Global Commodity Chains and Labor

1. Global Commodity Chains and Labor

2. Outline • Economic integration of “Greater China” (China-Hong Kong-Taiwan) and China in East Asia • Concept of “global commodity chains” • Experience of labor in low-wage mfg’ing • Actors affecting labor rights

3. Economic Integration of “Greater China”: A Player in Global Production Chains • How did China become a player? • enabled by certain political initiatives • driven by economic complementarities • Geographic proximity • Exchange rates • 1980s appreciation of New Taiwan Dollar • Stricter environmental regulations in democratizing Taiwan • Ex: electro-platingarsenic in ground water • Land values increase in Taiwan in 1980s • Upward pressure on wages in Taiwan in 1980s • facilitated by linguistic and cultural affinities • Question: Where were the first special economic zones located? Why?

5. Economic Integration of “Greater China”: A Player in Global Production Chains • Chinese government policies to attract foreign direct investment in export-processing zones strategially located near Hong Kong and Taiwan • “Special economic zones” • Tax breaks for exporters • Duty-free import of inputs • Infrastructure development

6. Origin of Direct Foreign InvestmentCumulative 1990-2004

7. Global Commodity Chain Analysis:Roots in Dependency and World Systems Theory Dependency World Systems Core Core Periphery Semi-periphery Periphery Global commodity chain studies draw on the insights of dependency/world systems theory

8. Global Production Chains(aka Global Commodity Chains) • Distinguish • Producer-driven commodity chains • Capital, technology intensive • Exs: automobiles (GM, Toyota), aircraft (Boeing, Airbus), electrical equipment • Core multinational corporations invest directly

9. Global Commodity Chains • Distinguish • Buyer-driven commodity chains • Labor intensive, low technology • Exs: apparel (Gap, Levi), shoes (Geoxx), toys (Brio, Disney) • Core corporations own trademarks, engage in sub-contracting • “Just-in-time” inventory control • Very short production lead-times • Low barriers to entry in manufacturing  High barriers to entry in design and marketing

10. Global Commodity Chains • What functions take place in the • Core? • Semi-periphery? • Periphery?

11. Where is power located in the buyer-driven commodity chains? locationfunctiondivision of profits core design/marketing $$$$$$  orders, contracts ex’s: Reebok, Nike semi-periphery higher-end mfg’ing $$$ trade intermediary for low-end mfg’ing quality control, financing, shipping (middle-man role)  direct foreign investment ex: Yue Yuen periphery low-end mfg’ing $ (paid by middle-man) ex: Lili (working sister 打工妹） Dongguan 2007 wages now ~$3/day

12. What is “triangle manufacturing”?

13. Sample industry breakdown • 75 billion dollar industry 36 billion  brands/stores 48% 25 billion  transportation logistics 33% 14 billion  factory oversees 19%

14. “Sweatshop Labor” • Objective and subjective interpretations • Video • http://video.google.com/videosearch?hl=en&q=labor%20china&um=1&ie=UTF-8&sa=N&tab=wv# • 5:20-10:33; 20:11-24:00 • Why might “sweatshop labor” seem desirable to workers?

15. Discussion Topic • Identify several pro’s and con’s associated with “sweatshop labor.” • This question relates to the debate about whether low-wage labor in export processing industries is • “a route out of poverty” or • “a race to the bottom”

16. Competing Theories about Impact of Global Commodity Chains • Dependency vs. Neo-liberalism vs. Statism Debate • Is low-wage labor in export-processing factories a • “route out of poverty”? • Driven by market forces (neo-liberal) • Does a developmentalstate promote • Labor protection • Policies toward higher-tech, higher-wage jobs (statist)? or • “race to the bottom”? • Driven by multi-national corporations (dependency) • Driven by predatory state (statism) • Lack labor protection, etc.

17. Is low-wage labor in export-processing factories a… • “route out of poverty”? • Higher paying job oppor-tunities for rural surplus labor • Labor remittances important source of capital • “China Blue” & “Working Sister” • Open small business • Help pay for sibling education • Dowry—more independence in choice of marriage partner

18. Is low-wage labor in export-processing factories a… route out of poverty”? • “Race to the bottom?” • Low or unpaid wages • Wages for unskilled workers rising very slowly (in part due to intense competition both locally and internationally), • while wages for skilled workers rising dramatically (note: not a level playing field in terms of access to education for children in remote, rural areas) • Abusive working conditions

19. New Developments in Labor Politics:Strikes Hit Honda Parts Factories

20. Discussion Questions • Pun Ngai • What has improved as a result of corporate codes? • What has not improved as a result of corporate codes? • Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai. • Which institution/actor(s) has the biggest effect on labor conditions? • Friedman and Lee • What would Friedman and Lee add in terms of institutions/actors affecting labor conditions? • Other questions

21. Discussion Questions • Pun Ngai • What has improved as a result of corporate codes? • Upgraded factory, dormitory facilities • Contracts • 1 day off in 7 • No labor deposit • No holding of id’s • What has not improved as a result of corporate codes? • Mandatory overtime • Below minimum wage • Free trade unions

22. Discussion Questions • Pun Ngai • Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai. • SA 8000 • non-governmental, multi-stakeholder organization whose mission is to advance the human rights of workers around the world • auditable social certification standards for decent workplaces, based on conventions of the ILO, UN and national laws • “works with brands to focus their corporate social responsibility programs on management control of working conditions” • Western (European) transnational corporation • Western audit firm • Clean Clothes Campaign (Europe)/Worker Rights Consortium (US) • Foreign investors • Taiwanese co-owner of China Miracle • Hong Kong owner of China Galaxy • Chinese private investor • Co-owner of China Miracle • Chinese factories • China Miracle Garments • China Galaxy Apparel • Chinese Government (Labor Laws) (local labor bureau tasked with enforcement; who is labor bureau subordinate to?) • Garment industry Federation Trade Union • Factory trade union branches

23. Discussion Questions • Pun Ngai • Try to identify and list all the of institutions/actors affecting labor conditions, as cited by Ngai. • What would Friedman and Lee add? • Powerful, fiscally interested local governments • Hukou (household registration system) • Legal system (arbitration--committees, litigation—courts) • New social media • Labor NGOs

24. Discussion Questions • Pun Ngai • Which actor(s) has the biggest effect on labor conditions?

25. Publicity over Rash of Suicides Drives Changes at Taiwan-Owned Foxcomm

26. Actors at Different Levels of Analysis Affecting Labor Rights in China • Supranational Level • Global Compact • United-Nations-sponsored initiative • http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html • World Trade Organization • “social clause”  failed • International Labor Organization • China signatories to more conventions than US • But • “reservations” QUES: What’s a likely Chinese “reservation”? • No teeth • Multi-national Corporations • Corporate Codes of Conduct • International Non-Governmental Organizations (NGOs) • Global Exchange • http://www.globalexchange.org/campaigns/sweatshops/

27. Actors at Different Levels of Analysis Affecting Labor Rights in China • State Level • Developed Countries—U.S. example • U.S. Department of State • U.S. Congress • Developing Countries • China: Labor Law effective 1994 • Organizational Level • Unions • Other Interest Groups • China Labor Watch—Li Qiang • http://www.chinalaborwatch.org/ • China Labour Bulletin--Han Dongfang • http://www.clb.org.hk/public/main

28. Actors at Different Levels of Analysis Affecting Labor Rights in China • Individual Level • Students • Labor Activists • Consumers

29. SLAP campaign wants UW to be sweatshop-freeMarch 7, 2007 • Senior Rod Palmquist, a representative for SLAP, emphasized the responsibilities of college students in particular to “take ownership of knowing where their clothes come from and that they are ethically made.” • In order to ensure every article of clothing that bears the UW logo has been constructed ethically, SLAP has petitioned the University to adopt the Designated Suppliers Program (DSP), an agreement sponsored by the nationwide United Students Against Sweatshops (USAS). • The program aims to secure at least 75 percent of all UW apparel from factories with workers’ rights, including living wages (salaries high enough to support the standards of living depending upon the country) and the right to unionize. • Contracts with collegiate apparel generate huge profits for athletic apparel companies such as Nike and Reebok, Palmquist said.

30. The Seattle Times November 17, 2000 UW to join Worker Rights Consortium University will continue to monitor groups' involvement in issues related to sweatshops “The University of Washington will join the Worker Rights Consortium, despite earlier concerns about the fledgling anti-sweatshop group's refusal to allow garment-industry representatives on its policy-making board. “The school also will maintain its affiliation with the Fair Labor Association, a U.S. Department of Labor program that has been criticized by student activists for including corporate partners such as Reebok, Eddie Bauer, Nike, and Kathie Lee Gifford.

31. Wal-Mart Wins Ruling on Foreign Labor December 19, 2006 “Wal-Mart Stores cannot be held liable under United States law for labor conditions at some of its overseas suppliers, a federal judge has ruled. A complaint filed last year in Los Angeles by the International Labor Rights Fund contended that employees of Wal-Mart suppliers in China, Bangladesh, Indonesia, Swaziland and Nicaragua were forced to work overtime without pay and in some cases were fired because they tried to organize unions. The complaint said that the contracts required suppliers in the five countries to comply with local labor standards and that what the plaintiffs deemed the company's failure to enforce those terms meant the employees were working under ''sweatshop'' conditions. ''This is basically a local wage and hours violations case and should be handled in those countries,'' said Beth Keck, a spokeswoman for Wal-Mart. ''It is very inappropriate that Wal-Mart should be made part of this.''

32. China Drafts Law to Empower Unions and End Labor Abuse, October 13, 2006 “China is planning to adopt a new law that seeks to crack down on sweatshops and protect workers' rights by giving labor unions real power for the first time since it introduced market forces in the 1980's. The Chinese government proposal, for example, would make it more difficult to lay off workers, a condition that some companies contend would be so onerous that they might slow their investments in China. The skirmish has pitted the American Chamber of Commerce -- which represents corporations including Dell, Ford, General Electric, Microsoft and Nike -- against labor activists and the All-China Federation of Trade Unions, the Communist Party's official union organization. On Friday, Global Labor Strategies, a group that supports labor rights policies, is expected to release a report in New York and Boston denouncing American corporations for opposing legislation that would give Chinese workers stronger rights.

33. Who is responsible for sweatshop conditions? • Multinational corporation based in the core? • Do corporate codes of conduct exist? Enforced? • Pressure on price, delivery schedule, etc. • Subcontracting middle man who owns/manages the factory in the periphery? • Subvert codes of conduct? • Government where the factory is located? • Enforce local laws? China’s Labor Law passed 1994 • Note: independent trade unions--illegal • Consumers based in the core? • We are what we wear?