Expanding Fair Trade to Garment Production in Ciudad Sandino, Nicaragua

A thesis presented to

the faculty of

the Center for International Studies of Ohio University

In partial fulfillment

of the requirements for the degree

Master of Arts

Linda J. Ellersick

March 2009

This thesis titled

Expanding Fair Trade to Garment Production in Ciudad Sandino, Nicaragua

LINDA J. ELLERSICK

has been approved for

the Center for International Studies by

Yeong-Hyun Kim

Associate Professor of Geography

Betsy J. Partyka

Director, Latin American Studies

Daniel Weiner

Executive Director, Center for International Studies 3

ABSTRACT

ELLERSICK, LINDA J., M.A., March 2009, Latin American Studies

Expanding Fair Trade to Garment Production in Ciudad Sandino, Nicaragua (120 pp.)

Director of Thesis: Yeong-Hyun Kim

Despite challenges the movement is having and may continue to have, fair trade has proved itself a viable grassroots alternative to neoliberal free trade for farmers in the

Global South and has gained legitimacy in both literature and consumer markets.

Producers and consumers are becoming increasingly aware of fair trade as an economic and social alternative. While there exist set standards for fair trade agricultural products, no standards yet exist for fair trade garment manufacturing. Through a case study of

COMAMNUVI (Cooperativa Maquiladora Mujeres de Nueva Vida) in Ciudad Sandino,

Nicaragua, this research analyzes the application of fair trade principles to the garment production industry. Claiming to be the first garment production cooperative in the world to operate within both the fair trade and free trade markets, COMAMNUVI has contributed an unprecedented prototype of how fair trade garment production may extend to other communities. However, the cooperative has yet to be considered a success and has encountered many problems that challenge the very goal they set out to achieve.

Approved: ______

Yeong-Hyun Kim

Associate Professor of Geography 4

To the workers of COMAMNUVI and others venturing to make positive changes 5

ACKNOWLEDGMENTS

A special thank you to my parents, Steven and Tricia, and my dearly loved Tony for your unconditional support, love, and humor while undergoing this project in the US and abroad.

To my committee chair, Dr. Yeong-Hyun Kim, for her guidance and being a great coach.

To my committee members, Dr. Brad Jokisch, and Dr. Amado Lascar, for their encouragement and immense willingness to help at every turn.

To Tatiana Arguello and her family in Nicaragua, which without their generous hospitality, this research venture would not have been possible.

To all other Ohio University faculty who contributed their guidance and support.

To Beth Clodfelter and Leah Vincent whose vast assistance and patience helped me to hone my writing and editing abilities.

To my friends and family here in the US and the new friends I met while in

Nicaragua for showing true interest in my work.

To Pavel and Mitya for uplifting me while I was away from home and welcoming me back so warmly and enthusiastically.

TABLE OF CONTENTS Page

Abstract ...... 3

Dedication ...... 4

Acknowledgments...... 5

List of Tables ...... 9

List of Figures ...... 10

Chapter 1: Fair Trade as an Alternative to Free Trade ...... 11

Emergence and rise of fair trade ...... 13

Fair trade organizations ...... 16

Fair trade in Latin America ...... 19

Challenges and drawbacks of fair trade ...... 21

Conclusion ...... 23

Chapter 2: Garments and Handicrafts in Fair Trade ...... 24

Typical fair trade channels ...... 24

Fair trade garment production ...... 26

Research methods ...... 30

Conclusion ...... 33

Chapter 3: Nicaragua’s Economic Development and Challenges ...... 35

Nicaragua’s historic economic difficulties ...... 35

Dilemmas of neoliberalism and zonas francas ...... 42

Conclusion ...... 49 7

Chapter 4: COMAMNUVI as a Worker-Owned Fair Trade Organization ...... 50

A new type of fair trade arises ...... 51

The Nueva Vida community ...... 58

Production operations of COMAMNUVI ...... 60

Workers of COMAMNUVI ...... 66

COMAMNUVI as an alternative to other zona francas ...... 70

Conclusion ...... 72

Chapter 5: COMAMNUVI’s Marketing to the Global North ...... 74

Global understanding ...... 74

Global markets and demand for products ...... 75

Conclusion ...... 78

Chapter 6: Impediments to Global Market Expansion ...... 80

Difficulties with business principles ...... 80

Conceptual problems: fair trade and fairer trade ...... 84

Support from fair trade organizations ...... 87

Conclusion ...... 90

Chapter 7: Conclusion...... 92

References ...... 96

Appendices ...... 104

Appendix A: FLO Certifiable Fair Trade Products ...... 104

Appendix B: Fair Trade Certified Product Samples ...... 105

Appendix C: Fair Trade Product Advertising Pamphlet Samples ...... 108 8

Appendix D: Organizations Partnering with Maggie’s Functional Organics ...... 111

Appendix E: Sample Consent Form ...... 112

Appendix F: Sample Organizational Flow Chart of COMAMNUVI ...... 114

Appendix G: Current COMAMNUVI Partners and Positions ...... 115

Appendix H: COMAMNUVI’s Clients ...... 116

Appendix I: Fair Trade Cotton Producers ...... 117

Appendix J: Sample Websites on which COMAMNUVI Appears ...... 119 9

LIST OF TABLES

Page

Table 1: Comparison of ATOs and Labeling Organizations ...... 17

Table 2: Nicaragua’s Trade, Debt, and Inflation Indicators Prior to Neoliberal Policy Implementation ...... 41

Table 3: Sources of FDI in Nicaragua ...... 46

Table 4: Advantages and Disadvantages of Operating in the Free Trade Zone ...... 56

Table 5: Comparison Between COMAMNUVI and Other Zonas Francas ...... 71

LIST OF FIGURES

Page

Figure 1: Map of Nicaragua ...... 31

Figure 2: GNI per capita: Nicaragua 1965-2005 in current USD ...... 36

Figure 3: Nicaragua’s imports and exports: 1960-2006 in current USD ...... 37

Figure 4: Nicaragua’s external debt: 1960-2006 in current USD ...... 38

Figure 5: Nicaragua’s FDI net inflows: 1960-2006 in current USD ...... 43

Figure 6: Map of Managua, Nicaragua, and surrounding area ...... 52

Figure 7: Families relocated to Nueva Vida after Hurricane Mitch ...... 53

Figure 8: Map of Managua and Location of COMAMNUVI Cooperative ...... 55

Figure 9: Current conditions in Nueva Vida ...... 59

Figure 10: COMAMNUVI’s structure from the outside ...... 61

Figure 11: Production line inside COMAMNUVI ...... 61

Figure 12: Storage area and small office inside COMAMNUVI ...... 62

Figure 13: Inspection and packaging area inside COMAMNUVI ...... 62

Figure 14: Administrative cubicles and offices inside COMAMNUVI ...... 63

Figure 15: An administrative office inside COMAMNUVI ...... 63

Figure 16: COMAMNUVI product chain ...... 65

Figure 17: Maggie’s Functional Organics label and sample products ...... 76

CHAPTER 1: FAIR TRADE AS AN ALTERNATIVE TO FREE TRADE

Fair trade has rapidly gained popularity recently as an alternative to free trade and

as a tool for social and economic development within many developing countries. This

chapter explores the contemporary literature on fair trade ideology and products and on the organizations involved in both. Most of the conventional international trade practices are deemed insufficient to promote sustainable economic development at the grassroots level of producers in the Global South. As an alternative, fair trade has been promoted as a trade mechanism that can aid in development. A growing number of families and small cooperatives in low-income countries throughout the world are pursuing fair trade with alternative trade organizations (ATOs) and fair trade labeling organizations. For them, fair trade is an avenue to obtain a higher payment for the products they sell to Northern markets to invest in the development of themselves and their surrounding community.

Consumers, mostly located in the Global North, are also becoming increasingly aware of the socially constructed notion of fair trade as well, being known as “an international social movement that promotes the payment of above-market prices to producers of agricultural commodities in developing countries by setting a floor price, with an additional premium that goes to farmers for reinvestment and social projects,” as mentioned in The Economist (2008). During 2004-2005, total fair trade sales in Europe amounted to more than USD 1 billion of the total USD 1.6 billion fair trade global sales

(Raynolds & Long 2007). In 2006, the estimated retail value of fair trade goods was approximately USD 2.4 billion, growing 42% from the previous year (Fair trade Labeling

Organizations (FLO), 2006c). With the majority of the fair trade artisans and farmers 12 being located in Latin America, this area is of particular interest to explore the history and potential of fair trade (Wilkinson & Mascarenhas 2007).

Much attention has been paid to the examination of the difference between fair trade and free trade commodity production in Latin America, especially in regards to the certification of coffee and bananas, and to the confusion of for whom fair trade is fair and how fair trade should be carried out. The umbrella labeling organization, the Fair Trade

Labeling Organization (FLO), has clarified some of the confusion with set standards for many fair trade agricultural commodity producers and traders. As fair trade gains popularity, this organization continues to encounter challenges to maintaining consistency within the fair trade philosophy while trying to expand demand. FLO must continually reshape the concept of fair trade balancing increases in consumer demand for fair trade products and the idea that fair trade is directed toward helping smaller, rather than larger, producers.

However, in garment production, no standards yet exist for fair trade garment production and very little research has been done to examine the different types of fair trade garment production. Claims have been made that worker-owned garment production cooperatives should be the model for fair trade garment production. This thesis seeks to evaluate fair trade garment production and furthermore the differences between the types of fair trade garment production factories in Latin America by conducting a case study of a worker-owned fair trade sewing cooperative in Ciudad

Sandino, Nicaragua. Personal interviews and focus groups of workers were conducted with particular focus on the production process, ownership, and marketing networks to 13 analyze the advantages and disadvantages of working with the particular mechanism of worker-owned fair trade garment production.

Emergence and rise of fair trade

Neoliberal reform policies of the 1990s have proved rather incomplete to address all of the conditions essential to economic improvement in developing countries. Taylor

(2005) notes that throughout the 1990s, neoliberalism translated into an abstraction of globalization as a depersonalized system working outside social institutions and cultural principles. For many countries in the Global South, it may have addressed necessary conditions regarding trade liberalization and deregulation to heighten accountability and transparency, but it also represented the undermining of social conditions (Murray &

Raynolds 2007). The World Bank’s (2005) assessment document recognizes the disappointments of neoliberal policies across the Global South. The actual global economic performance through the 1990s did not correspond to or follow any existing economic theories. The reform policies were expected to deliver much greater growth in

GDP per capita than what was reported. The disappointments of neoliberal reform policies were the deepest in regards to Latin American countries, showing that this region in particular did not respond to neoliberal reform as expected by its advocates. It has been widely concluded that neoliberalism is not sufficient to address development issues in

Latin America, and that any one reform theory cannot be broadly applied to all or even a majority of developing countries (Rodrik 2006).

Moving away from formulaic solutions and so-called best practices, such as the

Washington Consensus of neoliberalism, opens the door for alternative development 14 methods (Williamson 1993; Rodrik 2006). Although the fair trade movement has been in existence since after World War II, it was the emergence of neoliberal reform policies that allowed it to gain considerable speed as an alternative social movement (Littrell &

Dickson 1999; Barrientos, Conroy, & Jones 2007; Raynolds & Long 2007). Growing as a resistance to neoliberalism in the terms of corporate expansion, this movement operates differently within the mechanisms of the globalized market. Despite its critique of neoliberalism, fair trade should not be understood as an anti-globalization movement.

Rather, it incorporates a broad range of social justice issues, such as respectable labor conditions, fair wages, and sustainable farming, to form a new, anti-hegemonic globalization (Evans 2000; Murray & Raynolds 2007). It is not trade or globalization themselves that are harmful, but the way in which they are implemented according to fair trade advocates. Globalization from the grassroots level can serve to help those who are marginalized take part in international exchange; fair trade is one mechanism through which globalization from the grassroots level can take place (Evans 2000). While neoliberalism addresses many of the inefficiencies and dangers of government failures in improving the economies of developing countries, it fosters the burgeoning inequalities between the Global North and South created by market failures (Stiglitz & Charlton

2005; Toye 1993). Seeking to challenge the historically unequal nature of the global market and to change North-South trade relations from a means of exploitation to a means of development through empowerment, fair trade creates global negotiations for trade that call for higher standards of minimum prices, wages, working conditions, and worker involvement in decision making and community development. 15

Unlike what economists would expect, producers have united their efforts in

solidarity rather than increasing competition among themselves. It is not surprising for

this alternative to turn out to be a trend unlike anything expected by economists (Murray

& Raynolds 2007). Because the neoliberal policies instituted by many governments did

not make enough progress in the country’s trade situation balance and excluded many

small- and medium-scale farmers and businesses from the benefits of these policies, these farmers and businesses looked elsewhere for support and turned to fair trade to sell their product. Fair trade continues to gain considerable popularity today with fair trade commodities being one of the fastest growing sectors of the global food market. Rather than concentrating on large corporate expansion, fair trade focuses on the bottom line of marginalized producers. The bulk of the philosophy involves creating a more egalitarian option for international trade and improving the quality of life for producers in developing countries (Littrell & Dickson 1999; Raynolds 2002). In addition, the fair trade philosophy aims at empowering the workers and producers in the global market (Littrell

& Dickson 1999). The goal is to use fair trade practices as an initiative towards meaningful, sustainable development at the community, and then country, level (Littrell

& Dickson 1999; Fridell 2006a). This involves putting the power into the people’s hands at the grassroots level (Littrell & Dickson 1999; Fridell 2006). Producers in developing countries, like those in Latin America, can then have more involvement and control over their work, products, income, and working conditions through sustainable development

(Blowfield 1999; Halepete & Park 2006). 16

Fair trade organizations

Along with failure of neoliberal policies, including conventional free trade, consumer awareness of these failures and negative aspects of free competition played an important role in the development of fair trade. Joining together producers and consumers in a sustained system of trade is essential to carrying out the philosophy behind the fair trade movement (Littrell & Dickson 1999; Raynolds 2002). Fair trade products appearing on the international market are due to the growing concern from the consumer about both the conditions under which products are made and the amount of income that reaches the producer in developing countries (Blowfield 1999; Littrell &

Dickson 1999; LeClair 2002; Maseland & De Vaal 2002; Halepete& Park 2006). From the consumer’s point of view, the fair trade appeal provokes a desire to purchase more socially responsibly. This may involve an ethical or moral obligation to purchase goods only which the consumer knows to have been produced under the fair trade philosophy

(Maseland & De Vaal 2002). As Littrell and Dickson (1999) state, informed and socially aware consumers feel that they affect the lives of the artisans through their purchase

decisions. It is through the consumers that the fair trade principles find their significance

and achievement.

Two distinct sets of organizations are involved in carrying out the philosophy of

fair trade: alternative trade organizations (ATOs) and labeling organizations. Table 1

compares ATOs with labeling organizations. In many instances these organizations

cooperate to achieve the goals of fair trade. The research carried out on both sets of

organizations is performed either by gathering primary data from the individual 17

Table 1

Comparison of ATOs and Labeling Organizations

ATOs Labeling Organizations

*Comprised of wholesalers and retailers *Comprised of international organizations

*No certification programs *Set standards for certifying fair trade

products with a label

*Include a variety of goods produced from *Include only the products that can be

the Global South certified as fair trade

*Sell certified and non certified goods *May sell fair trade certified goods

*Seeks personal relationships with Global *Seeks international recognition for fair

South producers trade standards

organizations or evaluating data from other authors (Littrell & Dickson 1999; LeClair

2002; Global Gallery 2007; Berggren 2006). ATOs are individual NGOs operating as

wholesalers or retailers, such as Ten Thousand Villages, SERRV, Oxfam, Bridgehead,

Global Gallery, and Karma Market, that mainly, although not exclusively, sell

handicrafts. The late 1980s and into the early1990s saw the establishment of the major

ATOs in operation today. The first were an association of ATOs in Europe with the advent of the European Fair Trade Association (EFTA) being the first in 1987, followed by International Fair Trade Association (IFAT) in 1989. In North America, the Fair 18

Trade Federation was established in 1994, followed by TransFair USA in 1998. Also,

IFAT expanded into North America, Asia, Latin America, and Africa.

Much of the existing research focuses on certified labeled fair trade primary

commodities and the organizations that create the labeling standards for those products

Littrel & Dickson 1999; Taylor 2005; Raynolds & Long 2007; Wilkinson & Mascarenhas

2007; Kruger & du Toit 2007; Raynolds & Wilkinson 2007; Barrientos & Smith 2007).

The largest European and North American ATOs consolidated their labeling efforts under one organization in 1997 and created the Fair Trade Labeling Organization (FLO), which remains one of the most widely recognized labeling organizations with 20 ATO members. Some argue that with this consolidation, the fair trade movement shifted from an ATO dominated to a labeling and certification dominated movement (Raynolds 2002;

Raynolds & Long 2007). While ATOs uphold broadly defined standards, FLO declares very specific criteria for a commodity, producer, or trader to become certified under their label. For example, to be a fair trade trader, FLO requires the trader to:

1. guarantee payment of at least the price of sustainable production

2. pay a supplemental premium to be devoted to community development

3. supply partial prepayment, upon request, at the time of purchase

4. sign long-term contracts that allow sustainable production practices (FLO

2006a)

FLO also lists specific product standards for small producers and for hired laborers (FLO

2006b). Because FLO only certifies agricultural commodities as fair trade, it leaves the

responsibility of determining the standards of other products that fall under the fair trade 19 movement’s principle standards up to individual ATOs, such as with handicrafts, textiles, and garments. (*See Appendix A for list of FLO Certifiable Fair Trade Products). In these specific criteria, the FLO seeks to institutionalize and come to an international understanding of “fairness.”

Fair trade in Latin America

Although there have been other case studies performed throughout the world,

Latin America dominates current research since it is the largest producer of fair trade goods. Furthermore, the vast amount of research has focused on the literature and primary data evaluating the success or failure of specific goods. The foremost research stems from organizations involved in fair trade coffee production within Latin America since it is a crop of substantial historical importance. Uncertified fair trade coffee was available through ATOs, like Equal Exchange, for many years, and it was the first fair trade product to be certified in 1994 in Europe and 1998 for the US (Murray & Raynods

2007; Grodnik & Conroy 2007). It has also remained the largest selling fair trade product. According to Levi and Linton (2003), small fair trade cooperatives in Latin

America are successful in achieving higher wages, connecting trade cooperatives, and increasing the accessibility to technological support. By forming cooperatives, these coffee farmers are able to organize a fair price among them before selling the coffee beans. For example, the northern region of Nicaragua, especially Matagalpa, contains several small-scale coffee farms that have turned to the fair trade and organic markets and in fact, do earn a higher average price per pound of coffee sold, averaging between $.55-

.60 per pound (Bacon 2005). Under the conventional trade system, in contrast, farmers 20

would sell their beans at the lowest price to attract buyers, averaging about $.40 per

pound (Bacon 2005). The success fair trade coffee has already seen in the global market

is significant, as coffee, conventional or fair trade, is the second largest commodity sold

in the world, falling only behind oil/petroleum. (*See Appendix B for Fair Trade

Certified Product Samples and Appendix C for Fair Trade Product Pamphlet Samples)

Another important Latin American commodity fair trade has expanded to is bananas, which have become the second largest fair trade product sold (Murray &

Raynolds 2007). As Raynolds (2007) notes in her extensive case study of bananas, they

are particularly significant in Latin America because of their colonial origin, repression,

and poor working conditions under the “Banana Republics” that existed in several

countries for years. Large- and small-scale producers are now involved in banana production with labeling standards including equal pay, healthy working conditions, no forced child labor, and democratic labor force. Although bananas have not shared the same initial success as coffee, fair trade bananas have increased steadily throughout

Europe and the US. In the US, the specialty natural foods store, Wild Oats, helped initiate fair trade bananas into the market in January 2004. By the end of the following year, an additional 600 stores were selling fair trade bananas. Bananas mark another significant success for fair trade in Latin America.

Because the nature and production of commodities vary, not all efforts to expand fair trade have been as successful as coffee or bananas. Although international demand for quinoa, for example, is very promising in fair trade markets, its production lacks stability and the export quantities tend to fluctuate, according to Cáceres, Carimentrand, 21

& Wilkinson (2007). Therefore, it is difficult for quinoa to enter the fair trade market. It

is quite difficult to predict if a new fair trade commodity will be successful on the market

because products are dependent on consumer demand in an ever-shifting globalized

world and because various factors influence the sale of each commodity.

Challenges and drawbacks of fair trade

One of the largest current challenges to fair trade commodities hinges on the success of the fair trade philosophy itself. Increasing demand for fair trade products may mirror an increase in the size of production and the number of producers. With fair trade gaining a larger share of the mainstream markets, fair trade producers enter into more competition with larger conventional businesses. According to one estimate, fair trade items appearing alongside conventional products in supermarkets caused an increase in fair trade sales by 30% in 2004 (Barrientos & Smith 2007). This type of product placement increases awareness of fair trade goods to the shopper who would not otherwise have been familiar with or actively sought out fair trade products.

Conventional mass-market businesses and large-scale retailers, seeing the potential to either regain customers previously lost to fair trade products or to attract new customers, want to capitalize on the growing demand for fair trade goods. For example, large banana plantations operating in Latin America desire fair trade certification for a portion of their banana production, while maintaining their other conventional lines of bananas. This superficial desire to participate in fair trade defeats the very purpose of fair trade to aid small, marginalized farmers by allowing a large plantation to devote only a portion of their business to fair trade only in order to gain a share of that growing market. 22

In response to this, the FLO has had to make their requirements stricter and introduce

new stipulations to the process of obtaining fair trade certification (Barrientos & Smith

2007). One new stipulation created by the FLO has been to include workers in the

participation in all levels of business operation, skill development, and capacity building

programs (FLO 2007; Kruger & duToit 2007). In the future, the FLO will continually

have to address the challenge of modifying and adding conditions to the process of

obtaining fair trade certification.

Competition also exists within fair trade markets and between fair trade

producers. After just three years, the number of fair trade producers negotiating deals

with supermarkets exceeds all the FLO and ATO enterprises combined (Wilkinson &

Mascarenhas 2007). Barrientos and Smith (2007) have noted that over 100,000 fair trade

fruit farmers in South Africa vie for deals with five successful supermarket chains in the

UK. In Brazil, smaller peasant farms are directed toward producing domestic crops, such

as bananas, whereas larger farms are directed toward producing export crops, such as

coffee, for trade with other Global Southern countries. This division makes it difficult for

those export oriented farms to become fair trade certified because of their large size.

Moreover, it is problematic to attain a market share in poorer countries not integrating

into the Northern markets where the demand for fair trade products is far greater

(Wilkinson & Mascarenhas 2007). One of the greatest challenges of fair trade is and may

continue to be finding a balance between the ever-increasing demand for fair trade

products and the desire to increase fair trade production, and amending certification regulations as the concept of fair trade changes through time. If the fair trade movement 23

continues to be centered on small, rather than large farms, it may be difficult to keep up

with consumer demand in the future. It may also be difficult for international fair trade

organizations to come to a consensus regarding what should be changed about the fair

trade movement while keeping up with demand for fair trade products.

Conclusion

Despite challenges the movement is having and may have in the future, fair trade has proved itself a viable grassroots alternative to neoliberal avenues of free trade for producers of several agricultural products in the Global South. Producers and consumers are becoming increasingly aware of what fair trade as an economic and social alternative means to them. Several organizations and institutions exist to support fair trade practices for producers of these products and others and to educate consumers about the benefits of purchasing fair trade products, many of which have agreed on set standards for certain agricultural products to be certified as fair trade. Consumers are readily able to identify fair trade products by the fair trade certification label on it. The large body of literature that currently exists documents the path of several fair trade agricultural products, producers, and organizations. The next chapter focuses on the lesser-researched fair trade products of nonagricultural handicrafts, textiles, and garments. 24

CHAPTER 2: GARMENTS AND HANDICRAFTS IN FAIR TRADE

Much of the existing research on handicraft, textile, and garment production has

focused on the ATOs that sell these fair trade goods, rather than on the producers (Littrel

& Dickson 1999; Scrase 2003; Taylor 2005; Barrientos, Conroy, & Jones 2007;

Wilkinson & Mascarenhas 2007). Chapter two investigates the common routes through

which fair trade artisan goods travel and discusses the potential to apply fair trade

principles to the garment manufacturing industry. While these organizations provide a

broad framework for applying fair trade principles to these types of goods, no

international or multi-organizational consensus on fixed standards for garment

manufacturing has been established. Without set standards for fair trade garment

production, although all alternative trade organizations aim to carry out the general fair

trade philosophy and principles, the individual philosophies and principles within the

organizations tend to differ vastly. What price is considered fair, what constitutes

humane working conditions, and to what extent natural resources and cultural traditions

are preserved vary between organizations along with the ways in which they pursue these

principles.

Typical fair trade channels

Primarily, in the most customary route that fair trade handicrafts travel, the initial

connection between an ATO and the artisan family or cooperative is a face-to-face

process. The ATO, whether it is a wholesaler or a retailer will evaluate the working conditions and the product and they will negotiate terms of price and quantity with the

cooperative. Once that contact is established, the cooperative sends products to the ATO 25

to be sold in developed countries (Littrell & Dickson 1999). If it is sent to a wholesaler,

it is added to a catalogue or website. Consumers are able to purchase directly from the

wholesalers, or through retailers who place orders either online or through the catalogue

to sell the desired goods in their storefronts. If it is sent to a retailer, the product is sold

directly in that retailer’s storefront or online website. ATOs build local capacities for the

producers and improve global awareness for the consumers, bridging “artisans’ needs for income, retailers’ goals for transforming trade, and consumers’ concerns for social responsibility through a compatible nonexploitive, and humanizing system…” (Littrell &

Dickson 1999 p. 4; Raynolds 2002).

To uphold the fair trade movement, ATOs have limited basic principles for methods of production. Since the FLO does not have set international standards for every type of product, being that it may not be a plausible idea given the diversity of products, these organizations aim to include the fair trade values of fair price, wage, and working conditions for the products they sell that are not fair trade certifiable. First, it aims to offer a guaranteed minimum price for the goods that are sold and tries to pay as much as possible back to the artisan (Littrell & Dickson 1999; LeClair 2002; Maseland & De Vaal

2002; Halepete & Park 2006). The thinking behind this is that fair price translates into a fair wage to support the workers that made the product and their families’ needs, a fair price to pay for the cost of the materials and shipping, and a portion to contribute to the development of the community in which the workers live. The second principle is that the goods must be manufactured under humane working conditions. Laborers must be able to work in a physically and emotionally safe environment (Littrell & Dickson 1999; 26

Maseland & De Vaal 2002; Halepete & Park 2006). The third and final major standard

of fair trade is that natural resources and cultural traditions are preserved so that

sustainability of the environment as well as development can be ensured (Littrell &

Dickson 1999).

Fair trade garment production

Currently, there is a movement gaining strength among fair trade garment

producers and consumers to establish concrete standards for garment assembly in order to

extend fair trade labeling beyond just commodities to include garments (TransFair USA,

2006). Their recommendations resemble the FLO’s standards for commodities:

1.) worker-empowerment with voice and freedom of association

2.) additional social premium

3.) workers paid at least above minimum wages progressing into a living wage

over time.

4.) long term relationships between buyers and producers, investments in

compliance, and technical assistance.

However, these proposed standards are incomplete at best. The criteria for determining the existence, legitimacy, and mechanism for implementation of each of these standards have yet to be investigated.

Without set standards for selling goods other than commodities, like garments, it is difficult to evaluate if fair trade is truly aiding in the development of people in developing countries. Individual organizations pursue different ideologies and in different ways. Similar to agricultural commodities, the major craft importing countries 27

are the US and European countries with a market largely based on Global North demand

(Scrase 2003). Moreover, the success of large-scale retailers and their increasing global reach have fostered handicraft production to become more exploitive and have provided the incentive to mass-produce crafts with inferior resources. Garment production, however, is quite different from growing an agricultural commodity for exporting in that it passes through many more steps in its supply chain. These artisan products are sold through ATOs in the form of wholesalers and retailers with their own independent labor standards (FLO 2006c; Wilkinson & Mascarenhas 2007; Raynolds 2002). This can greatly complicate the fair trade process and create further confusion of what it means to participate in fair trade; for whom is fair trade fair and how fair is it?

Some organizations focus on upholding the cultural integrity of the goods and artisans in developing countries (Littrell & Dickson 1999). For example, Littrell and

Dickson (1999) cite a 1997 Ten Thousand Villages promotional brochure that emphasizes the importance of supporting cultural traditions and advancing them into future generations: “Making handcrafts is a way to pass one’s culture and skills to the next generation. But as the outside world pushes at the village, taking its natural resources and often its children, it becomes more and more difficult to live the village way of life”. This appeals to customers who want to help cultures in developing parts of the world. Their philosophy is to spread the image of the village lifestyle, which is considered more culturally honorable as well as economically sustainable (Littrell &

Dickson 1999). All of the products sold either from Ten Thousand Villages or other organizations that share this philosophy inform the consumer of the cultural story of 28 where the product came from (Littrell & Dickson 1999; Raynolds 2002). It narrows the focus to the community level, making a direct connection to the producer’s community.

This and other organizations like it incorporate cultural education into their business practices. Other ATOs, however, have different mission statements and core values that they uphold while administering fair trade. One of the largest challenges is the fact that these organizations differ to a great extent and are not connected on any basic level other than fair trade (Blowfield 1999). The differences in values between organizations have different implications for the development of people in the developing world, which is the “bottom line” of fair trade.

In addition, organizations pursue these principles and philosophies in several different ways. ATOs may work directly with families or small groups of families weaving garments in developing countries. For example, Global Gallery works directly with a family in Otavalo, Ecuador and Mayan Hands works with women weavers in

Guatemala (Global Gallery, 2007; Mayan Hands, 2007). There also exist informational watchdog organizations that inform consumers of companies that are or are not using sweatshop and/or child labor, such as Co-op America (Co-op America 2008). Unionized garment factories is another avenue where organizations like No Sweat Apparel obtains apparel such as t-shirts, athletic wear, outerwear, footwear, and accessories from 100% unionized garment factories from the US, Canada, and developing countries (No Sweat

Apparel 2008). Yet another way to pursue fair trade garment production is through worker-owned cooperatives where the workers have full involvement in the entire production and marketing process, such as the Nueva Vida sewing cooperative in Ciudad 29

Sandino, Nicaragua (Renk 2005).

Separating garments from other fair trade agricultural commodities, what the existing literature does not address sufficiently is if worker-owned garment production cooperatives are capable of carrying out these four general fair trade standards laid out by

TransFair USA, and how much the fair trade movement benefits garment workers in developing countries, specifically Latin America. Although woven and sewn finished goods may be included in the handicraft category, apparel more largely consists of practical goods that can appeal to consumers on a much broader basis and can vertically integrate more sectors of an economy, giving the fair trade market further growth potential. More research needs to be done with specific respect to fair trade garment assembly process, factory ownership, and marketing networks to evaluate how it compares to existing free trade methods and if the principles of fair trade are being effectively carried out through the organizations involved in fair trade garment production. One specific mechanism of fair trade garment production that deserves research is the worker-owned garment production cooperative. Expanding the fair trade market with apparel items may further the fair trade movement and development of people at the grassroots level in Latin America. The academic as well as the practical aspects of this valuable sector of the economy need to be thoroughly investigated to asses if the worker-owned mechanism may further fair trade as a viable alternative to conventional free trade sweatshops. 30

Research methods

This research seeks to uncover whether fair trade principles established in

agricultural products can be applied to the garment manufacturing process as a further

alternative development mechanism. The worker-owned cooperative method of garment

production is examined in this research as a fair trade mechanism from the production, rather than the ATO, side of the supply chain. In order to investigate the worker-owned mechanism of fair trade garment production, a case study involving personal interviews and focus groups was conducted in Ciudad Sandino, Nicaragua, during the summer of the

2008. Ciudad Sandino is within the city limits of the capital of Nicaragua, Managua, on western border of Lake Managua (Figure 1).

A second portion of research was conducted with the main retailer that the sewing cooperative has worked with, Maggie’s Functional Organics in Ypsilanti, Michigan.

This retailer, established in 1992, focuses on providing apparel such as tee-shirts, socks,

loungewear, and other apparel made from organic cotton under humane working conditions (Maggie’s Functional Organics, 2008). When Maggie’s Functional Organics expanded their products to include organic cotton, the organization learned of the poor working conditions and pay for factory workers in the apparel industry. Addressing these

concerns, they partnered with the Jubilee House Community Incorporated’s Center for

Development in Central America (JHC-CDCA) to help create

Figure 1. Map of Nicaragua

Source: Embassy World 2005

the Nueva Vida sewing cooperative in Nicaragua. Currently, the retailer works with several organizations and cooperatives in addition to the Nueva Vida sewing cooperative.

(*See Appendix D for list of Organizations Partnering with Maggie’s Functional

Organics) Prior to commencing the field research, contacts were made with the marketing manager, Eva, and the coordinating manager, Alicia, at the Nueva Vida sewing cooperative in Ciudad Sandino. The interviewees signed written consent forms translated 32 into Spanish and the names of the interviewees have been changed to maintain their anonymity. (*See Appendix E for Sample Consent Form)

In order to examine the benefits of worker-owned fair trade garment production cooperatives on the development of workers, their families, and the surrounding community, the following research questions were sought to be answered.

For fair trade garment workers:

1. What are the benefits that worker-owned fair trade garment factories

and workers get that other conventional factories and workers do not?

2. Why do the workers of the Fair Trade Zone cooperative choose to work

for the cooperative instead of the conventional garment production

factory or other jobs in the community?

3. What type of involvement and participation do workers in fair trade

garment factories have in decision-making with regards to production

and marketing?

4. How are the workers of the fair trade factory involved in the community

in comparison with the workers of the conventional factory workers?

For Maggie’s Functional Organics:

1. How was the connection with the Fair Trade Zone in Nicaragua

established?

2. How is this retailer involved in the marketing process of the fair trade

garments? 33

3. How does this retailer see their future relations with the Fair Trade Zone

cooperative?

To facilitate investigating the answers these questions, an interview-based

methodology was used, where personal interviews were conducted with six workers and

three focus groups of at least three to four workers of the sewing cooperative. The

workers’ and producers’ involvement and perspective is essential in evaluating if the

benefits of fair trade are reaching their intended destination of small-scale, marginalized

workers and the efficacy of the worker-owned fair trade garment production mechanism.

All of the interviews were conducted in Spanish and the transcribed into English. Also, a

personal interview with the head and founder of Maggie’s Functional Organics was

conducted via telephone.

Conclusion

With the support from the contacts made at the cooperative and with an interview-

based methodology, a study of worker-owned fair trade garment production in Latin

America was conducted to explore insights into alternative avenues of development and see if they are indeed benefiting the people in developing countries. Fair trade has shown to be an important alternative to neoliberal reform policies, concentrating on methods of production and the wage paid to the producers in the Global South. It includes the small-

scale, marginalized producers that have been squeezed out by neoliberal competition

within the global free trade markets. The success of primary commodities such as coffee

and bananas allows for diversification of fair trade products into other industries, such as 34

garment production, where there is a lack of research literature. The historic context and

existing research on fair trade provides the necessary background information to pursue a specific case study in the area of garment production in Nicaragua. In the following chapter, the historic, economic, and geographic context for the recent development of fair trade in Nicaragua and the research site are examined. 35

CHAPTER 3: NICARAGUA’S ECONOMIC DEVELOPMENT AND CHALLENGES

There are numerous ways to analyze a country’s economic situation historically.

In regards to fair trade in general, the most significant analyses focus primarily on trade liberalization policies. Foreign direct investment (FDI) also becomes an important factor in examining in the case of garment production in Nicaragua. This chapter analyzes these two elements of Nicaragua’s economy, neoliberal trade policy and foreign direct investment, in relation to the recent rise of fair trade within the country.

It is important to note that there are various factors contributing to Nicaragua’s economic development, or economic woes for that matter, besides those hinging on the existence of neoliberal policies. Many of these factors have historically made it quite problematic to attract FDI before and during the neoliberal policies enacted. The country has a past of political instability with certain governments demanding large bribes to set up businesses inside its borders. This was then replaced with a civil war and followed by an economic and political blockade by the US during the Sandinista government of the

1980s. These factors along with the several natural disasters that have torn through the country have left Nicaragua with a deficient infrastructure, unsettled property rights issues, and an economic setting inferior to most other countries in Central America by the time neoliberal policies were instated (Arana 1997; Hoyt 1997)

Nicaragua’s historic economic difficulties

Over the past several decades, as shown in Figure 2, Nicaragua’s Gross National

Income (GNI) per capita has grown only USD 850, from USD 140 in 1962 to USD 890 in 2005 (The World Bank Group 2007). Although trade has comprised an integral part of 36

Figure 2. GNI per capita: Nicaragua 1965-2005 in current USD

Source: The World Bank Group 2007

Nicaragua’s economy, the country has a historical trend of a growing negative trade

balance (Figure 3) and large external debt (Figure 4). While both increasing export and

import values are shown in Figure 3, the imports have increased more rapidly than

exports over the past many years, leading the country into an progressively more severe negative trade balance. Despite Figure 4 showing a decline in external debt, this figure still remains as approximately 100% of the country’s GNI. It was these factors, among several others, that initially led Nicaragua to the adoption of neoliberal policies in the

1990s. The most immediate factors contributing to this shift resulted from the Sandinista 37 regime’s unsustainable economic policies throughout the 1980s. However, to more fully understand how Nicaragua arrived at this point, the decades leading up to this era need to be examined as well. During the 1960s, Nicaragua’s economic policy was largely made up of a combination of export crop diversification and expansion along with industrial growth under the Import Substitution Industrialization (ISI) model (Biderman 1983).

USD millions

Figure 3. Nicaragua’s imports and exports: 1960-2006 in current USD

Source: The World Bank Group 2007

Figure 4. Nicaragua’s external debt: 1960-2006 in current USD

Source: The World Bank Group 2007

The expansion of export crops, such as cotton, coffee, and bananas, included taking

possession of many smaller producers’ lands, with only a fraction of these displaced

people becoming workers at the plantations that had taken over their land (Biderman

1983). Also, subsidies and other government support, such as irrigation infrastructure

and access to credit, favored large farms, further concentrating the land and wealth in the

hands of a few.

At the same time as agro-expansion, the government was also undertaking ISI as part of the Central American Common Market. According to Biderman (1983)

Nicaragua saw industrial growth during the 1960s due to its expanded value-added 39

manufacturing, such as food processing and chemicals. Although state-owned enterprises

(SOEs) were formed, many new industries resulted from foreign joint ventures, giving

Nicaragua positive inflows of FDI throughout this decade.

As these economic policies carried on into the 1970s, Nicaragua’s foreign debt

and social unrest became a great problem. Because the newly formed industries were a

result of FDI, many of their profits did not stay in the country to be recycled back into

other sectors. Large amounts of foreign loans were needed to offset the loss of these

profits, maintain the industrial sector, and support expanding agro-exports. Also, with the policies favorable toward large-scale farmers, the small-scale farmers were getting eliminated. This tension between large- and small-scale farmer policies contributed greatly to the revolution that ushered in a new government with new economic policies in the 1980s (Arana 1997; Hoyt 1997).

Major changes to Nicaragua’s economic policy occurred once the Sandinista government took office. After struggling against policies favoring large plantation owners, among the top priorities of the revolutionary government were agrarian reform and expansionary economic policies, seeking to shift power to the small- and medium- scale producers. The government opened access to credit, gave lower interest rates to smaller and cooperative farms, and increased subsidies and public spending (Arana 1997;

Hoyt 1997). In addition, the government, suffering from a lack of technical assistance to

properly manage the loans, forgave loans to small producers when they could not be repaid (Hoyt 1997). This expansion of support, along with redistributing many 40 mismanaged or unused agricultural lands to landless peasants, reduced the concentration of land ownership and production.

However, Nicaragua still needed increasing amounts of foreign loans to compensate for a negative trade balance and finance the increased public spending policies (Table 2), and it became overwhelmingly clear that this level of foreign borrowing could not be sustained. As shown in Table 2, there are a combination of economic factors that led the country to crisis; a decreasing GNI per capita, a larger portion of GDP accounting for imports than exports, and increasing external debt and inflation. Despite the positive effects of the policies, the country simply could not produce enough to pay for all of the spending within the country and became reliant on foreign borrowing to maintain its economic policies. The cost of goods bought by small- scale producers was rising at a faster rate than the subsidies they received. Along with higher input prices, commodity prices and terms of trade for agro-exports dwindled greatly throughout the decade (Hoyt 1997). Also hurting rural small-scale producers were cheap food policies in the cities to promote lower wages for industries. In addition, there was increased defense spending to fight the Sandinista enemies, the Contras, as revolution continued within the country. The agro-export sector could not be maintained due to low export prices, and the ISI model could not be maintained due to high import prices. Both sectors of Nicaragua’s economy were suffering and heavily relied on external funds to survive.

Table 2

Nicaragua’s Trade, Debt, and Inflation Indicators Prior to Neoliberal Policy

Implementation

1960 1965 1970 1975 1980 1985 1988 1990

GNI per capita n.d. 200 310 570 600 690 680 310

Exports as % GDP 24 29 27 28 24 15 18 25

Imports as % GDP 26 32 29 37 43 22 58 46

External Debt as %GNI n.d. n.d. 28 55 109 230 384 1088

Mid-Year Inflation n.d. 3 3 8 33 220 14316 7485

Source: The World Bank Group 2007; Banco Central de Nicaragua 2007

In the mid 1980s, with insufficient access to foreign funds, mild stabilization efforts attempted to correct the unsustainable government spending and reverse some ISI policies. Similar to some of the measures taken in structural adjustment packages promoted by the World Bank and International Monetary Fund, price controls on food were allowed to float somewhat, subsidies were reduced, government spending was reduced, and credit was limited along with higher interest rates attached to loans (Hoyt

1997). As Hoyt (1997) and Arana (1997) detail, this first attempt did not sufficiently keep inflation down and stabilize the economy, and more severe measures were taken in

1987. These actions resembled structural adjustment even more with further restrictions on credit, and government spending. 42

Despite these attempts to correct the economy, external debt was climbing to the highest amount of the decade, hyperinflation went unmanaged, and by the end of the decade (Table 2), it amounted to more than 14,000% mid-year 1988 and 30,000% by year end (Arana 1997; Central Bank of Nicaragua 2007). The ratios of exports to imports and exports to external debt only further declined. Also, stability declined, rather than improved from the increasing unemployment and decreasing production with these various attempts to adjust the economy. To exacerbate the situation, the US placed an embargo on the country in response to the Sandinista government taking office, promising to lift it as soon as a US-friendly government took its place.

Dilemmas of neoliberalism and zonas francas

Due to uncontrollable hyperinflation, instability, and lack in foreign funds to finance the expansionary policies, the country became desperate for new sources of financing. Running out of options and with the promise of US aid, the country elected a new government under Chamorro and signed an agreement with the IMF, ushering in the era of neoliberal polices (Envio 1991; Arana 1997; Hoyt 1997).

As shown in Figure 3, rather than improve since the implementation of neoliberal free trade policies in the early 1990s, the country’s trade balance has only further deteriorated from averaging -16.2% of gross domestic product (GDP) throughout the

1980s to -24.9% GDP throughout the 1990s and then to -30% GDP by 2006 (The World

Bank Group 2007). Neoliberal policies included the devaluation of the currency to make domestic companies’ and locally-owned foreign companies’ products cheaper in exporting markets, and the reduction, in some cases elimination, of protective tariffs and 43

taxes on goods imported (Envio 1991). Most importantly, the neoliberal policies instated

by the government sought to attract FDI at all costs as the path to the country’s economic

development. While these policies increased FDI net inflows from 0% GDP in the 1980s

to 4% in the 1990s and 5% by 2006 (Figure 5), and increased annual GDP growth from

an average of -1% in the 1980s to 3.5% from 2000 to 2007, they have not contributed

enough to overcome the country’s negative trade balance

USD

Figure 5. Foreign direct investment net inflows in current USD1960-2006

Source: The World Bank Group 2007

(The World Bank Group 2007). Further, as noted by the Economist Intelligence Unit

(EIU 2007), a worldwide economic publisher, much of the external debt accumulated 44

throughout the 1980s and 1990s has been reduced by debt relief programs through NGOs,

rather than by any neoliberal policy implementation.

Two major components of neoliberal policies are to open up markets for free

trade and to attract FDI. One export sector that has grown since the early 1990s export-

driven policies has been agriculture, such as coffee, sugar, meat, and seafood, which

together accounted for nearly half the country’s exports in 2006 (EIU 2007). Coffee

exports alone grew 36% from 1998 to 2005. Neoliberal policies, while targeting exports,

benefited and offered credit to larger agricultural ventures in the hopes that it would

promote larger quantities of exports (Envio 1992b). This discouraged medium- and

small-scale farmers in more marginalized regions in the mountains from being able to

participate in neoliberal free trade from the start.

In 2005, the Nicaraguan government passed new legislature regarding the creation

of businesses in the zonas francas. These zonas francas were created to attract FDI to the

country with the intention of increasing exports, which would then shore up the value of

the country’s weakening currency and therefore, also their trade balance. According to

the Central Bank of Nicaragua (2007), Nicaragua’s currency had fallen from 4.28

Córdobas for one USD in 1991 to 16.73 Córdobas for one USD in 2005. Among other application plans, such as area needed, number of employees needed, and capital investment, a commitment was required from the businesses to stay in the country for at least 25 years (Bolaños Geyer 2005). Companies’ responsibilities included constructing

the necessary infrastructure with either direct or contracted third party labor,

communicating monthly with the Comisión Nacional de Zonas Francas de Nicaragua 45

(CNZF), the governing body of the zona franca system, and adhering to the original

business plan submitted with their application, among others (Bolaños Geyer 2005).

As of February 2008, the CNZF (n.d.) reported 121 foreign direct investment

companies employing approximately 89,200 Nicaraguans (Table 3). Despite this

increase in FDI, however, the currency had fallen even further to 19.05 Córdobas/USD

(Central Bank of Nicaragua 2007). The companies employing the most people originate

from the U.S., Korea, and Taiwan. Surprisingly, Nicaragua ranks third in the number of

companies, but only employs a little over 4,700 people, which means that most domestic companies operating in the zonas francas are significantly smaller than their foreign

counterparts. The largest industrial activity by far, accounting for approximately half of

these companies’ output, is garment production. Other smaller industries include

tobacco, furniture, textiles, call centers, and agroindustry.

By attracting FDI as the ultimate economic solution, Nicaragua easily falls prey to exploitation by foreign investors looking to make profits, not only in regards to natural resources, but also people. Despite the reported rate of overall unemployment in

Nicaragua by the Central Bank of Nicaragua (2007) of 4.9% in 2007, nearly half of the country’s population is experiencing underemployment and living below the poverty line.

One way the government has addressed this problem has been to make the country’s abundant labor force attractive to foreign investors, creating several of the free trade

Table 3

Sources of FDI in Nicaragua______

______December 2007______February 2008______

Source # of Companies Employees # of Companies Employees___

US 37 18,320 37 19,460

Korea 29 23,800 30 24,124

Nicaragua 16 5,200 17 4,726

Taiwan 15 23,330 13 22,877

Honduras 4 930 4 1,070

Mexico 4 7,200 4 7,200

Canada 3 2,954 3 3,321

Guatemala 2 311 3 600

El Salvador 2 490 2 490

Hong Kong 2 750 2 831

Spain 2 1,550 2 1,550

Argentina 1 80 1 80

Costa Rica 1 223 1 230

Cuba 1 223 1 230

Others n.d. 3,552 n.d. 2,572______

Total 120 88,750 121 89,200______

Source: Comisión Nacional de Zonas Francas de Nicaragua n.d.

export zones. Both the websites of the CNZF (n.d.) and the Corporación de Zonas

Francas de Nicaragua (CZF 2007), an administer of several of Nicaragua’s free trade zone industrial parks, advertise the country as the perfect place for foreign investment, soliciting for electronic, textile, agro-industrial, infrastructural, and logistic and digital

services. They boast that Nicaragua has a favorable legal system to protect investments,

and offer several tax breaks, that it is the safest country in Central America, and of

course, that it has an abundant work force with a lower minimum wage than surrounding

countries. (CNZF n.d.; CZF, 2007). Although the free trade zones, or zonas francas,

provide an administrative framework that appeals to FDI, it is very much at the expense

of the rights, conditions, and wages of the workers (Envio 1992a).

Because the neoliberal policies instated by the Nicaraguan government did not make enough progress in the country’s trade situation balance and excluded many small- and medium-scale farmers and businesses from the benefits of these policies, these farmers and businesses had to look elsewhere for support to sell their product. The northern region of Nicaragua, especially Matagalpa, is an example of several small-scale coffee farms that have turned to the fair trade and organic markets to sell their coffee due to neoliberal policies concentrating benefits to large-scale export producers. The farmers who have been marginalized in the neoliberal trade segment have opted for fair trade on their own. In fact, those coffee farmers who participate in fair trade networks do earn a higher average price per pound of coffee sold, averaging between $.55-.60 per pound, whereas those who participate in conventional markets only average about $.40 per pound (Bacon 2005). In addition, those coffee farmers who grow organic coffee beans 48

and sell them in the fair trade market receive an additional premium for an organically

grown product. Those who I spoke to in Managua during my fieldwork and at the

cooperative outside of Managua knew very well that there were numerous coffee farms in

this region of the country and that these coffee farmers were able to earn a much better

wage by producing organic coffee beans (personal communication, August 4-9, 2008).

Unfortunately, this is generally where the idea of fair trade begins and ends in rural

Nicaragua. Many workers I interviewed seemed to intertwine the ideas of fair trade and organic, using these terms interchangeably.

However, the northern Nicaraguan fair trade organic and nonorganic coffee producers only go through fair trade channels for about 40% of their crops according to

Bacon (2005). Due to the lack of demand through fair trade export and consumer channels, the farmers must sell their product on multiple markets, and the majority of their crops that would qualify as fair trade coffee are sold through conventional networks

(Bacon 2005). The alternative that fair trade presents to the coffee growing region of

Nicaragua provides some improvement to the livelihoods of those farmers who participate in it but it carries a limited impact.

Similarly, those who have worked for garment factories in the zonas francas have been marginalized in the way of their rights, working conditions, and wages. As part of attracting FDI, the government puts few restrictions on these foreign factories within the zonas francas. Workers are not guaranteed permanent positions and the factories reserve the right to hire and fire as they deem necessary or convenient. This greatly reduces the ability of workers to assemble or to form unions. Also, there are no government 49

standards of working conditions within the factories. These factors have led both

workers and already established fair trade organizations to seek alternatives to this neoliberal free trade model of economic development.

Conclusion

Nicaragua’s difficult economic history had placed the country in financial crisis

by the end of the 1980s. In an effort to recover the economy, structural adjustment was

adopted in the early 1990s. However, the economy has yet to show significant signs of improvement, with certain economic indicators actually further declining rather than improving. With more current Nicaraguan economic policies aimed at attracting foreign direct investment as the mechanism to build the economy, the rights of workers have been marginalized to some extent. In the past, those who have been marginalized by neoliberal policies promoting fair trade in Nicaragua, and throughout Latin America in general have sought out fair trade as an alternative. This alternative has brought a higher living wage to many producers of agricultural products such as coffee, bananas, and chocolate and may be used as a model for other nonagricultural industries.

CHAPTER 4: COMAMNUVI AS A WORKER-OWNED FAIR TRADE

ORGANIZATION

Like the agricultural farmers, garment workers have also turned toward the

alternative of fair trade and have established a garment production cooperative in the

Nueva Vida community within Ciudad Sandino, Nicaragua. Chapter four delves into the

historic background and organizational, production, and marketing operations of the

Nueva Vida cooperative. This cooperative works within the framework of free trade,

being certified by the government to operate as one of the zonas francas, or export

processing zones. However, it also seeks to operate within the concepts of fair trade,

offering higher wages and better working conditions than any other factory in the area

(personal communication, August 4-9, 2008). Since the community is located so near

free trade zones textile and garment factories, the majority of the jobs available to the

community are with these textile and garment factories. Those within the community

look to the cooperative as an alternative to the harsher working conditions and lower pay

of other factories in the nearby zonas francas.

With the assistance of an NGO, alternative trade mechanisms in Nicaragua have

expanded from just agro-exports to include garment production. While there are multiple

approaches to what would be considered fair in the garment production industry, this particular method is the worker-owned cooperative. A case study in Ciudad Sandino,

Nicaragua was performed to investigate the workings of this particular cooperative. This chapter examines the inner workings of production within the organization. 51

A new type of fair trade arises

An innovative attempt at an alternative development strategy has branched away

from the ever-popular fair trade coffee: a sewing cooperative that produces organically

and conventionally grown cotton shirts, among other garments, under conditions

mirroring the fair trade concepts. Although there is no internationally recognized

certification for fair trade garment production, this cooperative certainly provides a model

for this type of production. Within this organization, fair trade concepts shift from

simply focusing on trade practices, as in fair trade coffee, to also encompassing

production practices. This concept would translate into producers receiving a fair price

for their garments, while producing them in a non-exploitive manner. In addition, workers are involved in the decision-making process of production and marketing of their products. This supports the cooperative as a whole, both the owners and the workers.

The acronym COMAMNUVI stands for Cooperativa Maquiladora Mujeres de

Nueva Vida. Its history begins in 1998, when Hurricane Mitch displaced thousands of

Nicaraguans. Most of the people I spoke to came from Managua or the surrounding area.

These people got redirected to an open area that now makes up the Nueva Vida

neighborhood incorporated in the large Ciudad Sandino area, just west of Managua

(Figure 6). They appeared to be internally displaced refugees within their own country.

The people made tents out of plastic (Figure 7), and eventually, over time, those tents

became more permanent structures, and dirt roads were cleared throughout the

neighborhoods. Churches were built, corner stores were opened, and Nueva Vida, along 52

Figure 6. Map of Managua, Nicaragua, and surrounding area

Source: Instituto de Estudios Territoriales de Nicaragua 2002

Figure 7. Families relocated to Nueva Vida after Hurricane Mitch

Source: COMAMNUVI n.d.

with other communities, was constructed inside Ciudad Sandino. Renk (2005) details that Ciudad Sandino has one of the highest population densities in Nicaragua, despite its smaller geographic area, with more than 200,000 people and over 4,500 people per square mile.

One organization that played a key role in the relief and development of Nueva

Vida and Ciudad Sandino was and still is the Jubilee House Community Incorporated’s

Center for Development in Central America (JHC-CDCA). It is an NGO, which started in North Carolina and transferred its efforts to Nicaragua by organizing the Center for

Development in Central America in 1993 (Renk 2005). In 1998, it provided medical 54 relief to the displaced victims of the hurricane in what would become Ciudad Sandino.

While administering medical relief, they realized that more help was needed. These people not only had no homes, but no way to make an income to build homes. They spoke with people who visited the medical clinic tent to gauge the interest of organizing and creating an economic venue for employment (personal communication, August 5-9,

2008). People of the community wrote their names down if they wanted to be contacted about the possibility of creating a business for employment. This grew into yet another development venture for JHC-CDCA.

Fortuitously, the JHC-CDCA had previously formed connections with Maggie’s

Functional Organics, a Michigan retailer looking to expand their organic cotton clothing line. Maggie’s Functional Organics agreed to give their sewing contracts to the organization if it specifically created a sewing cooperative (personal communication

December 17, 2008). The JHC-CDCA then met with those in Nueva Vida that were interested in creating an employment opportunity to discuss what skills they had and decide what type of business would be created. In conjunction with Maggie’s Functional

Organics’ proposal, it was agreed that a garment factory would be the most suitable type of employment for the skill level of all those involved. Once this was decided, the JHC-

CDCA organized a loan in the amount it would take to build and set up the business for the community (Renk 2005). Then, the JHC-CDCA members and those interested in creating the cooperative—including their children—helped build the cooperative, brick by brick, literally from the ground up (Renk 2005; personal communication, August 4-7, 55

2008). The cooperative is located in Ciudad Sandino about a block from the JHC-CDCA

(Figure 8).

COMAMNUVI, Nueva Vida

Figure 8. Map of Managua and Location of COMAMNUVI Cooperative

Source: Lonely Planet 2008.

COMAMNUVI is distinguished from numerous other cooperatives by being registered as both a cooperative and a zona franca, Zona Franca Masilí, S.F. Being a cooperative eligible to operate as a free trade zone combines the benefits of the liberalization of trade barriers and ideals of egalitarianism of a cooperative. It is a Fair 56

Trade Zone inside a Free Trade Zone. As shown in Table 4, the benefits of being a

member of the zonas francas are largely monetary. However, because the cooperative is

located within the free trade zones, it does encounter some negatives as it enters into

competition with other zonas francas. There are larger, conventional garment factories

situated in close proximity to it with higher amounts of available physical and

Table 4

Advantages and Disadvantages of Operating in the Free Trade Zone

Advantages Disadvantages ______

*30% government tax waived * Competition with higher capacity, better

established factories with larger amounts of

human and physical capital

* Export tariffs waived * No community support from other

cooperatives

* Utilization of government agencies for * No access to additional loans to expand

economic and technical support to a more competitive business

Source: Personal interviews 2008; Comisión Nacional de Zonas Francas de Nicaragua

n.d.

human capital. These resemble the more traditional factory structure, built of higher- quality construction materials and more professional workmanship than the cooperative.

These other larger factories experienced in marketing and product development are

already established and know how to operate efficiently. The owners also have more

access to loans and credit, since they have more liquid assets and equity. COMAMNUVI

does not have any credit to get a new loan. The current loan that it has is with JHC-

CDCA, which is not figured into regular monthly payments. Because the cooperative pays only when it has extra money, the interest, and therefore the total loan amount, continues to accrue.

As the financial backer of the development project and with more business

experience, the JHC-CDCA stipulated that it would be the administrator of the cooperative and oversee all operations. However, according to my interviewees at the cooperative, after a few years, the cooperative decided to take over the administrative

duties from the JHC-CDCA. They came to this decision after difficulties with

communicating and negotiating with the administration. Several people from the

cooperative state in my personal interviews that they were not working well together, and

that the administration was not consulting properly or enough with the workers. The

JHC-CDCA and the workers came to an agreement in 2006 that the JHC-CDCA would

no longer serve as administrator for the cooperative. Rather, the Nicaraguan workers

would run their own administration and JHC-CDCA would remain the financer and

holder of their loan with the cooperative still responsible for paying back the loan they

owed to the JHC-CDCA. This transition of the administration into the hands of 58

the workers of the cooperative made the sewing cooperative a worker-owned fair trade

organization. Today, the administrators are the 11 partners that originally founded the

cooperative.

The Nueva Vida community

Nueva Vida gets its name from the hope of new opportunities for people relocated

to the area after hurricane Mitch destroyed their homes in Managua. Over 1200 families

were transferred from Managua to the Nueva Vida neighborhood in Ciudad Sandino

(Renk 2005). As shown in Figure 9, despite the evident improvement from the makeshift tents, the conditions inside the community remain among the most impoverished in the country. The only paved road near the community runs in front of the free trade zone factories, the cooperative, and the JHC-CDCA headquarters. Since

Nicaragua has a surplus trash problem with no government-provided system of proper trash removal, people either throw trash in the streets or burn it. While I was conducting field research in the community, I noticed a pungent stinging smell in the air from burning plastics and other materials and also from the type of gas that is used to cook.

There is also animal dung in the roads from pigs kept near the roads and horses used to pull carriages and trailers on the roads. There is not potable running water for every house. JHC completed a project to bring potable water to a good portion of the

community, but some of the houses are too steep to bring water through pipes in their

houses (Renk 2005; personal communication, August 2-9, 2008). The house that I stayed at was one that did not have running water. Instead, water runs through a pipe to a well

or pit dug at the front of the yard space next to the house and the people fill buckets from 59

a spigot built into the pipe. They have an outside bathroom that has a non-functioning

toilet and a space to shower from a bucket of water.

Figure 9. Current conditions in Nueva Vida

The toilet does not flush; it is more like a drainable outhouse, with no plumbing connected to it. A bucket of water is kept just outside the bathroom area to scoop water into the toilet to force-flush. Likewise, a bucket of water with a lid is kept inside the 60

house for drinking and cooking, which is not boiled before using to kill any bacteria or

parasites that may exist within the water. Moreover, because of these sanitation

concerns, personal hygiene is also difficult to maintain. These conditions are typical

throughout the neighborhood of Nueva Vida and other parts within the larger

municipality of Ciudad Sandino. This extremely poor neighborhood, in which the vast

majority of workers at COMAMNUVI live in, does not provide much opportunity for a

healthy and sanitary environment.

Production operations of COMAMNUVI

From the outside, COMAMNUVI does not compare much in size to the other

garment production factory in the free trade zone across the street from it. As shown in

Figures 10-13, the structure is a small, concrete block building with a large room

consisting of 23 sewing machines in two rows, two long cutting tables with cutting

machines, one material printing stamp machine, one small office, an area for a raw

materials stock room, an area for a completed product stock room, and an area for

inspection and packaging orders. There are small offices located outside the large factory

room where the administrative duties take place (Figures 14-15). The cooperative owns

about four computers all with internet access, two telephones, and a fax machine to be

able to communicate with clients and the governmental and nongovernmental

organizations they need to keep the cooperative running. The operational services are very expensive, some months amounting to USD 3,000 between monthly zona franca fees, electricity, water, telephone, and internet costs.

Figure 10. COMAMNUVI’s structure from the outside

Figure 11. Production line inside COMAMNUVI 62

Figure 12. Storage area and small office inside COMAMNUVI

Figure 13. Inspection and packaging area inside COMAMNUVI 63

Figure 14. Administrative cubicles and offices inside COMAMNUVI

Figure 15. An administrative office inside COMAMNUVI

The government grants the cooperative the same exemption from the 30% export

taxes as other export zone factories. Having the status of a free trade zone gives

COMAMNUVI a benefit that other cooperatives in the county do not qualify for. A

business or organization has to be certified as part of the fair trade zone in order to

receive the tax-free benefit. From the point of view of the buyer, the tax-free benefit is

the same regardless of if the garments are made by conventional or fair trade means. In

this case, there is no monetary benefit for making fair trade garments because there is no

monetary advantage to the buyer.

Another benefit the government offers is expositions where they can receive support from the Ministry of Economics. There, cooperatives and businesses can share

their vision with this agency and they can receive technical help, such as capacity

building workshops. In addition, when this agency does its strategic planning with funds that pass through, the funds would be distributed to the organizations and businesses that

have previously consulted with the ministry.

Most of the time, the cooperative sews garments directly for an order, not having

the capital to have large stores of an array of finished products. Figure 16 shows the

product chain from order to shipment. However, when they do not have any orders, the

workers cut and sew the raw fabric supply they do have to keep for future orders. Shirts

are made in pieces, batches at a time in any one color and size. One person or group of

people makes the sleeves, another person or group makes the bodies, another combines

these pieces, and the collars put on lastly by yet another person and/or group. They are then sent to an inspection group that checks the quality of the seams, length, and size. 65

North American client, such as

Maggie’s Functional Organics

orders with 50% payment

COMAMNUVI orders fabric

COMAMNUVI production

Zona franca commission

contacted for eligibility

Shipment to airport

Client receives shipment and

pays remaining 50%

Figure 16. COMAMNUVI product chain 66

The shirts are then stacked in piles by size and color. Sometimes they are marked with tape as to how many are in a stack. Other than tee-shirts, the coop also makes onesies for babies, camisoles, criss-cross shirts, and totes. Once all of the shirts for an order have passed through inspection, the shipment is checked against the client’s order and packing slip. Each box is then labeled with its exact contents, sealed, and then stacked (Figure

13).

While production is under way, the free trade zone commission is contacted to obtain export permission from the CNZF. A Certificate of Eligibility to allow the product to be shipped without export taxes is granted from the CNZF. COMAMNUVI has to go through the commission of the free trade zone to make sure their shipments meet the 50lb./box requirement. Everything that satisfies this requirement shipped to the

US, the cooperative does not have to pay taxes on. Once that is obtained, the cooperative contacts a truck driver to pick up the boxes to take them to the airport for shipment. Like other garment factories in Nicaragua’s zonas francas, COMAMNUVI does not pay tariffs to export their product. The customers are expected to pay 50% of the order total upon placing the order, and the other 50% upon receipt of the finished product. The cooperative does not have the capital to fulfill an order without upfront payment from clients.

Workers of COMAMNUVI

The cooperative is made up of 11 partners and anywhere from 30 to 100 workers, depending on the amount of orders COMAMNUVI is filling at any one time. From interviews conducted in August 2008, the workers attested that before they worked at 67

COMAMNUVI, many of the workers had jobs at other zonas francas or in the informal

sector. Those who decided to leave their informal work did so because it was not a

secure enough way to earn money and they did not have access to medical insurance.

Those who left other export processing zones did so because they were not earning

enough pay, the company was not paying for insurance, and they did not get treated as

well.

The amount of pay varies between partners and contracted workers. Partners and permanent workers are paid at least the basic salary, 2600 Córdobas (about USD 146) per month year-round, regardless of how little orders there are. They are paid more when profits are larger from a larger amount of orders. Because the cooperative is worker- owned, the profits are divided up between the workers and stay among those in the Nueva

Vida community, rather than ultimately ending up overseas, as with FDI factories.

Contracted production line workers are contracted on a monthly basis depending on the amount of orders the cooperative has at any one time. The amount of pay is determined

in the contract.

Sick days are paid for as long as the doctor prescribes the person to recuperate. If

the doctor does not recommend a person to stay home and they do anyway, then they lose

that day’s pay. When there is an accident or injury at work, they evaluate how severe it is

and they go to the doctor if it is an emergency and they follow the doctor’s orders from

there. There is no additional worker’s compensation, but they get paid for the days that

they have to take off work. They may have to go back to the doctor for check-ups before

they go back to work. 68

Paid vacation time accumulates at 2.5 days per every month a person works and is available to be taken every six months. At the end of the year, a worker accumulates 30 days of vacation for all workers alike. The worker who needs a vacation day goes to the administration to ask for that day off and if the business is not too busy or if the company can spare them that day, then they can have that day off. If the company has too much work, then they will not grant that vacation day.

Initially, after working for an entire year, contracted workers were required to become associate partners with vested interest and shared ownership in the cooperative.

Because there exists less responsibility for the cooperative’s success or failure as a contracted worker than a partner, many workers oppose the option to become an associate partner and prefer to continue working the production line. As a partner, Some of the partners have even expressed the difficulty in seeing the advantage in being an associate partner because they are tied to the business for better or worse and they don’t get paid more than a worker. As a result, and because the original 11 partners of COMAMNUVI felt they could not enforce the requirement to become part owner, many workers have become permanent workers without becoming associate partners. Over time, this could contribute to a division between the administrative partners and the permanent and contracted workers similar to the very division that led the cooperative to break ties with

JHC-CDCA. Despite this risk, all of the workers I interviewed asserted that they enjoy working for COMAMNUVI more than other jobs they have had and they feel that there is a good deal of solidarity between the workers, whether they are partners, permanent 69

workers, or contracted workers. (*See Appendix F for Sample Organizational Flow Chart

and Appendix G for List of Current COMAMNUVI Partners and Positions)

The partners are involved in all aspects of the cooperative, some working with

production and some working with the administrative duties. Further, the partners have,

at some point, individually worked in nearly every aspect of production and can fill in

where needed. Once the cooperative established itself as independent from the JHC-

CDC, the 11 partners all decided who would take which administrative positions. Of the

11 partners, Eva and Alicia carry the most responsibility and weight in administrative

decision making. Eva is oversees and is the final inspector of shipments before an order

is sent to a client. She is responsible for checking the product to be shipped against the

order submitted from the client. In addition, Eva is also the cooperative’s marketer. She keeps in touch with existing clients and suppliers through emails and telephone calls.

She solicits existing clients to see if they need or want to put in any orders and also tries to find new clients. She does not necessarily enjoy being the marketer; she is the marketer simply because there is no one else in the cooperative that is as qualified as she is. Prior to COMAMNUVI breaking association with the JHC-CDCA, she worked on the production line, as did all of the current partners.

Alicia is the coordinator of the cooperative, making sure all administrative and production aspects are communicating and working well together, as well as ensures proper records are kept for everything (inventory, packing slips, payment receipts, etc.) and provides those records to the accountant, gives tours when they have visitors, makes 70

sure changes the business consultant deems necessary are implemented, and fills in

wherever needed. She oversees all departments and operations.

There are monthly meetings that all the partners are required to attend and

permanent workers are sometimes required to attend, depending on the agenda being

discussed. All the regulations, rules, etc. are discussed and decided upon within these meetings. Also, any problems with production, orders, clients, or among the workers or between the workers, it is discussed and resolved in the meetings. Those who attend the meetings like them because things are communicated and discussed.

COMAMNUVI as an alternative to other zona francas

There are several fundamental differences, as summarized in Table 5, between

working at COMAMNUVI and working at other zonas francas. From interviews with

workers at the cooperative who have either worked at or know people who have worked

for foreign companies at other export processing zones, many attested to there being a

high level of mistreatment at other zonas francas (personal communication August 2-7,

2008). There were recounts of exploitation of workers and physical abuse while working

on machines in the production line, “there is a feeling of working on opposing sides

inside other zonas francas, with the managers yelling at you and constantly pressuring

you to produce more and faster” (personal communication August 7, 2008) In addition,

workers were excluded from any decision-making processes regarding the products and

their marketing. At COMAMNUVI, there are various ways that the workers feel better

working here than at other free trade zones. The workers get higher pay, an hour lunch,

and liberty to go to the bathroom without having to ask for permission. In addition, it is 71

Table 5

Comparison Between COMAMNUVI and Other Zonas Francas

COMAMNUVI __Other Zonas Francas

* Higher contract-worker wages * Lower contract-worker wages

* Pays for a portion of employee insurance * Employer portion of insurance cost gets

passed on to workers

* Exhibits respect between administration * Workers mistreated physically and/or

and workers and among workers otherwise

*Workers allowed 1 hour lunch break * Workers allowed 30 minute lunch break

* Workers allowed bathroom breaks * Permission from management required to

whenever they want use the bathroom

* Profits are divided up among the workers * Profits are kept among the owners and/or

administrators

* Paid vacation * May not allow for vacation time

* Paid sick time and time off due to work * No paid sick time or time off for work

related injuries related injuries

* Option of becoming a permanent worker * No option of becoming a permanent

or partner worker or partner

* Workers involved in decision-making * Workers excluded from decision-making

process process

Source: Personal interviews 2008 72 easier to take a sick or vacation day, and women do not get fired once they become pregnant. Also, the pressure the workers feel is less here and they feel is much better to work in this manner because they can develop themselves personally. There is more humanity and respect for what it means to be a human being.

All workers in Nicaragua are entitled to insurance provided by the government through employers registering workers as employees with their company. The amount paid for insurance is supposed to be split between the workers, the employer, and the government. Workers at COMAMNUVI pay 6.25%, the cooperative pays 15%, and the government pays the remaining portion. However, at other zonas francas, it is common for the employers to pass the cost of insurance onto the workers, cutting costs for the employer and cutting pay to the worker.

On the other hand, because the cooperative is not a larger factory with higher amounts of available physical and human capital, it does encounter some negatives.

Other factories large in size and experienced in marketing and product development are already established and know how to operate efficiently. They also have more access to loans and credit, since they have more liquid assets and equity. COMAMNUVI does not have any credit to get a new loan. The current loan that it has is with JHC-CDCA, which is not figured into regular monthly payments. Because the cooperative pays only when it has extra money, the interest, and therefore the total loan amount, continues to accrue.

Conclusion

In combination with Nicaragua’s economic and geographic context, critical assistance from the JCH-CDCA NGO helped create an environment in which fair trade 73 has become the viable alternative for marginalized producers. The JHC-CDCA played an essential role in organizing the opportunity for fair trade garment production to manifest within Nicaragua’s dire economic situation. Furthermore, it is noteworthy that the JCH-

CDCA relinquished control when the cooperative expressed the desire to administer itself. The NGO helped develop a sustainable organization and the allowed it to be operated by local Nicaraguans, further contributing to the empowerment of the workers.

Without the JCH-CDCA’s role in the development of the cooperative, fair trade garment production may not have been set into motion for many more years.

With COMAMNUVI as the first combined worker-owned free trade and fair trade organization, the implications of its success or failure are extremely important for future fair trade endeavors. If successful, this method of fair trade production in the garment industry could spread to other areas within Nicaragua, and throughout countries with similar economic situations. If it fails, then it may take quite a while to introduce another alternative to sweatshop labor conditions. Currently, the cooperative is not very familiar with other fair trade organizations and is not well connected to the fair trade global marketing networks. Its future may depend on the collaboration with these organizations.

With a connection to these organizations, marginalized workers can be exposed to a global market where they will be better able to compete against their larger, and more exploitative counterparts. The next chapter explores this topic of how COMAMNUVI fits within this global marketing network for fair trade and what connections the cooperative does have presently.

CHAPTER 5: COMAMNUVI’S MARKETING TO THE GLOBAL NORTH

Finding the right tools to connect with clients is essential for any business to succeed. Many worldwide large businesses are able to dedicate a large amount of capital to market research and advertising to reach their clients. Fair trade artisans and farmers do not have access to such capital, however. They must rely heavily on the international network of organizations that support the fair trade process, largely via the internet. This chapter explores the client and organizational connections COMAMNUVI has made, how they have achieved these connections, and yet other connections that they may also need to incorporate in order to succeed in the global fair trade markets.

Global understanding

Although the majority of the workers at COMAMNUVI do not understand what neoliberalism is exactly, they do understand globalization and that they exist within an international exchange. Furthermore, despite the overwhelming feeling that international trade is not fair as it operates today, the workers do not see globalization as the problem in and of itself, “it’s not globalization that does harm, but the intentions of the person”

(personal communication, August 7, 2008). They see globalization as giving all producers the opportunity to sell globally, and as advancing technology that is valuable for both large and small producers. However, they are very keen in their awareness of how globalization can turn out to be harmful if used to exploit workers by building factories in poor countries and paying the workers less than a living wage, to block access to the technologies created, to increase profits by destroying the environment, or to pay less than a fair price for exported goods. 75

They feel that globalization needs to be regulated in order to avoid these possible

dilemmas (personal communication August 4-7, 2008). Moreover, some feel that government should be the agent responsible for regulating it, “the government should regulate the price of goods being exported. They should make the prices equal for

producers. If the producer is selling it for 10 and the market says 7, it should be sold at

10” (personal communication, August 7, 2008). Because they view the rich countries

depending more on the poor countries, they feel it is their government’s role to ensure

that the rich countries and their companies are not abusing globalization in a way that

would harm their country and the people inside their country. Others feel that the

responsibility of regulation falls on the buyer and the seller, “the buyer needs to

understand that the workers in fair trade are not exploited and willing to pay more for the

product, and the seller has to be willing to pay the employees more” (personal

communication, August 4-9, 2008). The workers expressed that globalization is not bad,

it simply needs to be regulated against those people and companies that would use it in a

way to increase their profits by exploiting others. From the point of view of those I

interviewed at COMAMNUVI, “if there was globalization and if everyone had this

consciousness, the world would be much better. Most people don’t think about this, but

rather they think about their riches.”

Global markets and demand for products

The cooperative reported that they have worked with approximately 15 clients in

the past few years (personal communication, August 7, 2008). COMAMNUVI’s largest

client, up until February 2008, was Maggie’s Functional Organic clothing (personal 76

communication, August 4-7, 2008 and December 17, 2008). This is an online retailer

located in Ypsilanti, Michigan, with its clothing products also appearing in organic food

stores. As mentioned earlier, this retailer played a key role in deciding what type of

employment was created for the community of Nueva Vida. Because Maggie’s

Functional Organics only sells organic cotton garments (Figure 17), the cooperative largely concentrates their efforts on organic cotton garment production, rather than on conventional cotton garments.

Figure 17. Maggie’s Functional Organics’ label and sample products

Source: Maggie’s Functional Organics 2009

Recently, however, Maggie’s Functional Organics has stopped sending sewing

contracts and orders to COMAMNUVI. Because of Maggie’s Functional Organics’ close

ties to JHC-CDCA, it did not approve of the cooperative’s break from the NGO. In

addition, Maggie’s Functional Organics was expanding in size and a production team was

created to coordinate and manage their garment product line (personal communication,

December 17). The founder of Maggie’s Functional Organics could no longer oversee all

aspects of the connection with the cooperative. Because the connection with

COMAMNUVI was being handled by this new group at Maggie’s Functional Organics,

rather than solely by the founder, the connection, the nature of the relationship between

the two organizations changed. Moreover, since the new production team took over the

direct connection with the cooperative, they have had several complaints of high numbers of irregulars and errors in orders coming from COMAMNUVI. Maggie’s Functional

Organics expressed willingness to work with the cooperative again in the future if the cooperative’s quality and client relations improve.

Since its creation, the cooperative has been able to expand its client base somewhat, but Maggie’s had always provided the bulk of the orders COMAMNUVI received. Some of these clients include the Presbyterian Church USA, universities throughout the US, and a small client in Germany. (*See Appendix H for List of

COMAMNUVI Clients) Mainly, the connections with these clients arose from their direct visits to the cooperative in Nicaragua, many of them being missionary or religious groups. The majority, if not all, of COMAMNUVI’s customer links have been created by the clients actively seeking out the cooperative, not the other way around (personal 78 communication Aug 4-7). In addition, with the exception of some people from Managua and other parts of Nicaragua that have come to COMAMNUVI as tourists, it is rare to come across someone in the country who is familiar with the cooperative.

Improving business skills through capacity building workshops gives the workers at the cooperative the opportunity to learn how to increase their client base and efficiency as a business. The most common types of capacity buildings and trainings the workers of

COMAMNUVI attend are in the area of finance, accounting, and managing, among others. Some capacity building workshops are held on site at the cooperative, but the majority of the workshops are held at hotels in Managua, as large conventions. When they take place at the cooperative, outside instructors hired by the cooperative come to run the trainings. Workers both in the administration and the production line attend these workshops, varying depending on the topic being presented. It costs approximately $1000 for six sessions divided up between those who attend. According to those interviewed, these trainings and capacity buildings are viewed as favorably as a way to learn how to better run the business. With no previous business experience and with very limited primary or secondary education, let alone business education, these capacity building workshops serve as the only education that the workers at

COMAMNUVI receive to better their business skills.

Conclusion

The workers I interviewed to at COMAMNUVI are well aware of the world outside of

Nicaragua and that globalization can help them obtain what they want and need to succeed as an international business cooperative. They have had experience doing a good 79

deal of business with international clients since their establishment. Maggie’s Functional

Organics and the JHC-CDCA contributed to building their fundamental business skill level and the cooperative is continuing to enhance the skills of its workers through capacity building workshops and through the international connections they have made.

However, these business experiences were lacking in some degree with respect to several different business aspects. Despite the measures the workers of the cooperative have taken in the past and continue to take, they have come to encounter numerous challenges to maintaining and expanding their client base and product line. In the next chapter, those business aspects along with other obstacles are discussed.

CHAPTER 6: IMPEDIMENTS TO GLOBAL MARKET EXPANSION

Several challenges have arisen throughout the years COMAMNUVI has been in operation. The creation of the cooperative itself was the result of an enormous challenge, with recovering from destroyed homes and livelihoods from the floods and mudslides of

Hurricane Mitch. Establishing a business and cooperative operation under a still fresh catastrophe mentality may have contributed to the causes of the obstacles the cooperative’s workers faced over the next several years and continue to face.

Functioning under the sometimes clashing ideals of a cooperative dependent on fervent worker participation in all aspects as well as the business principles of a zona franca also contributes to the many causes of such hindrances. Analyized within this chapter are three different categories of difficulties that have been observed and documented in regards to both sides of this struggle. The workers of the cooperative encounter challenges within three areas:

• Business education and skills

• Coherent fair trade philosophy

• Support from other fair trade organizations.

Difficulties with business principles

As the marketer of the cooperative, Eva tries to find new clients that would be interested in their product. However, because Eva, or anyone else at the cooperative, has not been schooled or trained in marketing, she is inexperienced in how to use the internet as a tool to search for fair trade organizations or retailers to contact as new clients. Also due to this lack of marketing education, her sales tactics and communication lacks the 81

finesse of a practiced solicitor. Therefore, the cooperative is inadequate in the large area

of marketing and entrepreneurship that could connect them very well to the rest of the

world. “How did you find out about us?” the workers at COMAMNUVI asked me

several times, unaware that their cooperative appears on several websites (personal

communication, August 2-9, 2008). I showed Eva how to use Google as a search engine

and a few specific websites to search for new clients, or to contact the website’s

organization to become a member of that organization and be listed on their website as another possible vendor of fair trade products. Many of these websites are only in

English, and many workers at COMAMNUVI do not speak English. The cooperative has

since hired an English translator, giving COMAMNUVI the opportunity to further explore these internet sites in English.

One of the largest obstacles in COMAMNUVI faces may possibly be the way that the cooperative workers view themselves. Inside this view, one of the largest confusions is the distinction between fair trade and organic products. Several times when asked about the prospects of fair trade, the interviewees responded with “fair trade is good because an organic product is better for the land, environment, and body,” not distinguishing organic from fair trade products (personal communication August 2-9).

Some referred to the fair trade coffee growers in northern Nicaragua, stating that they get a higher price for selling organic coffee and the consumer knows that they are getting a better product because it is organically grown. Likewise, when asked about the prospect of fair trade products being sold in local markets in Nicaragua, again some workers’ answers addressed organic, not fair trade products. They stated that Nicaraguans may not 82

buy organic products because they do not know what they are or because organics are

more expensive. Because there is not much publicity about organic products within the

country, it is looked at as international export rather than as a crop for domestic

consumption, and there is not much demand from consumers for organics. Explaining

further, they stated within Nicaragua, not many people understand the benefits of organic

products or value them as superior to conventional products. There is a general lack of

understanding among the workers that organic products and fair trade products are

separate concepts, and that a product can be one or the other or both. This confusion can

also hinder the cooperative’s ability to properly market their products to all the

potentially interested sectors of the market. If COMAMNUVI is marketing their products strictly as organic, they would be missing out on the portion of the market that is

more concerned with fair trade, and not necessarily organic, practices. Despite these

misunderstandings, a few workers specifically made a distinction between fair trade and

organic, recognizing that fair trade aims to eliminate worker exploitation and understanding that the products should be marketed that way so that the consumer also understands this idea of fair trade and is willing to pay more for it. Also, some stated that fair trade coffees from Costa Rica were available in supermarkets in Nicaragua, but questioning whether they are organic or not. One worker even understood the additional

1-2% premium included in the price of fair trade coffee for growers to reinvest in their

farms or communities. Whatever their concepts of fair trade, the cooperative as a whole

agrees that more people have to know about fair trade, locally within Nicaragua and

internationally, for it to expand into other areas beyond coffee. 83

How the cooperative sees itself and its role within the global context reflects

greatly on its ability to make business and development goals, effectively market itself,

and find clients. Currently, the cooperative as a whole has a very mixed and possibly

confused vision of what its mission is and where it fits in the global market, let alone how

it could become an alternative to free trade oriented manufacturing firms for the

betterment of workers and socioeconomic development of their community. The

cooperative’s mission statement aims, “to improve the socioeconomic conditions of our

members by means of business and production development of our cooperative from a

perspective of social business and harmony with the environment” and their vision is “to

be known on a national level as well as an international level as a leading cooperative of

clothing textiles with a high business level, production capacity and supplying to the

niches of the fair trade markets” (COMAMNUVI n.d.). Workers expressed a general

idea of producing a superior product because it was made from organic cotton, and that

the conditions under which the products were being made were better than other factories

producing the same sort of goods. They believe that from a sales perspective, fair trade is beneficial because if people know that it was made by fair trade methods, it should sell better and that if there were more people who knew about fair trade, sales would increase.

From a production standpoint, all production line workers interviewed expressed that

although it may not be the best job in the world, working at COMAMNUVI is better than

other jobs they held in the past. 84

Conceptual problems: fair trade and fairer trade

On the other hand, they were not clear on what exactly fair trade means as an organized social movement or as an alternative develop mechanism, and that there exists non-governmental institutions already established that could possibly assist them in

developing their fair trade business. They also see themselves at a disadvantage in

competing against much larger factories in the zonas francas that can afford to inject

enormous amounts of capital into the production process. They cannot afford to hire the

consulting experts to ensure operations are running efficiently and they miss out on

opportunities for government programs that may help them because they cannot afford

the administrative staff to dedicate time and effort to dealing with these bureaucratic

processes. In addition, emerging from a devastating natural disaster where they lost their

homes and were relocated to the outskirts of Managua, among other political and

economic factors within the country, also contribute to a feeling of being helplessly

overwhelmed and attitudes of resignation.

In addition, many workers were not familiar with fair trade as an institutionalized

concept. Again, when asked their opinion of fair trade, several of their responses focused

on how the actual trading process in general is not fair, instead of understanding fair trade

as a concept with standards made up by institutions that have been created to support the

mechanism. These responses asserted that fair trade should be reciprocal between

countries, but when trading, larger developed countries did not always pay a fair price to

poorer countries. Some were more vehement in their answers, stating that fair trade is nonexistent because poor countries like Nicaragua never receive a fair price for their 85

goods, and angry that other countries do not exchange fairly. There was a lot of

frustration expressed regarding what the workers are seeing on the free trade markets.

From their perspective, free trade is not fair. They do not see the price they receive on

the open market as a fair price for their product. They say Nicaraguans cannot live on the export prices they receive; it costs the farmer too much to purchase all the inputs he needs to grow crops for the price he receives for the finished goods. These concerns regarding how trading between countries is not fair overshadowed the concept of fair trade as an alternative trade mechanism administered by international organizations that aims at offering a fairer trade than what these workers are used to seeing on the international markets.

Despite these negative aspects, the workers at COMAMNUVI surprisingly expressed a good deal of optimism for the future. Some who were interviewed during the case study referred to the practical application of fair trade principles, whereas the global demographics increase, they feel more and more consumers are going to demand fair trade goods, and the cooperative can develop and maintain itself through discovering new niches of the market. Others said that more cooperatives like this one can be created because fair trade has been present now for years and people in Nicaragua and the rest of the world are becoming more familiar with it and understanding more about it. They look to the fair trade coffee farmers to the north and the fair trade spinning plant being

constructed behind them as evidence of this, and they see the creation of the spinning

plant as yet another employment opportunity with better working conditions.

Nicaraguans, like others in the world, are familiar with the benefits fair trade coffee 86

brings the farmers and their communities in the northern part of the country and can then

apply this idea of fair trade to more products. Furthermore, Nicaraguans would be in

favor of purchasing fair trade products themselves if their economic standing and access

to fair trade products were to improve.

The workers at COMAMNUVI are very keen in their awareness of what they see as necessary improvements to their alternative method of business and community development. Along with their realization that their fair trade operation could be better, they also have identified what it would take to improve it. The need expressed the strongest was a large amount of capital investment. This capital would be used to purchase updated equipment and more machines that can sew on different fabrics to expand the products they offer to more than just t-shirts, thus expanding the potential client base. Also, they could acquire a large stock of uncut fabric in all the colors they offer to be able to fulfill large orders in a more timely manner when they come in.

Consulting and other administrative experts they need to ensure their operations are running smoothly and efficiently could be hired. Arguably most important, they could

attend more capacity building workshops to educate the workers on all the aspects of the

production line, business, and management necessary to run the cooperative successfully,

although these workshops do not substitute for sustained education.

Again, the workers’ feelings of helplessness and of being overwhelmed become

evident when discussing how these needs might come about. Also, despite

COMAMNUVI having a mission statement and a vision, the workers do not seem to be

clear on exactly what this means and what it entails. Many are unaware of any realistic 87

means to achieve the goals outlined in either the mission statement or the vision. Some

have placed the responsibility on other countries to give them the money they need in the form of aid, or on international organizations to make stricter definitions on what can be considered a fair trade. Others hold a more practicable viewpoint in aiming to expand

COMAMNUVI’s client base to increase revenue flowing into the cooperative. One worker suggested that as the cooperative would grow in this manner, they could start charging the clients the additional 1-2% premium, similar to the fair trade coffee growers, to reinvest into the cooperative or the surrounding community.

This vision of self needs to be clarified in order for the cooperative to operate in a more efficient manner. Workers need to be clear on how the mission statement and the vision translate into everyday production, client relations, and administrative operations.

The cooperative also needs to be clear on the different sectors of the market it is appealing to, and how to market to those sectors. When the cooperative was formed as an organization with the goal of operating along fair trade principles and their largest client was an organic clothing retailer, it is easy to see how the concepts could get confused. Understanding the distinction between the organic and the fair trade markets, and understanding that they could potentially market to both, is essential in this endeavor.

Support from fair trade organizations

This lack of knowledge about what the concepts of fair trade and organic entail is also evidence of a further lack of connection with the international organizations for both of these markets. COMAMNUVI does not have support, direct or indirect, from international fair trade organizations like coffee and other commodity producers do. 88

Direct support has been extended to cotton production when it was added as a certifiable fair trade good through FLO in 2005, although FLO does not offer direct support with regards to garment manufacturing (FLO 2006d). Other ATOs, such as independent retailers and wholesalers, exist to offer more assistance to the cooperative.

However, despite the cooperative’s desire to get some sort of certification that would allow it to be internationally recognized as a fair trade garment producer, there still does not exist an internationally recognized certification available for the garment production process that the cooperative may obtain. Therefore, the cooperative could purchase fair trade cotton from FLO certified fair trade producers, but they cannot

produce a certifiable fair trade garment with those materials, and they are outside the

reach of direct support from the most internationally recognized fair trade certifying

organization. (*See Appendix I for List of Fair Trade Cotton Producers)

There are several websites for other organizations that provide indirect support

through database listings of fair trade wholesalers, retailers, and producers from all over

the world. These organizations have the potential to link the cooperative to numerous

fair trade markets globally. The cooperative could use the databases to contact

wholesalers and retailers to sell their products directly to them, and they could submit

their contact information to producer directory database organizations to be listed among the fair trade producers on their websites. This would extend their potential market connection to any business or person looking for fair trade products. Unfortunately,

COMAMNUVI is unaware of many of these websites, and how to search for them. Even having a list of websites that could possibly help the cooperative gain more clients does 89

not guarantee they will be successful in this endeavor. The English translator on staff at the cooperative does not have a very high level of English writing skills and may not be understood or taken seriously by prospective clients. Also, the cooperative does not have a trained salesperson that can specialize in establishing new client contacts. This is among the cooperative’s many abilities that need to be developed.

Although the cooperative’s information is not listed among any fair trade database websites, there are several websites that report on and tell the story of the cooperative

(*See Appendix J for Sample Websites on which COMAMNUVI Appears). However, most of these reports and stories are out of date and do not provide much current information about the cooperative. Also, they focus largely on the social benefits and empowering aspects of the cooperative, which are important for people to know, but do little to attract business for the cooperative. Again, the cooperative is largely unaware of

the information being provided on these sites, or that information about COMAMNUVI

exists at all on the web besides their own website they were in the process of creating at

the time interviews took place (personal communication August 4-7, 2008).

Furthermore, unless someone is specifically looking for the cooperative or other garment production cooperatives like it, it is difficult to locate the cooperative’s website, or any

other website with information regarding the cooperative. The information currently

provided about the cooperative is not sufficient to lead someone interested in fair trade to fair trade garment products and, thus, COMAMNUVI. The cooperative may benefit greatly from being easier to locate on the web; those interested in fair trade products may 90

be led to the cooperative through fair trade database websites, rather than searching for specifics through the general internet search engines.

Conclusion

Much of the cooperative’s global connections were through the JHC-CDCA,

including its largest client. Notwithstanding the great amount of help and support the

cooperative received in its creation from this organization, and the almost guaranteed

work given by Maggie’s Functional Organics, there was still a lot more the workers of

COMAMNUVI needed to understand and learn to be able to effectively run a cooperative

and a business. Once the cooperative severed ties with the JHC-CDCA, the cooperative

no longer received their support and the workers had to learn how to operate the business

on their own. In addition, because COMAMNUVI severed ties with the JHC-CDCA, it essentially severed ties with its largest client, Maggie’s Functional Organics, and with a contact that had international connections that could potentially bring more clients to the cooperative.

Workers not being educated in business practices shows one of several disadvantages the cooperative faces in comparison to other export processing factories in the zonas francas. Also, the vision the workers have of themselves as a cooperative and how they fit into the concepts of fair trade reflects the almost negative expectation they have come to adopt in regards to getting fair business deals. In addition, the cooperative lacks the ability to utilize the international fair trade organization community for support

in pursuing fair trade business goals. All of these aspects need improvement, but they

also need to be understood as a balance. Any one aspect may be pursued at the sacrifice 91

of another, risking contradiction of one of the cooperative’s initial goals. If business skills are pursued to the extreme, maintaining fair trade principles may be abandoned.

Similarly, if the cooperative relies too heavily on the support of international organizations to uphold their connections with fair trade principles and businesses, it may forsake its autonomy. COMAMNUVI must find a balanced relationship with constant negotiation between these three forces.

CHAPTER 7: CONCLUSION

Claiming to be the world’s first garment production organization to operate within both the fair trade and free trade markets, COMAMNUVI has contributed an unprecedented prototype of how fair trade garment production may extend to other impoverished communities in the future. As it has been expressed previously, there are some drawbacks that the cooperative faces. This research has examined the alternative development mechanism of fair trade in the wake of disastrous neoliberalism and free trade. The case study of COMAMNUVI has studied the application of the principles of fair trade to the garment production industry. The implications for potential success or failure of the cooperative and for possible fair trade garment production in the alternative development of Nicaragua, Latin America, and other developing regions of the world is discussed in this final chapter.

This cooperative could be a loose example for fair trade production that labeling organizations are seeking. The idea was created and nurtured by an NGO in cooperation with a large client and then carried on by the local people in the surrounding community.

Because it is native worker-owned, the COMAMNUVI cooperative is well aware of the value of good working conditions and fair pay between the administration, permanent workers, and the contracted workers. The cooperative has successfully upheld the ideals of fair trade like incorporating workers in administrative decision-making by including workers in monthly meetings and capacity building trainings. The cooperative also provides more humane working conditions through a relaxed, nonthreatening 93 atmosphere, not physically mistreating the workers, allowing workers a sufficient lunch break time, and allowing bathroom breaks as needed.

However, the cooperative has yet to be considered a success in the fair trade realm. There are certain business specializations that COMAMNUVI gave up for the freedom of being Nicaraguan worker-owned. The NGO administrators and owners and operators of other zona franca garment factories have much more business knowledge and schooling than workers at the cooperative. The overall low level of education among the workers of COMAMNUVI does not provide a good base for business development.

This results in a large need for knowledge and capacity building in almost every aspect of operating the cooperative. In order for the cooperative to maintain and grow its business and become the successful model for a possible fair trade garment production industry, the cooperative needs education in all areas of business including accounting, finance, marketing, and advertising, among others. The training through the capacity building workshops the workers at the cooperative attend is not sufficient to replace secondary or college level education specialized in the business fields necessary to run a business effectively.

Despite its growing popularity, fair trade is still not a clear idea for many people throughout the world—even for those participating in fair trade as producers, consumers, and marketers. Consumers in the North need to be educated more about all aspects of fair trade and how it may be applied to garment production, as well. Those at the cooperative clearly label themselves as a fair trade organization. However, when interviewing them, it became evident that the distinction between the two markets is not 94

clear to the cooperative. Many workers at the cooperative believe that they are a fair

trade organization because their products are organic and that fair trade products in

general must be organic to be considered part of fair trade (personal communication

August 4-7, 2008). This perceived link became evident when those interviewed

repeatedly referred to the fair trade coffee farmers in their country when commenting on

fair trade as a practical alternative development mechanism. The majority of those fair

trade coffee farmers grow for the specialty organic fair trade market because they receive

an additional premium for organically grown beans on top of the fair trade premium

(Bacon 2005). Also, these coffee farmers sell what they cannot sell of their product

through fair trade in the conventional free trade markets, and can get more money for an organic specialty product (Bacon 2005). There definitely exists an additional benefit to

producing an organic product, but the workers at the cooperative do not understand that

products do not have to be organically produced in order for them to be considered fair trade.

Overall, the workers feel that although it could be better and regardless of any or

all the negatives they have come across within their business dealings, working for

COMAMNUVI and toward fair trade is worth the effort. It is a difficult path to follow

and they have encountered many problems that challenge the very goal they set out to

achieve. Other cooperatives or NGOs seeking alternatives to sweatshop production in

Latin America and other developing regions of the world can look to COMAMNUVI not necessarily as a complete model to strictly adhere to, but rather as an innovator to borrow

from what worked and change what did not. The lessons learned from COMAMNUVI 95

can be used and applied to the creation of other fair trade garment production operations.

This is particularly of interest in Latin America where unemployment and

underemployment rates are high and countries have implemented neoliberal policies

favoring large-scale producers. Numerous workers in Latin America could benefit from

a successful fair trade garment production factory, as coffee and banana farmers have in

this same region. Whether COMAMNUVI can find the means and persistence to find its

way to success is yet to be seen, and is what the cooperative’s future depends on.

Although the cooperative may be on the path to fair trade garment production, it is far from achieving a stable extension into this industry.

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APPENDICES

Appendix A: FLO Certifiable Fair Trade Products (Source: FLO 2006e)

Bananas

Cocoa

Coffee

Cotton

Flowers

Fresh fruit

Honey

Juices

Nuts/oilseeds

Rice

Spices/herbs

Sports balls

Sugar

Tea

Wine

Composite Food Products

105

Appendix B: Fair Trade Certified Product Samples

Source: Equal Exchange, Inc. 2009

106

Appendix B: Fair Trade Certified Product Samples (continued)

Source: Café Campesino, Inc. 2008

Source: Global Exchange 2008 107

Appendix B: Fair Trade Certified Product Samples (continued)

Source: Global Exchange 2008

108

Appendix C: Fair Trade Product Advertising Pamphlet Samples

Source: World of Good n.d.

109

Appendix C: Fair Trade Product Advertising Pamphlet Samples (continued)

Source: Café Campesino n.d. 110

Appendix C: Fair Trade Product Advertising Pamphlet Samples (continued)

Source: Equal Exchange n.d. 111

Appendix D: Organizations Partnering with Maggie’s Functional Organics

(Source: Maggie’s Functional Organics 2009)

Opportunity Threads – Morganton, NC

• US domestic sewing cooperative created in 2007 through connection with

the Southern Appalachian Center for Cooperative Ownership/Ownership

Appalachia.

• Make animal dolls from the excess sock and apparel fabric.

The VG Kids – Ypsilanti, MI

• Screen printing shop that makes and prints designs on apparel for

Maggie’s Functional Organics

• www.vgkids.com

Coopcostura – San Jose, Costa Rica

• Formed in 1988 when workers took over factory after owner abandoned it.

• Maggie’s Functional Organics was this cooperative’s first direct client.

Nueva Vida Sewing Cooperative – Nueva Vida, Nicaragua

• Worker-owned sewing cooperative formed in 1999 with help from the

Jubilee House Community Incorporated Center for Development of

Central America and Maggie’s Functional Organics.

• First worker-owned cooperative to also be certified as a free trade zone,

qualifying for tax and export benefits while keeping the profits in the

country.

• Maggie’s Functional Organics is their largest client. 112

Appendix E: Sample Consent Form

Forma de Consentimiento

Título de investigación: Fair Trade: Development of People in Globalization (Negocio justo: desarrollo de gente en globalización

Investigadora principal: Linda Ellersick Departmento de universidad: Latin American Studies

Regulaciones federales y universitarias requieren firma de consentimiento para participar en investigación que supone humanos. Después de leer las declaraciones abajo, por favor señale su consentimiento con firma en esta forma.

Explanación del estudio Proposito del estudio: Investigar y evaluar textiles en el proceso de comercio justo.

Procedimiento: Linda realizaré entrevistas con participantes de comercio justo con respeto a textiles en la cooperativa Nueva Vida . Linda realizaré entrevistas con otras organizaciones facilitando comercio justo en todo de los EEUU. Entiendo que mi participación es completamente voluntaria y puedo rechazar a contestar cualquiera pregunta no me siento cómodo de contestar.

Duración de participación: Entiendo que las entrevistas van a variar desde persona a persona y puedan durar aproximadamente 30 minutos o más.

Riesgos y incomodidades

Yo entiendo que las entrevistas van a estar grabado. Aunque, también yo entiendo que toda la información permanecerá confidencial y yo retendré anonimato. Yo puedo escoger a no responder a cualquiera pregunta que quiero.

Beneficios

Este estudio le da la oportunidad para compartir conocimientos sobre comercio justo.

Compensación Yo reconozco que recibiré no dinero para mi participación.

113

Appendix E: Sample Consent Form (continued)

Confidencialidad y documentos

Yo entiendo que toda de la información y grabados permanecerán confidencial y privacidad estaré protegido por el uso de aliases cuando necesario. La información va a estar usado para escribir el tesis de Linda y entonces destruido por abril de 2009.

Información de contacto

Si Ud. tiene preguntas sobre el estudio, por favor contacte: Linda Ellersick [email protected] 1-614-580-8731

Si Ud. tiene preguntas en respeto a sus derechos de participante de investigación, por favor, contacte a Jo Ellen Sherow, Directora de Conformidad de Investigación, Ohio University, (740)593-0664.

Yo certifico que he leído y comprendido este forma de consentimiento y aceptar para participar en la investigación descrito. Yo acepto que riesgos conocidos me han estado explicado a mi satisfacción y yo comprendo que no compensación está disponible de la Universidad de Ohio y sus empleados para cualquiera herida resultando de mi participación en esta investigación. Yo certifico que tengo 18 años de edad o más. Mi participación en esta investigación está dado voluntaria. Yo entiendo que puedo discontinuar mi participación a cualquier tiempo sin pena o pérdida de algún beneficio que por lo demás tengo derecho. Yo certifico que he estado dado una copia de esta forma de consentimiento para quedar.

Firma Fecha

Nombre con letra de imprenta______

114

Appendix F: Sample Organizational Flow Chart of COMAMNUVI (Source:

COMAMNUVI)

115

Appendix G: Current COMAMNUVI Partners and Positions

Partner Position______

Alicia President—Administration

Josefina Vice President—Stock Room

Lola Treasurer—Production Line

Adela Secretary—Production Line Supervisor

Eva Marketing/Sales--Administration

Carmina Board Member

Ernesta Associate Partner—Production Line

Gabriella Associate Partner—Production Line

Juanita Associate Partner—Production Line

Héctor Associate Partner—Production Line

Paula Associate Partner—Production Line

116

Appendix H: COMAMNUVI’s Clients

Organization Country______

Maggie’s Functional Organics USA

Presbyterian Church USA USA

Garment Workers Fund USA

Norcountry Fairtrade USA

Boston College USA

Purdue University USA

University of Michigan USA

Urbana High School USA

Paganae Denmark

Paytime Denmark

Fair Wear Germany

117

Appendix I: Fair Trade Cotton Producers (Source: FLO-CERT n.d.)

Country Organization______

Burkina Faso UPPC du Gourma

Burkina Faso UNPCB

Cameroon OPCC

Egypt Farmers Development Association

India Pratibha-Vasudha Jaivik Krishi Kalyan Samiti

India Agrocel Pure & Fair Cotton Growers Association – Salur

India Chetna Organic Farmers Association (COFA)

India Suminter - Gujarat Sustainable & Organic Farmers Association

India Delight C.P.L (Mahima) -Shri Jaivik Prasar Samiti

India Arvind Limited- Arvind Organic Producer's Society

India Agrocel Pure & Fair Cotton Growers Association – Zolarpet

India Agrocel Pure and Fair Cotton Growers Association-Orissa

India Agrocel Pure and Fair Cotton Growers Association-Rapar

India Shiv Krishi Utthan Sanstha

India Agrocel Pure & Fair Cotton Growers Assn. - Yamakanmardi

India EcoFarms Growers Social Development Body (EGSDB), Orissa

Kyrgyzstan Bio Farmer Public Union

Mali UC-CPC de Djidian

Mali UC-CPC de Sébékoro

Mali Mobiom 118

Appendix I: Fair Trade Cotton Producers (Source: FLO-CERT n.d.) (continued)

Country Organization______

Mali UC-CPC de Kita Nord

Peru Asociación de Productores de Algodón Ecológico Morrope

Senegal US-GPC Saraya

Senegal US-GPC de Kédougou

Senegal Fédération Yakaar Niani Wulli

119

Appendix J: Sample Websites on which COMAMNUVI Appears

COMAMNUVI: http://www.nuevavidafairtradezone.org/

JHC-CDCA: http://www.jhc-cdca.org/index.html

North Country Fair Trade: http://00674e0.netsolhost.com/Comamnuvi.htm

Maggie’s Functional Organics: http://www.maggiesorganics.com/partners.php

Catholic Relief Services Fair Trade:

http://www.crsfairtrade.org/fund/development/nicaragua.cfm

Esperanza Acción: http://www.esperanzaenaccion.org/content.php?CID=99

Grassroots Economic Organizing: http://www.geo.coop/node/179

NicaNet: http://www.nicanet.org/?p=47

SERRV: http://www.serrv.org/ArtisansFarmers/LatinAmericaCaribbean/Nicaragua/NuevaVida.as

PeaceWork: http://www.peaceworkmagazine.org/node/570

Center for Global Justice:

http://www.globaljusticecenter.org/papers2005/larcom2_eng.htm

Diocese of Cleveland, Ohio:

http://www.csnmail.net/~globalsolidarity/fairtradefundraising.htm

New York State Labor-Religion Coalition: http://www.labor-

religion.org/ip_cooperative_nueva_vida.htm

Sweat Free Communities: http://www.sweatfree.org/shoppingguide

Peace Coffee Fair Grounds: http://www.peacecoffee.com/pcfg/0410/index.html 120

Appendix J: Sample Websites on which COMAMNUVI Appears (continued)

The University of Wisconsin Oshkosh: http://www.uwosh.edu/sustainability/commitments/FTU/women

Fair Trade Resource Network: http://www.fairtraderesource.org/learn-up/fair-trade- films/