The Academic  Consortium on  International Trade (ACIT), which consists of lawyers and economists specializing in international trade policy and economic law, released a letter to university presidents that criticizes the manner in which universities reached decisions regarding sweatshop policies and the objectives of the Fair Labor Association (FLA) and Worker Rights Consortium (WRC). The letter was signed by roughly 200 scholars from universities and other organizations and released on July 29, 2000.

ACIT was inspired by the WTO protests in Seattle and is seeking to disseminate information via papers and policy statements regarding international trade policy. It is directed by a steering committee of 6 professors, two of which, Alan Deardorff and Robert Stern, are among the University of Michigan faculty and are codirectors of the Research Seminar in International Economics, a joint operation of Michigan’s school of public policy and economics department.

The ACIT’s criticism of the universities’ decision-making regarding anti-sweatshop codes is that the decisions were heavily influenced by activist group intimidation and did not give adequate consideration to the views of scholars studying the issue and the faculty and students in general. The letter states that the “careful research, discussion, and debate … appropriate to informed decision making” is obstructed by student sit-ins.  According to Professor Robert Stern, a member of the University of Michigan’s faculty who specializes in international trade policy, a member of ACIT’s steering committee and one of the letter’s principle drafter’s, “the judgments were made about university policy under the pressure of intimidation by student groups.” Student’s Organizing for Labor and Economic Equality (SOLE), the University of Michigan’s anti-sweatshop group had forced the university to join the WRC during a half-week sit-in at a LS&A dean’s office last winter semester.

Professor Stern believes that it is a mistake for the universities to get directly involved in mandating the terms of labor in the apparel manufacture business. He cites the high degree of decentralization and competition among contractors and subcontractors, which makes regulation difficult. Also, university apparel production only accounts for 1% or 2% of apparel production, so their influence on the apparel producers is insufficient to cause change.

ACIT’s primary criticism of the FLA and WRC is that despite being well intentioned, their goal to create a “living wage” is actually counter to the interests of the workers.  Multinational corporations already pay wages above the market average in developing countries, although they may seem very small compared to an American “living wage.”  This is due to the abundance of available workers in these countries and the low amount of development. If wages are increased to the “living wage” standard, the ACIT speculates that the cost increase will either cause the companies to employ less workers or transfer production to areas or firms that are not bound by the same wage requirement.  The loss of jobs from either cutting or transferring production will make the workers of the developing country worse off on average, since few will continue to benefit from the higher wages. Also, Professor Stern believes that maintaining a wage way above the market rate for certain apparel companies would benefit a select small group of thirld world workers working for these companies while denying employment to a much larger group in these countries. Additionally, although the wages are a small fraction of the selling price, they compose a significant portion of the production price, whereas the sales price also includes the expenses of transportation and marketing, including the costly and extensive ad campaigns large apparel manufacturers are well known for.  Such ad campaigns are ubiquitous, and very likely a necessary cost in the apparel sector.

Another criticism of these groups is that they are based and funded in the USA. This distances them from the target of their efforts and prevents them from fully understanding the conditions in the developing countries and taking into account the concerns of the workers and governments of the countries themselves. USA-based groups also would be operating in a role which is normally reserved for the domestic government.  Thus, the university should avoid dealing with organizations based in industrialized countries, according to Professor Stern, “It’s rather unseemly for western dominated groups to go into less developed countries and to poke around the factories trying to uncover abuses and problems that may exists there. In one sense it’s an invasion of sovereignty of those countries.”
Professor Stern also points out that the WRC is also dominated by protectionist and interventionist groups and has a strong mistrust of the apparel companies. The WRC has the support of the AFL-CIO and it’s affiliated workers apparel union UNITE, two groups that may have more interest in preventing American jobs from being sent overseas than in improving working conditions abroad.  Also, the substantial rift between the apparel industry and the WRC would make the cooperation necessary to bring about change difficult.  Also, the proponents of the WRC have pushed for its adoption through tactics based more on intimidation than discussion, frequently making use of sit-ins and protests to pressure administrations rather than trying to build a popular consensus.

A more proper way to proceed, according to the ACIT, is to promote the development of domestic governmental and non-governmental groups to assure safe working conditions and the application of existing international standards.  The ACIT also recommends exploring the use of the Council on Economic Priorities Accreditation Agency, an international non-governmental organization, to administer the Social Accountability Standard (SA8000). This standard serves as a guideline for monitoring the compliance of member companies with local and national laws as well as international worker rights principles, such as those of the International Labor Organization, the Universal Declaration of Human Rights, and the United Nations Convention on the Rights of the Child.

In the long term, the low wages and unsafe conditions of sweatshops are addressed domestically as the nation develops, Professor Stern believes. Historically, wages have grown substantially over time as countries have industrialized.  From the 1950s to today, wages in East Asia have grown from the low levels found in today’s developing countries to levels comparable with other countries that industrialized earlier.  Also, as increased development brings more revenues to domestic governments via taxes, the governments gain the resources to provide public goods and regulate working conditions. This development occurred within the world’s current industrial nations and is responsible for the regulation of working conditions in the US today.

If the university wants to promote better working conditions, Professor Stern believes that its objectives would be best accomplished by encouraging the development of governmental and non-governmental monitoring groups in the developing nations themselves. Professor stern offers his own plan for the University promoting working conditions in developing nations. “I would recommend that the University of Michigan devote 1-2% of revenues from the sale of apparel with the logo to target directly governmental and non-governmental organizations in the countries themselves to help the countries improve their capacity and ability to bring about better working conditions for the workers and their families.

To learn more about ACIT and international trade policy, go to their website http://www.spp.umich.edu/rsie/acit/