III. GOVERNMENT MONITORING TRENDS

Here we look at the second question of monitoring and how it seems to us to be leading toward increased levels of government intervention and mandated working and wage conditions. We see French Taylorism action research experiments as a way the Athletic Apparel Industry can proceed which could stem this trend. In either case, research into monitoring that is scientifically conducted is, we think, warranted.

Review - One of the central issues is what is the role of government in such monitoring? How can governments effectively monitor transnational corporate social conduct?  Do Codes of Conduct actually help local stakeholders?  What will it take to significantly place factories beyond what experts and workers define as sweatshop conditions? Corporations prefer self-monitoring to government approaches. We have also been asked by Academic associations to clarify the role of government in the apparel industry. Table One suggests various options for monitoring global enterprise and subcontractor labor, environment and ethical practices that involve government. The options move from minimal to maximum government and transgovernment (agreements across governments) agreement. 

TABLE ONE: SIX LEVELS OF GOVERNMENT INVOLVEMENT ON GLOBAL ENTERPRISE MONITORING

Level 1 - The government takes no formal role in apparel monitoring forums, legislation or research. Monitoring is left to the voluntary action of the global enterprise, its subcontractors, labor unions, workers, and non-governmental organizations.

Level 2 - The government encourages corporations to establish codes of conduct as it did in the case of the Apparel Partnership following public outcry over the apparel industry practices in Indonesia in 1991, Kathy Lee and sweatshops in 1996, and the rise in campus protests over apparel monitoring in the last five years.

Level 3 - The government facilitates forums and research into the myriad of codes between such entities as Apparel Partnership, universities, Fair Labor Association, Workers Rights Consortium, Collegiate Apparel, SA8000, and other organizations with codes. These codes vary according to corporate or non-corporate control and the inclusion or exclusion of areas such as living wage, right of workers to associate, enforcement of local national laws. This would mean establishing research grants for university research into such issues as the viability and effectiveness of codes of conduct, what is a sweatshop, how to measure living wages, and the relationship between the university and organizations such as Fair Labor Association, Workers Rights Consortium, and Collegiate Apparel who offer alternative and different monitoring standards and programs.

Level 4 - The government monitors everything from barbershops, beauticians, and chiropractors. The government could begin to monitor the claims and practices of consulting firms and non-governmental organizations such as Global Alliance, Price Waterhouse Coopers, Fair Labor Association, Workers Rights Consortium, etc. who either offer apparel factory monitoring or certify and recommend those who do or procedures for monitoring the apparel industry. This is done through the establishment of an agency for apparel monitoring of worker rights and environmental accountability.

Level 5 -The government enacts laws that oversee the certification and re-certification of monitoring programs to meet minimum standards for workers rights and environmental accountability.

Level 6 - Transgovernment trade agreements that include ecological, wage, health and safety standards for global enterprises and subcontract factories.

Public protest around the world, on college campuses, in factories, and in the streets of various nations has been a main reason that government has become involved in how global enterprises have begun to behave with more conscience and ethics. A corporate sense of ethics and social accountability that is independent of government action has been a second rationale.  

A decade ago few global apparel enterprises had codes of conducts. And having one did not mean that violations of a code were being enforced. In this research we look at the Nike Corporation, the first to adopt a code of conduct and to begin to enforce its standards on some 720 subcontractors in the apparel industry. As Nike, the market leader implemented codes, some, but not all competitors followed the example. We want to study this proliferation. The question of enforcing these codes of conduct led to a demand by the public for monitoring of compliance of subcontracting factories with the codes of the global enterprises and with local laws and standards. Several monitoring agents, such as Fair Labor Association and Global Alliance were born by corporate as well as government initiatives to deal with this issue. In addition audit firms such as Ernst and Young and PricewaterhouseCoopers (PWC) became widely involved in auditing compliance of subcontract factories with corporate, university, and other codes of conduct. 

There is also a move toward level 5 and 6 government involvement. "Negotiations are now underway to reconcile the House bill (which includes the amendment to bar the IMF and World Bank from mandating user fees [for health services]) and the Senate bill (which does not have that amendment)" as conditions for debt relief (Corporate Watch newsletter, October 10, 2000).  Since subcontract employment in debtor nations most times comes without health coverage, anti-sweatshop activists have an incentive to oppose user fees for health care in trade and debtor agreements.

There is a need for basic field research that would assess the level of mandated control necessary to change subcontract factory conditions. To date, global enterprises have agued that they can enact or contract monitoring services that effect such control. Since 1997, a series of studies have challenged the validity and reliability of the monitoring being provided by consulting and auditing firms to the global enterprises. MIT professor Dara O'Rourke has done much of this work. In 1997 O'Rourke released the Ernst and Young audit report to the public media which showed that the apparel industry and its subcontractor was not meeting its code of conduct, was violating labor, health, safety, and ecology laws of the country of Vietnam.

We are applying to the Athletic Apparel industry logo corporations and subcontractors to gain access to a sample of subcontract factories in nations identified in Table Two which would assess the responsible control of Nike as a global enterprise of the monitoring of subcontractor factory conditions. 

On September 28, 2000, O'Rourke released a study of the PricewaterhouseCoopers (PWC) auditing firm. In this study he critiqued PWC audits in factories in China, Korea, and Indonesia. PWC audits for such apparel firms as Wal-Mart, Disney, the Gap, Jones Apparel, Nike, and even universities that are attempting to verify that campus apparel is not being made in sweatshops by subcontractors not adhering to codes of conduct and violation host country laws. O'Rourke (2000: 1) concludes that PWC's "monitoring methods are significantly flawed. Universities and firms interested in auditing labor conditions in the factories producing their goods should consider other monitoring methods and should demand improvements in current monitoring schemes." Consulting firms such as Global Alliance and auditing firms such as PWC and Ernst and Young may not employ personnel with the requisite scientific expertise to monitor hazardous chemical use, barriers to collective bargaining, violations of local overtime, wage, safety, health and environment laws. In addition monitoring by corporations, paid consultants, and corporate-paid auditing forms introduces the opportunity for methodological bias and challenges that monitoring is not independent of corporate control.

The most recent investigation, conducted by a team of independent consultants, was commissioned by University of California, Harvard University, the University of Notre Dame, Ohio State University and the University of Michigan to help the schools better understand the conditions under which licensed apparel is manufactured. The schools shared the $ 250,000 cost of the yearlong consultant investigation, which concluded that codes of conduct and monitoring is inadequate control in the factories studied. "Fifteen licensees were asked to participate. While companies such as Nike, Champion, JanSport and Adidas-Solomon did get involved, six others did not, including Russell Athletic, Pro Player and Fruit of the Loom" (Schevitz, 2000). Consultants did not specify ownership of individual factories. While findings such as "Visitors found violations in each factory visited, including relatively minor problems in two U.S. plants" (Thompson, 2000: 1) --  are important, we believe that researchers can take a more action research approach to figure out solutions to problems being raised.  In addition, while bullet points about various factories are interesting, it takes sound methodology with reliable procedures and detailed analyses to get beyond the current state of research. For example, in this university study, factories were given 72-hour advance notice of the visits and tours were conducted by PWC. Is this sound methodology for eliciting reliable data?  Is a brief  visit to a factory enough time on task to generate reliable data?  As Rick Brimmer, director of trademark and licensing services for Ohio State University, put it, "Any kind of look is just a snapshot of what's going on'' (Thompson, 2000: 1). The report also provides helpful ideas on how to conduct the present project.  For example, "smaller companies that subcontract work from large factories are suspected of illegally employing children, the 145- page report states" (Thompson, 2000: 1).  (Sources: "Workers sweating for OSU." The Columbus Dispatch, October 11, 2000: p. 1, by Alice Thompson; "Study Says Campus Suppliers Abuse Foreign Workforce" by Tanya Schevitz, San Francisco Chronicle, October 7, 2000).

We are proposing an approach that moves beyond use of "agents" and brief "visits" to monitor factory practices and instead looks at a combination of basic academic research and action research.  Calton and Kurland (1996) in their review of the stakeholder concept raise issues about the validity of "agent" approaches to issues involving multiple stakeholders. 

• Calton, Jerry M & Nancy B Kurland (1996). "A theory of stakeholder enabling: Giving voice to an emerging postmodern praxis of organizational discourse. Pp. 154-177 in Boje, David M., Gephart, Robert, Jr. and Thatchenkery, Tojo Joseph (Eds.) Postmodern Management and Organization. CA: Sage Publications.

That is there is a difference between an instrumental or Kantian stakeholder theory of the firm which relies on "agents" to decide stakeholder issues and an action research approach in which face-to-face dialogue and negotiation among actual stakeholders occurs. Agent approaches to stakeholders risk becoming an exercise in "stakeholders of the mind." That is, relying upon an auditor, inspector, consultant, government mandates, or even a university researcher to speak for other stakeholders (i.e. workers, government, communities, ecology).  We, on the other hand, argue that it is through community conversations and participatory research where workers, management, corporate executives, union, non-governmental and government voices are convened that an empowered stakeholder approach can be enacted. An agent does not empower. Therefore we propose basic research by academics in collaboration with stakeholders that looks at how face-to-face meetings and collaborative research efforts that would include many voices.

Current Trends: H. R. 460 (2001 H.R. 460; 107 H.R. 460; Retrieve Bill Tracking Report) has been proposed and introduced by Cynthia McKinney (D-GA) as of February 6, 2001.  This bill would require nationals of the United States that employ individuals in a foreign country to provide full transparency and disclosure in all their operations. Here are the provisions of the first two sections of the bill:

SECTION 1. SHORT TITLE.

 This Act may be cited as the "Transparency and Responsibility for United

States Trade Health Act of 2001" or "TRUTH Act of 2001".

SEC. 2. TRANSPARENCY AND DISCLOSURE REQUIREMENTS FOR UNITED STATES NATIONALS IN FOREIGN COUNTRIES.

 (a) Requirement. A national of the United States that employs 1 or more individuals in a foreign country, either directly or through subsidiaries, subcontractors, affiliates, joint ventures, partners, or licensees (including any security forces of the national), shall take the necessary steps to provide transparency and disclosure in all its operations, including the full public disclosure of the following:

      (1) Information relating to location, address, and corporate name of all facilities abroad, including such information of all subsidiaries, subcontractors, affiliates, joint ventures, partners, suppliers, or licensees (including any security forces of the national).

      (2) Applicable financial agreements, and investments of partners, suppliers, subsidiaries, contractors, and subcontractors of the national of the United States (including any security forces of the national).

      (3) Worker rights practices and labor standards, including any complaints from employees and violations of local labor laws.

      (4) Age, gender, and number of employees in each facility.

      (5) Wages paid to employees, including policies on overtime pay.

      (6) Working conditions based on current standards of the Occupational Safety and Health Organization for similar operations.

      (7) Programs that educate employees about dangers and safety precautions of any chemical used in the workplace.

      (8) Environmental performance, including toxic release inventory of all pollutants released into the local land, water, or air and disclosure of the amount of natural resources that are extracted, processed, or purchased abroad.

      (9) The existence of security arrangements with state police and military forces or with third party military or paramilitary forces.

      (10) The human rights policy of the national, any complaints received from local communities, and any human rights lawsuits filed against the national.

  IMPLICATIONS - This is an example of level five (see above) government intervention.  It would mean that athletic and campus apparel corporations based in the U.S., such as Nike, Reebok, and New Balance would have to reveal all their factory locations, and would be liable to class action suits that violate any of the ten provisions.  As of April 16, 2001 HR 460 has 15 endorsements.