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Nebraska Anthropologist Anthropology, Department of

1997

Starbucks vs. : Assessing the Human Costs of Economic

Lindsey M. Smith

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Smith, Lindsey M., " vs. Equal Exchange: Assessing the Human Costs of " (1997). Nebraska Anthropologist. 111. https://digitalcommons.unl.edu/nebanthro/111

This Article is brought to you for free and open access by the Anthropology, Department of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Nebraska Anthropologist by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Starbucks vs. Equal Exchange: Assessing the Human Costs of Economic Globalization

Lindsey M. Smith

This paper discusses the impact of economic globalization on human populations and their natural environment. Trends leading to globalization, such as multilateral and bilateral trade 8fT88ments which reduce trading barriers between countries, are discussed. According to the economic principle of , all countries which specialize in what they can produce most efficiently should benefit equally from . Developing countries must increasingly rely on cheap labor and low environmental standards to compete for foreign investment and capital in the global economy. Observers argue that the market is not free enough to conect the long-term damage associated with export policies like this. Poverty, misery and social stratification are increasing in many developing countries as a result. A case study of the industry in provides evidence of the consequences of globalization policies on the most vulnerable populations. NAFTA and the collapse of the Intemational Coffee Ag-eement contributed to environmental degradation and Joss of livelihoods in Chiapas, Mexico. The result was increased social unrest, which led directly to the Zapatisla uprising of 1994. Responses to the impacts of globalization are considered. International regulation of labor and the environment in trade agreements, voluntary codes of conduct for multinational corporations, and the alternative trade movement, in combination, provide the best mechanisims to address the human cost of economic globalization.

Starbucks va. Equal Exchange Western-skewed economic climate, they The term "globalization" is used must increasingly bid their human with increasing frequency in late populations and natural resources into twentieth century political, economiC, an untenable and unsustainable "race to and social discourse. Institutions such the bottom" by continually lowering labor as the Wor1cl Trade Organization and environmental standards to (WTO), the General Agreement on compete for investment by multinational Tariffs and Trade (GATT), and the North corporations seeking low production American Agreement costs and limited regulations (Compa (NAFTA) are part of the intemational 1993). movement towards a global free market. While the long-term viability of Whether a nation-state and its citizens such economies may be seriously will benefit from or lose out under the undermined, the business and terms of these agreements depends on govemmental elite in these countries where that state falls on the intemational often do benefit, enormously, from such scale of development, and on how those foreign investment partnerships and benefits and losses are measured. global free trade agreements. Stanley Industrialized nations tend to Korten describes this phenomenon, benefit economically from the trade which he has observed in locations as liberalization process that has become varied as Pakistan and the Philippines, the goal of post Wortd War II as that of "growing islands of great intemational trade regimes. Developing wealth in poor countries" (1995:114). As countries are often trapped in the the managers and owners become proscribed roles of primary commodity increasingly privileged, they become producers. If these nations do attempt isolated from the populations who work industrialization in the heavily in the and on the plantations

68 that are so attractive to foreign factors beyond those envisioned in investment and contracts. As economic economic theory. A perfect and equal globalization gathers steam, the global market does not exist; subsidies communitarian interest, which used to and other domestic trade barriers bind the rich and poor together in pursuit abound on goods and services in of their nation's economic growth, is industrialized, as well as developing giving way to "a melding of the world's ... nations (Madeley 1992:9). But the trade elites into a stateless community in the liberalization being sought in the clouds" (Korten 1995:114), while the multilateral trade negotiations of the poor face an increasingly borderless 1990's is derived directly from the world of , environmental and unrealistic concept of comparative societal exploitation, and despair. advantage operating in a perfect market. This paper examines the impacts For much of the post World War of the current mode of economic II era, the ability of governments in both globalization on producer populations in developing and industrialized states to the developing world, and evaluates the adjust market inefficiencies through responses to these impacts currently protection of domestic economies had a proposed by economists, governments, compensatory effect on the impact of multilateral agencies, and grassroots or trade liberalization efforts (Oxfam non-governmental organizations. Web-Site). However, trade agreements like NAFTA and the most recent GATT An Overview of the Process negotiations have dramatically reduced In theory, international the power of governments to· intervene competition in a global market can be in their own export trade; instead, beneficial. According to the economic economic power rests increasingly in theory of "comparative advantage", if all the hands of the powerful multinational nations specialize in what they produce corporations, who will always choose ''to most efficiently, and trade with their locate production in sites of maxirnurn export earnings for everything else, all profitability-that is, where labour is nations should benefit, (Madeley, cheapest and ... standards are lowesf' 1992:3-4; Buchsbaum 1997). However, (Oxfam Web-site). Madeley goes on to emphasize that The Uruguay Round negotiations comparative advantage works only of the GATT, which ended in 1993, were when "trade is between countries which by far the most comprehensive set of are roughly equal" (Madeley 1992:6). multilateral trading agreernents ever This is not the case in the current global concluded (Lawrence 1996:3). Because system, as the structure of international of the aforementioned historical trade still reflects the nineteenth century economic imbalance between pattern which was based on the developing economies of the global production of manufactured goods in the south and the developed nations of the industrialized countries, while their global north, the Uruguay Round of the colonies depended on primary product GATT was dominated by the interests of exports to generate any foreign the industrialized nations (Lawrence, exchange for imports (Madeley 1992:7). 1996:6). The accords essentially Although Madeley (1992:11) and codified the status quo, that is, Lequesne (1996:25) do not deny the increased trade liberalization through occasional benefit of reduction of trade barriers for all nations for all countries involved, both question in areas of key interest for the north the applicability of the theory of regardless of differing levels of national comparative advantage to a global development (Lequesne 1996:6). The economic system affected by many industrialized nations ernerged as

69 benefi~ries from the negotiations, with investment In many cases, with economiC gains estimated at $500 "hundreds of miHions of people billion per year by 2005 (Lequesne desperate for any kind of job the global 1996:9). economy may offer" (Korten 1995:229), On the other hand the the governments of many poor nations developing nations were more h~rt than are being forced to depend heavily on helped by the Uruguay Round what has been called their comparative agreements in their hopes to enter the advantage. global economy on an equal basis with the industrialized north. The ...the fact of (their) poverty: in particular, negotiations did not substantially cut cheap labor and a greater tolerance of protective tariffs globally on primary pollution (standard Deviation 1994). commodities, sum as precious or According to the aforementioned strategic minerals and tropical hardwoods which are major exports for ths?ry of comparative advantage, many poor nations (LeQuesne 1996:13). nations that specialize in their most However, the negotiations did lift most efficient resource as an economic import restrictions on agricultural strategy should be realizing gains from international trade comparable to other products, making it easier for nations which also specialize to industrialized nations to inexpensively export their substantial agricultural maximize their profits. If unregulated surplus. At the same time, the 1993 labor and pollution havens are the legitimate comparative advantage for GATT accords required reduced domestic subsidies on agriculture which developing nations, then those nations retying on this as a national economic will only affect the poorer nations (Lequesne 1996:15), since the U.S. and strategy should be realizing gains from the E.U. were able to opt out of these international trade. However, exploiting cuts. The combination of reduced ~u~s like cheap labor, an subsidies and increased cheap IncreaSIngly common strategy in agricultural exports from the global north developing countries, seems to have has placed smallholder agriculture produced the opposite effect. In recent (which can account for two-thirds of the history, GNP per head of people in north employment in developing countries) at and south has gone from "about the same" hundred years ago eight an impossible disadvantage in the two to global market (LeQuesne 1996:16). times higher per capita in the north by Such negotiations increase the 1990 (Swiss economist Paul Bairoch in difficulties developing countries face in Madeley 1992:6). international competition. Many The available evidence indicates governments of the south rely that the benefits from trade liberalization increasingly on investment by measures like the GATT and NAFTA do multinational companies for economic not outweigh the costs to the majority of growth and higher employment These producers. For example, the agricultural corporations, almost all based in the refo~s associated with NAFTA may be north, realized enormous gains in capital proViding less expensive maize to mobility and deregulation as a result of Mexican consumers (Stea, et. ai, the Uruguay Round and the 1997:224). However, the corresponding establishment of the World Trade subsidy cuts to farmers by the Mexican Organization (Lequesne 1996:18). Their government as required under NAFTA interest in the developing world is terms of trade are "leading to predictions strongly based on benefits developing that up to 2.4 million peasant producers countries can offer in exchange for their and their families could be forced off the

70 land" (LeQuesne 1996:17). The impoverishment of rural economies" International Cooperative Movement, leaves them with "narrow economic which has supported worker-run options" (Weissman 1997) and pushes cooperatives as a democratic alternative them off their land into industry or tenant to top-down industrialization schemes farming at impoSSibly low wages since its inception in 1895, has seen a (Madeley 1992:11). decrease in A degraded labor force and a degraded environment usually exist wolters' cooperatives, forced to ctose together, as two parts of a whole set of because they could not compete with conditions surrounding the expansion of sweatshops and other exploitative fonns increasingly deregulated trade. of production (C8pdevila 1997). Oxfam's experience is that In fact, poverty and misery in livelihoods-indeed, sulVival-for the developing countries following an wor1d's poorest people depend export-led national economic strategy is fundamentally on the wealth of the increasing, not decreasing as might be natural environment (LeQuesne 1996: expected based on neo-liberal economic 24-25). prediction (Madeley 1992:12). Overall GNP may show a relative increase, but, Uberalized trade expansion efforts as LeQuesne (1996:2) points out, under NAFTA and the WTO accords, Oxfam's experience of working with poor often through the agency of communities in Chile demonstrates that multinational corporations, are "when production ... is dominated by increasingly free to seek the lowest large-scale producers and foreign production costs, pushing environmental companies, it is they, rather than the standards down and exacerbating the rural poor, who will receive the major poverty of people who depend on this benefits from trade expansion". Stea et environment (LeQuesne 1996:24-25). al. came to similar conclusions about The abysmal working conditions Mexico under NAFTA: in 1994, "the and rampant pollution associated with income of [the] two dozen billionaire ... the maquiladora fadories on the border families was more than the combined of Mexico and the U.S., which have income of the poorest 25 million of sprung up overnight by the hundreds Mexico's people" (1997:219). since the NAFTA accords, are one It is these poor who struggle to example of the nexus between survive through non-market based environmental and human costs in the economies, such as the noncash, new globalized economy (Korten informal trading systems found in much 1995:129-130). The increase in child of Africa, or the community-based land labor as a way of cutting costs in tenure in Mexico known as ejidos (Stea, production around the worid is another et. al 1997:225). Their livelihoods are (Zielinski 1995). The conditions under increaSingly neglected by government which children work are fraught with elites, both because of the limits on environmental health hazards. A recent government assistance imposed by International Labor Organization report global free trade agreernents indicates, that sixty percent of the two (LeQuesne 1996:26) and because of hundred fifty million children working in attempts to increase economic growth developing countries are exposed to by quick-fix" export-industrialization chemical and biological hazards, which schemes (Madeley 1992:11). It is these have long-term consequences not only poor who bear the consequences, while on their individual health, but also upon the resulting "urbanization and the health and productivity of the

71 community of which they are part (Child stocks that had been built up" (Madeley Labor 1996:19). 1992:37). The wor1d price of coffee Coffee, one of the most slumped to their lowest level in important exports produced by the seventeen years (Madeley 1992:38), developing world, clear1y illustrates the leaving smallholder farmers around the connection between environmental and wor1d unable to cover the costs of human costs. The impad of production (Madeley 1992:20). Some globalization on this commodity and its governments cut the prices paid to producers not only tells the story of growers, others attempted to subsidize environmental degradation, labor their farmers through the crisis. exploitation, and the increasing role of Farmers who could switched to a more multinationals, but also shows us the prOfitable crop (Madeley 1992:38), dramatic social impacts of unregulated which in some cases meant a switch trade expansion. The impad of from the legal export crop of coffee to economic globalization on the coffee the illegal export crop of coca (used to industry contributed to a revolution. manufadure cocaine) (FairTrade Foundation web-site). The Human Cost of Coffee The intemational coffee trade is In tropical regions of the developing heavily 'vertically integrated'. The few wor1d as varied as EI Salvador, companies that "dominate the trade Tanzania and Indonesia, coffee is the control most aspects of production and second most important legal export distribution. Eight multinational (after oil) for generating foreign enterprises account for between fifty-five exchange (Equal Exchange web-site). It and sixty percent of wor1d coffee sales . is, for United States consumers, the (Madeley 1992:95), with a most important legal import from Latin correspondingly large impact on the America (Greenberg 1994). Farmers foreign exchange acquisition of the have traditionally grown coffee for countries from which they purchase. In export to supplement their otherwise northern Latin America, including subsistence-level income; historically, it Mexico, the Caribbean, and Central is "a relatively democratic crop" America, coffee "is the leading source of (Greenberg 1994). More technologically foreign exchange ... it is hard to advanced inputs, govemmental overestimate the importance of [its] incentives and subsidies for export production and exportation" (Greenberg fanning have encouraged a steady 1996). Govemments in these countries increase in the supply of coffee emphasize coffee production for export produced over the past twenty years regardless of whether the prices (Madeley 1992:38). However, as is true received by growers are adequate to with many primary commodities, the support their families; such policies economic growth of the past twenty often disenfranchise small farmers in years in the importing, industrialized favor of big private concems (Madeley countries has not meant an increase in 1992:22). Politics can exacerbate such the demand for coffee (Madeley conditions for small coffee farmers. In 1992:9). Nicaragua, during the 1979 socialist During this time of economic revolution, coffee farmers were given growth, the wor1d price of coffee was land at the expense of former plantation loosely managed by the International owners. In 1990, with the retum of a Coffee Agreement (ICA). When the ICA based govemment, collapsed permanently in 1989, there their land was re-privatized and sold off was a "free-tor-all on wor1d markets, at exorbitant prices (FairTrade with producing countries freely exporting Foundation website).

72 In 1992, the Salinas and not shade, plantations (Greenberg administration passed legislation to 1994). Agribusiness has taken over and privatize and sell off the ejidos in the encouraged the adoption of higher southern Mexican state of Chiapas yielding coffee plants that, along with (Stea et al. 1997:225). These massively higher inputs, must be grown communally-owned .farms, which were in full sun. By 1990, "nearly half of initiated as part of the 1917 Mexican northern Latin America's 2.7 million Constitution (Stea, et al. 1997:225), hectares of coffee [had] been converted traditionally produce almost half of the from shade to sun" (Tangley 1996). The coffee grown in Mexico (Greenberg yields are higher, although prOfits may 1994). The 1990's land "reform" not be, since the traditional method of measures were directly related to the production is much less labor-intensive, enactment of NAFTA, which stipulated with lower labor costs (Greenberg that farm subsidies be reduced and 1996). domestic industry be freed from However, recent research by the protective barriers (Stea et al. Smithsonian Migratory Bird Center in 1997:229; Gossen 1998). These policies Chiapas and further north in Mexico followed the already devastating blow indicates that the ecological costs may suffered by 64,000 Chiapans, who grew be high as well; the switch in coffee coffee as a cash crop when the production methods has been implicated International Coffee Agreement in the long-running concern about the collapsed, and crushed hopes that gradual disappearance of neotropical coffee production would recover as migratory bird species (Tangley 1996; prices slowly rose when the coffee glut Greenberg 1996). subsided on the world market (Stea et These forest-dwelling birds, al. 1997:229). Potential substitute crops dependent on the high quality diverse such as maize were now vastly ecosystems of the traditional shade out-competed by the high-input imports plantations for, overwintering, may be from the United States flooding the suffering significantly from the loss of market as NAFTA lifted agricultural this specialized habitat, which trade policies which had protected exacerbates the impact of Significant Mexican farmers (Stea et al. 1997:229). habitat degradation in their U.S. summer Coffee in Chiapas and other homes as well (Tangley 1996). As parts of Latin America has traditionally Greenberg (1994) points out, this is been grown on small shade plantations, more than just the loss of pretty birds; using many pre-Columbian era neotropicals perform "unstudied and techniques (Greenberg 1994). These unappreciated ecological services, such plantations are diverse as control of forest insect populations mini-ecosystems, providing "niches for and the dispersal of the seeds of shrubs many tropical organisms" among them and trees". Their continued are neotropical migratory songbirds, disappearance will have an increasingly which overwinter in Mexico before noticeable impact on the environment heading north to breed and nest in the on both the U.S. and the Mexican side U.S. and Canada in the summer of the border (Greenberg 1994). The (Greenberg 1994). The recent free decreaSing diversity of bird species is market reforms and deregulation, accompanied by other losses in combined with the shift to fewer, larger biodiversity due to coffee farms as a result of multinationals' "modernization" techniques in Latin pressures for lower production costs, America. Greenberg (1996) warns that have resulted in a "technification" of "unless steps are taken, many of these coffee farming, most noticeably into sun, coffee zones ... are likely to suffer

73 environmental degradation in the tenure, including the consolidation and coming years." privatization of coffee farms, and took The ecological threats matters into their own hands. On the associated with the loss of traditional day NAFTA went into effect, anticipating methods of coffee production have been further explOitation and loss as U.S. accompanied by rising social unrest in industry received carte blanche to move rural northern Latin America (Gossen into Mexico, the Zapatista uprising 1998; Stea et al. 1997:224-226). began (Stea etal. 1997:217, 226-229). Formerly independent Mexican coffee As Russell Greenberg (1994), who had growers, who were paid a standardized been doing songbird research for price set by the regulated commodities several years in Chiapas prior to the market, lost all domestic protections with uprising noted, the enactment of NAFTA (Gossen 1998). Those small-scale farmers that The coffee crisis did not cause the survived the collapse of the ICA must uprising in Chiapas, but it has certainly now sell their product to multinational contributed by increasing the misery of coffee companies, often through small land-owners. middlemen known as "coyotes" at very low prices (Equal Exchange web-site). If Although there was some hope that peace talks would include social they are not fortunate enough to own land, peasant farmers often hire out to and environmental provisions . large private plantations for very low (Greenberg 1994), the negotiations in wages. In Guatemala, for instance, Chiapas broke down in September of 1996, and the region remains heavily "virtual slave conditions prevail on the majority ... of coffee plantations militarized with significant social unrest "According to the U.S.lGuatemala Labor and increasing impoverishment (Stea et. Education Project, workers earn two al. 1997:232-234). Meanwhile, coffee cents a pound for picking berries production continues to be increasingly (Zielinski 1995). mechanized on large sun plantations Production outside this throughout Latin America, and worker exploitative framework has been conditions are only beginning to be attempted by some of the ejidos in addressed (Greenberg 1996; FairTrade Chiapas, Mexico, which formed a union Foundation Web-site; Zielinski 1995). dedicated to "sustainable, organic Correcting the Costs? agricultural production of such cash crops for Mexican and foreign markets Various responses to the as apples, beans, coffee, com, honey, environmental and humanitarian costs and mushrooms" (Stea et. al. 1997:230). associated with coffee and other rapidly These efforts have been met with globalizing industries have been hostility and sabotage from the national proposed; some have actually been government (Stea et. al. 1997:230) and enacted. Because many suggest some "paramilitary, pro-government" groups, "regulation" of the global market, they such as those responsible for the are controversial. A combination of Christmas week massacre in late 1997 some of the following solutions could (Gossen 1998). provide what economic globalization has The indigenous, largely agrarian promised all along, improved and Mayan population in Chiapas, sustainable livelihoods for populations recognized that their suffering and around the globe. impoverishment was directly correlated to massive exploitation of their traditional lands and changes in land

74 The -Do-Nothing Sttategy" employ only cheap, unskilled labor, and Free market economists, when suppress any efforts by the workers to confronted with the charge that improve conditions or provide globalization is producing unacceptable opportunities for education or training. environmental and social costs in the As LeQuesne (1996:11) points out in developing world, commonly respond her discussion of women in export that market forces will eventually industries in developing countries: "as compensate for short-run costs incurred long as [they] have only their ... labor to now (see Passell 1997; Henderson offer, their working conditions will 1996). Their position is that "open trade deteriorate ... and their standard of living is the key to rapid income growth in will remain low". In a correlated developing areas, and high income commentary, a recent study by the U.S. leads to adoption of tough social and Labor Department shows that it is not, in environmental rules" (Passell1997). An fact, economically beneficial for adaptation of this argument is even countries to build export industry based used to defend the use of child and on exploitative labor practices, such as other fonns of labor abhorrent to the employment of children, because industrialized nations. Economists such such policies leave adult labor under or as David Henderson, in his essay in a unemployed, while undennining the recent issue of Fortune, suggest that labor potential for the future by children and exploited laborers in the exploiting and damaging children before developing countries choose "a they are grown (Miller 1996). particular job because [they] prefer it to In short, "letting the market [their] next-best alternative", that to corred the costs" is proving less than regulate against the use of child labor applicable in the modem global leaves the children Ultimately worse off economy. The nations bearing these (Henderson 1996). According to free costs are, in many cases, not realizing market principles, employers who offer the benefits promised by free market unsatisfadory working conditions will be economists. Unregulated intemational unable to retain a skilled and stable trade, resulting in exploitation and work-force; in order to recoup costs, degradation, has trapped the developing they will have to improve working nations in a cycle of poverty. conditions (de Wet 1995). However, it is difficult to apply Voluntary Codes of Conduct these economic principles to the modem The favorable tenns of the global economy, wher$ multinational recent GATT accords for multinational trade agreements legislate increasingly enterprises and the increasing mobility permeable borders for both capital and of investment capital around the globe labor markets, where impoverished directly implicate the giant transnational countries are willing to "make use of corporations in much of the labor and unacceptable labor practices in order to environmental abuses in the developing lower the price of production" to attrad countries today. For example, in 1995, or keep large companies (de Wet 1995). Starbucks Coffee was accused of In the "consumer's world" that paying its coffee bean pickers in intemational trade agreements have Guatemala less than the country's legal created, investors are free to move if daily of U.S. $2.50. regulation seems too strict; another Levi-Strauss contradors in Saipan were country will provide the lower standards implicated in "virtually enslaving required to keep production costs down. imported Chinese women" (Rothstein The jobs provided in such 1996). Child labor produced the Kathie export-oriented economies tend to Lee Gifford line for Wal-mart

7S (Miller 1996). Furthermore, the Starbucks Coffee, many feel that the maquiladoras on the MexicolU.S. protections for workers do not go far border, more than half of which produce enough. "They've limited their dialogue hazardous waste, are subsidiaries of partners rm Guatemala] to the U.S. companies like GTE., G.M., and [large-scale growers] that are least likely Dupont (LeQuesne 1996:67). to effect the kind of change they say These particular companies' they want, " according to a production procedures are well-known representative of the Intemational Labor because they were exposed by Education and Research Fund and environmental watch-dog groups in (Food-Labor 1995). In some cases, the industrialized countries. There is no enacting higher standards has left reason to suspect they are unique in corporations wlnerable to more their exploitative practices. intensive public scrutiny, which can Multinationals are "powerful, secretive deter future "responSible" corporate and unaccountable ... their size often policy-making (Compa and Darricarrere dwarfs the countries where they 1996:193). operate" (Madeley 1992:102). Unless While voluntary codes by pressure is brought to bear by corporations are a step in the right consumers, they will take advantage of direction, a more comprehensive and the cheapest labor and the lowest global standard needs to be developed. regulatory standards, keeping their Neutral codes, extemal monitOring, and costs as low as possible. These costs, a framework designed to enforce these however, are strictly related to cost per codes is optimal. According to many unit of production, and do not include observers, intemational trade long-tenn losses for the host countries. agreements provide the best forum for a The environmental degradation incurred comprehensive set of intemational in production or extraction and the costs standards for labor and the of a debilitated 'NOrk-force are rarely environment considered. When exposed, however, some Intemational Standards corporations have shown willingness to Universal minimum standards for develop voluntary codes of conduct for labor and environmental protections their overseas partners. Levi-Strauss is within intemational trade agreement credited with closing 35 of its 700 provisions are the most frequently worldwide contractors because they advocated mechanism through which failed to meet new standards the most unacceptable inequities of established after the working conditions economic globalization could be of overseas laborers were revealed regulated. The United States and (Rothstein 1996). Starbucks announced stalled the conclusion of the "a framework for a code of conduct to Uruguay Round of the GATT in an encourage good labor and attempt to put a "social clause" "fonnally environmental practices by its producers on the agenda" for the WTO (Standard in developing countries after the Deviation 1994). The NAFTA accords consumer protests in 1995" (Food-Labor included a side agreement on labor 1995). rights. However, it is weak and unlikely Although they are developed to change exploitative conditions in any with good intentions, such voluntary of the countries who signed it codes are problematic. As Rothstein (LeQuesne 1996:59). The Generalized (1996) points out, "these promises have Systems of Preferences, which no extemal monitor, let alone regulates some north/south trade by enforcement", and in the case of and the U.S., has some labor

76 rights conditionality included, although it competitive products from the is not well enforced (LeQuesne developing countries (Standard 1996:60-64). Deviation 1994). Every observer Such proVIsions in trade advocating international regulation agreements often use the standards in conceded the developing countries' already -existing international treaties reluctance to permit restrictions based that deal with labor rights and on fears of as a legitimate environmental protections. Several of concern (de Wet 1995, Compa 1993, these treaties have been negotiated by and Lawrence et al. 1996). the sevemy-eight-year-old International However, as de Wet (1995) Labor Organization (ILO). There are points out. "protectionism would be conventions on workers' rights to counter-productive, because it is a organize, on prohibition of forced labor costly process that saves very few jobs" and discrimination in employment, and in the industrialized countries, while on limiting child labor. These having a very deleterious effect on the conventions are ratified by many international economy (see, for countries, indicating a certain degree of instance, the Smoot-Hawley tariff universal agreement on their content legislation of 1930, often credited with Compa points out that contributing to world economic conditions that led to World War II). outside this human rights core, more than Social and environmental clauses in 160 other conventions and as many international trade agreements, recommendations seek to regulate negotiated multilaterally with less­ wortdng hours, basic benefits, health and developed nations' input, would, in fact, safety protection and other conditions of employment" (1993). be in the best interests of developing countries. As Lawrence, et al. (1996:6) Several United Nations human rights points out, "the absence of clear instruments, including the Covenant on international rules could well provide Economic, Social and Cultural Rights, opportunities for protectionists to are also part of the existing international influence their domestic policies". standards for business practice (de Wet De Wet (1995) outlines an 1995). This Covenant has been ratifaed effective regime for providing and by 135 states (not including the U.S.) as enforcing minimum standards in of 1996 (Weiss et al. 1997:140). association with the WTO regime. This Enforcement of both the ILO would incorporate the already existing conventions and the U.N. Human Rights complaint investigation and moral instruments is limited to "moral persuasion mechanism of the ILO in pressure" on offending countries by addressing violations of international international reviewing committees (de standards into Article 23 of the Wet 1995 and Compa 1993). Un king GA TTMfTO Contracting Parties. The these accords with international trade ILO procedure would be the first step, agreements would provide a much more while economic sanctions, as the effective enforcement mechanism of second stage of addressing ongoing economic sanctions. Developing violations, would be mobilized through countries strongly resist such changes. dispute resolution procedures already They fear international labor and included in Article 23. This coordination environmental regulations would be between the ILO and the WTO is used to justify policies protecting recommended in most proposals domestic industry in industrialized regarding international standards and countries from less expensive, more enforcement (see also Ehrenberg 1996, Compa 1993). In fact, Oxfam,

77 understanding the reluctance of developing worlds, seeks to address the developing countries to work within the impacts of globalization outside this wro "would support the inclusion of a framework of world trade. It is called social clause only if the ILO is given the "alternative trade" or "fair trade". The lead role in monitoring compliance and movement has "sought to help small judging infringements" (LeQuesne producer groups and farmers in the 1996:65). developing wor1d to flQht exploitation While challenges remain in and trade on more advantageous terms" determining which labor rights should be (Senter 1998). As the International considered basic and unassailable Federation for Alternative Trade, a human rights, and on how to incorporate consortium of 100 organizations from 40 environmental protection without industrialized and developing countries, allowing the developed world to says, the objectives of alternative trade discriminate freely against developing are two-fold, "to improve the working countries, "multilateral consensus ... is conditions of the poor and oppressed in preferable to unilateral action" (Compa developing countries; and to change 1993). By incorporating universally unfair structures of international trade" accepted rights (as defined in widely (IFAT Web-site). ratified ILO and U.N. conventions) into Benjamin and Freedman international trade agreements, and by describe three major distinctions clarifying the relationship between trade between "alternative" and "commercial" accords and environmental treaties, import strategies in their work on conflict can be minimized (lawrence et practical solutions for closing the al 1996:94-97). These are important north-south gap. First, "unlike other steps that governments can take in businesses, their goal is to benefit the reducing the impacts of globalization on poor, not to maximize profits" (Benjamin human populations and their and Freedman 1989:122). Alternative environment. trade organizations (ATOs) keep overhead as low as posSible, and cut Outside the Paradigm: out the intermediaries like buyers, who -Alternative Trade- are often in the employ of multinational While enacting international corporations and instructed to buy at standards through trade and extremely low prices to keep profit environmentallhuman rights linkages is margins high. For example, the an important aspect of addressing the "coyotes", who serve as middlemen in consequences of globalization, such the international coffee trade in Latin measures function within the current America, often take a large cut of the conceptualization of global capitalism, price paid for coffee by the where profit and loss are the driving multinationals, leaving "very little of the force behind investment and money for the people who spend their development, production and lives growing and harvesting the beans" consumption. Economic sanctions, as (Equal Exchange Web-site). ATOs, like envisioned in such linkages, would be the U.S. based Equal Exchange and the "punishments" which might change British Cafedirect, for whom trading trading practices within an offending directly with farmers is a founding tenet country over time, but will most of their organizational principles, are assuredly have the heaviest impact on able to return a high percentage of the poor, who are already the victims of profits, often more than forty percent, to exploitation in the name of globalization. the producers; commercial ventures A growing grassroots movement, through buyers return less than ten throughout the industrialized and percent (Equal Exchange Web-site;

78 Hamid 1996; Benjamin and Freedman Because, as Oxfam points out, "there is 1989:122). a close correlation between poverty and Secondly, Benjamin and distance from markets", most ATOs Freedman emphasize that " .. .ATOs see implement fair trade programs reaching the education of consumers as an out to rural communities, helping them essential part of their work" (1989:123). access "by stages ... local, national and This education can take the form of export markets" (Oxfarn Website). trademarks and labels which describe Producer groups are empowered to the conditions under which the product build their own sustainable futures was produced, and often contrast this to based on fair trade principles. Paul the conditions under which a similar Leatherman of SelfHelp Crafts, now product, commercially marketed, might called , the be produced. The European Fair Trade largest North American ATO, indicates: Association has initiated the TransFair "we encourage and help [producers) find label in Europe as a standardized label other marketing outlets, other for "products imported from developing non-profits or even commercial outlets" countries which meet certain social and (Benjamin and Freedman 1989:124). ecological standards" (de Bruin 1992). Social justice is accompanied by The German "Rugmark" label certifies an emphasis on environmental that rugs imported from south are sustainability in alternative trade not made with child labor (Rothstein operations. Oxfam Trading, "the first and 1996). Such labels encourage .. .largest alternative trading organization consumers to make educated choices in Britain" (Madeley 1992:150), initiates about the interconnectedness of their . trading ventures with people in the purchases to populations and developing world on the premise that environments around the world. Prices for sustainably produced goods may be the future of the world's most vulnerable slightly higher, although this is not habitats depends on their having a always the case. However, as Irani Sen, greater value to society in a living state than they do when destroyed- (Oxfam a consultant handicraft cooperatives to Web-site). in Southem Asia, insists, "instead of asking consumers pay more, they to Equal Exchange, an ATO dedicated to should be asked why they pay little" so improving conditions of coffee growers for imports with low prices that reflect around the world by supporting grower the unfair and unsustainable practices cooperatives and marketing their coffee under which .they were produced (de in the industrialized nations, emphasizes Bruin 1992). organic production, as well as the Benjamin and Freedman grassroots nature of sustainable (1989:124) also consider the change. "Small-scale farmers depend populations that alternative trade on healthy soil for their livelihood. When targets. "ATOs often work with given access to resources and producers shunned by commercial education, they are the people best able distributors". These producers are often to protect the earth" (Equal Exchange the poorest the poor, in countries of Web-site). shaken by social or political upheaval, Critics of the alternative trade where large commercial ventures would movement suggest that it will never never invest, because of potential move beyond a specialized, tiny portion losses incurred in changing of international trade. However, ATOs circumstances (Benjamin and Freedman have existed since the sixties (Madeley 1989:124; also Oxfam Fair Trade 1992:148), and account for about four Programme, Oxfam Web-site).

79 hundred million dollars of total world historic, rural development problems." trade (Zimite 1996). ATOs in Europe are The international partnership with Equal lobbying the European Parliament to Exchange, begun in 1996, has helped recognize alternative trade as the model these producers withstand the rural for European import standards. Such distress reverberating through southern market shares may be tiny, and such Mexico (Equal Exchange web-site). reforms may be in the far-distant future, By addressing the long-term but the movement has had an impad on sustainability of produdion, by the global structure of trade. Recent educating consumers about their public opinion polls indicate that purchasing power to change, and by consumers will pay a higher price for challenging the multinational corporate goods they know are sustainably assumption that profits can only be produced (Zirnite 1996). This consumer derived when the lowest possible support for alternative trade options is produdion costs are explOited, the unsettling the giant multinational alternative trade movement is a bid to corporations. In 1996, several "reconcile profit with conscience and corporations attempted to manipulate ethics" (Hamid 1996). Fair trade is a their control of international trade rules fundamental challenge to unregulated in the WTO to implement a ban on free market capitalism because it insists labeling that indicate the conditions on factoring the human and under which the produd was made environmental costs of produdion into (Zimite 1996). Some ATOs, like the the profit margin. Furthermore, it British Ethical Trading Initiative, have entrusts those decisions directly to pressed their moral (and consumer producer populations, and not to supported) advantage to initiate unpredictable voluntary corporate codes dialogues on sustainability reforms in or top-down international regulations, produdion with corporations that supply that may make producer groups even major retailers in the UK (Senter 1998). more vulnerable. In market surveys Meanwhile, even the small there is support for goods " ... [which] are number of producers aided by not produced under alternative trade praise the positive conditions [and which] are impad such trade has on their quality of environmentally sound" (Zirnite 1996). life. Coffee farmers, who supply Equal Producers see alternative trade as "a life Exchange for example, describe very line and the one thing that helps farmers different working conditions than those see a way out of their present problems" under which coffee is commercially (a Nicaraguan producer quoted in the produced. A spokesman for web-site). As Paul Tanzanian coffee cooperative in Freundlich, a U.S. fair trade adivist, partnership with Equal Exchange says says, "if enough of us support these that "a better income from coffee will alternative strudures, who knows? mean better schools, dispensaries and Maybe one day we won't have to call roads" (Tobias Ndakidemi, Equal ourselves 'alternative' anymore" Exchange Web-site). The coffee (Benjamin and Freedman 1989:139). cooperatives that work with Equal Exchange in Guatemala are able to Conclusion "promote sustainable rural development Economic globalization is projeds" (Equal Exchange Web-Site). increasing daily as domestic trade Equal Exchange also trades with a barriers are reduced through coffee cooperative in Chiapas, Mexico. international trade regimes such as It was started in 1983 by indigenous NAFTA and the WTO. Capital freed farmers to "build integrated solutions to from investment restridions, seeks the

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