Middle East Conflict: Trade and Retailing
By George Anderson
Jordan is one of America’s greatest friends in the volatile Middle East region so it was not unusual that, in 2001, the U.S. signed a free trade agreement with the Arab nation.
The deal has proved beneficial for both nations.
Jordan has seen its exports of apparel to the U.S. grow “twentyfold in the last five years,” according to The New York Times, while merchants in the U.S. such as Gap Inc., J.C. Penney, Sears, Target and Wal-Mart have found a new source to supply their stores with inexpensive clothing.
Now, however, charges that factory workers in Jordan are being forced to work excessively long hours for wages below what they were promised has brought the aims of the U.S. government in direct conflict with standards of labor practice that most merchants say they support and enforce.
Beth Keck, a spokesperson for Wal-Mart, acknowledges that abuses take place and that the retailer must continually be on the lookout.
“It is a continuous challenge, not just for Wal-Mart but for any company,” she said. The most common problems the company found, said Ms. Keck, were companies failing to pay proper wages, forcing employees to work “egregious hours” and using false books or supplying insufficient data to try and get around the retailer’s requirements.
The retailer has said that company inspectors recently identified serious labor violations at three factories in Jordan. In one instance, Wal-Mart stopped doing business with the supplier (Ivory Garment Factory) altogether.
Wal-Mart has said it intends to increase the number of surprise inspections it makes overseas and that it will continue to require suppliers to conform to local laws. According to the company’s web site, Wal-Mart conducts more than 250 inspections of supplier factories around the world on a weekly basis.
Charles Kernaghan, executive director of the National Labor Committee, said that retailers sourcing products will need to be more vigilant as mistreatment of employees has hit a new low in Jordan.
“These are the worst conditions I’ve ever seen,” he said. “You have people working 48 hours straight. You have workers who were stripped of their passports, who don’t have ID cards that allow them to go out on the street. If they’re stopped, they can be imprisoned or deported, so they’re trapped, often held under conditions of involuntary servitude.”
Jordan’s trade representative in Washington, Yanal Beasha, said that more is being made of this issue than should be. “It would be wrong to think that problems at a few places are representative of the 102 apparel factories in my country,” he said.
Moderator’s Comment: Can retailers improve the working conditions for workers in overseas factories without costing them jobs? Do retailers and the U.S.
government need to work in concert together with the prospect of punitive measures against both individual violators (factories) and host countries (suspending trade agreements)
if improvements in labor conditions are not made?
Wal-Mart has taken the position that there have to be limits on trying to find the lowest price. The company demands labor laws be observed and has even
taken the step of requiring suppliers to meet environmental standards.
Last October, Wal-Mart CEO Lee Scott, said factories overseas are going “to be held up to the same standards as the factories in the U.S. There will be
a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory where you save three cents a foot in the cost of garden
hose are developing cancers at a significant rate so that the American public can save three cents a foot, those things won’t be tolerated, and they shouldn’t be tolerated.”
– George Anderson – Moderator