Clothesource Comments

Do Vietnamese rights allegations set TPP back by years?

noreply@blogger.com (Unknown) — Fri, 26 Jul 2013 15:01:00 +0000

A set of disturbing claims about Vietnamese rights violations by US unions and activists, together with the US Department of Labor blacklisting Vietnam for its use of child labour in garment making, holds the potential, in our view, to delay implementation of the Trans-Pacific Partnership (TPP) past the end of this decade – if it ever gets off the ground

Before readers snort and accuse me of exaggeration, let’s remember that the last Free Trade Agreement (FTA) the US Congress ratified (with Colombia) took almost six years to go from draft agreement between negotiators to implementation. Over five years of that was spent stuck in Congress – which has still to ratify the FTA with Panama.

The allegations being made by the US Department of Labour (DoL) about the use of child labour in Vietnam are serious – but probably not as serious as its finding (which no-one has contested) that there is no serious monitoring of the use of child labour in Vietnam. Vietnam’s consequent blacklisting is probably commercially immaterial (China’s blacklisted too, and it hasn’t hurt its apparel sales to the US) – but China’s not seeking an FTA with the US. In its review of Vietnam’s response to initial abuse allegations, the DoL observes that the Vietnamese seem not to have understood the claims being made – and every single protectionist Congressman will point out that that hardly instils confidence in Vietnam’s likelihood to observe whatever rights guarantees are in the TPP.

In our view, these things are like a pendulum. For the years from 2000, there was a wave towards free trade in much of the Western political community – and the US Congress granted TPA to get deals through quickly. But since then, we’ve had a recession followed by (in the US) a jobless recovery, and elsewhere in the West just more joblessness, leaving a widespread sense throughout the developed world that free trade just shipped jobs somewhere else. On top of that, the South Asian garment factory tragedies have made many conclude that there is no way goods can be made offshore without increasing the total amount of human misery – and a politician who wants to be re-elected has to deal with this change.

The activists publishing the reports we’ve mentioned want the US to call off TPP negotiations, and we think that’s unrealistic. But it’s not unrealistic for activists to win the battle to bring debate about the TPP onto the floor of Congress – which inevitably means onto the floor of the Canadian and Australian Parliaments and probably the Japanese Diet. While the US-Australia FTA was being negotiated, it took the Australians longer to agree to ratify than it took the Americans: scepticism about the benefits of free trade isn’t just an American peculiarity.

With observers now expecting no final agreement from the negotiators before 2014, it’s looking increasingly likely the Partnership will come into practice no earlier than 2020. If then

India’s growth strategy doesn’t even begin to add up

noreply@blogger.com (Unknown) — Mon, 22 Jul 2013 14:32:00 +0000

India’s new Textiles Minster, K Sambasiva Rao, has high ambitions for the country’s garment industry.

And it’s about time someone did: India’s performance in global garment trading has been lamentable: it’s been consistently among the worst performers since quotas came off in 2005, and the volume of garments it’s exported to rich countries has fallen year after yeawr, month after month, between early 2010 and March this year.

That doesn’t just affect this industry and those working in it: India’s appalling underperformance in everything to do with manufacturing, and its equally appalling record this century in tackling illiteracy, child poverty, malnutrition and access to decent sanitary facilities are closely linked. India’s widely-trumpeted economic growth over the past 20 years has trickled down to a smaller proportion of its population than anywhere else in Asia, except possibly Burma – partly because that growth simply hasn’t created the millions of higher-paid manufacturing jobs growth has in China or Vietnam. ON practically every indicator of human misery, India ranks with the poorest countries of Sub-Saharan Africa – and the gap between it and its Asian neighbours has widened over he past 20 years

The country’s Prime Minster, Manmohan Singh, is possibly the most highly qualified statesman – at least academically – anywhere, ever. But it’s now nine years since he came to power with promises to reform the bureaucratic complexity the garment industry, like so much else in India, is shackled by. He has simply failed to get reform through the maze of conflicting pressures in his coalition government. As a result, India has not only failed to improve living conditions for the mass of its people: its balance of payments has got dramatically worse.

Now Singh, with under a year before the next parliamentary elections, has set up a group of ministers to try to develop policies to achieve real growth, especially in manufacturing. Rao appears to have lots of good ideas, for spinning, weaving and garment making, and we’ll look at those ideas in the next in this series.

But while his heart is certainly in the right place, his grasp of numbers risks undermining the credibility of any plans he might have – and of the quality of advice he’s receiving from his civil servants.

The dollar value of India’s garment exports fell 5% in the Indian 2012/13 financial year (the 12 months to March 31, 2013) to $12,5 bn “mainly due to the reduced demand in the US and Europe” Indian apologists constantly – and wrongly - claim. India’s volume share of rich-country apparel imports fell in 2012 from 5.2% to 4.9%, while Vietnam, Bangladesh and China all saw increases in their share. India’s falling sales were the result of bad Indian policies – and the continuing repetition of the untrue “reduced demand” claim demonstrates a contempt for proper analysis that permeates all of India’s hamfisted approaches to competing globally.

But Rao believes his plans can help turn all that round. So dramatically, in fact, that he claimed India’s garment exporters can sell $20 bn worth of clothes by March 31, 2014. He said on July 15 that’s what the exporters themselves were saying. But they’re not going to face an election in a year’s time. He’s chosen to repeat their propaganda – when two seconds with a slide rule (his PM will happily teach him) can demonstrate the numbers are fantasy.

$20 bn of apparel exports represent a 55% growth (in dollars, not rapidly devaluing rupees) over 2012/13. India’s garment makers are claiming that exports (by value) grew 11% in the three months from April 1 to June 30. So between July 1 2013 and March 31 2014, India needs to export a further $16.5 bn worth – 28% up on the whole of 2012/13, and an incredible 69.3% up on the $9.75 bn India exported in the same nine months of that financial year.

No substantial apparel making country has ever achieved sales growth of over 50% in a year. And Rao hasn’t even got any plans to achieve his numbers. All he’s got is a list of ideas he’s going to take to his colleagues at the end of July. Those ideas include things like looser regulations on overtime and employment protection: precisely the same ideas the Prime Minster was touting a decade ago, and still can’t get through his coalition colleagues. They aren’t plans for making and selling more garments: they’re plans for making manufacturing easier – once they’re implemented.

Maybe this time they’ll happen. But it’s highly unlikely they’ll happen fast enough to affect exports before 2014/15: even if his colleagues buy his proposals in an hour, they won’t be able to implement them until most Western clients finish negotiations for winter 2013/14 orders.

Rao’s accepting numbers the industry has plucked out of the air because they think such numbers will persuade the government to back their pet projects. No-one in the Indian garment industry believes for a nanosecond they’re remotely credible: they’re silly numbers, invented with complete contempt.

Whether it matters that India will undershoot its preposterous target by 30% or 40% is debatable. But in endorsing these junk numbers, Rao has handed opponents of industry reform the gift they want. “What’s the point of backing further reform?”, they’ll argue in April 2014, when apparel exports come in at around $13.5 bn - $14.5 bn. “He’s just done what the bosses demanded, and still undershot by 35%”

Bangladesh agreements: as always the activists badmouth first, check facts later

noreply@blogger.com (Unknown) — Wed, 10 Jul 2013 15:07:00 +0000

The launch of the Alliance for Bangladesh Worker Safety was picketed on July 10 by self-described “activists”, handing out leaflets attacking it as “a fake”. None had any idea what the Alliance was proposing.

For our readers, here is a summary of the key differences between the Alliance the demonstrators have rejected without looking at it and the Accord on Fire and Building Safety in Bangladesh they purport to regard as wonderful:

Membership. The Alliance currently consists of seventeen North American retailers/brands, with Li & Fung in an undisclosed "advisory capacity", though it "expects to add more members in the future". The Accord consists of 70 mainly European brands and retailers, though it also includes PVH, Abercrombie & Fitch, Canada's Loblaws (Joe Fresh), several Australian businesses and a number of smaller North American buyers

Absence Perhaps more interesting than which plan major buyers belong to is the list of major buyers who belong to neither, but do have sourcing in Bangladesh. No explanation has been offered for failing to commit by these buyers, listed in Clothesource's global Top Forty Apparel Buyers:

TJX
Nike
Adidas
Hanesbrands
Limited Brands/Victoria's Secret
Levi Strauss
Ralph Lauren
Fast Retailing
Shimamura
Sogo/Seibu
Takashimaya

Legal underpinning. Ultimately, the Alliance is a voluntary agreement: the Accord has a legal structure enabling factories accounting for most of signatories' procurement in Bangladesh, subject to commercial viability, to force buyers to maintain their volumes for two years. Accord signatories are committed by the Accord to stay with the programme for five years.

The reasons behind the difference are unclear, and in our view not being presented honestly. Walmart reject legal underpinning because it “would subject us to potentially unlimited legal liability and litigation”: unions claim this argument “has no legitimacy whatsoever”, though have never demonstrated any legal authority for such assertions. We believe the real division is that, generally, European buyers have no real alternative for the next few years to including Bangladesh in the list of countries they source from: for most North Americans, leaving Bangladesh (which has no import duty advantage over China or Vietnam for Americans), or dramatically reducing buying from it, might well become the best commercial alternative. The real fear for Americans is being "forced" into staying in Bangladesh if they do not want to. Walmart have been as unable as the unions to provide any support for their lurid claims.

Management: The Accord is managed by a Steering Committee of unions, buyers and an independent Chairman, Dan Rees of the ILO Better Factories Programme. Bangladeshi trade associations are complaining about their exclusion and lobbying for inclusion.

A nine-member Board of Directors has been established for the Alliance, consisting of four retailers, four stakeholders who provide specific expertise, and an independent board chair. The chair is expected to be named within the next few weeks.

Factory Inspections and Safety Commitment: Within one year (ie by July 2014), 100 percent of all factories that conduct work with an Alliance member will be inspected. Members have agreed to work only with factories that ensure a safe working environment, and as a result, all have committed to refusing to source from any factory the member determines is unsafe.

Accord Signatories have agreed to initiate an Interim Inspection Program to speed up the assessment of Bangladesh textile industry factories. Initial inspections will be carried out at every covered factory at the latest within a 9 month period of July 1 (ie by March 31), and plans for renovations and repairs put in place where necessary.

Establishing Common Safety Standards for Factories: The Alliance will develop and put in place common safety standards by October of this year.

The Accord strikes us as woollier on this: it “has started to review existing standards, engage experts and liaise with the Bangladeshi government to design and structure a program including standards, rating systems, review of existing inspection reports, forms of inspection report and protocols for renovation and other remediation actions necessary” It intends initially inspecting while agreeing common standards

Result publication. Both the Accord and the Alliance will publish inspection results through the Fair Factories Clearing House. The Accord is clear that aggregated supplier data will be published in English and Bangla: the Alliance is clear that inspection results will be available to workers, but unclear about wider publication

Worker Training: Both have programmes for ongoing, mandatory training and education for factory workers and managers.

Worker Voice: The Alliance will establish an anonymous worker hotline by November of this year that will use mobile technology and be administered by a third party. The Accord relies on elected worker committees

Progress Reports: Both have broadly similar programmes of public progress reports.

Programme Funding: Each member of both the Alliance and the Accord will contribute a specific amount to support the initiative, based upon the amount of production each company has in the country.

Alliance members with the higher levels of production will pay $1 million a year for five years. Currently, the alliance safety fund is $42 million and growing, and the alliance will designate 10 percent of the fund to assist workers temporarily displaced by factory improvements or in the event of a factory closure for safety reasons. The funds also will support the selected non-governmental organization (NGO) that will implement components of the programme. . Collectively, individual retailers have committed over $100 million in funding, the Alliance says, for low-interest loans and affordable access to capital in order to ensure repairs at factories they work with are made in a timely manner. At the launch, the Alliance claimed its members had actually committed $142 mn

Accord retailer/brand signatories are responsible to ensure that sufficient funds are available to pay for renovations and other safety improvements as directed by the Chief Safety Inspector. Such funds may be generated through negotiated commercial terms, joint investment, direct payment for improvements, government and other donor support or any combination of these mechanisms.

Net effect

The Alliance signatories are already making great play with the fact that there is substantially more cash available right now from Alliance signatories than from Accord signatories. Whether $142 mn is remotely near the amount needed to make Bangladesh factories safe is far from clear

Might soaring Bangladesh exports have partly caused its tragedies?

noreply@blogger.com (Unknown) — Tue, 09 Jul 2013 13:18:00 +0000

Is there another, and rarely commented on, way in which retailer practices have contributed to the spate of garment factory catastrophes in South Asia over the past year?

It would be unrealistic and cynical to attribute the pace at which Bangladesh apparel exports have soared since the Tazreen fire in November to publicity for low prices the country has been receiving: however cynical an observer might be, garment orders cannot be switched on that quickly. In the first six months of Bangladesh’s current financial year (July-December), apparel exports (in US dollars) were up 8.5%, but growth has been in double digits ever since, and hit 20.7% in June.

In our view, there is a link though. That link (which applies to the Ali Enterprise fire in Pakistan as well) is the little-discussed, but difficult to understand, decision by management on the spot to order work to continue amid evidence of a likely imminent disaster.

Universally, commentators in the West have attributed those decisions to “greed” and those condemnations have gone unchallenged. But observers at the Razzak Plaza building on June 27 saw factory workers beating a TV reporter up for reporting it was unsafe: engineers that day confirmed it was dangerous and the building, and the factories within it, remains closed. So why do people, in a city with a long history of factory accidents, treat evidence of more unsafe buildings so lightly?

One reason, of course, is that if you’re very poor, there’s always going to be a temptation to run risks. Personally, I can’t imagine being in a factory like Rana Plaza, after seeing a TV programme the previous day about how unsafe it was, and working there nonetheless. Or, in a city with a long history of factory fires, accepting a foreman’s claim that a fire warning was a false alarm. But I’ve never lived on $38 a month.

There’s a similar motivation on the part of management. It’s now clear that a contributory factor in the current disasters has been the awful coincidence over the past year of booming orders, an uncertain Western retail environment and a massive collapse in public order in Pakistan’s and Bangladesh’s biggest cities.

There’s a horrible commercial risk in being a garment manufacturer these days. You get the order from Walmark or whoever and you think you’re going to make money. You buy the raw material they tell you to – and there’s a guarantee you’ll get the full price for the finished garments within so many days of your delivering those garments to a ship or truck at the time specified in the contract. But if, between getting the order and shipping the goods, production is disrupted by power outages, raw material being delayed en route or access to your factory blocked by violent rioters (in other words if you’re a normal Dhaka or Karachi factory), you’ll be left with a huge pile of unsellable garments and a whopping fabric bill you’re going to struggle to pay.

Sometimes, the Western retailer will allow a shipment delay. But if he’s worried sales aren’t going to be as rosy as he expected six months ago, he won’t – or he’ll fine the factory so much it might have been better for the manufacturer if the order had been cancelled.

Now there are hundreds of things that can delay production. Hundreds of reasons why factory owners get neurotic about getting a whopping debit note. And hundreds of reasons why an owner might want to subcontract production elsewhere – whatever a customer’s book of rules might say. Hundreds of reasons, too, why a manager in a garment factory might, idiotically, choose to assume an alarm bell is ringing because the alarm’s not working properly.

Most of those reasons have nothing to do with greed: but they’ve got a lot to do with a manager’s terror a faulty alarm is going to bankrupt him – because that’s what will happen if he stops production for a day on an already massively delayed job. By some estimates, it was impossible to work in most Bangladesh factories in the first three months of this year for fully one-third of the working days available.

Now none of that excuses lethal decisions. But it explains why factories can make stupider decisions when they’re busy than when they’re not. And it also means that Western buyers wanting to stop the cycle of deaths in South Asia have to try to break the cycle of orders often not being able to start production until so close to the delivery date that corners are cut. And it reminds buyers that a political climate assuring public order is just as important a factor in evaluating a factory as low prices or decent transport infrastructure.

There are times too much work CAN be bad for business.

Are rich country software companies scaremongering over alleged "pirate" IT in developing country garment exporters?

noreply@blogger.com (Unknown) — Mon, 08 Jul 2013 10:55:00 +0000

Cambodia’s Information and Communication Technology (ICT) Business Association warned garment makers of likely, potentially catastrophic, legal action in the US after the State of California announced it intended suing Indian and Chinese apparel exporters manufacturerfor using unlicensed software. Without

A judgement in California’s favour could have the manufacturers barred from having goods enter California and face a fine of $2,500 “per violation”. The action was launched in January against India’s Pratibha Syntex and China’s Ningbo Beyond Home Textile by the California Attorney-General under the state’s Unfair Competition Act of 2011. California claims Pratibha Syntex had licences for using Microsoft software on four computers, but ran it on 400: Pily Wong, president of the Cambodian ICT Business Association, said “US authorities are definitely very active and one day or another, some factories from Cambodia will get hit”.

Possibly. Or is this just another cynical stunt by Microsoft (who pay Wong's salary: he is also Microsoft country manager in Cambodia) to create Fear Uncertainty and Doubt (a formally accepted part of Microsoft's marketing techniques) among honest businesses?

A California-style competition law exists so far only in California and Microsoft’s home state of Washington. There has been no court hearing on the California lawsuit so far, and – though the case has received wide publicity in the worldwide software industry - little discussion about how a US court can obtain evidence of an act committed abroad.

It appears that Microsoft obtained information about Pratibha Syntes from an internal whistle-blower, and failed in its legal action in the Delhi High Court against the company, though it has succeeded in a number of similar suits in India. It did succeed in forcing an inspection of Pratibha’s computers. Pratibha has now brought legal action against Microsoft in Delhi under clauses in the Indian Penal Code which criminalise fabricating false evidence. Pratibha is no fly by night: it is one of the few Asian members of the Sustainable Apparel Consortium. Unlike Microsoft, it has never been found guilty of illegally manipulating markets, or been proven to have dishonoured commitments it made to major governments

Software piracy is, of course, rife and California legislation can potentially put an Asian exporter to the US (or a subscriber to The Source) out of business even for using legitimate software on more computers than licensed: there is no clear definition of “violation”, California’s Deputy Attorney General has publicly boasted, leaving the real possibility a court might rule an offence involved a separate violation (and a separate $2,500 fine) every time someone runs Word or Excel on a computer for which it does not have a licence. But in the only attempt so far to apply the legislation against a foreign company, the State of California has made no progress after six months in even getting a date for a hearing – and Microsoft has been accused in India of criminally fabricating the evidence against Pratibha Syntex. And the IT industry’s reputation among serious business people for unsubstantiated scare-mongering has still not recovered from the Y2K anti-climax in the run up to December 31, 1999.

We are all used to corporate IT staff, and outside consultants, promulgating scare stories which turn out to be unfounded. Though no-one can seriously argue software piracy or licence infringements are unknown in garment manufacture, no-one can argue either that the California or Washington statues have resulted in a successful case against a garment exporter.

Inspecting suppliers for conformance to the statutes of two US states might be as pointless a waste of management time as the more absurd questionnaires buyers imposed on factories in the Y2K mass delusion.

China’s apparel exports sustain growth and US share – but for how long?

noreply@blogger.com (Unknown) — Thu, 04 Jul 2013 14:45:00 +0000

For several years now, we have been explaining how US importers in particular seem no less prepared to buy their clothes from China these days than in the past. How long can the real world continue to behave differently from how most commentators are convinced it really ought to?

China accounted for 38.3% by volume of US apparel imports in May 2013 –practically unchanged on May 2012, up on 2011 and fractionally down on its record 40.1% May share it achieved in 2010. Most other exporting countries keep telling everyone how they’re just about to reap the bonanza that importer dissatisfaction with China is going to bring – and no doubt if they keep saying that for long enough, they’ll be right for a minute or two. But that bonanza just isn’t showing up anywhere. And, if anything, Chinese prices to the US have been falling slightly faster over the past two years than prices from elsewhere

The touching belief in China gets surreal from time to time: the Sri Lankan garment industry is getting excited about selling $15 mn worth of clothing to it in 2012, compared to the $3.6 bn worth of garments it exports to the US and EU. Bangladeshi garment makers flatly told Europeans last year they weren’t going to increase wages, and didn’t have to because they were about to be overwhelmed by Chinese investors who didn’t hold with all this ethical compliance nonsense. In fact the biggest overseas investment by a Chinese garment manufacturer we can trace since the beginning of 2012 has been by Bosideng in one London store – where the $53 mn it’s invested is actually greater than all garment making investments combined by Chinese businesses in any overseas country during 2012.

Though there are a number of Chinese manufacturers setting up around Asia, taken together they amount to almost nothing: Chinese wages are no longer going up much faster than in nearby countries, and most Chinese garment makers have concentrated since 2008 in improving their productivity – whether by internal relocation or through better equipment and planning. Though they squeal if ever their currency shows signs of strengthening, their government has kept it practically unchanged against the US dollar, against which it’s appreciated just 5% in the past two years

Some of that may be changing – but there’s little sign of it affecting China’s competitiveness yet: China’s prices to Europe, for example, fell 11% in the first three months of 2013.

Common sense says China’s competitiveness should be getting hit by the artificially high prices in China for raw cotton: but that seems to be hitting the spinners, while garment makers and weavers just import cotton yarn from elsewhere. The really big threat, to my mind, comes from the sharp tightening of credit in China, and I think credit has been China’s secret weapon over the past few years.

In Mexico’s complaint to the WTO about Chinese trading practices in garments and textiles, there’s a lot about easy credit, but estimating the benefit is tricky.

Look up any official source or banking data, and you’ll be told that lending rates are a bit higher in China than in the West. But that’s not the real point. Cashflow in garment making is horrible: the factory pays a fortune for fabric and trim, and adds very little value itself. A huge part of a factory owner’s job is negotiating for more favourable payment terms from suppliers, and borrowing cash to run the business if a consignment’s a bit late. More often than not, the sources he uses for cash top tide him over don’t show up in official statistics: they’re often little more than loan sharks – and the things Mexico complained about are a myriad of different techniques China has developed for smallish businesses to get by without resorting too much to loan sharks.

These are precisely the sources China’s current credit crackdown is trying to dry up. If China doesn’t handle that with great sensitivity, there’s a real risk a lot of garment makers might run out of cash at just the wrong time.

Tough to predict. But if we ever see an end to China’s extraordinary skill in keeping hold of its world garment market share in spite of so many predictions it won’t, that end won’t be due to rising wages. It’ll be because more and more factories just find themselves unable to pay their wage bill

A small point – but still worth making

noreply@blogger.com (Unknown) — Mon, 01 Jul 2013 10:21:00 +0000

The only self-styled “workers’ representatives” to support America’s suspension for Bangladesh of some little-used import duty concessions are American. In supporting this withdrawal, they have taken positions completely contrary to every single Bangladeshi worker representation organisation.

In Bangladesh, every garment worker organisation we can identify has opposed the suspension:

- Bangladesh Textile Garment Workers Federation President Mahbubur Rahman Ismail: “They [US] are saying this was done for the sake of the workers. But this will not help them. Rather they could have pressured the government to ensure compliance in garment factories, international standard salary and the right to form trade unions.”
- Garment Owners-Workers Unity Forum President Moshrefa Mishu: the suspension is a ‘step against Bangladesh’s interest’ and “immoral”. “This is cannot be supported. This is illogical.”
- Bangladesh Garment and Industrial Workers Federation President Babul Akhtar “The US decision to suspend the GSP facility without considering the government moves were wrong”
- Bangladesh Ministry of Foreign Affairs “It cannot be more shocking for the garment factory workers of Bangladesh that the decision to suspend GSP comes at a time when the Government of Bangladesh has taken concrete and visible measures to improve factory safety and protect workers’ rights.”

In the US, of course “worker representatives” know what’s good for Bangladeshis far better than mere Bangladeshis:

- International Labor Rights Forum: “A step forward for workers’ rights and public health”
- Nine, heavily union-funded, Democrat Senators: “"We urge that the administration suspend Bangladesh's eligibility for GSP”

Now there IS a good argument that suspending these benefits might be in the long-term interest of Bangladeshi workers. But there’s also an argument that the only people on earth qualified to decide what’s in the interest of Bangladeshi workers are Bangladeshi workers.

The people of what’s now Bangladesh have spent much of the past 75 years fighting for their liberty from government by British, Japanese, Indian and Pakistani people convinced they know best what’s right for the people of East Bengal. You might have thought Americans would have at least acknowledged no-one in Bangladesh agrees with them.

Especially if those Americans masquerade as worker representatives

Activists can’t be trusted either…

noreply@blogger.com (Unknown) — Mon, 01 Jul 2013 09:44:00 +0000

Activist organisations attacking the garment industry are forever claiming buyers should publish lists of their suppliers. But why can’t the activists?

It can’t be that difficult surely? Looking at a couple of recent attempts, it looks as if it is. And the explanation has to lie in the laziness, self-absorption and dash for cheap headlines of the activists claiming they’re creating lists.

The Cambodian Center for Human Rights (CCHR), for example, published a list on June 30 it claims provides a list of Cambodian garment factories that provides “where available, the specific brands supplied.”

Yet it ignores information freely available in the supplier lists published over the past few months by H&M, Nike and Adidas, as well as older information published by Timberland, Patagonia and Varner Gruppen. The CCHR list claims H&M, for example, uses just three Cambodian factories: H&M have recently published details of thirty-three Cambodian factories it uses. Missing 90% of suppliers to the world’s second largest garment specialist does imply just the teeniest amount of carelessness

If the compilers are too idle to go to those buyers’ websites, fine. But why insult people by accompanying this publication with the usual activist guff about “While more work needs to be done to trace the supply chains for specific factories where human rights abuses are most prevalent”?

There may well be a case for activist groups to add to the information many buyers are already supplying. But if those activists can’t make use of freely available information, it does rather pose the question of what other claims they’re making are based on zero homework.

The School of Data at least managed get contributors to dig out some of the published supplier lists when it tried crowdsourcing garment brands’ supply chains. But its contributors couldn’t be bothered getting Adidas’ either. I mean, it’s not as if Adidas keeps its lists a secret: it even updates them twice a year. But, beyond those off the shelf lists every sourcing manager in the industry keeps on his hard drive, there is scarcely a single piece of original research in the School of Data’s work.

The sloppiness of its contributors didn’t stop it pontificating for the planet on a subject it clearly doesn’t understand. It berates businesses who’ve produced lists for using so many factories in Bangladesh that haven’t been accredited by WRAP, a US-based accreditation programme: “That these certified factories constitute a mere 3% of all factories in Bangladesh gives us an insight into how far the industry has to go as far as certification is concerned. Interestingly, 22 of the Wal-Mart blacklisted factories feature on this list.”

Interesting indeed. The School of Data’s daylong seminar teaching people to download bits of the Nike website was sparked off by a series of tragedies in Bangladesh based on unsafe buildings. But WRAP doesn’t inspect buildings independently: its “accreditation” merely assumes national building certificates are worth the paper they’re printed on. In Bangladesh they weren’t: and part of the reason Walmart blacklisted 22 “WRAP certified” Bangladeshi factories is because WRAP accreditation in Bangladesh is no guarantee of worker safety.

To paraphrase the School of Data’s gullible commentator. That 10% of Walmart’s blacklist was WRAP certified gives us an insight into how deficient current accreditation systems are in Bangladesh. A point most activists usually grasp – which is why most activists who understand factory safety mistrust WRAP, ETI and the rest just as much as they mistrust Gap or Walmart.

Using crowdsourcing to help improve working conditions around the world has immense potential. It’s such a pity that its advocates are more interested in jumping to sloppy conclusions based on ignorance of the industry than in helping save lives and improve the quality of garment workers’ lives

Bangladesh GSP: It IS an empty gesture

noreply@blogger.com (Unknown) — Fri, 28 Jun 2013 08:43:00 +0000

America’s decision to suspend Bangladesh’s Generalised System of Preference GSP concessions was supposed to be coming “with some kind of roadmap to enable the restoration of suspended trade privileges if it makes progress on labour issues," according the anonymous official who first leaked the story.

In fact it just came with a bland sentence that “the Administration is also initiating new discussions with the government of Bangladesh regarding steps to improve the worker rights environment in Bangladesh so that GSP benefits can be restored… The Obama Administration is committed to reflecting American values in our trade policy, including with regard to the rights of workers worldwide” There followed a list of what the Obama Administration has done with countries with seriously awful worker rights and a US free trade deal.

Which, in the case of Bahrain, Guatemala and Colombia is nothing – but with enough court hearings and public investigations discussing just how “nothing” nothing means to keep a fair proportion of America’s lawyers in gainful employment for several years. And in the case of other US free trade partners, nothing at all.

Bangladesh is being penalised (as Madagascar was a few years ago) because it doesn’t hurt the US. Bahrain, Guatemala and Colombia – all countries where unions are aggressively, and often lethally, persecuted – all have strategic roles that matter to US policy makers. Bangladesh – where strikes break out daily – is having sanctions imposed on it as Burma – which has aggressively kept unions out for decades – is having its sanctions lifted because America believes its companies can sell a lot of services to the Burmese.

It’s important to understand what the US decision means, and doesn’t mean:

- Its impact on Bangladesh exports is trivial.

- It means nothing for any plans by American businesses to invest in Bangladesh, because practically no foreigner invests in Bangladesh. And, as Youngone’s current travails indicate, Bangladesh doesn’t really want them to anyway: the Bangladesh Garment Manufacturers’ and Exporters’ Association has repeatedly made it clear that it opposes foreigners investing. Bangladesh does want investment in its roads, trains, ports and energy – but they’re not things American companies particularly want to invest in

- It means nothing, by itself, for US businesses buying from Bangladesh. If seeing hundreds of garment workers die there hasn’t alienated significant numbers of US shoppers, it’s hard to see how a minor import duty adjustment on things Bangladesh doesn’t export will influence US garment retailers and brands

- It means almost nothing for Europe. In the US, a country’s GSP status may be altered by Presidential mandate, which takes weeks. In Europe, changing a Least Developed Country’s duty free status is a complicated affair, requiring public debate in the European Parliament and endorsement by the community’s 28 (as of July 1, 2013) members. Not just likely to take a couple of years, but quite possible to get hijacked en route by the many interest groups who believe Bangladesh’s duty free status should not be changed.

The best possible outcome of all this is that it encourages the EU to start the process of looking at withdrawing Bangladesh’s privileges. There’s a real debate in Bangladesh about what kind of rights unions should have, though in the West there’s far too little heard from those pushing for controls on what unions can do.

That debate can easily be used as an excuse to stop unions altogether – and one way of ensuring the Bangladesh government won’t drag its feet in its promise to legalise unions is by holding those feet to the fire of a real threat its European duty free access will disappear if there aren’t proper unions quickly.

Otherwise: this suspension is going to be little more than a device for improving the Administration’s relationships with its union contributors

India gets ambitious. About handloom weavers?

noreply@blogger.com (Unknown) — Fri, 28 Jun 2013 07:23:00 +0000

India’s new Textiles Minister is pretty ambitious. But those ambitions would be a lot more credible with a bit more realism.

Or do we mean honest thinking?

India, viewed from a worldwide perspective, has been the great disappointment among the countries that could have prospered from the collapse of quotas on European and North American apparel importing in 2005. Instead it’s been about the most sluggish performers in Asia when it comes to garment exporting. China exports about ten times as many garments to Europe, the US and Japan as India, whose garment exports are less than Vietnam’s or Bangladesh’s, only a bit bigger than Indonesia’s and just 50% greater than Cambodia’s. Cambodia is about a twentieth India’s size.

The country’s new Textile Minster, K.S. Rao, thinks he can change that. He’s said he wants to see garment and textile exports up to $50 bn in the 2013-14 fiscal year, from the $30 bn they managed in 2012-13.

His priority, he says, are handloom weavers. Because “the artisans must be taken care of”

Well, maybe: but he’s not going to increase exports by 66% (or even 0.66%) by prioritising handloom weavers. Those “artisans must be taken care of” because they represent a lot of votes: but it’s not votes India’s soaring trade deficit needs, it’s a healthy spurt in India’s exports of fabric and garments. And they include next to nothing handloom weavers make.

He’s actually got other targets in his sights: “red-tapism”, which seems to be holding new factory sites up, what he says is a perverse policy by the country’s finance ministry to make textile and garment businesses borrow at 12-14% when other industries are borrowing at 7% and delays in implementing the country’s Textile Upgradation Fund Scheme (TUFS) which he believes has been approved but has to still come into effect.

There’s a lot more than just that to India’s weal performance in global garment markets, and personally I think Rao’s $50 bn target is hopelessly unrealistic. But if he’s going to lift India’s game, much of his thinking is fine.

Though I wouldn’t bank on handloom works to kick in much of that $20 bn export growth he’s gambling with his career on

Would suspending Bangladesh’s US duty concessions be yet another pointless gesture?

noreply@blogger.com (Unknown) — Thu, 27 Jun 2013 16:30:00 +0000

The US will announce that it will suspend Bangladesh’s minimal import duty concessions, news agencies reported on June 27.

Quoting highly-placed US congressional sources the agencies said the Democrats have been pushing for the step since last year, ostensibly because of restrictions on union membership, though the unions pushing hardest for it have also consistently pushed for more barriers against imports from poor countries.

Bangladesh has been promising to legalise free unions for several years, but consistently fails. Amendments to its current legislation, thought to be likely to clear the country’s parliament by the end of June, have been widely criticised as both failing to permit free unions and to reduce workers’ rights in a number of ways.

In practice, of course, US thinking has been swayed by the fire at Tazreen in November and the deaths of 1200 people when Rana Plaza collapsed, and in particular by the complete failure of the country’s government, factory owners and public officials to honour any legislation or provide any straightforward explanation of anything. It is also no coincidence that the Senators who wrote to President Obama on June 26 calling for the suspension are all heavily dependent on union contributions to their campaign funds.

Under its Generalised System of Preferences (GSP) concessions from the US, Bangladesh can export nearly 5,000 products duty-free to the US, but such products account for less than 1% of its exports, which are dominated by garment exports to Europe. The US promised in 2005 to offer the same duty-free concessions on clothing to the world’s 49 poorest countries that the EU, Canada, Japan, Australia, EFTA and even China do. But that promise has turned out as reliable as a Bangladeshi politician.

A congressional official aware of the administration’s thinking briefed news agencies that Bangladesh has not been permanently dropped from GSP, but has been suspended from the list of the countries entitled to enjoy it.

“Bangladesh won’t be expelled from the programme, and its suspension will come with some kind of roadmap to enable the restoration of suspended trade privileges if it makes progress on labour issues” said the official who spoke on condition of anonymity because he was not allowed to make any formal comment over the issue.

The decision, if confirmed, is clearly trivial in itself. The common argument that it will make the EU more likely to withdraw its duty-free concession is, in our view, absurd. If the death of 1400 in six months as a result of factory owners’ contempt for their workers’ safety will not force the EU to withdraw its concession (and there are valid arguments that the EU should not withdraw duty-free access), it is hard to see how a trivial gesture, aimed more at ingratiating the US Administration with American unions than saving any Bangladeshi lives, will carry any influence with EU legislators.

The triviality of the GSP concession makes it unlikely Bangladesh’s politicians will follow any realistic roadmap the US Administration might dangle. Bangladesh is currently riven with political violence, and many prominent Bangladeshis believe they are the result of deliberate attempts to destabilise the country. Union activities are limited because many sensible Bangladeshis honestly believe many self-styled union activists are motivated more by the desire to create mayhem than to improve the lot of Bangladeshi works.

Saying this does not make their views accurate: but no sensible Bangladeshi is going to risk more violence for easier access to the US market for goods the country doesn’t make.

If the US offered duty-free access for garments, some Bangladeshis might have a different view: but America’s promised that before, and reneged. Its track record on renewing the AGOA duty-free privileges for Africa is disgraceful – and the years and years its legislators have taken to approve free trade agreements with Korea and Colombia give no grounds for expecting any offer by the US to be honoured in anyone’s political lifetime.

On the other hand, the suspension does little harm either. And it just might make Bangladesh’s politicians take the EU’s threats to suspend duty-freeaccess more seriously.

Or it might not.

America has had just one war for independence. In the past 70 years, many Bangladeshis believe they have had at least four. Their territory was on the front line in the fight by British India to prevent Japanese invasion between 1941 and 1945. The struggle against British rule was as supported in what was then East Bengal as anywhere else in India – and most Bangladeshis are descended from people who then had to fight Indians for Pakistan’s independence. Thirty years later, the people of West Bengal had to fight Pakistan for their own freedom – and many in the country believe they’ve been in a constant struggle to stay free of India since.

Few in Bangladesh, after taking on most of the world’s great powers in the last three quarters of a century, are going to take favourably to threats from the US or EU.

My own suspicion is that Obama, ultimately, is just siding with American unions again. And he’ll provoke Bangladesh into believing foreigners can’t be trusted.

This decision, if confirmed, will turn out to be counter-productive. But let’s hope I’m wrong

Do US Senators go to special “foot in mouth” school?

noreply@blogger.com (Unknown) — Thu, 27 Jun 2013 07:56:00 +0000

On May 16, eight American Democrat Senators urged twelve retailers “to reconsider your decision not to sign the [Bangladesh safety] Accord”. Just two days AFTER three of those retailers had been reported, even in the Washington Post, to have announced they WERE signing.

Worse still: two of those three are Spanish and one Canadian. It’s understandable that publicity-hungry American politicians can’t be bothered checking their facts before shooting their mouths off. And it’s understandable that they haven’t quite twigged that their views are utterly immaterial outside the United States. But doesn’t sticking your nose in where it’s not wanted AND getting your facts wrong to boot imply just the teeniest bit of carelessness?

Harry Reid (a Senator from Nevada), Sherrod Brown (Ohio), Tom Harkin (Iowa), Richard Durbin (Illinois), Carl Levin (Michigan), Patrick Leahy (Vermont), Patty Murray (Washington State) and John Rockefeller (West Virginia) wrote on May 16 to thirteen businesses: Cato Corporation, Walmart, Sears, Kohl’s, Target, Macy’s, JC Penney, Gap, Mango, George Weston (the holding company for Canada’s Loblaws, which sells Joe Fresh clothing) , VF Corporation, The Children’s Place Stores, and Corte Ingles.

They pointed out that the Rana Plaza collapse “underscores the urgent need for retailers to adopt a common, legally binding response that ensures basic workplace safety and fundamental worker rights are guaranteed in your facilities”. They did seem insistent on calling them all retailers, which isn’t what most of us would call VF, the world’s largest garment maker. But US Senators are busy people, especially if they’ve got to find time to lay down the law to six billion non-Americans, so maybe it’s unreasonable to expect too much attention to detail.

They then went on to praise the Bangladesh Safety Accord which they said would “address longstanding and systemic worker safety issues stemming from a global race-to-the-bottom in standards.” And – on May 16, remember – went on to “urge you to reconsider your decision not to sign the Accord and sign on promptly”

Which is precisely what Mango, Corte Ingles and Loblaw’s had done days before. And, though John Rockefeller might not take Madrid’s El Diario or the Toronto Globe and Star at his West Virginia home every day, stories confirming their signature had been all over the internet –including on the web pages of the Washington Post, which you might have imagined US Senators DO read - since at least May 14. Or if that’s expecting a bit much, at least get their interns to.

More or less the same shower of “say what you like, because no-one’s going to check” headline hounds have now written to President Obama, telling him to withdraw Bangladesh’s minor import duty concessions, so that the US Administration might “establish a roadmap and timeline for reinstatement based upon tangible improvements in worker safety and related labor law reforms”. There is no support in Bangladesh for withdrawing those concessions – and this gang are trying to pretend they think the US somehow knows better than the Bangladeshis what’s good for Bangladesh.

They don’t of course. What they DO know about is what gets campaign contributions, and for Democrats that means money from unions . In the press release accompanying the latest letter, Tom Harkin says that “"It is essential to stop the 'race to the bottom' among clothing brands, hunting for the cheapest place to make clothing without regard to…the cost to American jobs"

Tom Harkin has, by some estimates, received more campaign contributions from unions over the past 20 years than any other US Senator.

And in the battle to retain that flow of cash, who’s possibly got time to check whether they’re writing to the right people?

Messengers so often get shot

noreply@blogger.com (Unknown) — Wed, 26 Jun 2013 14:17:00 +0000

It’s hard yet to know whether the Razzak Plaza building in Bangladesh is about to collapse, or just has a few spots of cracking plaster. Without wishing to make light of a possible tragedy, our house has got cracks everywhere. But it’s stayed up for 300 years. On the evidence so far, drawing attention to them might be more dangerous than working in the building

Yesterday (June 25) a TV programme on an independent Bangladesh channel carried a story about cracks appearing in the Razzak Plaza building – like the Rana Plaza, in Savar. Some media claim they’ve been there for months – but the building doesn’t just house shops, but about 6,000 garment workers in Juvian Sweaters, Pacific Blue (Jeans Wear) Ltd., and Al Muslim Garments on its 4th till 8th floors. So, no-one in authority is taking any chances.

At 0730, Bangladesh time, today, inspectors from the BGMEA, the Bangladesh University of Engineering and Technology and Dhaka district administration turned up at the building, found the cracks, and after a few meetings, the local authority ordered the building closed.

At which point, shop owners and some garment workers turned on TV reporter correspondent Nazmul Hossain, who had reported the “cracks” story the previous night, and started beating him up. The shop owners were out of pocket, and it wasn’t clear whether the 6,000 garment workers were going to be paid for the day off. None of them liked the idea of an income-free day, and apparently couldn’t see why the building needed to be closed.

Right now, we don’t know how serious the threat of collapse is. But the workers know how serious the threat of a day without wages is, and clearly think Hossain is profiting from their problems. Especially since the cracks don’t seem recent, and they’ve all been happily working.

It’s not that the workers would rather be sorry than safe. It’s that they know (or think they know) their building. They were working more or less happily there till last night, when some TV reporter told everyone it was unsafe.

Now all these people turn up from the Council, and they’ve closed the factory. The workers don’t know when they’ll be working again – and they’ve got bills to pay. All because of some sensationalist TV reporter.

Who among us wouldn’t want to take a flyer at him?

Do Western shoppers care about how products are made

noreply@blogger.com (Unknown) — Tue, 25 Jun 2013 13:55:00 +0000

There's a huge amount of assertion going on right now about how important decent working conditions are to people buying clothes. But very little hard evidence. Indeed, I'd say there's none at all

For all the journalists’ tales of Western shoppers “enraged” at Bangladeshi disasters, there is very little sign of customers allowing their alleged rage to influence how they spend their money.

Bangladeshi apparel exports in May were 15.1% up on last year: indeed the annual rate of apparel export growth has stayed ahead of where it was before November every month since the Tazreen fire. US imports from Bangladesh grew faster in April than they had before Tazreen

There are a number of pieces of consumer research that shed some kind of light. About 70% of Americans have heard of the Rana Plaza collapse in Bangladesh, according to a survey by Harris Poll of more than 2,000 adults from May 14-16. Among those who learned of the deaths, 39% (42% of women and 34% of men) said they would probably buy fewer products produced in Bangladesh.

Vancouver-based retail specialist DIG360 Consulting found in research that 26% of Canadian shoppers would “no longer purchase” Joe Fresh apparel from the Loblaws chain after labels for the brand were found in the Rana Plaza debris. This appears a far stronger reaction against the brand – generally praised by commentators for its proactive response to the disaster – than the vague and unquantified decline in US shoppers’ “impressions” of Walmart found on YouGov’s BrandIndex since early May and attributed by BrandIndex management to Walmart’s public refusal to sign the AFBSB. BrandIndex has released no data to substantiate its managers’ conclusions: Walmart has received negative publicity for lots of different reasons in the past two months, and there is no evidence Americans are more upset about what agreements it has signed than about lengthening checkout queues, bribery allegations or a spate of highly publicised strikes.

A 2012 study by Harvard University and Massachusetts Institute of Technology (MIT) researchers looked at "fair-trade certified" clothing, as part of a small-scale pilot set up by Fair Trade USA . It found that someone looking for the best bargain on a package of socks is much less inclined to buy the slightly more expensive "fair labour" option, but someone buying a pricier item might spend a little extra for fair-trade certified clothing. Fair Trade USA have made no further progress on “fair labour” certified clothing: the European Fairtrade movement has shown no interest in fair labour development, and its “Fairtrade” garments specify that it is merely the conditions under which the cotton was grown that is “fair”. Spinning, weaving and assembly of allegedly Faitrade garments are carried out under the same conditions as any other clothing.

Several studies claim to have investigated the effect of “fair labour” labelling. A 2004 study by a group under the leadership of a University of Michigan professor found that when the two types of socks labelled “Made under Good Working Conditions" were sold at the same price as unlabelled socks, only 43% of customers bought the labelled socks; when the labelled socks were sold at prices higher than the non-labelled socks, about 25% of consumers bought the labelled ones.

A study published in 2012 by an MIT researcher and carried out in 38 US Banana Republic outlet stores seemed to show 14% uptake on more expensive garments with an ethically reassuring message. The research compared organic T shirts with a poster flagging a meaningless message (“The Island Wash organic T shirt”) shirts with a poster carrying a message that meant something (“The Island Wash T shirt means fair working conditions”).

Both carried the same premium price, but sales of the shirts with the meaningful message were 14% higher. At much lower price points, the meaningful message got no extra sales. From which the researchers conclude there is “a substantial segment of shoppers willing to support fair labor standards by voting with their shopping dollar”.

But we would suggest the research merely shows that an instore promotion with a meaningful message works better - and might work just as well with a message saying “made in a factory where no-one’s paid too much, so you know you’re getting the best value”. No attempt was made to see what kind of a premium shoppers might pay for a shirt made by “fairly” paid workers

Though the Alta Gracia factory in the Dominican Republic keeps 130 people employed at wages three times higher than the national minimum, it appears to do so only because its ultimate owner – Knight’s Apparel – is prepared to operate the factory at a loss. No-one has attempted to drive its retail price up, or to persuade US college shops to accept lower returns per square foot.

There are lots of reasons why it can be good business for a retailer or brand to see that the people making garments with their name on are well treated, and we'll return to those reasons in a future Blog. But so far: no-one's shown those reasons include the effect of compliant social policies on retail sales

Why is academics’ understanding of the garment industry so limited?

noreply@blogger.com (Unknown) — Tue, 25 Jun 2013 13:48:00 +0000

Do academics have anything useful to contribute to the debates around social accountability?

When they bring real knowledge, of course they do. But not when they purport to know things they don't.

Muhammed Yunnus, a Bangladeshi Nobel prize winner, has proposed a global minimum wage for garment workers, the immediate doubling of Bangladeshi minimum wages, a special surcharge on Western sales to fund a Bangladesh Garment Workers Welfare Trust and a marketing programme in the West promoting ethical sourcing. He has asserted – without showing any evidence – that “Consumers would be proud to support” a surcharged product.

He argues that buyers should “jointly fix a minimum international wage for the industry. This might be about 50 cents an hour, twice the level typically found in Bangladesh.”

He goes on to argue that “It wouldn't be necessary for all the companies to agree on the minimum wage at the same time. If some leading firms take the initiative, it would start the ball rolling.” He continues:

“There is also another practical way to help ensure better standards for Bangladeshi garment workers… Let's say a garment factory produces and sells a piece of clothing for $5, which is then packaged and shipped to New York.

“Another $30 was added in the US for taking the product to the final consumer… Would a consumer in a shopping mall feel upset if they were asked to pay $35.50 instead of $35? My answer is no, they won't even notice. If we could create a Garment Workers Welfare Trust in Bangladesh with that additional 50 cents, we could resolve most of the problems workers face – safety, work environment, pensions, healthcare, housing, their children's health, education, childcare, retirement, old age and travel. Everything could be taken care of through this trust.”

“When consumers saw that a well-known and trusted institution had taken responsibility to ensure both the present and the future of the workers who produced the garment, they wouldn't mind paying 50 cents extra”, he claims. “Consumers would be proud to support the product and the company, rather than feeling guilty about wearing a product made under harsh working conditions”

Separately, Yunnus has argued that ““The average wage is 25 cents an hour, making it 50 cents an hour won’t cost a leg and an arm” because raising wages for Bangladesh’s 3 million or so garment workers would spur increases in other countries, according to Yunnus. “Prices will go up everywhere, Bangladesh will not lose its competitive edge,”

If Bangladeshi wages doubled, of course, and no one else’s did, few people buyers would put up with the horrors and inconveniences of buying there. Putting up wages in Bangladesh will do nothing to increase wages elsewhere.

Yunnus is a widely respected academic, with a background in economics. He also has a following in much of the world as a development visionary: he won the Nobel Peace Prize in 2006 for his work developing microfinance, especially for poor Bangladeshis trying to start up the smallest businesses.

But he has no experience, academically or in real life, of dealing with Western consumers. He describes Disney as “A very large foreign buyer” – implying near ignorance of the global garment trade, and similar ignorance what the Walt Disney Company does for a living. He has no identifiable expertise or even knowledge about Western markets or what motivates Western customers.

His assertions about what Western customers are prepared to pay are based on no research, or even any known case of his ever having ventured inside a Western apparel retailer. His heart in undoubtedly in the right place – and in the pioneering work he has done on microfinance, he may well have pulled more Bangladeshi women out of poverty than even te Bangladeshi garment industry.

His considerable expertise in helping desperately poor peasants start in business may well carry a lot of lessons into getting marginalised people in the West get a start. But they have no value in predicting how shoppers will behave in Gap or M&S. His goodwill might possibly inspire someone to start an altruism-based campaign to get Western shops to pay more for garments made by well-paid people – and, with enough enthusiasm and well-aimed PR, such a campaign might work. But right now there is simply not a shred of evidence it would.

Yunnus’ assertions aren’t wrong: they commit a far worse offence. For an academic (which is what he is by training), they’re simply unprofessional. He’d like the world to reward good practice – but as far as garment pricing is concerned, there just isn’t an example of good practice being rewarded.

Bluntly: Yunnus should stick to microfinance. On that, he’s worth listening to. On Western consumer motivation, he simply has nothing to contribute

Summarising what we've learned from events since the Bangladesh disasters

noreply@blogger.com (Unknown) — Tue, 25 Jun 2013 09:22:00 +0000

The Bangladesh disasters, and those in Pakistan and Cambodia, have been far too complex for simple explanations like "capitalist greed" or "the lesson of buying too many clothes".

In this month's Source, we've summarised the key events since the Bangladesh deaths.

Here's our summary:

Bangladesh building safety plans hit by confusion

Estimates of the state of Bangladesh factory buildings varied widely, with some respected surveyors claiming that up to 60% of factory buildings are unsafe. Major buyers’ inspections provoked controversy, as other buyers disputed some judgements, some factories disputed buyer’s findings and other factories accused Walmart of deliberately libelling suppliers who had previously fired the retailer. Conflicting codes seem partly to blame

With no common ground about the scale of dangerous buildings, there is no serious estimate of how much repairing or replacing them will cost. Plans to relocate many factories are stuck as land still has not been acquired for a new factory zone – eight years after it was first announced. Fewer factories want to move than expected – but they want twice as much space as is planned for them

Truth of “food poisoning” and “worker unrest” equally hard to establish

A number of near-simultaneous apparent food poisoning and water contamination incidents in Bangladesh were claimed by activists to be further evidence of unsafe working conditions, by some factory owners to be the result of deliberate poisoning and by doctors to be mass hysteria partly caused by dehydration, poor ventilation and poor nutrition. Near-continuous violent disputes around Ashulia have apparently caused many buyers to shift production elsewhere in the country, and encouraged a huge range of suggested causes: from simple criminality, through legitimate worker grievance to conspiracies by mysterious foreigners or just opposition politicians.

Buyers pursue agreements as shopper concern evidence dubious

Buyers accounting for about 35% of Western European garment sales signed an Accord committing to helping fund rectifying unsafe factories, accept worker involvement in planning and continuing to buy in Bangladesh. Most US buyers declined, with spokesmen claiming to have an alternative plan. It later transpired they did not, but knew why they dislike what Europeans signed and say they might have one by mid July. Walmart and Gap, however, probably invested as least as much money and effort into Bangladesh factory safety as any European.

Though media described widespread public outrage over factory safety, our review of published research shows no evidence of significant public preparedness to pay more for better working conditions. Some market research seems to shows about 30% of North American shoppers just don’t want to buy anything made in Bangladesh

UK, US and Canadian investors call for signing. Australians say “quit”

US and UK shareholder groups sent letters to buyers implying continued shareholding requires greater buyer attention to working conditions. A group of Canadian shareholders sent a similar letter, without the implied threat. An Australian bank said it regarded continued use of Bangladesh factories as a risk. Outside the English-speaking world, shareholders were silent.

Bangladesh exports grow, amid gloomy external predictions

Bangladesh’s garment exports since the November Tazreen fire have been growing at twice the growth rate they enjoyed before, but many buyers and factory owners think they will start falling from about July. No-one but Disney has announced it is leaving. Moody’s rating agency predicted the disasters would discourage foreign investment – but more foreign garment and support businesses have opened in the past six months than for some years. Businesses still report serious labour shortages, as a thriving labour broking industry arises.

Will wage rises and union rights dampen perpetual violence?

The Bangladesh government announced unions would be allowed, but most worker representatives attacked its proposals as undemocratic. Many Bangladeshis, though agree with the government that politically motivated activists need to be kept out of industrial relations. The government announced a wage review board, and promised to backdate its award to May 1. Activists are pushing aggressively for a 150% increase, as many observers believe there is more to the violence than worker dissatisfaction.

Bangladesh “food poisoning”. Contamination or mass hysteria?

noreply@blogger.com (Unknown) — Tue, 18 Jun 2013 09:34:00 +0000

We’ve been told that over 140 garment workers north of Dhaka fell ill on June 16 after drinking suspected contaminated water from work. Few media outlets have added that 140 reported symptoms – but scarcely any continued to show them after an hour or so

On the face of it, Sunday’s poisonings were just the latest of a series of food and water poisoning incidents in Bangladesh’s garment industry over the past month.

On June 5, over 500 at the Starlight Sweater Factory in Gazipur were reported to have been “hospitalised” after drinking contaminated water. The reports actually meant to say “taken to a hospital emergency ward for examination after claiming food poisoning symptoms”, but that wouldn’t have made so good a headline. On May 31, over 50 workers of Linda Fashion in Jamgarah area fell sick after eating food distributed by the factory, while the following night around 30 workers at Global Knit factory in Shimultala fell sick after eating food provided at work.

Naturally, activists suspect the worst. “There is fear persisting among garment workers since the [Rana Plaza] incident", said Mushrefa Mishu, president of the Garment Workers’ Unity Forum. She pointed out that hygiene standards throughout Bangladesh factories are poor: “The water used in the factories is not purified,” she said. “Most of these workers take water from jars that are filled with pipe waters without purification.”

Naturally, Bangladesh’s government and its factory owners have their standard explanation for everything. “We are suspecting that it was poisoning of the water. It could be some sort of pesticide,” said S.M. Mannan, a vice president of the BGMEA after the Starlight Sweater incident. “This is an A-grade factory. It has its own water supply which comes from a deep tube well, so there is no scope for contamination. Someone might have mixed poison to the water”. Local industrial police officer Mahfuzur Rahman told reporters “Primarily we suspect the water supply of the Starlight Sweaters factory was poisoned or contaminated.”

Neither group bothered checking how many people actually showed any symptoms after their hospital inspection. At one of the June 16 “outbreaks”, Alvin Fashion, just two people out of the 60 referred for examination needed treatment.

When Bangladesh’s Institute of Epidemiology, Disease Control and Research tested samples of the water after the incident at Starlight Sweaters on June 5, they did not find anything unusual from the regular contaminants in water.

The Institute’s director, Dr. Mahmudur Rahman, says such phantom outbreaks are not rare, especially at this time of year. “This is a complicated issue, which has been recurrent in Bangladesh, particularly in schools. Most recently it is being observed in garment factories,” he has said, and identifies empty stomachs and dehydration during summer as a contributing factor to such outbreaks in the past.

According to the World Health Organization, the phenomenon seems especially common in politically charged environments, with a strong active rumour mill and a lot of young women in the same place. On June 3, 97 schoolgirls in northern Afghanistan were reported sick after smelling gas, only two months after a similar incident was reported in Takhar province in northeastern Afghanistan. Just as the Dhaka cases are being attributed to greedy bosses, the Afghan cases were attributed to a Taleban plot to discourage girls from attending school. But the WHO has concluded: “In the last four years over 1,634 cases from 22 schools have been treated for mass psychogenic illness in Afghanistan. There are no related deaths reported.”

There was a similar story in Palestine’s West Bank in 1983. 983 young women fainted in what was at first claimed by Palestinian nationalists to have been a chemical attack by Israelis (as part of their alleged plan to clear Arabs out of the West Bank), and then claimed by extremist Israeli supporters to have been created by Palestinian nationalists discrediting Israel. Later US and Israeli investigations – endorsed by the WHO – concluded the faintings were not the result of any chemicals, but had been triggered by collective anxiety.

Mahmudur Rahman is certainly not claiming the people affected in Bangladesh were well fed, properly hydrated, working in comfortable surroundings or had access to truly drinkable water. At Starlight, he concluded “the water cannot be considered for drinking.” And it’s not just young women in politically contentious environments that are the common thread in the Bangladesh, West Bank and Afghanistan “outbreaks”: it’s young women who may not be in the best of health anyway. No outbreaks have been reported at elite schools, or among foreign brands’ buyers and quality controllers at any of the Bangladesh factories.

But there’s an infinity of difference between nausea or digestive problems from unsuitable water and real poisoning. Media referring to “hospitalisation” when they mean “gone for a check-up” or claiming the highest possible number of “casualties” when they mean “showing some symptoms” aren’t helping the problem: the evidence is that fear and uncertainty are part of the influences that lead to these “outbreaks”.

Calling these pseudo-poisonings “mass hysteria” (or the less sexist “mass psychogenic illness”) doesn’t mean the outbreaks weren’t at least in part induced by poverty, discomfort and well-founded anxiety about personal safety. In Bangladesh, the likelihood is that much of the food and water involved may not have passed proper safety inspections.

That’s no excuse for equally hysterical (OK: rabble-rousing) pseudo-journalism. Which is the best term I can think of for reporting the number of people reporting sick, and not the spectacularly smaller number found to have any symptoms

How Fair is Fairtrade?

noreply@blogger.com (Unknown) — Wed, 05 Jun 2013 12:43:00 +0000

A 227 gramme packet of Tesco Original roast coffee beans costs £2.29 today. An identically sized pack of Tesco Fairtrade roast coffee beans costs £2.99, or 31% more. The average cost of 227 grammes of coffee beans landing in the EU in 2012 was 54 pence.

Why the differences?

The difference that screams out loudest is the one between the imported cost of coffee (fairtrade or plain vanilla) and the cost on the Tesco shelf. Practically all that is the cost of processing, packaging or marketing: Tesco probably takes around 40% of the retail price (or 92 pence in the case of the Tesco Original), but processing and other costs in Europe account for 83 pence.

Now there’s a myth widespread in the Fairtrade community that rich countries impose a huge import duty on processed coffee, so “the system” is somehow unfairly stacked against producer countries, forcing them to provide just coffee beans. This is simply untrue: some processing (like making instant coffee) in theory attracts 7.5% duty, but this reduces to 2.6% (or 1.4 pence on that 227 gramme pack) for most countries hot enough to grow coffee (like Vietnam or Brazil), or 0% for many (like Peru, where Tesco’s Fairtrade comes from) .

It’s also often argued that it’s impractical to process coffee in hot countries. Somehow, it’s claimed, you can sew (and steam-press) garments in hot countries, but you can’t roast coffee. Which is just silly.

The reason for the high costs incurred in Europe for coffee is that the Fairtrade movement has made no attempt to create jobs in poor countries. Its preoccupation is with how the income from growing basic commodities (like cotton, tea or coffee) is split between small farmers and their employees on the one hand and big buyers on the other. There’s no debating the fact that the Fairtrade movement has been successful in this. But, unlike the much-maligned garment industry, there isn’t a global network of manufacturing plants doing to coffee in Vietnam or Peru the processing that used to be done in Europe or the US.

Fairtrade has switched some of the income in coffee growing from rich to poor in poor countries. But it hasn’t created jobs in poor countries, as garment and textile making, toy making or shoemaking have. The only jobs the movement has created are pleasant office jobs in rich countries for the socially conscious middle class.

Some may think such jobs are morally superior to buying T-shirts. But when politicians smugly assert (as Britain’s Shirley Williams disgracefully asserted on May 2) that Fairtrade is the answer to factory disasters, they can only mean one of two things:

- We ought to follow the Fairtrade movement and stop using workers in poor countries altogether, or

- They’ve simply never looked at where the money paid for Fairtrade goods goes

Neither are stances any purportedly “ethical” person should adopt

POSTSCRIPT:
This article was written from a UK perspective: allegedly "Fairtrade" garments sold in the UK are merely made from Fairtrade cotton, and the Fairtrade Foundation makes no attempt to control the circumstances under which an allegedly "Fairtrade" garment is spun, woven, knitted, assembled or got into a consumer's home. The premium for "fairness" is justified only by the tiny proportion of the garment's cost that the raw cotton accounts for.

Fairtrade organisations do not take such an absurdly blinkered view of their job everywhere. Fair Trade USA (a quite separate organisation from Britain's Fairtrade Foundation) has been attempting for some years to create and sell garments assembled under circumstances in sympathy with the overall aims of the Fairtrade movement. Its success has been limited, and a fair review of FTUSA's pilot programme would have to conclude that the reasons for its disappointing progress are complex.

The facts in the FTUSA report certainly do not support any one-dimensional conclusion (like "big retailers won't support it" or "Activists are a great deal more interested in pointless whingeing and in squabbling with each other than in creating jobs in poor countries, which they prefer to leave to grownup businesses they can then whinge about"), though there is support for both views between the lines of FTUSA's carefully drafted report.

What the report does show is how extremely difficult it is to apply fully audited Fairtrade principles, in the context of today's obsession with "multistakeholder initiatives", to the garment industry. Similar problems apply to most other manufactured products.

There are lessons from the Fair Trade USA garment pilot. A forthcoming Blog will review them

Opere et omissione: if sourcing’s not pragmatic, it’s not ethical

noreply@blogger.com (Unknown) — Wed, 05 Jun 2013 11:19:00 +0000

Catholics claim the Pope’s infallible. Mercifully that doctrine doesn’t apply to his political judgements, or my parish priest would be giving me a hard time this coming Sunday

"Living on 38 euros ($50) a month - that was the pay of these people who died. That is called slave labour" said Pope Francis on May 1, talking about the Bangladesh tragedies.

But later on that day, he went on to say “Work is fundamental to the dignity of a person. I think of how many, and not just young people, are unemployed, many times due to a purely economic conception of society, which seeks selfish profit, beyond the parameters of social justice” He then called on governments to tackle high unemployment and eliminate slave labour associated with human trafficking.

The founder of the Pope’s religion seems to have been clear about the dangers of his teaching being misapplied to political complications: “Render unto Caesar the things that are Caesar's, and unto God the things that are God's”, said Jesus – which over the following 2,000 years many have taken as a warning to clerics against getting involved in political debate.

That’s not how the current Pope sees the biblical text, and Jorge Borgoglio, before he became Pope Francis, had a long tradition of speaking out on social issues. In a series of interviews published last week (Papa Francesco. Il nuovo papa si racconta. Conversazione con Sergio Rubin e Francesca Ambrogetti) he goes so far as to describe what in his view is the greatest problem facing the world.

For what it’s worth, I agree with him. And it’s not Islamic fundamentalism, deficits, slow growth or climate change: it’s unemployment (or in other contexts, underemployment, and often in his talks, youth un/under employment in particular) that he sees as the core of everything else.

Now he usually goes on to argue that’s because the world is pursuing the wrong objectives, and that’s not something this Blog has any expertise in. But most of my education was at the hands of the religious order to which Pope Francis belongs (the Jesuits), so I suspect I have some basis to challenge, respectfully, his apparent belief that the world would be a better place if businesses didn’t source clothing from Bangladesh.

Imagine you’re a sourcing manager at Inditex: not just the world’s biggest specialist buyer of clothing, but the largest retail business of any sort headquartered in a country whose majority population acknowledges Pope Francis as their spiritual leader. And let’s assume you accept his overall ethical philosophy, and also agree with him that underemployment is the world’s biggest scourge: how should you make buying decisions?

Well, first of all you don’t stop moving production round the globe. The biggest social achievement of the past 20 years has been the collapse in global poverty: In 1990, 43% of the world’s population met the official definitions of living below the local poverty line, and by 2010 that had dropped to 21%. Many economic development experts seriously believe it’s not just realistic, but on balance probable, to expect that figure to drop below 10% by 2030. The fall in poverty over the past 20 years comes mostly from the move of many business processes from the West to poorer countries, and the buying power created as a result in formerly poor countries.

All other things being equal, anyone with a sense of ethics has to believe creating jobs in Bangladesh (whose economic development is more dominated by the garment trade than any other country’s) is a good thing. Now every day of his priestly life, the Pope has examined his conscience for whether he has followed his principles “opere et omissione” (“in what I have done and in what I have failed to do”), as his Church would expect that virtuous Inditex sourcing manager to do. It would probably be immoral, goes the principle, to continue buying from a rich country (or a middle-income country one, like Argentina) if more jobs could be created in a really poor country like Bangladesh. Failing to grasp the opportunity to create new jobs is immoral, just like exploiting poverty.

Now a lot of moral obligations go with that decision to buy from Bangladesh. A fully moral person sourcing for Inditex would ensure Bangladeshis making her garments worked in safe buildings, were treated properly and had a remuneration system that enabled them to work their way out of poverty. She might or might not support initiatives like the Accord on Fire & Building Safety in Bangladesh (AFBSB), or insist that suppliers had unions: there’s a serious argument that self-appointed worker representatives in Bangladesh aren’t all just motivated by altruistic concern for workers, that some union representation might do more harm than good, and that the mess in Ashulia is the result of wilfully destructive agitation

But there’s a really strong argument that insisting on high wages in Bangladesh isn’t among those moral imperatives. The current $50 a month is more than those garment workers would be getting if they still depended on their family’s subsistence farming upcountry. Garment making in Bangladesh is so difficult that it may well take only a small hike in wages to move clients to somewhere sourcing’s easier, like Cambodia. It may be that the generally low productivity buyers find in Bangladesh isn’t something better training or investment can iron out: it takes more people to sew a shirt together there because it’s simply impossible to assure continuously available power, or for components to arrive in the right order. So there’s a point where higher wages might move production from Bangladesh to somewhere that needs the jobs less.

Given all this, a moral sourcing manager may well be doing more good sourcing at low wages in Bangladesh than at higher wages in a better-off country. She’d be behaving immorally (opere et omissione, remember) if she didn’t work to improve conditions in Bangladesh – but she’d be just as immoral if she moved production somewhere political activists felt more comfortable seeing on the label.

It’s all a complicated maze of moral issues. That moral sourcing manager needs lots of advice, both on ethics (which is the Pope’s job) and on the practicalities of sourcing (which is mine). But her religion makes it clear that ultimately her conscience decides where to source from, and that’s her responsibility – not mine, and not the Pope’s.

Because ethics needs to be as humble in all this as any other ideology. Not one of the four million jobs created in the Bangladesh garment industry over the past two decades can be attributed to the new fashion of ethical sourcing – though ethical sourcing has a lot to help our moral sourcing manager.

Every one of those four million jobs comes from a business seeking better value. The same day the Pope attacked Bangladeshi wages, he added “Dignity is not bestowed by power, by money, by culture - no! Dignity is bestowed by work.” The work that’s created dignity in Bangladesh for four million people and their dependants was the result of the profit seeking system he disapproves of.

There are times when making the right ethical decision is just too important to be left to the ethicists.

Is the Living Wage movement economically feasible?

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 17:29:00 +0000

The Alta Gracia programme in the Dominican Republic is a real-world example of a theory that it’s possible to pay garment workers in poor countries good wages. Dispassionate study of the programme isn’t a good advertisement for it.

One remarkable aspect of the West’s reaction to the garment factory tragedies in Pakistan, Bangladesh and Cambodia has been how quickly most observers’ reaction has moved from horror at the deaths and concern about safe premises to almost equal horror at the wages involved.

It’s clear that there’s a huge gulf between the attitude to garment industry wages of most businesses operating in the industry and most people thinking about the underlying business model.

- Practically all businesses agree that the developing world’s biggest problem is underemployment, and the job of the garment industry is to bring decent jobs. Those jobs will migrate only if workers are paid substantially less than they’d be paid in the West: but will attract workers only if they pay better than local alternatives (which are usually staying as subsistence peasants). So Nike, H&M et al promise to use only factories paying at least the national minimum wage, but attempt to cajole factory owners into productivity programmes to make sure workers actually make more.

- Most activists reject that view. Pointing out that wages calculated that way still sound derisory to a Western ear, they argue that workers should be paid a Living Wage, and there are a number of formulae invented to calculate what that should be. The best known example is the Asia Floor Wage Campaign – which pitches for wages in South Asia not far short of those paid around the Southern Mediterranean, a few days’ drive by truck from buyers’ warehouses near Frankfurt or London

The Asia Floor Wage campaign is run emotively, with lots of phrases describing what it is like to be poorly paid in a poor country. Discussion of the underlying principles is rare: but behind all the complications, the issue comes down to one basic question:

If Asian workers got the same wages as Romanians, why would any European buyer commission clothes from Asia? And if Romanians got the same wages as Germans, why would anyone commission clothes from Romania?

H&M don’t commission their clothes from Bangladesh out of any loyalty to Bangladesh: if clothes cost as much in Bangladesh as in Germany, they’d be getting their clothes made next door to where those clothes are going to be sold. So what does happen if you pay workers in a poor country?

That’s what the Knight’s Apparel programme at Alta Gracia helps us see.

Knight’s Apparel, a privately held company that is no. 2 in America’s $4 bn collegiate wear market to Nike, bought in 2010 a factory closed three years earlier by its Korean cap-making owners. CEO Joseph Bozich says that when he “stopped being defensive and listened” to students buying his products, “ I heard them saying we want to and do take pride in our university and we want to buy apparel that bears the logo, but we also want to take pride in the conditions under which it has been made”

He now pays well over the Dominican minimum wage: in 2011, average monthly wages at Alta Gracia, including the 38% of wages paid into benefits programmes, averaged $759 a month, or 340% of the country’s minimum. The factory is “is run with strong employee input and relies on outside monitors to certify factory conditions”: it employs 130 people, publicity for the project claims that garments branded Alta Garcia sell at about the same prices as Nike or Adidas (which means higher than conventional private labels) and has been heavily promoted to college stores both through PR and through activist lobbying and demonstrations.

Productivity appears relatively high, but studies by Georgetown University, if their numbers are analysed any further than their topline “it’s a great idea” summary, show complicated results. After the first year, orders for Alta Gracia from the colleges lecturing the garment industry about fair wages remained disappointingly low. Knights moved some production to it from other factories (it does not publish supplier lists, but sources from subcontractors in Bangladesh, Egypt, Greater China and around Central America), which was not subsequently sold at the relative premium Knights achieved for its Alta Gracia product – but the factory still achieved only 80% use of available capacity.

Now, three years after the programme started, Bozich says the factory loses money, with lower profit margins on each item because of the higher wage and other costs, and low overall demand. But he remains confident.

Universities, however, call the programme successful, because shops in colleges return roughly the same amount per square foot of space allocated to Alta Gracia product as to apparel overall: Knight’s lose money on it because the colleges do not allocate enough square footage to give Knights a return, because in turn the colleges see no evidence students are interested enough in the Alta Gracia proposition to put their money where their signatures on e-petitions are. Meanwhile, Knights – bizarrely – has moved jobs out of factories in the world’s poorest countries to support the Alta Gracia experiment.

Bozich appears unfazed by his losses, and the Alta Gracia programme might reasonably be expected to see higher customer demand as a result of the current wave of scandals. But studies so far show no convincing evidence that even in the institutions demanding “fair” as opposed to “legally mandated” wages there is enough real interest among buyers to make the programme sustainable. Nor has it shown any evidence, even in university shops actually operated by the universities, that colleges are any more prepared to sacrifice revenue to fund their football teams than real retailers are to fund their shareholders’ pensions.

I’m sceptical about campaigns like the Asian Floor Wage – not least because such campaigns are most enthusiastically supported by people in countries (like Sri Lanka) likely to improve their competitiveness if wages elsewhere (Cambodia, say, or Burma) shot up. And the first three years of Alta Garcia make me more sceptical.

The loudest supporters of the case that “customers would pay more for decent wages” are precisely the people shopping at the US college bookstores that sell Alta Garcia. Knight’s have ensured that there’s good promotional material around Alta Garcia product, explaining the proposition. But those customers aren’t buying – and the colleges insist on the same income from Alta Garcia space as they’d get from space devoted to Nike or Adidas.

The cost of the loss-making test is being picked up by Knight’s. Or actually by workers in Bangladesh and Egypt who’ve lost their jobs in dirt poor countries to fund an experiment in a middle-income one (income per head in the Dominican Republic is five times that in Bangladesh and twice Egypt’s).

Strip out real abuses, and most activists are peddling a theory that’s fundamentally hostile to poor people in poor countries. Paying Western wages in Bangladesh – or the Dominican Republic - is the fastest possible way to move garment production back to rich Western countries.

Now there’s no law of nature that says it has to be like that: large numbers of Western customers might become altruistic enough to go out of their way to buy clothes made in poor countries – and that’s what many believe they’re doing when they buy Fairtrade coffee. They’re quite deluded when they think that, by the way, as we review in another Blog. But the Fairtrade movement does seem to show that people will pay a premium for a product they think is more ethical: a 227 gramme packet of Tesco Fairtrade ground coffee retails for 30% more than a 227 gramme packet of Tesco ordinary ground coffee.

If someone could demonstrate that Living Wage garments sold well enough to provide their brand owners with a return, there’d be a strong case for them. If retailers – including colleges who lecture real businesses about ethics - were prepared to sell them at a loss, there might be a case for them. It might well be that activists could usefully try to persuade their peers to buy such a product.

But on the evidence available right now, Alta Garcia doesn’t support any of the activists’ claims. It’s a well-meaning experiment that’s helping 130 workers have a better life, impoverishing an unknown number of workers in poorer countries, and giving an unquantifiable number of shoppers an unsupported sense of doing good.

Europeans and Americans think hard about free trade with China

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 16:41:00 +0000

Pressure groups in the US proposed thebeginning of free trade talks with China almost the same day an EU committee debated its strategy for closer trade ties. No real-world politician gave either set of ideas any public support,

Full free trade between the major Western countries and China is highly unlikely in the forseeable future. But that's not what the US pressure group and the EU committees are discussing. The world isn't static, and the only real alternative to talks about improving Western access to China's markets is letting the Chinese carry on freezing foreigners out.

The May 2013 edition of The Source, like its predecessors, doesn't just relate the last month's sourcing news. It places sourcing events into their wider context.

Disputes in Cambodia and Bangladesh turn violent

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 16:36:00 +0000

Businesses in Ashulia, near Dhaka, are reportedly planning to move elsewhere in theconurbation to escape the area’s near-perpetual culture of violent labour disputes. In Phnom Penh, several thousand workers reportedly fought with each other as astraightforward wage dispute turned into a violent battle between rival unions.

There's more to worker disputes in Bangladesh and Cambodia than spontaneous protests by the downtrodden masses against exploitative bosses. The May 2013 edition of The Source, like its predecessors, doesn't just relate the last month's sourcing news. It places sourcing events into their wider context.

Countries unveil widening range of garment-making development plans

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 16:31:00 +0000

Morocco’s government and textile trade associations revealed a development programme that was long on ambitious targets, devoid of any detail and suspiciously cheap for its predicted benefits.

Algeria’s plans depend on a Turkish partner with an established record of success in Egypt and Bangladesh. Nigeria, Africa’slargest country, presented a programme fordomestic textile manufacturers to move from 12% to 25% of the country’smarket that included providing adequate energy supplies, had demonstrated a year of finding investment money and honestly admitted it would include robust protectionism.

Iran thought it couldattract European investors.

Mongolian government invests in greater share of cashmere.http://www.clothesource.net/go/articles/mongolian-government-spends-to-boost-cashmere-production

India seemed to be announcing new garment/textile parks it had already admitted were abandoned.

North Korea sends Kaesong workers to courses intended to educate capitalism out of them.

The previous Egyptian regime’s strategies for attracting foreign investment overturned as current Prime Minster threatened with jail if he doesn’t re-nationalise textile companies

Some national plans work: some don't. The May 2013 edition of The Source, like its predecessors, doesn't just relate the last month's sourcing news. It places sourcing events into their wider context.

China’s competitiveness sharpens as wages continue growing

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 16:28:00 +0000

Chinese apparel exports to the EU and US were cheaper,relative to other garment exporting countries, in the latest month for which there is data than at any time since 2009. The volume of apparel imported into both territories from China also grew year on year. Though Chinese wages in 2012 grew more slowly than in earlier years – but Standard and Chartered Bank predicts higher wageinflation in 2013. Businesses’ reaction implies lower prices owe more to falling manufacturer margins than to rising productivity

Developing country factory owners worry about governments’ labour policies

noreply@blogger.com (Unknown) — Tue, 04 Jun 2013 16:27:00 +0000

South African “Chinese” factory owners continue to fight minimum wage law s, as Kenyans blame new government-imposed minimum wages for garment industry collapse. Vietnamese businesses protest against “heavy burden” of new labour law. Philippine garment exporters welcometwo-tier minimum

Government interventions to push up wages and improve working conditions are often unconditionally approved by Westerners. But those interventions may not be properly planned: Vietnam's seems to have been dreamt up by Communist bureaucrats (there's no other kind in Vietnam's civil service) with no proper consultation with real businesses. And not all the interventions might be in the long term interwst of a country's workers - or of its underemployed.

The May 2013 edition of The Source, like its predecessors, doesn't just relate the last month's sourcing news. It places sourcing events into their wider context.