Corporate responsibility and the US–Central America Free Trade Agreement (CAFTA): Are they compatible?

Abstract

The global garment-manufacturing industry will confront significant changes from 2005, when the system of quotas established under the Multi-Fibre Arrangement comes to an end. These changes pose serious threats to jobs in the Central American assembly plants, or maquila industry. One possibility, however, is that ‘politically correct’ consumption could provide a niche market for firms that are committed to corporate social responsibility and the respect for human rights, and that this might even be a way to improve working conditions in the region. In this sense, notwithstanding the grave risks it represents for the very poorest, the market could serve to bring about changes favourable to working people.

Notes

1. The maquila industry covers various sectors, but this article focuses only on industries in the textile, garment, and apparel manufacturing sectors.

2. By virtue of allowing tax-exempt status only to garments assembled from materials produced in the USA, previous trade regimes, such as the CBI, had already tacitly condemned Central America to assembly-plant status, producing goods requiring little or no specialisation.

3. The USA managed to negotiate additional protection for its own textile industry: for example, by applying disincentives to imports of Asian textiles, it has ensured that Central American factories will continue to use US materials. This is the outcome that US entrepreneurs had been advocating. Jerry Cook, vice-president of the international division of the Sara Lee company, stated: ‘What is going to happen at the end of the day if the treaty isn't signed? My reply to that question is that the USA will be the big loser in international trade’. Cook proposed that the trade agreement should allow a greater proportion of US inputs (cotton and yarn), which could be used with inputs from NAFTA, arguing that, ‘If we start out like this, we shall have certain advantages in relation to China’ (La Prensa Gráfica 10 December 2003).

4. In the USA alone, there are three multi-sectoral or umbrella initiatives aimed at incorporating major companies in codes of conduct to improve the conditions of workers in their suppliers' factories: the Fair Labor Association (FLA), which is the oldest and brings together at least ten of the most representative or ‘iconic’ brands in US consumer culture (Liz Claibourne, Gap, Nike, etc.); Social Accountability International (SAI), which administers SA8000, a certification standard set up by human rights organisations, trade unions, and certain companies (including Human Rights Watch, the International Textile, Garment and Leather Workers' Federation, and Avon); and Workers' Rights Consortium (WRC), which is a university-oriented initiative set up by US students and the AFL CIO to protest against sweatshop conditions in the maquila industry.

Additional information

Notes on contributors

Carolina Quinteros

Carolina Quinteros is a Salvadoran sociologist and teaches Political Science at the Universidad Centroamericana José Simeón Cañas (UCA) in San Salvador. She is the founder and principal researcher of the Independent Monitoring Group for El Salvador (GMIES).