It is a Saturday afternoon
on the industrial outskirts of Phnom Penh, capital of Cambodia,
on the eve of a holiday. Thousands of Cambodia's 250,000 garment
workers are boarding open-air trucks bound for their home provinces.
They pile in excitedly, standing hip to hip for their long journeys,
carrying jewelry, scarves, and other gifts for families and friends--items
purchased by sewing clothes for Abercrombie & Fitch, Adidas,
Ann Taylor, Gap, Kmart, The Limited, and other lesser-known multinationals.
But these are not sweatshop workers. By local standards, they
are well-paid, and they enjoy working conditions certified by
the International Labor Organization (ILO) as being in "substantial
compliance" with the highest labor standards. "God has blessed
me," says Chean Vanna, a 34-year-old widow who feeds her three
children and elderly mother on the $50 per month she earns drawing
fabric patterns. "It is better to work in a factory than a rice
Five years ago, these jobs didn't exist: Cambodia is the testing
ground for an unprecedented trade experiment. In 1999, the United
States and Cambodia signed an agreement linking U.S. garment
quotas to ILO-certified improvements in working conditions in
Cambodian factories. The more Cambodia improved its labor conditions,
the more access it would have to U.S. markets. Nothing so explicitly
linking market access to good labor practices had ever been tried
before. And it has not been tried since: The Bush administration
opposes such linkages, so Cambodia was the last of such trade
deals. Agreements signed by the Bush administration with Morocco
and with five Central American countries merely have each side
pledging toothlessly to "strive to improve" their labor standards
without any specific incentives or penalties. That's a shame,
because Cambodia's test case has been, for the most part, a success
story--not only economically, but morally as well.
When Cambodia inked
its deal with the United States, many trade experts doubted whether
it was wise policy to force a poor country to undertake a drastic
overhaul of its labor standards. In the trade deal's early years,
in fact, it seemed more destabilizing than beneficial. As emboldened
workers organized into unions, Cambodia suffered a dramatic increase
in labor-management acrimony, resulting in strikes and violence
that damaged the country's reputation with foreign investors.
In addition, making the improvements in working conditions required
by the ILO increased manufacturing costs. The garment manufacturers'
association had to cover part of the cost of paying for ILO monitors
(with their initial start-up fee of $200,000), and factories
were required to spend the money to bring operating lines up
to higher standards. Such problems may have deterred investors
desiring cheaper, more compliant labor forces, and some built
factories in Indonesia, Vietnam, or Bangladesh instead.
But, for other garment manufacturers, the value of a good labor
practices certification was worth the slightly higher costs.
Brands like Nike and Gap, both of which came under fire during
the 1990s for selling clothes made in sweatshop conditions, wanted
to overcome their negative reputations with consumers. And buying
from Cambodia brought better p.r. "The beauty is that we're the
only ones who can walk up to corporate America and say, ... 'We
don't have five million laborers like China, but we have a safe
haven for labor, we don't have sweatshops,'" says Cambodia's
Secretary of State for Commerce Sok Siphana. Indeed, with huge
volumes of garment purchases from companies like Nike, Cambodia
has tripled these annual exports since the agreement was signed.
According to government figures, 97 percent of its exports in
2003 were garments, accounting for one-third of its gross domestic
product, and 66 percent went to the United States. The government
reports that Cambodia's economy grew by 6.3 percent in 2001 and
by 5.2 percent in 2002.
This growth has helped average Cambodians. Two hundred fifty
thousand former poor rice farmers like Vanna now have jobs paying
between $45 and $90 per month in a country where civil servants
make, on average, $34.50. The money Vanna and others send back
to their home provinces sustains entire families; today, government
statistics show that 25 percent of Cambodia's population depends
on the $15.8 million per month in wages paid to these garment
Labor disputes still remain a problem and spill over into other
industries: In April, the Raffles hotel chain, which owns two
luxury hotels in Cambodia, fired some 300 striking workers who
are currently agitating for job reinstatement. Still, the garment
pact has helped teach Cambodians how to stand up for their rights--the
country now has more than 200 labor unions--and many managers
have gotten used to workers being organized. In general, although
there is some agitation for wage increases, labor-management
relations are better than they were when the agreement was inked.
On the whole, says Siphana, the trade experiment has benefited
Cambodia. "It does work for us," he says. "But it was not a walk
in the park. ... Other countries who want to do this had better
think hard about how they will manage. If they don't have the
[ability] to manage strong labor, it will fail."
Cambodia still faces
obstacles. In January 2005, the World Trade Organization (WTO)
will remove all quotas on textiles. Cambodia hopes to join the
WTO by then. If it does, it will face direct competition for
Western markets with textile giant China--without the protection
of quotas. "The garment sector here has maybe three to five years
before the good things are swamped by all the other things going
on here," says one Western diplomat in Phnom Penh. "Unless Cambodia
makes long-term changes to its infrastructure, its roads and
ports, its power grid, its bureaucracy and corruption, all this
is going to go away."
He has a point. Infrastructure problems and corruption in Cambodia
increase costs to manufacturers. The country has just one narrow
road leading to its sole deep-water port in the city of Sihanoukville.
It costs roughly $2,000 more in Cambodia to export a container
by sea, the diplomat says, more than in most other Asian nations,
and it takes six times as long. Worse, Cambodia's electricity
rates are among the highest in the world, and the country still
suffers from political instability. Elections held in July 2003
resulted in a stalemate that left the country without a functioning
government until earlier this summer. These difficulties have
scared off some foreign investors. In 2001, they pledged $150
million; in 2003 they pledged only $135 million.
And Cambodia has another looming problem: 60 percent of its
12 million people are under 20 years old. "Stasis is not going
to work when you'll have several hundred thousand people seeking
to join the job market year after year after year," argues the
diplomat. "In 2008, you might have as many new job seekers in
that year alone as you have current employment in all of the
garment sector. Where are they going to work?"
That's a question with no easy answer, especially if garment
manufacturers fed up with Cambodia's other problems decide to
go elsewhere. "We want these factories to continue here for a
long time," says Hum Srey Neun, a 21-year-old garment worker
from central Cambodia. If they do, the Cambodian model could
one day transform the garment industry around the world.