International Confederation of Free Trade Unions

Trade Union Campaign for a Social Clause


Anti-union repression in the export processing zones

April 1996

This Sruvey has been prepared for the ICFTU by Jean-Paul Marhoz, with Marcela Szymanski




An international phenomenon
The history of the export processing zone
Mexico: the maquiladoras
Workers' rights in the export processing zones
Anti-union repression


At the national level
At the international level
The social clause

The social clause

This publication forms part of the ICFTU campaign to seek the inclusion of a social clause in the World Trade Organisation and similar international trade agreements. The ICFTU's proposal reads as follows:

"The contracting parties agree to take steps to ensure the observance of the minimum labour standards specified by an advisory committee to be established by the WTO and the ILO, and including those on freedom of association and the right to collective bargaining, the minimum age for employment, discrimination, equal remuneration and forced labour."

The ICFTU has suggested that the following ILO Conventions should constitute the minimum labour standards to be incorporated into the WTO:

Conventions 87 and 98 on freedom of association and collective bargaining

Conventions 29 and 105 on the abolition of forced labour

Conventions 111 and 100 on the prevention of discrimination in employment and equal pay for work of equal value

Convention 138 on the minimum age for employment.


One of the most disturbing aspects of the growth of the global market is the increasing number of Export Processing Zones where millions of workers, mainly young women, are employed in grossly repressive conditions. This booklet describes what working in the zones means in reality. It is a shocking revelation of the dark underside of globalisation and a call to action by the international trade union movement, governments and employers to end a major scandal.

The original idea behind the creation of Export Processing Zones was to allow employers to import materials to be worked on and then re-exported without having to pay duty. It started in the early sixties with a zone round Shannon airport in Ireland which was threatened by the loss of employment in the refuelling of aircraft on transatlantic routes. It was seen as a cheap way of creating jobs without spending scarce taxpayers money and avoiding a bureaucratic system of reimbursing import taxes on goods intended for export. However from the beginning this seductive idea had a major drawback. It requires the sealing off of the zone or of designated factories, often behind high fences, to prevent untaxed goods being smuggled into the rest of the economy. As the EPZ concept spread around the world, governments found that they had to add further incentives to attract footloose investors to their enclave; subsidised factory buildings, telecommunication links, energy supplies and most worrying of all, guarantees that the labour force would stay cheap and uncomplaining.

The proponents of EPZs have argued that after a few years the incentives could be done away with and the enclave reintegrated into the rest of the country, but as the incentive packages got bigger and more zones were created in other countries it has become harder to wean investors off their special advantages. Indeed pressure has increased to constantly improve the attractions to stop companies relocating to other still cheaper locations. Many experts now question whether the zones actually increase overall employment at all or help the national development process. They certainly do boost the profits of the companies involved but at the expense of other businesses and employment outside the zones or in other countries. Even some of the most avid supporters of trade liberalisation now see EPZs as a distortion in the global market place which encourages a "slash and burn" pattern of development rather than sound long term investment and the transfer of technology. At best the country gets a few years worth of low wage low productivity jobs before the export processors move on to another country. At worst the country and its workers become trapped at the wrong end of a long international chain of production dependent on some of the world's most vicious employers competing in a cut-throat business for the bottom end of the global market.

This report shows the human cost of the EPZ experiment. Behind the concentration camp style fences in many countries, unscrupulous employers are abusing the basic rights of a predominantly young female workforce. In some countries basic labour legislation and core workers' rights are set aside in the zones. In others the zone managers simply use a system of pass controls to exclude union organisers and workers who try to join a union. Many of the worst of these so-called "free zones" allow employers the freedom to exploit without restraint but restrict basic workers' rights to freedom of association. Their continued growth calls into question the legitimacy of the entire international trading system. Democratic governments and socially responsible employers must join the international trade union movement to prevent the intensification of competitive pressures, exemplified by the spread of EPZs, from undermining the basic rights of workers.

The ICFTU and its affiliates are campaigning vigorously for the inclusion of a clause on international workers' rights in the multilateral rules set by the World Trade Organisation. Our objective is to increase respect for basic ILO standards worldwide. The growth of trade holds the potential for increased employment and improved working conditions but will not reach millions of workers if gross exploitation, repression and discrimination is allowed to continue and spread. Already international union action is putting pressure on governments and employers to stop the denial of the basic freedom of zone workers to join a union of their own choosing and bargain with their employer for decent conditions of work. Companies that sell products on the international market place are being made increasingly aware that consumers want reassurance that not only what they are buying is of high quality but that it has been made by workers who are treated decently. Hypocrisy is bad for business.

Tackling the global crisis of unemployment and poverty requires a coordinated international approach as called for by UN's Copenhagen Summit for Social Development. Export Processing Zones are a dangerous step backwards which vividly symbolise the tendency to try and hide the fundamental problem that unrestrained competition leads to exploitation. Fencing in and denying working people their basic freedoms is an outrage that will be exacerbated by the powerful forces of globalisation unless effective international action is taken to prevent the violation of trade union rights in Export Processing Zones.

ICFTU General Secretary

Part One



"The metal covered buildings lie under a leaden sky. Nothing in their appearance suggests there are human beings inside. They look like giant warehouses. Inside, the only sound is the noise of machines. There is not a single human sound: no voices, no laughing, just the occasional whisper here and there. From time to time, someone gets up and asks to go to the toilet. The workers are only allowed to go once during their ten- or twelve-hour shift, and even then, their time is strictly limited. If they are absent for more than three minutes, the supervisor shouts for them to come back to work. Once the women have entered the building, the doors are locked. Nobody can leave, or have any contact with the outside world. Their whole world is behind those doors.

Sometimes, it is more than the body can stand. Temperatures soar, particularly in summer. Even if one of the women falls ill, she is not allowed to go to the doctor. Recently, Amanda fell ill. As the hours passed, she felt worse and worse, but she was not allowed to leave. After six hours, she fell dead at her machine: she was 22 years old and she died because she did not have permission to walk out of a door.

Anger drives some of the workers to organise. But any efforts are immediately repressed. Order is restored, with the supervisors using every method available. The end justifies the means: shouting, harassment, physical violence.

If somebody were to ask where the scenes described above took place, no doubt most of us would reply: in a prison or a concentration camp. Wrong. It is simply the way workers are treated in the maquiladoras of Central America."

Adriana Rosenvaig

International Graphical Federation (Latin America).

In Mexico, they call them maquiladoras; in Guatemala, "swallow" companies and in China, "special economic zones". A study by the US Labor Department lists no less than 19 terms to describe export processing zones (EPZs), but their characteristics are virtually identical throughout the world. They are based on the same principle - the international segmentation of the production process - and adopt the same practices: the search, regardless of international conventions, for the most favourable conditions for the investor, namely low pay and few or no trade union rights.

According to one definition, "the maquila is part of a process of segregating production in different stages whereby each stage can be carried out by a different enterprise in a different country, to benefit from the comparative advantages that each offers and reduce costs to a minimum". Wage costs are the most decisive factor for EPZs, and it is the most labour intensive stages of the production process that are the first to be relocated. In 1991, for example, the hourly wage in the clothing sector was five times lower than the US rate, whereas in Costa Rica it was ten times lower and in Nicaragua nearly twenty-two times lower.

The EPZs cannot be ignored. They are a rapidly developing international phenomenon which affect an increasing share of trade flows at the international level and employ a growing number of workers. In 1995, there were more than 230 export processing zones, spread across nearly 70 countries, including more than 100 in Latin America and the Caribbean, 64 in Asia and 31 in Africa. According to ILO figures, employment in the zones grew by 9 per cent between 1975 and 1986, and by 14 per cent between 1986 and 1990. Over 1.2 million Latin American and Caribbean workers, 250,000 Africans and three million Asians are employed in them. In addition to this are the 14 to 40 million Chinese employed in the "special economic zones".

In these zones, also known as "free" trade zones, it is the employers who run free - like a fox in a henhouse. According to a worldwide survey carried out by the ICFTU among its affiliates, enterprises in the zones gain their comparative advantage through worker exploitation and anti-union repression. Most of these enterprises are out to break their competitors in the price war, and they don't mind breaking the backs of their workers, and the union, to achieve that.

It is precisely because enterprises win a competitive advantage through the repression, discrimination and exploitation of workers that the ICFTU is pressing for the introduction of a social clause in international trading relations. The rapid expansion of the zones poses a considerable challenge to the international trade union movement. Enterprises rule supreme in these employers' paradises, while the labour world seems drawn into a downward spiral where everyone is the loser: the exploitation of workers in the Third World is seen as directly linked to the fall in living standards of workers in the North, while the recriminations of workers from the North are seen as an expression of protectionism.


Export processing zones have usually prospered at the initiative of private enterprise, with many developing countries taking the lead by setting up "turnkey" industrial parks and attracting enterprises with promises of tax exemptions and lax social regulations. The states who have ventured along this path hope to repeat the miracles of the "Asian dragons", using these modern enclaves as an engine for development.

While the economic benefits are far from negligible, particularly in terms of job creation, reality is still a far cry from the glossy image painted by the zones' publicity machines.

The zones are seductive to investors precisely because they are an enclave, in other words because they are physically, economically and socially separate from the rest of the country. This "apartheid" explains why the advantages offered to foreign investors - freed from the burden of bureaucracy, taxation, lack of infrastructure and the application of the labour code - do not necessarily translate into corresponding benefits for the host country.


The EPZs are to a certain extent a caricature of the rapid globalisation of the economy. This globalisation is seen as a threat by most workers in the industrialised countries and is often felt as a new form of exploitation by many workers in the Third World.

Over recent decades, Third World trade has increased almost exponentially, but this growth has been accompanied by a serious disruption of the international economy, and in particular a shift in power relationships. The old industrialised nations, Europe and the United States, have participated in this sudden expansion in trade flows, but their share has been gradually eroded not only by Japan but also by the NICs, the newly industrialised countries of Asia and, to a lesser extent, Latin America. The gap between the different developing countries has also grown: the NICs share of total exports of manufactures from developing countries increased from 13.5 per cent in 1965 to 45 per cent in 1980, rising to over 60 per cent in 1990.

Also in 1990, the four Asian dragons (South Korea, Hong Kong, Taiwan and Singapore) accounted for 61 per cent of exports of manufactures from the Third World, while the trio Indonesia, Malaysia and Thailand accounted for 12 per cent.

While it was the member states of GATT, now the WTO, who favoured the liberalisation of trade and the deregulation of economies, it is the multinational enterprises who have been the principal actors and prime beneficiaries of these changes.

Why? "Because", explains the economist François Chesnais, "they led to a dual process of accumulation: on the one hand, an accumulation of capital, through internal growth and acquisitions-mergers; on the other, an accumulation of specific skills and experience in the management of numerous and widely scattered production sites, of a private internal market, and of diversification by sector. By 1980, they had acquired a lot of experience in how to exploit the disparities between countries, particularly as regards wage costs and taxation. Internationalisation held no secrets for them, nor did mobility, in terms of the capacity to invest and disinvest, to enter into and withdraw from a sector or a country without scruples, their only criteria being profit, competition and growth."

"Then there is the human element" says Philippe Frémeaux, editor of Alternatives économiques (Paris). "Most people feel the effects of globalisation. They feel it even more when their governments, by conviction or by reason, are more sensitive to the demands of multinational enterprises than to those of their own people."

Suddenly, "hundreds of millions of people realised they would have to compete for their jobs with workers who may live on the other side of the world". Nothing is local any more, everything seems to be bound up in an international system that people don't really understand and that only the multinational enterprises, who operate at the world level, seem to have any control over.


Nobody knows who is producing what or where it is produced. Robert Reich, US Secretary of Labor, gives an eloquent example: "When an American buys a Pontiac Le Mans from General Motors, they are unknowingly entering into an international transaction. Of the 10,000 dollars they pay General Motors, about 3,000 ends up in South Korea for routine assembly, 1,850 goes to Japan for sophisticated components (engine parts, electronics), 700 to Germany for the design, 400 to Taiwan, Singapore or Japan for smaller parts, 250 to Great Britain for advertising and marketing and nearly 50 dollars to Ireland and Barbados for data processing. The remainder - less than 4,000 dollars - will end up in the pockets of the strategists in Detroit, lawyers and bankers in New York, lobbyists in Washington, insurance and health care workers throughout the country and General Motors shareholders throughout the world".

(The Work of Nations, Knopf, New York, 1991).


The proliferation of export processing zones is linked to the phenomenon of the relocation of activities which used to be based in the industrial regions of the North.

Trade union organisations from the North inevitably see these zones as responsible for the decline and collapse of employment in the old industrial regions.

The extent to which the South is responsible, however, is a very controversial issue. "The economy" writes Pierre Sohlberg in Alternatives économiques, "does not operate as a zero-sum game, where one side's gain is inevitably the other side's loss. It can operate in a positive sense, whereby everyone gets richer."

Take France, a country where there has been heated debate on the question of relocation not only at the world level but also within the European Union, with the "no" vote in the referendum on the Maastricht treaty coming very close to victory. According to research by France's foreign trade ministry (Mathieu and H. Sterdynalk, "L'émergence de l'Asie en développement menace-t-elle l'emploi en France?" OFCE Review, January 1994), France lost 200,000 jobs over 20 years through trade with low wage economies in Asia, representing a 0.5 - 0.6 per cent increase in unemployment. "It can therefore be said that an additional 0.5 per cent unemployment is the price to be paid for a fraction of the South overcoming its poverty" states A. Weinberg in the Human Science review.

"So what?" retort the clothing workers from the north eastern United States, the mill owners in northern France, and the weavers from Manchester who have lost their jobs and seen factories close as a result of Third World imports.

Relocation seems to have become a catch phrase which hides a far more complex reality. It is only the most visible and most easily understandable element, and the easiest target for criticism, because it happens "abroad", in a general shift in production methods, as part of a broad cost-cutting strategy. Relocation is to an extent the twin sister to investment in the streamlining of the factories of the north.

This economic explanation, however, does not change the reality of the situation. The overall picture is still one of high unemployment, regional depression, and young workers facing a dismal future. Employment in the textile industries or electronic assembly lines of the old industrial regions is disappearing, and is not being replaced, as the optimists would have us believe, by more rewarding jobs in the high technology sector. Only the lucky few can make the change. Of the 647,000 workers who lost their jobs when the textile and shoe factories of New England closed, notes the American economist, Richard Barnet, only 3 per cent found work in new technology.

The service sector has absorbed some of the "excluded", but there are "services" and "services". Far from the rosy image of a change of career with new jobs in the laboratory or in high-tech industries, most of the skilled workers have had to turn their hand to whatever they can get, working in hamburger restaurants or for express delivery services. Those who find work earn much less than before, while the rest join the ranks of the unemployed, the underemployed, or the socially excluded. The disappearance of relatively well-paid industrial jobs also makes integration into the labour market, and therefore into society, more difficult for the disinherited minority. And "deindustrialisation" is a factor behind the immigration crisis in western Europe and the problems facing the black minority in the US.

It is within this context of decline and depression that a significant part of the labour world - or the jobless world - is now facing the phenomenon of globalisation. It is a situation which has strong implications for the development of worldwide solidarity among workers swept up and scattered far and wide by this new wave. It also has serious implications for the political situation in the countries affected, as behind the unemployment figures and social insecurity rises the spectre of populism and racism, manipulating the feelings of insecurity among the most vulnerable members of society.

Hence the challenge is political. "Virtuous logic", (Editor: ensuring that globalisation does not occur at the expense of one group of countries), notes Pierre Sohlberg, "is neither automatic nor spontaneous. It supposes that the deflationist logic of competition between enterprises and nations is counterbalanced by national and international regulations which ensure global demand is maintained at a high enough level to ensure world growth. It also supposes that, within each country, governments ensure the transfers of income and employment that will allow for an equitable distribution of the costs and benefits of international trade. Finally, it supposes that the economic development set in train is sustainable, in other words, that it is not accompanied by the rapid depletion of natural, non-renewable resources. These three conditions are only partially met today. Coordination of economic policies between the big industrialised countries is virtually non-existant... The decline in social solidarity in the North, with the rise in liberalism, and the weakness of social policies in the South partly confirm the views of those who claim that globalisation is making the rich in the poor countries richer, and the poor in the rich countries poorer".


Faced with chronic unemployment and the rise in exclusion in the rich countries, the situation of the Third World seems even more catastrophic. There are of course several "Third Worlds". Some of the NICs are now developed countries. "The standard of living in Singapore", writes Pierre Judet in the journal of the French union, the CFDT, CFDT Aujourd'hui, "is equal to that of Great Britain; in Taiwan it is better than in Spain; and in South Korea better than in Portugal. These countries in turn sub-contract jobs to the low wage areas."

The challenge is still immense. In the next twenty years, according to the UN, 38 million job seekers will join the developing countries' labour markets each year, adding to the ranks of the 700 million unemployed and underemployed.

Industrial investment and financial assistance are often presented as the best antidote to immigration in the rich countries. Setting up factories in the Third World to mop up the "excess" labour spilling over onto the markets of the industrialised countries seems an obvious solution. It is too obvious however to be really convincing: not only because the aim of an enterprise is not to create jobs but to create profits for its shareholders, but also because the number of jobs created by foreign enterprises is negligible compared to the labour supply. The American economist Richard Barnet, who has closely observed the cultural aspects of globalisation, adds a third element: the modern sector of the economy, including the export processing zones, tends to encourage people to leave their countries. "Employees in the zones", writes Saskia Sassen in the World Policy Journal, "have encountered the American dream in their countries, in many different ways: magazines, toys, consumer goods, meeting the people who are searching for a disciplined and accommodating workforce, rock music... factors which all stimulate the desire to seek their fortune in the countries of wealth and freedom". "In these modern enclaves that have been set up in the middle of their traditional societies", adds Richard Barnet, "these young workers develop a new vision of their own possibilities, and the more adventurous among them want to seek a new life elsewhere."


Export processing zones have grown considerably in size and number over the last few decades, but the model is not a new one. Under the Roman empire free trade zones were set up along commercial routes. Used for storing duty-free goods before re-exporting them, they were a marginal element in a mercantile economy. The free towns of the Middle Ages and the duty free ports of the British Empire (Singapore, Gibraltar, Hong Kong) continued the tradition.

It is interesting to note that the special economic zones in China "are often located where concessions had been obtained in the Chinese Empire by the great powers using gunboat diplomacy in the XIX and beginning of the XX century", writes Olivier Dollfus.

At the end of the last century, free trade zones, used not only for trade but also for production, were emerging in the wake of the industrial revolution, colonial expansion and the internationalisation of liberal economics. In the banana growing regions of Central America and the Caribbean, the "enclaves" of the United Fruit Company already had many of the characteristics found today in an export processing zone.

Their history has a smell of gunpowder about it. Extolled by the liberal parties of the day, the advocates of free trade and the modernisation of society through foreign capital, the rapid spread of the banana plantations in Central America is the story of how a region was plundered. The host countries only saw a marginal benefit: their workforce was exploited, vast areas of land were given away to the companies, the infrastructure that was set up was only of use to the banana barons, the quantities exported were systematically underestimated, and the companies pulled out when conditions became less favourable.

By 1970, less than ten countries had set up export processing zones. In Asia, the first zone was created in Kandla, near Bombay. Sixteen years later, there were nearly 175 spread across fifty countries. Since then export processing zones have been created in nearly half the world's countries, mainly in the Third World.

Many developing country governments make the zones the mainspring of their economic future. In August 1995, El Salvador had five export processing zones employing 83,500 people. Four other zones are due to open in the next three years. The number of people working in the zones is expected to rise to 180,000.


The modern phenomenon of the export processing zone was born in 1960 in Ireland, around Shannon airport. With its future threatened by the advent of the transatlantic jet, the airport was turned into a duty free production zone for goods with a high value added. Its success surpassed all expectations: in the first year, nearly 440 jobs were created. Ten years later, the zone employed 4,750 people, giving a new lease of life to the airport, whose staff grew from 1,250 in 1960 to 2,200 in 1975.


Export processing zones have often been created in response to plans drawn up by the International Monetary Fund or the World Bank. They were perceived by the international financial institutions as one of the essential ingredients of the opening up of Third World economies. The UN system also played an important role in the development of export processing zones. A report by the ILO and the UN Center on Transnational Corporations openly recognises it, describing as essential the "link between the experience at Shannon and the technical assistance provided by young international agencies such as the UNIDO (United Nations Industrial Development Organisation) and UNCTAD (United Nations Conference on Trade and Development)".

"The history of these links has yet to be written", continues the report, "but we already know that one of the entrepreneurs from the Shannon zone went on to work as an expert for UNIDO and that he prepared for this organisation the first manual on the creation of export processing zones, and that he seems to have taken part in several UNIDO missions for the establishment of EPZs in developing countries. UNIDO has played a key role in the creation of the World Export Processing Zones Association (WEPZA) while UNCTAD has contributed greatly to legitimising the idea of EPZs through basic studies on the costs, benefits and advantages of these zones."

In Central America, USAID (the US international development agency) is behind most of the initiatives aimed at creating export processing zones. In El Salvador, for example, in 1974, USAID tried to promote the installation of EPZs in vain. After the peace accords, which followed ten years of civil war, the agency resumed its efforts.

The industrialised countries clearly favour the promotion of exports from certain Third World countries. The Generalised System of Preferences, which grants privileged tariffs for exports from developing countries, aims to help these countries diversify their produc-tive structures. The system applies to products that have acquired at least 35 per cent of their value added in the beneficiary country.

Countries in the North provided financial support for organisations responsible for export promotion. In October 1991, AIFLD (American Institute for Free Labour Development) revealed that at a conference on export processing zones, the representative of a Costa Rican organisation, partially financed by the US government, boasted of the elimination of trade unions in his country...


Most governments are keen promotors of the zones, and their attempts to attract foreign enterprises to the EPZs, from Karachi to San Salvador, seem to have been written by a single author. But countries don't all set out from the same starting point when trying to attract foreign investment.

"To compete at the world level, you have to build on comparative advantages. What advantages can the smaller states offer, except lower levels of regulation? History shows that the small states close to rich centres of consumption develop a parasitic strategy" (Alternatives économiques). It is at this stage that fiscal, customs and social dumping become a comparative advantage.

The government of the Philippines adopted a law on foreign investment that provided for the long term rental of private land for a period of 50 years, renewable for 25 years. The foreign investors may take part in public projects through the government's BOT programme (build-operate-transfer). In the Subic Bay zone, the metropolitan authority was given the power to issue visas to foreign nationals, a responsibility that had previously been the exclusive prerogative of the national government.

The provisions adopted by Guatemala give an idea of the concessions granted to investors. Decree 29/89 on maquiladoras offers:

1. Exemption from customs duties, including VAT, on raw

materials, prototypes, bottles and packaging.

2. Exemption from income tax for ten years.

3. Total exemption from customs duties and taxes, including VAT, on imports of machines, equipment and spare parts.

4. Total exemption from ordinary and extraordinary export taxes.

5. Reimbursement of customs duties, import taxes and VAT paid as a deposit to guarantee raw materials, semi-finished goods and packaging linked to the production process.

6. Exemption from taxes equivalent to customs duties and taxes paid on imports.

Another decree on export processing zones grants:

1. The right to sell 20 per cent of production on the internal

market, only paying the corresponding duties.

2. The right to sell sub-standard products (products which did not pass the quality control tests).

3. The right to export the products of the EPZ to Guatemala for finishing by a sub-contractor, and the right to return the

products to the EPZ in order to be able to export them without having to comply with the provisions of law 29/89 or the law on the finishing of goods. Tax only has to be paid on value added.

5. The right to take machines out of the zone for ten days for repair or other reasons.


In concrete terms, an export processing zone could be defined as "a clearly demarcated industrial zone which constitutes a free trade enclave outside a country's normal customs and trading system where foreign enterprises produce principally for export and benefit from certain tax and financial incentives".

Definitions abound, exceptions too. In some cases entire countries, such as Singapore or Hong Kong, are virtually EPZs in themselves. In others, such as China's "special economic zones", they are on such a vast scale that they don't seem to fit the definition. In fact the term export processing zone, in the sense of an enclave with clear geographical borders, does not cover all aspects of the phenomenon: individual firms have been granted zone status, notably in Tunisia, where nearly 580 firms (1989-90 figures) in nine regions of the country fall into this category.


Unlike the free trade zones of previous centuries, the new zones are not always located along major trading routes, or at the junction of such routes. They are located wherever the movement of goods can be most easily ensured, usually close to ports or airports, regardless of whether these are far from the trade routes.

One of the main criteria is the type of product: they need to be relatively light and ensure a high added value. It must be possible to produce them with a relatively unskilled workforce. Which covers a wide range of activities: the zones produce anything from tennis rackets in St.Vincent (Caribbean), to shoes in the Dominican Republic and toys in China. Despite this diversity, however, the zones mainly concentrate on the production of textiles, clothing and electronics for the mass market.

In Mexico, in July 1995, there were 705 textile factories out of a total of 2,747, representing 26.6 per cent. In El Salvador, in the same year 141 of the 225 enterprises in its zones, or 62 per cent of the total, belonged to this sector. In Guatemala, 90 per cent of maquiladoras are textile or clothing factories, and in Sri Lanka clothing represents 80 per cent of total production.


The export processing zones are closely linked to the multinationalisation of the economy. "Local entrepreneurs", says an ILO report, "may be active in the EPZs, but without the multinationals there wouldn't be any export processing zones."

In 1986, more than two thirds of the 1.5 million jobs in the EPZs were provided by the multinationals. While it is true that big names such as Sony, Sara Lee or Hewlett-Packard are to be found in the zones, they are not the only ones to invest there: more and more medium-sized enterprises are taking their chances in what is often their first experience of producing in a developing country.

It is certainly a very tempting prospect: instead of having to explore unknown territory, adapting to inadequate infrastructure and often very complex legislation, the processing zones provide a modern, predictable environment, with ready-to-use infrastructure. "It is to the inexperienced foreign investor what the package holiday is to the cautious tourist" comments the ILO report with a note of humour.

EPZ investors come in many shapes and sizes, and some even come from the Third World. The multinationals are not all from the

countries of the North either: more and more of those setting up in the processing zones are Third World firms, mainly from the NICs, including Korea, omnipresent in Central America.

Many textile maquilas in Central America are under the control of Korean or Taiwanese groups who came to the region mainly to take advantage of the export quotas to the United States.

More and more enterprises are under local ownership. In Guatemala, in 1994, there were 138 Guatemalan-owned maquilas, 11 North American and 53 Korean. Of the 225 enterprises in El Salvador's EPZs, 11 are Salvadorian, 8 Taiwanese, 16 Korean, 13 North American and 1 French, while 56 are "unidentified".

The sub-contracting and "name-borrowing" system complicates the identification of the real owners. But behind the supposedly locally owned enterprises there are often enterprises from the North who have decided they don't want to get their hands dirty, and prefer just to buy the products from them. Their role only emerges when a dispute breaks out. In 1994, for example, the American clothing company The GAP had to intervene with the owners, mainly Korean, of maquilas in the Continental Industrial Park in Honduras because the strikes provoked by these firms' anti-union policy were disrupting distribution to the United States.


EPZs are a global phenomenon, but one that is very unevenly spread, in terms of investment and jobs. The industrialised countries only have a few zones, mainly located in poorer or more remote regions: Australia, for example has a "Trade Development Zone" in the Northern Territory (Darwin).

In the developing countries, investment in these zones is concentrated in a handful of countries: in 1986, 14 countries - out of a total of 45 - accounted for 94.5 per cent of employment in the zones. This concentration can also be found at the regional level. In Africa, also in 1986, three countries, Egypt, Tunisia and Mauritius, represented 96.5 per cent of employment in the zones. In Latin America, Mexico, Brazil and the Dominican Republic account for 91 per cent of employment between them.

The processing zones, which the poorest countries are trying to set up as if they will open the door to development like a magic wand, in fact tend to favour the newly industrialised countries.


Is the question of location symptomatic of the objective assigned to the export processing zones? Have these countries joined the ranks of the newly industrialised thanks to the presence of the zones, or did the international companies choose to invest in the zones because the country's economy already showed signs of dynamic industrial development?

This is not just empty rhetoric - this question will recur throughout our journey into the world of export processing zones: "it raises far more complex questions", notes the ILO "concerning the links between foreign investment, particularly investment in the export processing zones, and the process of innovation in local industries".

The proportion of production and employment in the zone in relation to the rest of the country clearly determines whether it has a decisive or incidental impact, economically, socially, or even politically. When the zones represent, as is the case in Mauritius or Macao, more than three quarters of industrial employment (1984), they are no longer enclaves, they are the country's whole economy. The same does not apply when the zones, as is the case in Brazil for example, only represent 1.5 per cent of jobs in the manufacturing sector or a minimal proportion of the country's total exports, as is the case in India. According to 1993 figures, EPZs only had a 2.67 per cent share of the country's foreign trade.

The apparent statistical insignificance of the role of the EPZs does not explain everything, as they may disguise their true impact. In Mexico, for example, the maquilas represent 10 per cent of industrial employment, but their contribution to the balance of payments is considerable, far greater for example than tourism. Politically, their

presence along the 3,000 km border with the United States is such that they play a strategic role in Mexico's economic policy and its bilateral rel-ations with the United States.


With the advent of globalisation, the EPZ phenomenon is being called into question by the sheer extent of trade liberalisation and the deregulation of economies. "The transnationalisation of the economy", writes the ILO (San José, April 95) "which includes the opening up of economies, could push the maquiladoras out of the picture. Their competitiveness is based on quotas, subsidies and exemptions which, in addition to lower costs, particularly in terms of labour, have made such investments very profitable. But with the approval of free trade agreements, the whole region is turning into a free trade zone, with no room for special preferential systems. On the contrary, the global market will lead to global laws of supply and demand, with equal GATT regulations for all. In this new context, the maquila will have a low profile, its only advantage being to provide cheap labour, working in highly exploitative conditions, given that the free circulation of goods will be guaranteed by trade agreements."

In an interview published at the end of 1991, Daniel Azzini, a United Nations consultant in Uruguay, took a similar view: "the export processing zones are just one step on the road to the globalisation of the economy and their usefulness will decline over the next five to ten years".


For multinational enterprises, the search for comparative advantages is at the heart of the world economic system. The principal advantage of the processing zones is cheap labour. Governments seeking to attract international enterprises don't hide it: they "sell" their low wages in the prospectuses and publicity materials that they distribute to potential investors. In 1990, a group of Salvadorian business men, financed by USAID, placed a very enlightening advertisement in the US sewing industry's trade magazine, Bobbin. Introducing "Rosa Martinez", a pretty young woman sitting at her sewing machine, the advertisement said, with deliberate "double-entendre", "You can hire her for 57 cents an hour. She is not only beautiful. She and her companions are known for their industriousness, their seriousness and their ability to learn".

For the promoters of the export processing zones, the economic rationale is simple: these zones, by attracting foreign investment, promote national industrial development, enabling a transfer of technology, bringing in currency, improving infrastructure and creating jobs. But is the equation as idyllic as it seems?

Nobody seriously questions the contribution the export processing zones have made to job creation. "The only benefit the zones have brought us" writes German Garcia Facundo of the CTD (Democratic Workers' Confederation) of El Salvador, "is the creation of 50,000 jobs in 1994, but they are badly paid jobs carried out in inhuman conditions." In Guatemala, according to the association of exporters of non-traditional products, the number of workers employed in the EPZs rose from 6,500 in 1986 to 70,000 in 1992. As it is usually estimated that one job created in an EPZ leads to the creation of one job outside the zone, the impact is far from negligible, particularly in economies that traditionally have high levels of unemployment and underemployment.

While some trade unions, such as the Workers' Confederation of Cyprus, have a positive view of the export processing zones and believe that "they introduce new occupations and skills", the zones' record in terms of workers' training and the transfer of technologies tends to be negative. Working conditions clearly illustrate this: these enterprises, notes the ILO (San José, April 95), are very much cost-oriented, and are more interested in keeping labour costs to a minimum than improving the productivity of labour". The maquilas hire young women with little training and fire them after a few years.

The Central American Institute for Labour Research (ICAL) states quite clearly that "the export processing zones do not contribute to the industrial development of the countries in which they are established. These enterprises are characterised by their low level of technology transfer and by monotonous tasks that do not allow workers to develop new skills". (Instituto Centroamericano de Asesoria Laboral, ORIT seminar, Santo Domingo, February 1994).


A study carried out by the ICFTU and its regional organisation for Asia and the Pacific (APRO) in six countries of Asia (Bangladesh, China, India, Malaysia, Philippines and Sri Lanka) found that in 1995 "export income is often exaggerated in official figures. In fact the statistics often ignore the large scale importation of the products needed to assemble goods in the zones. For example, while in one year Sri Lanka recorded a gross export income of 250 million dollars from its EPZs, on closer examination, it appears that at the same time its imports amounted to the equivalent of 174 million dollars".

Bo Jonsson, an economist at the ICFTU, explains that "our research shows that net export income amounts to barely one third of their gross value. And from that you have to deduct the profits sent home by the companies."

According to an ILO document on Central America and the Dominican Republic, "the net macro-economic impact and the effect of the maquilas in terms of training and integration on the rest of the economy is quite limited. Similarly, the wide range of subsidies, incentives, tax exemptions, customs facilities, etc. costs the host nation a considerable amount."

Research in the region also shows that the goal of transferring technologies has not been met, again owing to the very nature of the zones. "They are physical, economic and social enclaves, in which there is no real motive to associate with local producers or establish links that would result in an increase in local technological capacity." There is virtually no technology transfer, reports the review Pensamiento Propio, referring to Guatemala. "In the textile sector, for example, the machines are obsolete, the initial investment is derisory and it does not contribute to the modernisation of the industrial apparatus."

The advantages granted by governments to enterprises based in the zones - exemptions, infrastructure, etc. - also imply a cost and it is by no means certain that the host country gains anything. Some companies pack their bags and leave before they can be asked to pay tax, and their contribution to the country's economy is lower than the investment the host government made to attract them there. The study by the ICFTU and APRO estimates that "Bangladesh invested 6,000 dollars for every Bangladeshi working in the zones and it will take it twelve years to recover its capital".


Cases of failure or mitigated success with regard to profits are not unusual: in 1989, for example, the government of South Korea concluded that "the effect of the export processing zones on the Korean economy is relatively small, if not to say negligible". In India and Pakistan, progress has been slow, and the results so far in terms of export figures have been disappointing.

The reasons for these failures may be related to mistakes in the choice of location or poor management. In the Philippines for example, the Bataan zone, the largest in the country, located in a deprived region 150 km from Manila, cost a lot more to get started than initially foreseen: granting comparative advantages, in relation to enterprises situated elsewhere in the country, and the cost of setting up the infrastructure, proved a heavy drain on financial profits.

But failures can also be due to more fundamental factors. In some cases, such as Korea, the impact of the zones proved insignificant beside the success of the country's industrialisation. "The EPZs", comments Won Sun Oh, author of a report for the ILO, "have made an important but relatively limited contribution to the promotion of export-based industrialisation and the country's technological progress. The future of these zones will depend on what favourable conditions can be granted to turn them into high technology industrial zones capable of attracting investment from the high-tech industries and providing employment for large numbers of skilled workers as well as technicians and professionals."

The experience of the Asian countries merits careful thought, because there is a strong temptation for some host countries to consider the zones as the easy answer to industrialisation, adopting a strategy based on the export of manufactured goods, as if this would miraculously open the door to development without having to make fundamental changes in government or employer practices.

The Asian "dragons" have never considered the EPZs as real "enclaves". The search for a link between the "export platforms" and the national economy has been constant. "South Korea", notes the Report on the Americas in a comparative study (February 1993) "has never applied indiscriminate economic liberalisation. Rather, it has applied a mixture of an active promotion of exports and efficient import substitution. Furthermore, industrialisation was preceded by a massive redistribution of wealth and income through agrarian reform...A fairer distribution of income created the necessary basis for the expansion of the internal market, such that growth was directed both inwards and outwards."

Furthermore, as shown in a recent report by the World Bank on the origins of Asian countries' development, the State was a decisive factor in their economic take-off. "Strong state intervention" adds the Report on the Americas "has played a key role in integrating private sector activity into a coherent industrialisation strategy."

The low wage strategy is also an illusion. The ICFTU/APRO study clearly shows that foreign investors are not only in search of the lowest wages. Productivity is also a key criteria: it explains, notes the report, that enterprises that had been based in Bangladesh had moved to Vietnam where wages weren't any lower.

"The quality of the workforce is a fundamental consideration. The countries that make huge investments in export processing zones without at the same time making substantial investments in education are getting their priorities wrong."

For those who believe that not everything can be reduced to figures, it seems that some investment decisions are made for "far more trivial reasons" such as "life style". The Cebu island in the Philippines, for example, attracts Japanese investors because of the quality of life there, even though wage costs are higher than in other zones in the region.


The Asian experience was not repeated in other regions of the world where states abdicate all responsibility and opt for export processing zones as a substitute for real economic and social reforms.

In the small countries of the Caribbean basin, the proliferation of export processing zones is simply an extension of the bad economic development "model" inherited from the colonial era. From independence in the second decade of the 19th century, Central America pursued the goal of development from the cochineal boom to the coffee boom, from bananas to cotton, but never quite succeeded.

Then came the crisis of the 1930's, marked by the collapse in the price of raw materials, followed, with the onset of war, by the loss of markets, sending shockwaves through the region. The nationalists and revolutionaries of Central America believed their outwardly-oriented development was to blame. The question was how to break the vicious circle of dependence and poverty with such small and impoverished markets.

The obsession of Central American nationalist leaders and economists, heavily influenced by the experts of the ECLAC (UN Economic Commission for Latin America and the Caribbean) was to reverse the mechanism and base the region's development on industrialisation and import substitution.

From the thirties onwards, in Mexico, Brazil, Argentina, Chile and, to a lesser extent, Colombia, this "national-industrialism" was to lead to the establishment of a solid - albeit inefficient - industrial base in the three largest Latin American countries. In the sixties, to create a credible market and support new industries, Central America entered into the hazardous territory of economic integration, which would be used principally by the subsidiaries of American multinationals.

Success was limited, however, as this industrialisation was not accompanied by the fiscal and social policies needed to create a real internal market. In reality, Central American integration, in the absence of income redistribution through taxation, the promulgation of agrarian reform and the adoption by the state of a more voluntaristic role in economic and social development, turned into a "miracle recipe" for avoiding reform.

By the beginning of the seventies the inwardly-oriented development model had had its day, and Central America found itself facing the very curse it had tried to escape: dependence on the outside. Just three hours flight from the world's richest consumer market, Central America decided to base its development on exports, not of agricultural products this time but of industrial products. At first glance, the region had a lot to offer: a cheap labour force, watched over by a strong police force and army, relatively modern infrastructure and management systems - the legacy of the "integration decade" which had instilled a management mentality among a new elite trained in the best North American universities - and governments prepared to go to almost any lengths and make any concessions to attract foreign investors to their country.

Using their meagre budgetary resources, appealing again for international loans - which in the guise of development cooperation were to reduce the investment costs for foreign companies - Central American governments set about building the infrastructure needed for foreign companies, before offering them huge concessions in terms of exemptions from tax and customs duty.

With this legislation, Central America was reproducing the model of the old banana enclave. For the host country, the only real advantage was the wages earned by its workers, pitiful wages that would never enable them to overcome their poverty.

Economically, the industries in the zones, producing only for export, were a failure. Central American governments have had to enter into ruinous competition to attract multinationals to their shores. The cost in terms of their public debt was often higher than the revenue gained through exports.

Neither do the maquiladoras have any knock-on effects for the rest of the economy. Workers are cut off from other activities in the national economy. Their only link with it begins at the end of their

working day when they spend their meagre wages in the local markets.

The final drawback of the maquiladoras and the EPZ model will come as no surprise to those who have followed the economic history of Central America since laissez-faire policies became the vogue in the 1850s: extreme vulnerability and a dependence on decisions taken thousands of miles away. The cost to multinationals of setting up a subsidiary is so low that they can very easily relocate their plants following a change in their international strategy or when their fiscal, wage or political advantages are threatened.


There are barely thirty export processing zones in Africa. The fact that there are so few reflects the economic isolation of the African continent. Left on the sidelines of world trade, crippled from decades of kleptomaniac political regimes, Africa today attracts barely 5 per cent of foreign investment.

Yet the continent provides interesting examples of the export processing zone phenomenon.

The case of Mauritius is in a sense a model example, because it has enabled a small isolated island in the Indian ocean to develop an industrial basis that has virtually wiped out unemployment in the country. The Mauritius Labour Congress sees the contribution of the export processing zones as a positive one, even if some of the provisions in the EPZ law are incompatible with the country's labour legislation, such as compulsory overtime, or the low health and safety standards in certain plants.

The Mauritian export processing zones - a status granted to all enterprises producing solely for export - were first created in 1970 and by 1990 employed 90,000 people, bringing 738 million dollars into the country, accounting for 60 per cent of total exports. Between 1970 and 1990, unemployment fell from 20 to 3 per cent.

Although some studies point to the fragility of a development model based on exports and the use of cheap, unskilled labour, Mauritius has inspired several other African countries to follow suit. In 1995, the Zimbabwe Congress of Trade Unions (ZCTU) used the Mauritian model, in which trade union rights and national labour legislation are generally respected and wages are higher than the national average, to convince President Mugabe's government not to exempt the Zimbabwean export processing zones from respect of the labour code.

Promoters of export processing zones in Mauritius seek to improve the skills and thereby the working conditions and pay of the workforce. Analysing the social history of the Mauritian EPZs and the protest movements that were active between 1970 and 1979, the ZCTU mission report concluded "at that time, bad working conditions led to a fall in productivity, a fall in quality and a lack of motivation, and consequently a drop in profits for the enterprises who failed to meet the needs of international competition."

"It is not our aim" said Mrs. Wong Ng, director of a promotional agency for the zones, "to attract foreign investors with cheap labour. In the long term, it is always counterproductive, because unskilled workers produce goods with no valued added which do not sell well on the export market."

There are nearly 300 trade unions active in the export processing zones of Mauritius, representing 22 per cent of workers.


China is the country that perhaps best illustrates the negative aspects of the export processing zone phenomenon, combining as it does economic exploitation and political dictatorship. Since the introduction of economic reform, nearly 20 million people have been employed in sub-contracting firms in small towns and in village enterprises, the four "special economic zones" and the export processing zones along the south-west coast of China.

China has converted to a market economy at breakneck speed. Between 1979 and 1992, the number of enterprises financed by foreign capital

reached 26,365 in the Guangdong province alone.

Nearly 30 sectors are involved: electronics, clothing, toys, shoes, pharmaceuticals... Textiles and clothing still play a predominant role, with vast numbers of sub-contracted village workshops springing up: In 1992, there were no less than 20,868 village enterprises employing 1.17 million workers, between 70 and 80 per cent of whom are women.

Exploitation is the rule. Most research, even that carried out by the official trade union, the All China Federation of Trade Unions, confirms the practice of low wages, often below the legal minimum. Very often, employers do not content themselves with paying very little, they also seek every possible excuse for paying even less. A worker who makes a mistake clocking in is punished by having two days wages deducted. Spending more than 15 minutes in the toilet means a loss of one day's pay. Some enterprises also choose to pay their staff in kind, often in the form of unsold stock.

Overtime is very common. Although legislation clearly stipulates that the working week should not exceed 44 hours and that the working day cannot be extended by more than three hours, to a maximum of 36 hours per month, violations are the norm. It is not unusual for workers to regularly work 10 to 14 hour days, for several months. The record for exploitation was reached when workers had to stay in their workshop for three days and three nights without rest.

Health and safety conditions are badly neglected by employers. Despite the censorship imposed on social information, the wall of silence is regularly broken by the announcement of serious accidents in factories in the zones. According to the Statistical Yearbook of China, there were 38,000 fires in 1993, killing 2,496 people and injuring another 5,997. In November 1993, for example, 87 workers were killed in a toy factory in the Shenzhen zone. The owners of this Hong Kong registered enterprise producing goods under the Chicco label had violated nearly every rule in the book: a makeshift electrical wiring system, blocked emergency exits, and no separation between the workshops and warehouses. In June 1994, employers at Yuexin Textile had insisted that their workers go into a factory where there had been a fire. Ninety-three of them died when the remainder of the building collapsed on them.

The nature of the Chinese political regime is a fundamental aspect of the exploitation suffered by workers in the EPZs. The official trade unions simply obey party orders and impose government policy on workers, a policy based on the oppression of the workforce. Added to this is the corruption of the "trade union representatives" who close their eyes to the most serious violations of laws and regulations in return for bribes or promotion. Often the trade union delegate moves over to the "other side" and is offered a management post.

Despite these control mechanisms, indoctrination and intimidation, Chinese factories are far from being havens of social peace. In 1993, according to official figures, there were nearly 10,000 "social incidents" in China, including strikes, demonstrations and protests.


Every morning, every employer and every owner gets up and asks themselves "how can I get the most out of my workers' today?" instead of thinking "how can I increase my productivity today?"

Enrique Mier y Teran

Director of the Tijuana Economic Development Corporation

The border between Mexico and the United States has its own unique synergy. The 3,000 km "Frontera" has nearly 12 million inhabitants across a 100km wide strip, in 22 "twin" towns housing the infrastructure needed for the development of maquiladoras such as Tijuana and San Diego, Ciudad Juárez and El Paso.

In this desert-like terrain, the maquiladora boom of the '80s gave rise to a 70 per cent increase in the population. The Mexican side has the highest per capita product in the country, while the US side is called "the Third World of the United States": 75 per cent of the population in this zone lives below the poverty line (US$ 13,359 per year, per family of four). On the Mexican side, such sums can only be dreamt of. The minimum wage, calculated in January 1996 on the basis of the daily minimum wage of 20.15 New Pesos, amounts to barely US$ 1,000 per year. The assembly industries along the Mexico-US border, the only place where the first world touches the third, are some of the most significant examples of the export processing zone system. Their origins are fairly unique: the aim was to compensate for the unilateral decision by the United States in 1964 to end the "braceros" or "manual porters" seasonal workers programme, established between the United States and Mexico in 1952. Nearly four million Mexicans who crossed the border to take advantage of the US's seasonal demand found themselves out of work.

The "braceros" programme gave way to the "Border industrialisation programme" the first Mexican maquiladora project. The new programme allowed for the import, duty free, of all equipment and manufacturing materials and permitted 100 per cent foreign ownership. Following the example of the Asian export processing zones, these new structures were intended to be both a response to the under-utilisation of the labour force, an effective means of bringing in currency and in the longer term a structural solution to the problem of unemployment, underpinning the transition from an import substitution strategy to an export-oriented economy. There was little foreign enthusiasm until 1971, when new legislation, under President Luis Echeverría, clarified the operating conditions for the maquiladoras, helping to attract the multinationals. The law allowed foreign enterprises to keep control over 100 per cent of capital while the domestic market still required a 49-51 per cent minimum co-ownership in favour of the Mexican firm.

The prolongation of the Mexican economic crisis of 1982 led to a gradual relaxation in the laws on foreign investment and a revision of Mexico's development strategy. In 1983, in addition to the usual fiscal advantages (for example, exemption from tax on income), the maquiladoras were given the right to sell up to 20 per cent of their production on the Mexican market. The procedure for registering multinational companies was simplified and in 1989 the government of President Salinas de Gortari agreed to the sale of up to 50 per cent of the maquiladoras' production on the domestic market, in exchange for the payment of normal duty on imported components.

From the beginning of the maquiladora programme, US investors enjoyed considerable comparative advantages:

-the proximity of one of the most powerful markets in the world;

- assembly costs at only 10 to 30 per cent of US prices;

- the reduction in the cost of managerial staff, given that the same person can manage a factory on either side of the border;

- the performance and high productivity of the Mexican workers;

- a relatively stable political and trade union environment;

- low wages;

- the availability of industrial sites with all the necessary services;

- exemption from direct and indirect taxes, as well as the removal of customs duty.


Environmental legislation is also relaxed for foreign investors. A report published in 1990 by the US Labor Department recognises that health and safety conditions "are more than problematic" in the Mexican maquiladoras and that "infrequent inspections by the authorities as well as the failure to apply environmental rules have provoked an increase in the potential risk of accidents" (Workers' Rights in Export Processing Zones, a special edition of Foreign Labor Trends, 1990, US Department of Labor, Bureau of International Labor Affairs). According to John O'Connor, chairman of the National Toxics Campaign, research along the US-Mexico border has found "the highest levels of exposure to toxic waste ever found in the world. We have seen families drinking water stored in petrol drums and children playing in toxic rivers" (Dollars and Sense, October 1992). And this pollution gets exported: according to the British weekly The Economist (12 December 1992), some studies show that toxic fumes discharged into the atmosphere by certain maquiladoras, notably in Matamoros, and the use of pesticides in agriculture, may be the cause of the abnormally high levels of babies born with birth defects on the other side of the border in the US town of Brownsville. Ten per cent of US maquiladoras based in Mexico, which took part in a study by the Colegio de la Frontera Norte (Tijuana, Mexico) mentioned legislation on the environment as one of the reasons for leaving the United States, and 17 per cent of them considered it an important factor.


A side agreement on the environment and working conditions had to be added to the North American Free Trade Treaty (NAFTA) before it was approved by the US Congress. Both Mexico and Canada were opposed to the inclusion of these themes in the principal text, fearing a loss of sovereignty and the imposition of American views in problems that have nothing to do with trade or borders. The final result was the creation of the North American Commission for Environmental Cooperation based in Montreal. This tri-national commission has the right to oversee the application of national laws and impose penalties if it can prove negligence by the authorities. The penalties are not heavy, and the procedure for reaching that stage is deliberately complicated, but the commission does have the right to publish its conclusions. The "accused" country is not obliged to abide by its recommendations, but the plaintiff does have the possibility of imposing import restrictions to an amount equivalent to the estimated damage. This procedure is considered by the three NAFTA members as "a transfer of sovereignty" in the interests of the inevitable globalisation of trade.

To give enterprises and communities the means of cleaning up their environment, specifically in the border area between Mexico and the United States, the North American Development Bank was created. More than 22 projects have already been submitted to it for financing.


In 1985, there were 789 maquiladoras. The sector provided direct employment for 211,968 Mexicans. By June 1995, there were 2,747 maquila enterprises directly employing 676,518 workers (2.25 per cent of a working population of 30 million).

The impact of the maquiladoras on trade and national labour markets can be calculated very simply, as suggested by Philip L. Martin: if the average worker in a maquiladora is from a family of five people, then 3,382,590 people (3.75 per cent of the Mexican population, calculated at 90 million in the 1990 census) benefit from the wages earned by the worker.

In 1990, the latter earned nearly $3,800 per year, well above the national average of $2,300. In addition, as each direct job generates between two and three indirect jobs, employment in the maquiladoras is responsible for the creation of between one million and one and a half million jobs in the service and housing sectors, etc.

These figures only reflect one aspect of the situation, however. The maquiladoras are developing without any real knock-on effect on the rest of the industrial fabric, while in Taiwan and Korea, the number of local enterprises has multiplied, which has contributed to the transition from assembly activities to manufacturing the original product. In fact 95 per cent of suppliers to the maquiladoras are foreign.

The Tijuana Economic Development Corporation has sought to emulate this Asian model since 1972. When questioned by The Economist about Mexico's slow development, the Corporation's director, Enrique Mier y Terán, explained that one of the major obstacles was the individual attitude of many Mexican bosses, who despite their competence did not seek to become owners or co-owners. The attitude of the Mexican banks, reluctant to make loans on the basis of future income, also helps to explain this phenomenon.

There is another factor holding back growth: the poor transport network. Sending a container by sea to Los Angeles from Taiwan works out cheaper than sending it by lorry from Mexico City to Tijuana! If railways and ports were to develop a better infrastructure, the big Mexican suppliers, based mainly in the centre of the country, would be able to enjoy a larger share of the profits from the maquiladoras.

Despite efforts by the Mexican administration, it is still three times more complicated to set up business in Tijuana than in the United States, and no less than two thirds of the paper mountain is attributable to the bureaucracy of Mexico City.


Enrique Mier y Terán does not ignore the responsibility of the employers in the slow development of the border zone. The workers have no job security to encourage them to stay, he notes. As soon as they become operational, they leave for another maquiladora. "Every morning", says Mier y Terán, "every owner gets up and asks themselves "how can I get the most out of my workers today?" instead of "how will I increase my productivity today?" According to Jeffrey A. Hart, professor of political science at the University of Indiana and author of Maquiladorization as a Global Process, there are some encouraging signs of a change in attitude among employers. Multinationals such as Apple and IBM sponsor technical schools in the towns where they are based, to ensure that some of their applications are included in the education programme. Hart also discovered that new technologies are no long tested first in the multinational's country of origin, but are transfered as a priority to the maquiladora in Mexico.

More than three quarters of workers in the maquiladoras are female. The border zone has for a long time been the only region in Mexico where women dominate the labour market, even in traditionally male sectors such as the manufacturing of electrical appliances. In 1979, the proportion of women in this sector, in the border area, was 82.4 per cent, as compared to 36.3 per cent at the national level. Equal opportunities is not really the reason for this situation. According to the ILO document The maquiladora industry in Mexico, employers are seeking a specific socio-demographic profile: women aged between 15 and 24, single, childless, and who have completed their primary education, because they "appreciate" their physical resistance and their "willingness" to endure long hours of monotonous work in very rudimentary conditions.

Another advantage is that single women often live in the parental home, which means they are less likely to seek the highest wages. Having no children reduces absenteeism as well as the need to replace them on maternity leave. Their educational level - primary education - and their youth - the maquila is often their first job - guarantee both the basic ability needed for the repetitive tasks they are expected to perform and great discipline. As trade union membership is low among young workers, it is also easier to dismiss them. This maquila system is therefore tantamount to a strategy of exploitation, that the law allows the employers to perpetuate. The employment crisis explains why complaints by human rights and workers' organisations have little effect. There are between 80 and 90 candidates for every vacancy. Those who have a job consider themselves lucky, and say that it is "preferable to be exploited in a maquiladora than to not be exploited at all."


A survey carried out in 1990 by MariO M. Carillo Huerta among 1,400 workers (62 per cent women, 38 per cent men) has shown that 72 per cent of workers came from urban areas and had emigrated in order to find a job. At the time of the survey, 84 per cent of those interviewed did not have any intention of emigrating to the United States.

The analysis of Philip L. Martin, economist at the University of California-Davis and an expert in migration, suggests however that there is a correlation between the sex of the workers in the maquiladoras and the quantity of immigrants using them as a "springboard", working there for a short time before emigrating to the "other side" of the Rio Grande. According to several surveys, it would seem that, even though it only concerns a tiny percentage so far, "springboard" migration is increasing and can be linked to the increasing proportion of male workers in the maquiladoras. When men do not find or lose their job in a maquiladora, they tend to stay in the region and seek informal employment, of which there is plenty thanks to the activities of the maquiladoras, while waiting for an opportunity to move on to the United States.

Some studies propose that this migration can be prevented by extending job creation initiatives to areas further away from the border region. This approach would at the same time strengthen environmental protection and infrastructure creation programmes along the border. In 1984, 89.9 per cent of the maquiladora industry was based in the border area, but over the last five years, investment in maquiladoras indicates a growing geographical dispersion in their location. According to official figures, in July 1995, 70 per cent of maquila-doras were in the border states, while 30 per cent were based in the interior of the country.


Maquilas and trade unions have never had a good relationship. Until 1970, the maquiladoras were exempt from labour laws, and nothing was done about violations of workers' rights. In 1990, most (between 80 and 90 per cent) workers were not unionised: Ciudad Juarez and Tijuana were considered as "union-free" zones, although there were reports of a stronger trade union presence in the State of Tamaulipas. The maquila workers in Maramoros, Teynosa and Nuevo Laredo were almost all affiliated to the CTM, the Mexican Workers' Confederation, close to the Institutional Revolutionary Party (PRI), in government for three quarters of a century. Trade union freedoms remained limited.

In order to establish a minimum wage, the Ministry of Labour created a body called the Minimum Wage Commission, which carried out research to estimate the cost of living per region, in order to coordinate meetings of employers' and workers' representatives. In a document entitled The Maquiladora Industry in Mexico (1987, p.17) the ILO noted that "the levels established were in reality the outcome of a political game in which the CTM plays the role of a monolithic organisation, which for more than 40 years has exerted such control over the labour movement that it actually inhibits workers' genuine demands. There are more and more independent trade unions however and even factions in the CTM that support workers' demands, even if it means opposing the view of the leadership. Naturally, their fight is not an easy one."

There are other factors which discourage trade union participation, namely employer hostility to the organisation of the labour force. On paper, Mexican labour legislation is comparable to that of the United States, if not better. According to the Journal of Commerce of 16 May 1989, Mexico was signatory to 72 ILO conventions on workers' health and safety standards, while the United States had only ratified ten. None of the members of NAFTA (Mexico, Canada, United States) had ratified the convention on child labour.

The North American Free Trade Treaty (NAFTA) between Mexico, the United States and Canada, in force since 1 January 1994, has been the subject of heated debate either side of the border. On the American side, discussions focus on the loss of "American jobs" to Mexico and the lack of measures to control clandestine immigration to the United States.

The supporters of the Treaty won the day, but advisers to the US administration suggested that new American investments should be directed at areas far away from the border in order to prevent clandestine immigration and to avoid environmental damage.

Between January and September 1995, 339 new maquiladoras were registered. But American investors did not heed the advice of governmental experts as to the choice of location: only 20 per cent of the new maquiladoras are far from the border. The important question is the integration of the maquiladoras into Mexico's development strategy and their contribution to strengthening technological skills and the training of the workforce. In the globalisation of the economy, "La Frontera" has made Mexico part of the great North American market. But will Mexicans be able to break out of the cycle of dependence?


"The jobs available to thousands of Latin American workers in the maquiladoras should not be turned down, but neither should they be accepted as a gift. We want jobs, but jobs with dignity."

Amanda Villatoro.

"The export processing zone is worse than a concentration camp"

Pakistan National Federation of Trade Unions

But what are they complaining about? Judging by the glossy brochures distributed by the developers of the export processing zones, and the advertisements they place in international economic reviews, working conditions in them are almost idyllic: the buildings are modern, the workshops super clean, and the workers all have a smile on their lips.

Most eyewitness reports contradict this image, however."Many factories are reminiscent of workshops from the last century where rows of adolescents worked side by side twelve hours a day" said John Otis, special correspondent for the Miami Herald, in March 1994 in Honduras. Of course these conditions are not exclusive to the enterprises in the export processing zones. All too often, they are comparable to those found in local companies. An ILO report, which clearly had to bear in mind the point of view of the most obstinate employers, asks "what is the point in comparing working conditions, social relations or work satisfaction" in the export processing zones? Which in reality means: "Comparing the social audit in enterprises in the EPZs with those of other enterprises in the host country doesn't mean anything. Comparing them with small enterprises in the informal sector is fallacious, given the generally very poor working conditions in this sector. Comparing them with enterprises in industrialised countries may lead to questionable conclusions, given the very great differences in per capita income, the organisation of work or the alternative job opportunities."

Should we then close our eyes to the situation, in the same way as some in the '80s asked human rights organisations to close their eyes to torture in Chile or disappearances in Argentina "because the countries cannot be compared" to the old western democracies? To accept this reasoning, that social rights are relative, amounts quite simply to calling into question the most important international conventions on human and trade union rights, which uphold the principle of equality between persons, and to agreeing to the views of those who believe that exploitation is an inevitable step along the road to development and democracy in the Third World.

Internationally recognised workers' rights are minimum rights, as they cover the principles that constitute the basis for all social democracy: the freedom of association, the right to organise and to bargain collectively, the prohibition of all forms of forced labour, the establishment of a minimum working age and the respect of acceptable working conditions in terms of a minimum wage, working hours, and health and safety.

Export processing zones are created by definition in countries situated on the fringes of the industrialised world - Mexico, Central America and the Caribbean around the United States; Philippines, Malaysia and Indonesia around Japan and Australia; and North Africa towards Europe - countries that belong to the developing world and where in most cases social and political conditions are deplorable, and are condemned by the trade union world.

You only have to look at the ICFTU's Annual Survey of Violations of Trade Union Rights to find that the blacklist includes most of the countries that are host to export processing zones. Are the conditions worse in the zones than in the host country in general? The ICFTU's survey and other reports give a mixed picture. In some of the industrialised countries that have free trade zones, such as Australia, enterprises are expected to respect national legislation and to observe collective agreements and industrial relations practices. Although some try to get away with it. According to Tony Woolgar, from the Australian textile union, there are currently no restrictions concerning either trade union rights or collective bargaining in Darwin's "development zone". Working conditions and wages are in line with legislation, regulations and national standards. But this "normality" did not happen of its own accord. The Australian trade unions, as shown by the dispute with Hengyang (Darwin) Pty Ltd., had to take very firm action against the enterprises in the zone.


Hengyang (Darwin) Pty. Ltd., which came to the zone in 1988, treated its employees - temporary workers from China - appallingly, violating regulations on the working week and overtime and failing to respect the pay scales set out in the collective agreement. The workers thought they were bound by contracts signed in China and by the factory's regulations, which prohibited them from complaining about their working and living conditions, from comparing their working hours and pay scales with those of their colleagues, and from joining a trade union movement or taking part in industrial action, or even from having normal social contacts in Australia. In response to trade union action, Hengyang (Darwin) Pty. Ltd. had to close down. Today there are no immigrant workers in the zone.

Between the two extremes of zones where normal labour standards are respected and those where no laws are applied, except the law that might is right, some countries offer a more mixed picture. In Malaysia, according to the Penang clothing workers' union, workers have the right to form a trade union and to negotiate collective agreements, and the right to strike is unrestricted. But special legislation for the zones is designed to ensure "industrial peace" and to prevent production being disrupted. When an enterprise is granted "pioneer" status by the ministry, strikes are banned as soon as a dispute is taken to an industrial tribunal or submitted to a minister. The government has formulated strict rules for the registration of trade unions, particularly in the electronics industry, where they are virtually banned. The union's report also points out that that pay and the working environment are better in the EPZ factories than in others.


There is usually a direct link between the type of political regime in the host country and the social and trade union situation in the zones. In a report written following a sub-regional seminar organised in April 1995 in Central America, the ILO stated unequivocally "precarious contracts, piece work, extremely long days, poverty wages, the violation of freedom of association and other inhuman practices are not the exclusive preserve of certain enterprises in the maquila industry, but are part of the deep-rooted culture of the exploitation of human and natural resources in our countries".

The export processing zones are also "enclaves" and as such are not only separate from the economy of the host country but are also seemingly exempt from its legislation. In the Dominican Republic for example, the 1992 labour code guarantees the right to organise and protects against acts of anti-union discrimination. But in the 31 export processing zones in the country, which employ some 180,000 people, employers systematically ignore the labour code and the authorities are incapable of enforcing it. In 1995, the ICFTU revealed in its Annual Survey of Violations of Trade Union Rights that "while over 100 trade unions had been formed in the zones, many of which had been recognised by the government, no collective agreements had been signed and the majority of trade union representatives had been dismissed". A collective agreement was finally signed a little later.

To evade labour laws and to prevent workers organising, enterprises practice "submaquilacion", known in Central America as "Hormiga" (ant) maquilas or pyramids. Trish O'Kane, in the review Pensamiento Propio, explains how it works in Guatemala: "A North American or Korean enterprise contracts only one enterprise in Guatemala, but this one company sub-contracts work to other enterprises which in turn have sub-contracts with other people, families, workshops or associations of workshops. While the majority of maquilas are in the capital, some villages on the high plateau have been turned into "maquiladora villages". The employers turn to the indigenous population which has a long tradition of producing textiles and clothing and where people often have their own sewing machines. The Indians work piece-rate and are less expensive than big enterprises."


As most of the industries situated in the EPZs belong to the modern sector of the economy and depend on the international market, it would be reasonable to expect that wages are relatively high.

In reality, pay is usually as bad or worse as in local enterprises: in the Philippines, the minimum wage in Manila in 1995 was set at 5.27 dollars per day, yet it was only 4.9 dollars per day in the zones, with average salaries in the EPZs amounting to 6.7 dollars. "Conditions inside and outside the zones" notes the Confederation of Filipino Workers, are virtually the same. The only difference is that the zones provide games and recreation areas. They also provide food and lodging for their workers."

An ICFTU/APRO study carried out at the beginning of 1995 confirms that "30 per cent or less of workers in the zones in six Asian countries earn wages below the legal minimum for their occupations in their countries, with the exception of Malaysia. And when wages in Sri Lanka and Bangladesh do reach the minimum level, it is usually only thanks to many hours of overtime."

In the Dominican Republic, wages in the EPZs were until recently a lit-tle lower "by law" than the minimum wages in enterprises outside the zones. This anomaly was recently revised and at the beginning of 1995 the general minimum wage was DR 264 pesos per week, i.e. about 20 US dollars.

In El Salvador, according to the IUF (International Union of Foodworkers) human and trade union rights project, employers resort to various stratagems to avoid paying the minimum wage. "Officially," write the authors of the report on maquiladoras, "wages in the EPZs are slightly higher than the monthly minimum wage (1,155 colons, or 133 dollars, in 1995).

However, in the textile industry, and particularly in the maquiladoras, a recent study by Gilberto Garcia and Marisol Ruiz on conditions for minors shows that while women officially receive the minimum, their salary is divided by 30 in order to determine their daily rate of pay, but they are paid twice a month, for only 14 days, so that they receive even less than the minimum wage".

Employers use many tricks to maximise their profits: they delay payment of the "aguinaldo" (year-end bonus), issue bad cheques, calculate the Christmas salary on the basis of the minimum wage only, etc.

Whether it is above or below the minimum wage, the money earned by workers in the EPZ is not sufficient to cover their basic needs. In Guatemala, in 1994, the average monthly wage was 543 quetzales, yet two years earlier the cost of the basic food basket was estimated at 815 quetzales.

The Subic Bay zone in the Philippines also seeks to circumvent pay legislation. According to a report in August 1995 by Charles Gray, director of the AFL-CIO's international affairs department, "employers in the zone regularly pay less than the legal minimum wage, keeping workers at apprenticeship level well beyond the legal time limit. Other workers complain of forced deductions from their pay packet without their consent."

In the electronics assembly plants in the Santa Cruz zone in Bombay, India, notes the ICFTU and APRO survey, the women workers are not employed by the enterprise but by intermediaries who take commission on their wages. Every nine months the workers in the zone receive a pay slip with the name of another employer, which prevents them getting an indefinite contract. The employers' Mafia has the complicity of the government in its manoeuvres.

Social security is by no means guaranteed either. In Central America, notes an ILO report (sub-regional seminar 1995), many enterprises do not pay their contributions to the social security institutions. Others delay their payments into the system even though they have already deducted them from the workers' pay slip... There are also anomalies in terms of the categories declared to the authorities and actual level of pay to the worker, to avoid having to pay higher social security contributions for higher categories."

Some of the multinationals in the export processing zones however provide better conditions than national enterprises. According to the All Pakistan Federation of Trade Unions "working conditions, salaries, extra-legal benefits and industrial relations are generally better than in national enterprises".

However, the EPZ ordinance adopted in 1980 totally suspends national labour legislation in the zones, including the right to form or belong to a trade union. Workers cannot take part in strike action to defend their rights. While this situation within the EPZs is viewed positively by certain trade unionists, what it really shows is just how bad the situation regarding workers' rights is in normal enterprises.


In most EPZ factories, Taylorism is the rule. Breaking down production into individual operations makes it possible to set very precise production targets. Workers are working against the clock, and are often paid on a performance-related basis, measured in terms of units of time or by quantity. Production targets are often set excessively high in order to reduce the wages actually paid. Workers find themselves obliged to take work home to avoid losing money.

Very little attention is given to workers' training. Few enterprises have internal training programmes and the possibilities for promotion within the enterprise are very limited. "Income levels", notes the ILO (Central America) "are linked to manual dexterity not to the knowledge or vocational training of the workers".

Instability and precarious employment are the rule. It is common practice in the maquilas of Central America to dismiss workers at the end of the year to avoid seniority payments and related rights. The same workers will be rehired a few weeks later.

Workers are subjected, more than elsewhere, to fluctuations in demand. When demand is high, they have to work overtime and production rates are set excessively high. When demand falls, workers lose their jobs.

The "horizontal" mobility of workers is particularly high: the turnover of staff averages 15 per cent per month, and can be as high as 35 to 40 per cent.


Enterprises rarely respect working hours. While the law in the Dominican Republic stipulates that the working week is 44 hours, for a five or six-day week, and that overtime must be paid at a higher rate, most employees work 10 to 15 hours per day and are only paid the normal rate for overtime.

Sometimes, workers are locked in the plant and forced to work all night to meet production quotas. When giving evidence to a sub-commission of the US senate in September 1994, a 15-year-old Honduran worker, Lesley Rodriguez, explained that in a Korean maquila based in Honduras, Galaxy Industry, the workers, often adolescent girls, began work at 7.30 in the morning and ended at 7.00 at night. On some days they had to stay until 21.30 or even 22.00. "We only have a half hour break for lunch, and sometimes we work 80 hours per week."

"The employers", continued Lesley Rodriguez, "set productivity quotas at such a high level they were impossible to reach. If we managed to reach them even so, they increased the quota the next day, so that we were always under the level and always under pressure. Many workers are forced to take work home to finish their quota. Sometimes they work until one in the morning and they are not paid anything for those extra hours. To go to work, they must get up at 5.30 a.m. I earn about 21.50 dollars per week... I was told that a Liz Claiborne sweater sells in the United States for about 90 dollars. I earn 38 cents an hour for making one."


In the pursuit of ever greater profits, anything goes. Child labour has become a comparative advantage and it is common to see children working longer than the permitted hours in the maquila workshops. The child labour force is particularly appreciated because in a sector that suffers from sharp fluctuations in demand, it is easier and quicker to hire and fire children.

In some countries, the situation has improved slightly thanks to the campaigns carried out by trade union organisations. In the Dominican Republic, there has been a considerable reduction in the number of children at work. Some enterprises, particularly those with Korean capital, still pursue this practice however. In Guatemala, notes the coordinator of the IUF human and trade union rights' project, Jésus Godinez, many children are employed in the maquiladoras. However, a study shows that 80 per cent of the workforce is between 18 and 26 years old.

In the Global Fashions factory, one of the Lesley Fay sub-contractors in Honduras, "children aged 13, 14, 15 and 16" writes Jay Mazure, president of the ILGWU International Ladies Garment Workers' Union, are forced to work ten or more hours per day, often in unbearable heat, which in the pressing and packing sections can reach 100 degrees Fahrenheit".


At least two out of three workers in the maquilas, particularly in the textile, clothing and electronics sectors, are women. In Panama, for example, 90 to 95 per cent of employees in the maquiladoras are women. Their age varies in general between 18 and 25 years, the age at which they are considered the most productive for the type of tasks performed in the maquilas.

The "feminisation" of employment has been accompanied by a deterioration in pay levels. In South Korea, at the end of the '80s, women earned on average one half of what their male colleagues in the same sector were paid.

Women are also used to allow for excessive "flexibility" reminiscent of the manufacturing methods of the second half of the nineteenth century in European towns: alone at home, women sew for

the clothing industry; others key in data into computers for travel agencies or for the distribution giants.

Most women are confined to repetitive tasks in production while men usually move on fairly quickly to better paid supervisory or maintenance jobs. The managers are exclusively male. Laws relating to maternity leave are not respected. At the Global Fashions enterprise in Honduras, women workers are obliged to stay at work until their labour pains begin. In some maquiladoras, women are dismissed after birth.

In El Salvador, the government and employers refused to ratify ILO Convention 156 on workers with family responsibilities or Convention 103 on maternity protection. They believe that any specific protection for women workers is bound to result in lower productivity and higher production costs.

Sexual harassment is endemic in the maquiladoras. "Some supervisors" complained Lesley Rodriguez, "pat the girls bottoms or feel their breasts. Some let them do it because they can get more money each week." But while sexual harassment is frequent, complaints are rare because they automatically lead to the dismissal of the woman who has virtually no chance of having her case heard at a tribunal.


The factories in the zones photographed for the publicity brochures look as if they have come straight out of an architects and office landscapers' practice. Reality is often far removed from these glossy images, however. The survey carried out among ICFTU affiliates lists numerous examples of violations of basic health and safety standards. In almost every case, safety measures are insufficient, there is a lack of protective equipment, particularly for handling machines or materials, and there aren't enough sanitary installations. In some maquilas, for example in the Betex SA company in Costa Rica, workers must buy their own first aid kit.

In the Dominican Republic, according to a study by the IUF human and trade union rights project, workers in the zones work in conditions that fail to meet minimum industrial health and safety standards. The heat and noise exceed tolerable levels, and no space has been provided for meals, with the result that workers have to eat on the pavement. The employers also keep a check on how many times workers go to the toilet by forcing them to ask for tickets. Management also delivers, reluctantly, authorisations for medical visits during working hours.

In Honduras, the daily El Heraldo recently revealed that some factories gave their workers' amphetamine injections to prevent them from collapsing after working 48 hours non-stop. For the employers in the Costa Rica maquiladoras, pregnancy is a cause for dismissal. In Guatemala, some maquilas, particularly those of Korean origin, distribute contraceptive pills to prevent their women employees from getting pregnant. In January 1994, workers in the Continental Industrial Park, near La Lima, Honduras, accused management of forcing women workers to have abortions.

There are no accurate statistics to show whether occupational accidents or diseases are more frequent in the maquilas than in other enterprises. The list of the most commen illnesses affecting women workers is impressive nonetheless: infections of the respiratory passages, eye irritations, varicose veins from having to remain standing for long periods, and stress related illnesses such as gastritis. According to an ILO report, cases of gas and chemical poisoning have been recorded, including fatalities.

"In China", The Times (London) correspondent in Hong Kong writing at the beginning of 1996 said "it is very common for people to smoke in the factories, in the middle of inflammable waste, and most of the doors are locked." The journalist made these comments following a fire in a Christmas decorations factory in which 19 people died and 37 were injured.

The Bonahan Apparel Company in the Bonao export processing zone in the Dominican Republic is one of the most reluctant to respect social legislation and trade union rights. The report by the Labour Ministry's inspector, dated 7 March 1995, demonstrates this contempt for the law. The following extracts are among the most edifying. Written in administrative language, they describe the trade union's principal complaints:

"- Overtime pay: the supervisors had promised that if workers worked 2, 3 or 4 hours overtime, they would be paid at 100 per cent, but management refused to pay this amount, arguing that the supervisors did not have the authority to take such an initiative. We think that this is a case of collusion between the supervisors and management.

- Physical abuse: on 2 March 1995, the woman worker Heridania Maria Soto was attacked by her supervisor, José Rodriguez, who twisted her arms and neck. The complaint was made in the presence of the supervisor, who did not deny the accusation. According to Heridiana, she was forced to withdraw her complaint against the supervisor.

- Redundancy payment: Natividad Quino and Yudelka received only 50 per cent of their compensation.

- Pregnant women: they cannot take a break at lunch time or during the day, but they can sit down from time to time.

We have also found that 1) the enterprise does not have any first aid kits, although it employs 700 people, 2) it takes two days for it to authorise an employee to visit the zone's clinic; 3) the temperature is very high and the workers can only drink water twice a day.

The employer has promised to paint over the two-way mirror in the toilets."


"For Rosa Maria Mendoza, 1995 was a year of struggle. For the first eight months she struggled to meet her quota: sewing 4,800 buttons per day on designer shirts. Employed by the Formosa Textiles factory in an industrial park in the east of San Salvador, she struggled to survive on a salary of 60 pounds per month... She fought against the diseases caused by absorbing, at the factory, water from a cockroach-infested tank... in August, Rosa Maria Mendoza, who is 24 years old, entered into a new sort of struggle. With 86 of her colleagues, she joined a trade union.

In October, they were all dismissed..."

Juanita Darling, The Guardian, 5 January 1996.

The enterprises go to these zones because they can take advantage not only of adequate infrastructure, exemptions from tax and customs duties, and low wages but also from the "anti-union" climate which enables them to reduce production costs and multiply their value added. Speaking in November 1994 from the Santa Cruz zone in the north of Bombay, India, the magazine Business India wrote: "Fortunately for the employers, most of the workers are not organised, a factor which according to the employers has helped them stay competitive at the international level."

Violations of trade union rights and the labour code effectively form part of the zones' "comparative advantages". In the sixties and seventies, the US textile and clothing industry deserted the north east of the United States to emigrate to the deep south, where there was an anti-union climate, and where the industrialists who moved to the zones sought to restrict, if not eliminate, any organisation of the work-force. Union busting became the general rule.

Widespread poverty in the zones' host countries, and the high levels of unemployment and underemployment are all major obstacles to union organising. Employers can use unemployment as a form of blackmail, and have an almost inexhaustible reserve to choose from, particularly given that the tasks performed in the factories require very little training. Thousands of workers are concentrated in clearly demarcated zones subjected to the close and often brutal surveillance of private guards preventing the entry of any trade union officials. The dispersion of workers in family workshops, in the "sub-maquilas" (sub-sub-contracting), also weakens trade union action. The employers often consider themselves omnipotent and untouchable. Even in a country such as the Dominican Republic, where the labour authorities are fairly active and where they have the "fuero sindical" (protection for trade union representatives), all the 114 trade unions in the zones were the victims of serious harassment and their leaderships were declared null and void in February 1995.

Hence the export processing zones are very often anti-union zones as well. Governments are fully aware of this and boast in their publicity brochures of the union-free environment, thereby recognising that they are violating the international conventions of the ILO that many of them have ratified. During the second international

conference on export processing zones, held in Miami in October 1991, the representative of Panama distributed brochures which highlighted the limitations imposed on trade union activities in the zones. Panama hosts the second largest zone in the world, the Colon zone at the Atlantic end of the canal.

Governments bear much of the responsibility for this anti-union repression. They do not only exonerate enterprises from paying taxes and customs duties, they also exempt them from applying the host country's labour legislation. In Honduras, a country which ratified ILO Conventions 87 and 98, it is illegal for a group of unorganised workers to sign a collective agreement in a firm where a legally formed union already exists. However, this measure is not worth the paper it is written on, as the employers know they can count on the government's sympathy. At AAA Honduras Apparel Manufacturers for example, a house union was formed after the expulsion of the members of the legitimate trade union was accepted by the labour minister.

One of the principal exemptions affects the right to strike. In 1982, in Pakistan, the government formally banned the right to strike in the zones. "No employee" says the ordinance that applies specifically to the export processing zones, "has the right to refuse work, hold up work or go on strike. No employee may begin, continue, instigate, incite or force others to take part in a strike or to support one."

Furthermore, workers in the EPZs do not have the right to form trade unions following the suspension of all labour legislation in the zones. The Pakistani authorities proudly announced their willingness to exchange trade union rights for foreign investment. At the end of 1992, the federal Finance Minister Sartaj Aziz, speaking to a group of Japanese business men in Tokyo, promised that "the labour laws of Pakistan will not be applicable in the special industrial zones created by the government."

When an EPZ was created in 1995 in Walvis Bay in Namibia the Windhoek government, sensitive to investors "concerns" banned the right to strike in the zone. Initially it had wanted to ban unions altogether.


Very often, governments choose not to apply the law. No action is taken against the enterprises, the fines foreseen by law are not collected, complaints filed by the trade unions are ignored. The workers are effectively living in 'lawless' territory where to defend their rights and interests they are constantly forced to take "illegal" action themselves. Unable to form a trade union or enter into collective bargaining, the only course of action open to them is wildcat strikes and sudden stoppages.

"Although national labour legislation covers the whole territory" notes the Associated Labor Unions-TUCP of the Philippines, "enforcement is a different matter." In El Salvador, the legislation appears to protect the freedom of association: article 47 of the Constitution grants workers in the private sector the right to 'associate freely in order to defend their respective interests by forming occupational associations or trade unions". This right is reinforced by article 248 of the labour code under the terms of the "fuero sindical" which bans the dismissal of trade union officials (unless on legal grounds determined by a judge) at the time of their election, during their mandate and for the year following their mandate.

"The reality endured by trade unionists however differs substantially from the letter of the law" notes an AFL-CIO report. "The list of sacked trade union members and leaders is getting longer. Not only are these workers dismissed for no reason, they are also refused any form of compensation or reintegration. Despite these abuses, the Salvadorian Labour Ministry maintains his complacent attitude and if an enterprise is found to be at fault, the Labour Minister often refrains from applying the law or even imposing a fine."

This laxity often hides the collusion between the public authorities and the enterprises. According to information collected from Korean owners, the Foreign Affairs ministry of Honduras, under the Callejas presidency, promised Korean investors that if they came to the EPZs trade unions would not be tolerated and the labour code would not be strictly applied. A parliamentary report published in May 1994 commented on "the slowness and sometimes apathy of labour inspectors called on to investigate workers' complaints". The report made several proposals, including the expulsion of foreign employers found guilty of illtreatment, but the suggestions were never acted upon.

The Honduran authorities, already very hostile towards any social protest, consider enterprises in the zones as strategic industries. The EPZs have the same status as a public enterprise, making all strike action illegal. The pro-government press is also part of the anti-union campaign. For many weeks, says an AFL-CIO report published in June 1995, the daily papers accused, without giving the slightest proof, the US trade unions of sending money to the Honduran unions, with a view to destabilising the maquila industry and bringing clothing jobs back to the United States.

Playing on nationalist feelings, the government came close to considering the trade union activists as "traitors to their country". Reacting to the complaints made in the United States by Honduran trade unionists, the Labour Minister said "it would be preferable to present these complaints to the country's authorities so that our government can take the appropriate legal measures and avoid this type of international complaint which is not only harmful to the government but also to the country." He clearly did not know that the complaints lodged in Honduras had the unfortunate habit of getting lost in a tangle of bureaucracy, corruption and indifference.

Treading in the footsteps of the private enterprises which draw up and circulate the blacklists of "difficult" workers, the Salvadorian labour ministry issues "certificates of good conduct" which specify that the person in question does not have a record as a trade union organiser, enabling enterprises to avoid "bad influences", sentencing anyone dismissed for trade union activities to almost certain unemployment. "There is an urgent need to restructure, purge and modernise the Labour Ministry" wrote two Salvadorian researchers, Gilberto Garcia and Marisol Ruiz. "It is riddled with corruption, bureaucracy and inefficiency". It is not unusual, in Central America, for corrupt labour inspectors to be appointed as personnel directors in the enterprises they were supposed to be inspecting.

In Mexico, the authorities have multiplied the obstacles facing the organisation of independent unions in the maquiladoras. According to the daily La Jornada, some towns on the border with the United States do not have a labour tribunal. "Attempts to set up a tribunal in the towns of Sabinas, San Pedro and Muzquiz were blocked by a member of parliament from the PRI (the ruling Institutional Revolutionary Party) who also owns one of the biggest firms running factories in these towns".


These practices confirm the fact that most of the countries that are host to export processing zones also appear regularly in the reports of human rights organisations. It shows that the repression against the trade unions comes not only from the employers but also from the public authorities.

Protest movements are regularly repressed by the police, but trade union activists are also at the mercy of the paramilitary groups and security guards working in collusion with the enterprises' managements.

In the Philippines for example, trade union leaders were "visited" by the governor's men to convince them to put an end to their trade union activities, while in the textile sector (Quiong El) trade union leaders were abducted and tortured by armed men. Since the last attempts at trade union organising in the Cavite zone some thirty kilometres south of Manila, seven trade unionists have been reported missing. Three other missing people were later found dead.

In the Dominican Republic, on 9 July 1994, a trade union official, Prospero Juan, was placed under arrest by the police as he was leaving a trade union meeting in La Romana. He was held in detention and not released until the following month.

In Guatemala, a country torn by for forty years by government and paramilitary violence, trade unionists in the EPZs are not spared the general climate of intimidation. Cases of disappearance and murder are legion. According to information from the Workers' Union of Guatemala (Unsitragua), Alejandro Gomez Virula, finance secretary of the trade union at the RCA enterprise, "disappeared" on 13 March 1995. Six days later, his body was found in Guatemala city. On 28 February, a trade union leader from the maquiladora M.J. and L&L Modas, Debora Guzman Chupen, was also kidnapped but her abductors "released" her on 1 March.


Enterprises are all too aware of their privileged status, and openly violate the law and the labour code. Labour inspectors are frequently prevented from entering factories and when they are allowed in, they often find there is nobody in the management to hand the official notification to. When in December 1992, after a succession of unfair dismissals of trade union leaders, the Honduran deputy Labour Minister allowed trade unions not to reveal the names of the 30 people needed to create a trade union, several maquiladoras continued with the practice. In July 1993, 45 workers who had signed up for the creation of a trade union were shown the door by the Seolim company.

Supported by governments with a long tradition of anti-union measures and the violation of their own laws, enterprises are fully versed in the union busting techniques tried and tested in many enterprises in, for example, the southern states of the US.


Psychological pressure is exerted on unionised workers by, for example, assigning them the most dangerous or lowest paid jobs, and openly favouring the creation of house unions. According to a report by the Trade Union Congress of the Philippines, the administrator of the Subic Bay zone, Richard Gordon, set up a Labour Centre to deal with "all industrial disputes and the welfare of workers in the zone". It soon became clear to the workers however that the main aim of the centre was to prevent union organising in the zone. The zone's guards prevent inspectors from the Labour Ministry from carrying out independent inquiries and holding private interviews with the workers. The Labour Centre, notes the TUCP, actively promotes the formation of house unions.

In Central America, Solidarismo, a movement sponsored by the employers and conservative circles and supported by the official US development aid agency (USAID), is openly favoured in the zones. This is particularly the case in Costa Rica where workers belonging to these associations almost outnumber the trade union membership for the whole country. A document from the US Labor department shows that 90 per cent of workers from US firms operating in Costa Rica are members of solidarist associations. The associations, favoured by the country's legislation, also claim to help workers by involving them in a "profit-sharing" scheme and by granting them extra-legal advantages, but their real objective is to break the trade unions and prevent collective bargaining. A survey published in the ICFTU monthly, Free Labour World in November 1992 showed that the advantages offered to workers, such as loans, consumer goods, canteens, etc. were always lower than those obtained by trade unions through collective bargaining, and that their sole purpose was to bind the employee to the enterprise and undermine any possible opposition. "According to the legal adviser of several Costa Rican trade unions" wrote FLW, the solidarist shops, which were supposed to sell basic commodities at low prices, could be used to encourage workers to buy expensive articles on credit, creating direct dependency on the enterprise."

The most blatant intrusion by solidarist associations into trade union activities is without doubt the signing of agreements directly between the management and the "permanent committees" controlled by the solidarists. These agreements replace collective bargaining with the trade unions and are in general far more favourable to the employer. It is therefore not unusual for an association to be created shortly before the negotiation of a new collective agreement. The trade unionists are kicked out and an agreement is signed with the new association."

Enterprises everywhere play on the divisions and the corruption of pseudo-trade union groups. In March 1994 for example in Tijuana (Mexico), says AIFLD, Plasticos Bajacal, an American-owned enterprise, signed a secret agreement with the affiliate of the CROM (Regional confederation of Mexican workers) in order to prevent the formation of an independent trade union. Mexican legislation only allows for one trade union to exist in an enterprise. The workers asked another organisation, the COR, to represent them and obliged the management to organise an election. Before the vote, however, the management called the workers in, in small groups, to tell them that if they voted for the COR they would lose their jobs. The day of the elections, in which workers voted by a show of hands, a photographer was present, hired by the management.

Enterprises are sometimes prepared to enter into virtual warfare to prevent unions organising in their company. In the Dominican Republic, the Hanchang textile company immediately adopted anti-union practices when it was confronted with the creation on 7 February 1995 of a trade union committee. Blackmail, attempted corruption, discrimination, isolation of trade unionists, dismissal of workers who are in favour of the union: the whole arsenal of union busting tactics was used. On 9 March, exactly seven hours after the official announcement of the formation of the union, the enterprise sacked all its founding members.

Some enterprises use violence to get their way. Death threats against trade union activists are not unusual and the employers have no scruples about using security guards who act as a veritable militia. In August 1994, in Honduras, during a dispute at the King Star company in the Buffalo Park, fifty guards with batons and tear gas attacked workers protesting peacefully against the management. "Hit them. Kill them if you can" yelled the head of the security guards. Shots were fired in the air and close to the workers' feet. Pregnant women were brutally attacked. According to the El Tiempo newspaper, one of the guards tried to rape one of the women workers after making her get into a lorry.


The enterprises based in the export processing zones are sometimes nicknamed "companies on wheels" or "swallow" companies, because they are quick to close down and fly towards more clement skies when they see their advantages wearing thin, which usually means when it gets harder for them to exploit their workers. The history of the maquiladoras is strewn with the empty shells of factories abandoned by their former owners when the workers succeeded in organising, such as the South Sea Textile factory in the Philippines which closed after a trade union was formed there, or the textile firm Confecciones Transcontinentales in Guatemala which packed its bags as soon as the creation of a trade union was announced.

The ICFTU's survey among its affiliates shows that this threat is permanent and that workers feel intimidated by it. In 1994, the Dominican Republic daily, Hoy, reported that the director of the Kunja Knitting Mill, when faced with attempts at organising a union, threatened to transfer his factory to Mexico, where the company thought it would find more sympathetic unions.

In 1991, according to an AIFLD document, a representative of the Westinghouse company said they would rather leave the Dominican Republic than accept a trade union in their factory.

The result of all this pressure is obvious: the rate of unionisation in the EPZs is extremely low. In Honduras, in May 1995, of the 45,000 workers employed in the 103 factories in the EPZs, there were only seven trade unions in a position to sign collective agreements. They were all based in the Puerto Cortes zone, controlled by the government. In private enterprises, all fledgling unions have been broken by the management, despite legislation which - theoretically - protects trade union leaders from management reprisals.


"The workers are forced to hold a chair over their head for half an hour or an hour. If they lower it before the time is up, they are suspended from their job. Another punishment consists of forcing them to stand still like a statue, with their eyes fixed on a point on the wall. When they are accused of not respecting production quotas, they are punished by being forced to stay out in the full glare of the sun. Those who chew gum get it in the face. Those who do not work fast enough are hit in the head with a ruler. The supervisors, armed with big sticks, prowl menacingly through the workshops. They speak rudely and crudely. The women are humiliated by managers and trainers and are subjected to constant sexual harassment... Pregnant women are dismissed without compensation. Holidays are granted at the will of the employer, children below the legal working age are employed and contracts are renewed every year to avoid redundancy payments."

El Heraldo, 25 February 1994, Honduras.

Part Two:


"Today we are experiencing a new stage in the long history of the growth of capitalism. There is no going back. But the future isn't written down. Capitalism is not a machine running out of control. It creates its own counter balances that can limit its negative effects: wage demands that call for greater justice in both the North and the South, citizens' demands for better economic, social and ecological regulations. Faced with the logistics of the economic war and the temptation for countries to turn inwards upon themselves, the real challenge is to give globalisation a positive meaning".

Philippe Frémeaux, editor-in-chief of "Alternatives économiques" (Paris)


The trade union movement has not been put off by the enormous difficulties it must face in order to protect workers in the export processing zones. The long list of trade union rights violations shows just how much trade unions are needed.

Some economists believe the trade unions have a decisive role to play in ensuring that the zones do not simply repeat the pattern of exploitation and dependence of other third world economies. By organising the workers and demanding decent working conditions, the trade unions are forcing enterprises to develop their productivity. In this way they are contributing to the improvement of workers' training programmes and therefore to the integration of the zones into the national economy.

The situation so far is not encouraging. Failures have been due not only to employer pressure but also to the weaknesses of the trade union movement. Training for activists and the elaboration of a strategy to unite the different organisations should be made priorities.

In many countries, however, the unions are trying to adapt their means of action. The TUCP of the Philippines, for example, has opened an office at the exit of a zone to help workers who need assistance. District offices have also been opened in some zones, such as Bataan and Baguio.

In Guatemala, trade unionists are organising in the areas where maquila workers live. The "workers' neighbourhood committees" help create a greater sense of solidarity, and link workers in the formal and informal sectors, a crucial aspect for most countries in the third world where the underground economy often "employs" most of the working population.

The case of the Bonahan Apparel company in the Dominican Republic speaks volumes. In February 1993, it dismissed all the workers involved in trade union activities. In May company guards physically beat the general secretary of the union Fabia Rosario off the premises when she tried to help a colleague who was feeling ill. In January 1995, the enterprise resumed one of its favourite anti-union measures, separating the union officials from the other workers to prevent any communication between them, and changed the machines to make it difficult to increase productivity in order to avoid having to increase wages. It dismissed the trade union officials protected by the "fuero sindical" and refused to answer the summonses from the Labour Minister.

At the end of October 1995, after renewed attempts at forming a union, the workers decided to stop production. Despite tear gas attacks by the police and the imprisonment of 18 strike leaders, the movement grew stronger and on 6 November the management said it was ready to negotiate in good faith. The workers resumed production. Two weeks later, the company agreed to sign a contract and to reinstate the trade union leaders it had dismissed and pay their wage arrears. The new contract set up an unemployment fund, provided for the payment of overtime, rest periods, meals and transport. It also set up a worker-management committee and a grievance committee. Wages and allowances were to be increased after one year, and the union consulted over productivity. "This fight", said Rosario Mejia, general secretary of the Bonahan union "was one of the greatest experiences of my life."


The success of campaigns for better working conditions within EPZ enterprises depends largely on the courage of the local organisers, but as the zones operate in an international context, there must also be a response at this level. This is where international solidarity comes into play, and the setting up of a coordinating strategy among all the trade union organisations concerned.

Coordination at the regional level is an essential step. The desire to form a common front to face up to the "swallow" companies led to a special meeting in February 1994 of the ICFTU's regional organisation for the Americas, ORIT. The participants, trade unionists from Central America, the Dominican Republic, and Mexico, promised to develop their capacity to monitor the multinational enterprises in the region.

The victory scored by workers at the Bibong factory in the Dominican Republic gives an interesting example of how unions can react. What were the ingredients of their success? The activism of the workers, their courage, the trade union training they had received, were of course decisive factors. But, notes the AIFLD, the international dimension of the struggle played a decisive role. A multinational trade union campaign was set up to support the efforts of the Bibong workers, with the participation of trade union organisations from North America (AIFLD, American Institute for Free Labour Development, ILGWU, International Ladies Garment Workers' Union), Latin America (Inter-American Textile Workers' Union - FITTVCC-ORI) and the International Textile Workers' Federation. Throughout the dispute, these organisations exchanged information and coordinated their action through a consultative committee.


Demands for better working conditions in the factories of the Third World are not, as its detractors claim, protectionism in disguise. The example of the battle fought by the workers at the Bibong enterprise in the Dominican Republic is proof of this. It also shows how governments who have been complicit in trade union rights violations can bow to external pressure.

"In April 1994, Aurelia Cruz, the elected leader of the 500 workers at the Bibong Apparel Corporation in Bonoa, was arrested at the plant by the police on charges of "defamation". The company also dismissed her. She had criticised the company during a radio broadcast. The previous month, she had traveled to the US to testify on workers' rights abuses at hearings of the US Generalised System of Preferences (GSP) Sub-Committee. The hearings were to determine whether the Dominican Republic's eligibility for preferential trade access to the US should be withdrawn because of its violations of workers' rights.

The government, fearing a suspension of trade privileges by the US, began to enforce its labour laws and took the unprecedented step of suspending Bibong's export licence on 26 April. The licence was reinstated in May after Bibong agreed to abide by the law. Aurelia Cruz was reinstated. The charges against her were dismissed, and the police officers were reprimanded for improper conduct. On 22 July, workers at Bibong achieved the first ever collective bargaining contract in the 25 year history of the zones. Under pressure from the government, the company agreed to recognise the union, and a grievance procedure was established to resolve conflicts over treatment by supervisors. The government pledged that it would continue to suspend the export licence of companies which broke the law."

Survey of Violations of Trade Union Rights, ICFTU, 1995.

The trade unions also put pressure on Bibong's client companies in the United States. Some of the companies suspended their buying contracts and threatened to cancel orders if the abuses continued. The Dominican government, worried about the request by the AFL-CIO to withdraw its privileges under the Generalized System of Preferences and the Caribbean basin initiative, was forced to exert increasing pressure on the firm to respect the workers' right to unionise.

More and more agreements and conventions include measures and safety clauses to protect workers' rights. The Generalized System of Preferences foresees fines or sanctions against countries which do not take steps to ensure that certain minimum labour rights are respected. The US trade unions for example are able to call on the US Trade Representative and ask that a particular country be "put to the test". This was the case for Guatemala in 1992.

Other countries also have a GSP. In 1995, the European Union included in its system conditions aimed at withdrawing preferences from countries that used forced labour.


The struggle at the shopfloor level, although vitally important, cannot provide the solution to what is a global problem. The question therefore is: should - and if yes, then how - the respect of internationally recognised fundamental workers' rights be linked to the process of trade liberalisation such as is taking place within the WTO? Should, in other words, a "social clause" be imposed on international trade relations to prevent a company or an enterprise being able to enjoy a comparative advantage through the violation of workers rights?

The idea of a "social clause" is nothing new. It already existed at the end of the First World War when the British delegation spoke, without success, of sanctioning countries which practiced disloyal competition through the exploitation of the workforce. It was also mentioned, in 1948, in a clause in the Havana Charter which established the GATT. The clause states that "the members recognise that every country has a common interest in achieving and maintaining correct labour standards in relation to productivity, and therefore in improving wages and working conditions to the extent that productivity so permits". This Charter was never ratified however, and this important aspect has remained absent from international trade agreements.


The ILO is preparing a special study on the export processing zones which is due to be published in the 1996 edition of the World Labour Report. The 1996-1997 budget foresees a special programme on EPZs including a survey of EPZs worldwide looking at health and safety, industrial relations, their economic impact, and women workers.

The report would be submitted to a tripartite meeting to be attended by 15 to 20 countries that host EPZs. The ILO hopes this meeting will result in a set of guidelines or a code of conduct that could serve as a manual to improve relations between workers and employers in the EPZs.

Financial difficulties however may mean that this programme cannot be continued after next year.

During the Uruguay Round negotiations of the GATT at the beginning of the eighties, the ICFTU relaunched the idea of a "social clause" based on the respect of the ILO's international standards. The aim is not to impose wages and working conditions applicable across the globe, but rather to ensure the respect of fundamental workers' rights and to prevent repression, exploitation and discrimination. The most important of the ILO standards are ILO Conventions 87 and 98 on freedom of association and collective bargaining, Conventions 29 and 105 on the abolition of forced labour, Conventions 111 and 100 on discrimination in employment and equal pay for work of equal value, and Convention 138 on the minimum working age (child labour). "These are not industrialised country standards" notes the ICFTU "they are standards that are global in their applicability".

"Universal respect of these seven key ILO conventions" writes the ICFTU "would prevent the most extreme forms of exploitation and fierce competition. It would not put an end to the comparative advantages of the developing countries but it would establish a process whereby working conditions can be steadily improved as trade develops, in particular by concentrating on an improvement in productivity."

"In the medium and long term, the universal application of fund-amental international labour standards would contribute to a more balanced expansion of world trade and a more flexible process of adjustment to the changes in the world division of labour". Contrary to what its critics would have us believe, the social clause may prove to be the best antidote to increasing protectionism. Far from being a new obstacle to trade, the social clause would serve to protect the developing countries' access to world export markets.

It would also enable them to develop their international competitiveness on the basis of improved productivity rather than on falling wages and deteriorating working conditions. It would protect them from the blackmail of certain multinational companies who play on their ability to find governments ready to violate workers' fundamental rights.

In short, the ICFTU suggests that a WTO/ILO consultative body be set up to be responsible for the application of the social clause. It would examine, at regular intervals or on the basis of well-documented complaints, the respect by the countries in question, in law and in practice, of the principles contained in the seven key international conventions on workers' rights.

In the event of violations, clear, progressive and foreseeable measures may be applied to the country concerned.


Multinational enterprises have a strong presence in the export processing zones either because they have direct investment there, or often because they sub-contract local firms there. They therefore bear heavy responsibility for the working conditions prevailing in the zones. According to a report published at the end of 1995 by the British organisation Christian Aid, Nike sports shoes that sell for approximately £50 a pair in Great Britain cost, in wages and other social charges, 46 pence in China, £1.08 in the Philippines and £1.19 in Thailand. The president of Nike, Phil Knight, earned US$ 929,113 in 1994. To earn the same amount, one of his Chinese employees would have to work nine hours per day six days per week for fifteen centuries.

Some enterprises deny exploiting workers. "Reebok" writes the weekly US News and World Report in 1995 "jumps from one Asian location to another in the search for cheap labour. Its network of factories in China and Indonesia produces nearly 60 per cent of Reebok's world output...Ten years ago, Reebok didn't produce a single pair of shoes in these two countries. Almost all of its production was in South Korea and Taiwan."

"Over the last few years" replies the human rights director of Reebok International "we have set up extensive programmes to monitor and audit working conditions and we carefully study our partners and the working conditions they apply."

Confronted with information on the activities of their sub-contractors, the companies, either through conviction or to save their image, are forced to react. At the beginning of January 1996, the ICFTU announced that after a long struggle by workers in the Mandarin Factory and a trade union solidarity campaign in the United States, the big US clothing company The Gap had agreed to demand that its suppliers respect a code of conduct and labour laws in the free trade zones of El Salvador. The firm also agreed to an independent surveillance system.

Some enterprises even support the trade unions' efforts. In the Philippines, for example, the Trade Union Congress "has initiated dialogue with a group of progressive businessmen who have put a pilot proposal to the governor aimed at ensuring the respect of human and trade union rights in the Cavite zone". In Honduras the vice-president of the US clothing company Liz Claiborne, accompanied by a representative of the ILGWU (the International Ladies Garment Workers Union) threatened one of its sub-contractors, the Korean firm Galaxy, in 1994 that the company would withdraw its contract if Galaxy continued to violate the law. With its back to the wall, the Galaxy management promised to respect the Honduran labour code, set up a creche, respect working hours, reinstate sacked workers and dismiss the middle-managers who had threatened and harassed the workers. In August 1995, however, the firm went back on its promises.

"Ethical" investment funds, which direct their investments towards "socially responsible" enterprises, and consumers organisations can be valuable allies in the fight against the exploitation of workers in the EPZs, for example by helping enforce the boycott of products manufactured in conditions of exploitation and violence.

The British organisation Tradecraft, whose purpose is to promote greater equity in trading relations between the industrialised and developing countries, has adopted a "buying policy" stipulating that "products should not exploit those that make them nor jeopardise their health". "Campaigns and demands for a code of conduct" write Deborah Lenvenson-Estrada and Henry Frundt, in Report on the Americas (March-April 1995), "when linked to strong local organisation, can be a significant antidote to the unbridled expansion of enterprises encouraged by GATT and NAFTA. The advantage of a code of conduct is that it offers American consumers the possibility of exerting pressure in the form of overseas trade union solidarity."

Human rights organisations such as Amnesty International or Human Rights Watch are also involved in the struggle for the respect of workers' rights (see text by Pierre Sané, General Secretary of AI). Already very active in the fight against child labour, Human Rights Watch takes a close interest in the conditions imposed on workers in third world factories, particularly in China's special economic zones. "The market is not an automatic guarantee of human rights" says the organisation's world report for 1996. In fact, in China, some violations of human rights - such as the repression of trade union activists and the exploitation of migrant workers - seem to have increased with development."


"The article by Peter Benenson, published in The Observer on 28 May 1968, that gave birth to Amnesty International, mentioned six cases of persecution around the world. One of the cases was that of a trade union leader. Toni Ambatielos of the Greek trade union movement was incarcerated by the then Greek regime. He was one of the very first prisoners of conscience adopted by AI. Since then we have had cause to intervene in thousands of cases of trade unionists, from the tin miners of Bolivia to the railway workers of India, or those who tried to form independent unions in the former Soviet Union.

Many of Amnesty's current cases are actually those of trade unionists victim-ised because of their fight for the rights of fellow workers. Trade unionists are often the only force standing between ordinary workers and rapacious employers, backed by the power of the state.

Look for instance at the case, among too many, of Deborah Guzman, a trade unionist at the Lunafil S.A. Factory, a textile company in Guatemala. She has been singled out for a sustained campaign of harassment and intimidation. She has been attacked by armed and masked men and abducted. Both she and her husband, trade union leader Felix Gonzalez, have received numerous death threats. In October 1995, they received another threat demanding that they leave the country in 72 hours. Neither she nor her husband have resigned from the Lunafil trade union and they are both continuing their struggle.

There are many areas in which I think it may be possible to work out common or interlocking approaches. Situations where both the ICFTU and AI have concerns are likely to involve serious violations of human rights, not only in respect of ILO Conventions, but also other international standards such as those set out in the United Nations Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights, which includes the specific rights that Amnesty International seeks to protect. Although we welcome the attention given by the ILO to situations of serious human rights violations, it is not possible for them to take into account material produced by NGOs such as AI. We would welcome access by NGOs to the ILO complaints procedures in the Committee on the Application of Standards. This is a matter on which the reflections and view of the ICFTU would be very welcome.

Our two organisations are now operating in a world context in which the prevailing economic and political dynamic has had terrible consequences for workers' rights. But the undeniable fact remains that the trade union movement in many countries is still the custodian of values of freedom.

We acknowledge that the labour movement was instrumental in ushering in the very concept of human rights. Now, as it did then, preserving and enhancing trade union rights depends on trade unions engaging themselves forcefully in the defence of the human rights of all."

Pierre Sané, General Secretary of Amnesty International

Free Labour World, January 1996

Human Rights Watch believes that "all enterprises have a duty to avoid direct complicity in the violation of human rights and internationally recognised labour conventions, such as discrimination, forced labour and restrictions on freedom of expression and of association, including the right to organise and to bargain collectively. This duty implies, as a minimum, the adoption of specific standards by country to avoid such complicity, and the implementation of a programme to apply these standards by means of credible inspections of factories and suppliers. If these standards are not respected, measures should be taken immediately in order to rectify the situation or, failing that, trading relations should be suspended."

The power of the multinationals can also be restricted by limiting their lobbying capacity and therefore reducing the capacity for financing political parties.


Levi Strauss and Co. Extracts from the "Business Partner Terms of Engagement" written in collaboration with the ACTWU. The company withdrew from Burma and China in 1992.

"Our concerns extend to the practices of our individual partners as well as the political and social problems in the countries of our potential suppliers.

1. Environmental requirements

We will only deal with partners who share our commitment to the environment.

3. Health and Safety

We only employ partners who guarantee their workers a safe and healthy working environment. The partners who provide housing for their staff must guarantee that it is safe and healthy.

5. Employment practices.

We will only deal with partners where workers work of their own free well, are not subject to physical risks, receive decent compensation, have the right to associate freely, and are not exploited in any way.

Moreover, these partners must abide by the following code of conduct:

Wages and benefits

We will only deal with partners who provide wages and benefits in line with all current legislation or equal to local practices in the manufacturing or finishing industry. We favour partners who share our desire to contribute to the improvement of conditions in their community.

Working time

While allowing for flexible working time, we will identify the local situation in terms of working hours and seek partners who do not exceed these except by paying for overtime in an appropriate manner.

Child labour

The use of child labour is not acceptable. By "child" we mean a person under 14 years or below the school leaving age. We will not use partners who use child labour in any of their plants. We support the development of legitimate apprenticeship programmes to help train young people.

Disciplinary practices

We will not employ partners who use corporal punishment or any other form of mental or physical coercion."


Swallow company: Empresa golondrina, the nickname given to enterprises situated in the export processing zones because of the ease with which they can "fly" away from the country to set up their operations elsewhere or reappear under a different name.

Maquiladora: an assembly factory set up within the framework of the border industrialisation programme introduced by the Mexican government in 1965. This programme allows for the importation of products assembled outside the EPZ, with customs tariffs being levied only on the value added during assembly and not on the total value of the product. This word is now applied to all assembly enterprises in the EPZs in the Caribbean region and elsewhere in Latin America.

APRO: Asian and Pacific Regional Organisation

ORIT: Inter-American Regional Organisation of Workers

Relocation: moving to a low wage country the production of goods destined for export to a country with a high level of purchasing power

Newly Industrialised Country (NIC): Those countries which have recently succeeded in developing their economies or which are involved in a development strategy usually based on the export of industrial goods. The list of these countries is fairly disparate and can cover many different situations. These include the four Asian "dragons" (South Korea, Hong Kong, Singapore, Taiwan) and the "tigers" (China, Malaysia, Philipines, Pakistan, Sri Lanka, Thailand). There are also NICs in Latin America (Chile, Brazil, Mexico, Dominican Republic) and Africa (Mauritius, Morocco, Tunisia).



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