The Apparel and Footwear Industry

The Energy Industry

The Role of the International Community

Introduction

The recognition that business and human rights were inextricably intertwined continued to grow throughout the year and moved beyond a simple debate over the need to adopt codes of conduct. Those companies that previously stated a commitment to human rights continued to develop programs to implement their policies. As in previous years, the apparel and footwear industry and the energy industry were the focus of scrutiny because of their long-standing problems.

However, the issue of business and human rights moved beyond the sole focus on corporations. Increasingly, governments--either individually or through multilateral institutions--became part of the effort to ensure that human rights were not sidelined by commercial considerations. Through court cases, scrutiny over the corrupting influence of oil revenues, or because of multilateral institutions' efforts to address these issues, governments emerged as a crucial actor in the debate over business and human rights.

The Apparel and Footwear Industry

As the U.S. and European apparel and footwear industry continued to develop and implement monitoring and compliance programs--principally through the development of the White House-sponsored Fair Labor Association (FLA), the Council on Economic Priorities (CEP) Social Accountability 8000 program (SA-8000), and the new Workers' Rights Consortium (WRC)--to ensure the rights of workers in the industry were respected throughout the world, controversies emerged about the effectiveness of the various initiatives. At the same time, litigation emerged as another method of ensuring corporate respect for workers' rights.

Controversy on College Campuses

Throughout the year, university students in the United States stepped up efforts to ensure that their schools did not sanction abusive labor practices through their apparel licensing agreements. Unlike previous years, however, the students focused their efforts on two key demands: that universities withdraw from the FLA, a monitoring body made up of corporations and human rights organizations, and instead join the newly formed Workers Rights Consortium (WRC), a monitoring body made up of student organizations, university officials, and labor organizations. These demands led to a heated debate over the quality of various voluntary monitoring organizations and was best epitomized by the actions of Nike in 2000.

On April 24, Phil Knight, Nike's chairman and chief executive officer, announced that he would not donate any more money to his alma mater, the University of Oregon, because the school had joined the WRC instead of the FLA, where Nike is a founding member. Previously, Knight donated approximately U.S. $50 million to the university and planned to donate millions more until the university joined the WRC. A few days later, on April 28, Nike terminated negotiations with the University of Michigan over the renewal of a six year multimillion dollar licensing agreement because of the university's support for the WRC.

On July 2, university professors stepped into the fray. Under the auspices of the Academic Consortium on International Trade (ACIT), more than 200 scholars wrote an open letter to universities stating concerns about the way decisions to join either the FLA or the WRC were made by universities and suggested that both initiatives may actually be detrimental to the cause of workers' rights. ACIT also urged universities to consider other initiatives such as SA-8000, to undertake more research and consultation before joining any particular monitoring group, and warned that raising wages of workers further may have detrimental effects because "the net result would be shifts in employment that will worsen the collective welfare of the very workers in poor countries who are supposed to be helped" by these initiatives. The FLA criticized ACIT, arguing that it had unfairly compared the FLA to the WRC. The WRC attributed ACIT's criticism to an effort to undermine the credibility of these initiatives since ACIT was not part of the decision-making process. While it was too early to assess whether any of these initiatives was completely adequate since none of them had been fully implemented, the controversies surrounding factory monitoring strongly suggested that these internecine disputes would continue in the absence of enforceable legal standards requiring corporations to respect workers' rights.

Litigation Against Apparel Companies

On June 2, the U.S. Ninth Circuit Court of Appeals overturned a lower court decision and ruled that twenty-three garment workers in Saipan could anonymously sue garment manufacturers because disclosing their identities could subject them to retaliation by employers, the Chinese government, and third-party "recruiting companies" since they had paid agents recruiting fees to migrate from China in order to work in Saipan; and allowed the case to be heard in Hawaii rather than in Saipan. The workers had filed a class action suit against twenty-two companies for violations of the Fair Labor Standards Act and accused apparel companies of conspiracy under the Racketeering Influenced Corrupt Organizations Act (RICO). Earlier, on March 28, eight defendants in the lawsuit: Calvin Klein Inc., Jones Apparel Group, Liz Claiborne Inc., The May Department Stores Company, Oshkosh B'Gosh Inc., Sears Roebuck and Company, Tommy Hilfiger USA Inc., and Warnaco Inc. agreed to a U.S. $5.7 million settlement with the plaintiffs that would be used to fund a rigorous independent monitoring program to monitor working conditions in Saipan. Previously, in 1999, Bryland L.P., Chadwick's of Boston, Cutter & Buck, The Dress Barn, Donna Karan Inc., Gymboree Corp., J. Crew Inc., Nordstrom Inc., Phillips Van-Heusen, and Polo Ralph Lauren also settled with the plaintiffs in exchange for funding an independent monitoring program. At this writing, Abercrombie & Fitch Inc., Associated Merchandising Corp., Brooks Brothers Inc., Gap Inc., J.C. Penney Co., Lane Bryant Inc., Levi-Strauss Inc., the Limited Inc., Talbots Inc., and Woolrich Inc. were among the companies that had yet to settle with the plaintiffs. Barring a comprehensive settlement, the trial was expected to begin in February 2001.