological
advantage, flexibility and just in time production. Between 1993 and 1995
the developing countries share of the global clothing trade dropped by
6.5% to 53%, which implies that the industrialised nations have reclaimed
some of the market (Bhattacharya, 1999). Those workers least threatened
in Western Europe are therefore those in involved in producing high quality
garments at the top end of the market. For all workers increased competition
means reduced bargaining power. More work is put out to homeworkers and
there is increased pressure to accept new "flexible" patterns
such as irregular shifts without adequate overtime pay.
Eastern Europe is benefiting from the ATC as well as reduced customs tariffs.
Inward investment has been from Germany, and more recently Italy, as well
as Sweden and Austria. In fact, the first wave of liberalisation appears
to be in line with E. European exports into Europe and not Asian exports
(Spinager, 1995) an indication of how biased the MFA phase out is in practice.
The bulk of investment into the area is in Poland, Romania, Hungry and
the Czech Republic. Germany and Italy are biggest investors in E. Europe,
while UK favours Far East and France favours North Africa. It is likely
that Morocco and Tunisia, and also Portugal and Greece, will be undercut
by Eastern Europe and Asia.
By 1996 Poland had become the sixth largest clothing supplier to EU, apparently
a great success story. However, economic success at the national level
does not translate into prosperity, or even job security, at the personal
level. In Poland wages are kept so low that women have to work long hours
to reach excessively high targets in order to earn wages that are below
the legal minimum. The average wage for a garment worker is DM230, while
a family of four need DM1,000 just to get by. If they work very hard with
overtime, working 12-16 hours per day, a worker can earn DM450, which
is still not enough to get by on. Also workers can be laid off temporarily
without pay, when there is not enough work (Made in Eastern Europe, Clean
Clothes Campaign, 1998). When demand changes, or a contract is in danger
of moving elsewhere, they are not given any warning and suddenly find
themselves unemployed and without compensation. Their lives are held ransom
to the vagaries of the international market and the increased mobility
of capital. Already within Eastern Europe there are signs of a situation
reflecting that in Asia, where production moves according to differences
in countries wage rates. Some companies are moving from Poland and Hungry
to Romania, Slovenia and Bulgaria. In Bulgaria workers report that they
are constantly threatened with the need to keep down production costs
in order compete. They are frequently locked into factories until quotas
are finished and made to perform excessive unpaid overtime (CCC Newsletter
11, 1999).
Turkey
Another significant player is Turkey, which had the largest share (11.7%)
of EU garment imports in 1995 and an increasing share of the US market.
It has advantageous access to EU and has a good chance of establishing
its position before the end of the phase out period (ATI, December 1996).
It has abundant access to cotton and unlike China has a strong fabric
market and quicker turnaround times. Deficiencies in capital and know-how
are slowly being built up. The combination of these advantages meant that
between 1990 and 1996 the number of foreign investment backed firms increased
from 58 to 114. This is very important on an economic level because investment
tends to return to the same places, clustering in specific countries (Textile
Outlook International, May 1997).
Links
to industrial restructuring
This clustering effect illustrates one of the paradoxes of the garment
industry. At the same time as production appears to be more footloose,
going where the prices are lowest, the industry is also becoming centralised
in specific firms and countries. Restructuring and rationalisation which
has taken place since the Asian crisis, has been characterised by not
only increased internationalisation of production but also company mergers
and increased market concentration among the largest groups (Euratex Bulletin,
January 1999). In other words theindustry is simultaneously concentrating
its resources while expanding and moving its purchasing through subcontractors.
This corporate structure exemplifies changes in the world economy where
profits and benefits are stored in one region and the sacrifices made
to create those profits are concentrated in another. Northern based companies
are managing production in Eastern Europe, Central America and Asia and
as countries are labelled too expensive they are abandoned for cheaper
neighbours causing a downward pressure on wages and conditions. The ATC
is simply an integral part of this trend, removing some of the remaining
barriers to the free flow of market forces.
Other changes in the industry also effect the nature of competition in
a more open market. In an international survey of the textile and clothing
industry carried out by Underhill (1998), the most important contributor
to failure was "inappropriate products for rapidly changing markets".
This has serious implications for the workers. The number of buying seasons
has doubled in the last few years to between six and eight as Northern
retailers are only willing to carry limited amounts of stock in order
to respond more rapidly to changing trends. Such demands for flexibility
are clearly linked to labour conditions since they translates into forced
overtime and extended periods of unemployment.
The garment industry has always been characterised by low wages and poor
working conditions. What trade liberalisation is doing is pushing this
to the limits. The unacceptability of this is becoming increasingly recognised
so that parent companies are coming under pressure to accept responsibility
for working conditions wherever production is based. Many garment companies
are responding by committing themselves to codes of conduct on labour
conditions. Turning this commitment into something meaningful is fraught
with difficulties. But more fundamental is the basic contradiction between
any notions of "ethical sourcing" and the whole way in which
the industry operates. The exploitation of global inequalities is fundamental
to the way the garment industry is now structured and it will take more
than company codes to prevent this. On the other hand companies may be
realising that they themselves may ultimately lose from this system. Unbearable
work burdens, low wages and the reduced ability of states to support health
and education is not the basis of an efficient workforce. In fact the
end result could be social breakdown. Such social costs are a price that
the very companies that are exploiting employees are going to have to
pay (Elson, 1998).
Conclusion
If we look at the MFA phase out within the framework of the global operation
of the industry we can begin to see beneath the official rhetoric. The
ATC is being presented as a great leap forward in international trade
relations, creating a more equal playing field which will benefit Southern
countries more than the North. In reality the main impact of the ATC will
not be a relocation of the industry from North to South but a relocation
of production sites within the South itself. Some Southern countries will
benefit, others will lose. However the main beneficiaries will be Northern
based companies who will profit from fewer restrictions on their global
operations. Meanwhile workers in both the North and South will suffer
as their jobs become even more insecure and conditions continue to deteriorate.
The ATC can be thus be seen as another mechanism through which companies
are able to use the free trade agenda to maximise their profits at the
expense of workers. Those who criticise the ATC present it as a battle
ground between South and North, but the real battle is between international
capital and workers everywhere.
Selected
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