Acknowledgments

This report was prepared under the direction of Andrew J. Samet, Acting Deputy

Under Secretary for International Labor Affairs (ILAB). The writing, editing, research

and coordination of the report was done by the staff of the International Child Labor

Study Office, Sonia A. Rosen, Maureen Jaffe and Jorge Perez-Lopez, Director of ILAB’s

Office of International Economic Affairs. Other staff of the Bureau of International

Labor Affairs, the Office of the Solicitor and the Office of Public Affairs who made

major contributions include: Kelly W. Bryant II, Carrie Cyphert, Teresa Estrada-Berg,

Marcia M. Eugenio, Maria Elena Gonzalez, Sudha K. Haley, Todd Howe, Lewis Karesh,

Angelique Larsen, John Luther, Thelma Majette, Maria Elena Marquez, David Parker,

Maureen Pettis, Gregory K. Schoepfle, James W. Shea, Daniel Solomon, Karen Travis,

Ana Maria Valdes, Diane Ward, Robert D. Wholey, Andrew Yarrow, Melissa Yazman,

and Bob Zachariasiewicz. In addition, Department of Labor officials received significant assistance from labor reporting officers and labor attaches in U.S. embassies and

consulates abroad.

This report is published by the U.S. Department of Labor, Bureau of International

Affairs. Copies of this report or other reports in ILAB’s child labor series, may be

obtained by contacting the International Child Labor Study Office, Bureau of International Affairs, U.S. Department of Labor, Rm. S-1308, 200 Constitution Ave., NW,

Washington, DC 20210. Tel: (202) 208-4843; Fax: (202) 219-4923. The reports are

available on the Internet via World-Wide Web: http://www.ilr.cornell.edu/library/

e_archive/ChildLabor/. [Excluding the Public Hearings]

Other publications in ILAB’s child labor series:

1. By The Sweat and Toil of Children (Volume I): The Use of Child Labor in U.S.

Manufactured and Mined Imports (1994).

2. By The Sweat and Toil of Children (Volume II): The Use of Child Labor in

U.S. Agricultural Imports & Forced and Bonded Child Labor (1995).

3. Forced Labor: The Prostitution of Children (1996) [Symposium Proceedings]

4. Public Hearings on International Child Labor (Proceedings) 1994

5. Public Hearings on International Child Labor (Proceedings) 1995

6. Public Hearings on International Child Labor (Proceedings) 1996
Table of Contents

Executive Summary

I. Introduction.......................................................................................................... 1

 A. Overview....................................................................................................... 1

 B. International Child Labor ............................................................................. 2

 C. Child Labor in the Apparel Sector ............................................................... 4

 D. Codes of Conduct: A Recent Innovation ................................................... 8

II. Codes of Conduct in the U.S. Apparel Industry ................................................11

 A. Introduction .................................................................................................11

 B. Corporate Codes of Conduct ......................................................................12

 1. Earlier Origins of Codes of Conduct .....................................................12

 2. Rationale for Adopting Codes of Conduct............................................13

 3. Extent of Usage of Codes of Conduct...................................................14

 C. The Apparel Industry...................................................................................15

 1. Structure of the Industry ........................................................................15

 2. United States Apparel Imports ..............................................................19

 a. Imports by Source............................................................................20

 b. Imports by Type of Importer ..........................................................20

 3. Globalization and Working Conditions in Exporting Countries ..........22

 D. Codes of Conduct of the Largest U.S. Retailers and Manufacturers

 of Apparel....................................................................................................22

 1. Survey of U.S. Retailers and Manufacturers of Apparel .......................22

 2. Survey Response ....................................................................................24

 a. Manufacturers ...................................................................................25

 b. Retailers ............................................................................................25

 3. Survey Results ........................................................................................26

 a. Manufacturers ...................................................................................26

 b. Department Stores ...........................................................................27

 c. Mass Merchandisers .........................................................................28

 d. Specialty Stores ................................................................................29

 e. Non-Store/Direct Apparel Marketers ..............................................30

 E. Development of Apparel Industry Codes of Conduct ...............................31

 1. Form and Method of Development of Codes of Conduct...................31

 2. Basic Elements/Standards of Codes of Conduct ..................................32

 3. Definitions ..............................................................................................35

 a. Minimum Age ...................................................................................35

 b. Additional Elements of the Child Labor Policies ...........................39

 F. Implementation of Apparel Industry Codes of Conduct............................41

 1. Implementation Challenges ...................................................................41

 a. Organization of Production .............................................................41

 b. Streamlining of Supplier Base .........................................................42

 c. Impact of Textile Import Restrictions ..............................................44
 2. Transparency ..........................................................................................45

 a. Education/Communication ..............................................................45

 b. Transparency of Implementation Process ......................................47

 3. Monitoring ..............................................................................................48

 a. Monitoring of Codes of Conduct in the Apparel Industry.............48

 i. Models of Active Monitoring......................................................50

 Internal Monitoring ....................................................................50

 External Monitoring....................................................................50

 Outside Audits ............................................................................50

 NGO Monitoring.........................................................................53

 ii. Active Monitoring........................................................................53

 iii. Contractual Monitoring ...............................................................60

 b. Evaluation of Prospective Contractors ............................................64

 4. Enforcement ...........................................................................................65

III. Implementation Experiences of Codes of Conduct in the U.S. Apparel

 Industry ..........................................................................................................71

 A. Introduction .................................................................................................71

 B. Field Visits ....................................................................................................71

 1. Planning of Field Visits ..........................................................................72

 a. U.S. Apparel importers ....................................................................72

 b. Labor Organizations ........................................................................72

 c. Department of State .........................................................................72

 d. Foreign Governments......................................................................73

 2. Conduct of Field Visits ...........................................................................73

 3. Plant Visits ..............................................................................................73

 C. Child Labor in the Apparel Industry ...........................................................80

 D. Transparency ...............................................................................................84

 1. Foreign Suppliers' Awareness About Codes of Conduct .....................85

 2. Training and Supplier Certification .......................................................88

 3. Posting of Codes of Conduct.................................................................89

 4. Workers' Awareness with Codes of Conduct........................................93

 5. Dissemination of Codes of Conduct .....................................................96

 E. Monitoring ....................................................................................................99

 1. Monitoring for Quality ...........................................................................99

 a. Purpose of Monitoring .....................................................................99

 b. Previous Knowledge About Monitoring Visits .............................100

 c. Pre-Contract Inspections ................................................................100

 2. Monitoring for Codes of Conduct .......................................................101

 a. Monitoring Methods.......................................................................103

 b. Active Monitoring ..........................................................................103

 c. Contractual Monitoring ..................................................................105

 d. Contractual and Active Monitoring ...............................................106

 3. Monitoring Procedures ........................................................................107

 F. Enforcement................................................................................................108

 1. Corrective Measures .............................................................................108

 2. Positive Reinforcement ........................................................................110

IV. Conclusion ..................................................................................................113
A. Child Labor in the Apparel Industry ...............................................................113

B. Codes of Conduct in the U.S. Apparel Industry.............................................114

C. Transparency of Codes of Conduct in the Apparel Industry.........................115

D. Monitoring and Enforcement of Codes of Conduct in the

Apparel Industry ..............................................................................................116

E. Recommendations ............................................................................................118

V. Appendices.......................................................................................................121

 Appendix A: List of Companies Surveyed ...................................................122

 Appendix B: Company Questionnaire .........................................................123

 Appendix C: Codes of Conduct Provided by Companies Surveyed ..........124

 Appendix D: Site Visits .................................................................................208

 Appendix E: U.S. Apparel Imports, by Region and Country

(1985-1995) ..............................................................................230

 Appendix F: ILO Convention 138 ................................................................235


i

EXECUTIVE SUMMARY

A. Congressional Mandate

This report is the third volume in ILAB’s international child labor series. It

focuses on the use of child labor in the production of apparel for the U.S. market,

and reviews the extent to which U.S. apparel importers have established and are

implementing codes of conduct or other business guidelines prohibiting the use of

child labor in the production of the clothing they sell. The report was mandated by

the Omnibus Consolidated Rescissions and Appropriations Act of 1996, P.L. 104-134.

B. Overview

A recent development, corporate codes of conduct and other business guidelines prohibiting the use of child labor are becoming more common, as consumers as

well as religious, labor and human rights groups are increasingly calling upon companies to take responsibility for the conditions under which the goods they sell are

being manufactured. Many U.S. companies that import apparel have adopted codes

of conduct that prohibit the use of child labor and promote other labor standards.

For purposes of this report, the term “codes of conduct” is used generically to refer

to various types of corporate policies and standards on child labor and other working conditions. These instruments take different forms — codes of conduct, statements of company policy in the form of letters to suppliers, provisions in purchase

orders or letters of credit, and/or compliance certificates.

1. Child Labor in the Apparel Sector

The term “child labor” generally refers to any economic activity performed

by a person under the age of 15. Not all work performed by children is detrimental

or exploitative. Child labor does not usually refer to “light work” after school or

legitimate apprenticeship opportunities for young people. Nor does it refer to young

people helping out in the family business or on the family farm. Rather, the “child

labor” of concern is generally employment that prevents effective school attendance,

and which is often performed under conditions hazardous to the physical and mental health of the child.

There are no reliable statistics on the rate of child employment in any particular economic activity, including the apparel sector. Most information on child

labor in the garment industry comes from eyewitness accounts, studies by nongovernmental organizations (NGOs) and academicians, reports by journalists, and

studies by the International Labor Organization (ILO).

Anecdotal information gathered during the preparation of this report indicates that in some of the countries examined, fewer children may currently be working on garment exports for the U.S. market than two years ago. A dramatic example

involves Bangladesh, where large numbers of children worked in garment factories
ii

as recently as 1994. International media attention and threats of boycotts and cancelled work orders led to the dismissal of thousands of child workers from the

garment sector — unfortunately with no safety net in place for them. Thus, it is

possible that in the absence of government programs to assist the children, the

precipitous dismissal of child workers can endanger, rather than protect them. More

research is needed so that governments, industry, international organizations, and

others concerned with the welfare of children are better equipped to design appropriate programs. It is clear, however, that local and national commitments to universal and free education for children are immediate and positive steps which can and

should be taken.

One reason for any potential downward trend in the use of children in the

garment industry may be the widespread adoption in the last several years of U.S.

company codes of conduct prohibiting child labor. This potential downward trend

may also be the result of (1) greater public awareness about child labor and its use in

export industries; (2) changes in the garment industries of exporting countries tending to eliminate subcontractors where the use of child labor is most likely to occur

coupled with policies to the same effect by U.S. importers; and (3) concerns that

importing countries could enact legislation banning the importation of products made

by children. Most likely all of these factors have worked in a mutually-reinforcing

way to reduce the use of child labor in the export sector. On the other hand, there

remains continuing evidence of child labor in the apparel industry of some countries,

including the use of child labor in homework. To be any more definitive, further

information is needed.

2. Codes of Conduct

Voluntary codes of conduct have become increasingly common among U.S.

corporations in recent years, particularly in the apparel sector. They have their roots

in ethical guidelines for multinational corporations developed in the 1970s and voluntary codes of conduct developed by private groups during the 1980s. The first

apparel company code of conduct was adopted in 1991. Most other codes have

been developed in the last two or three years.

United States corporations have adopted corporate codes of conduct for a

variety of reasons, ranging from a sense of “social responsibility” to pressure from

competitors, labor unions, the media, consumer groups, shareholders, and workerrights advocates. The U.S. Government has also encouraged U.S. corporations to

adopt model business principles for their overseas operations.

3. The Apparel Industry

The U.S. is the world’s largest importer of garments. Imports of garments

have been increasing steadily since the 1970s. Between 1985 and 1995, U.S. imports

of apparel grew in current dollars by 171 percent, reaching nearly $34.7 billion. In

that year, the U.S. imported apparel products from 168 countries.
iii

The U.S. apparel industry is made up of a complex chain of actors whose

functions often overlap. The industry includes the following entities:

• Apparel manufacturers are primarily engaged in the design, cutting, and

sewing of garments from fabric. Some manufacturers are contractors or subcontractors, which generally manufacture apparel from materials owned by

other firms. Larger manufacturers often contract production to many such

contractors and subcontractors in the U.S. and abroad. Some manufacturers

are vertically integrated, producing the textiles from which they make garments, or even operating retail outlets.

• Apparel merchandisers generally design and market clothing, but contract

the actual production to manufacturers.

• Buying agents locate, qualify and inspect foreign suppliers/producers of

garments, negotiate with suppliers/producers, and often monitor production

for quality control and compliance with other standards. They may be used

by U.S. companies that do not have a large presence abroad, or in addition to

a U.S. company’s buying staff.

• Retailers are primarily engaged in the distribution, merchandising, and sale

of garments to consumers. Apparel retailers include department stores, mass

merchandisers, specialty stores, national chains, discount and off-price stores,

outlets, and mail-order companies. A relatively new development is the rise

of electronic forms of retailing such as interactive TV and on-line shopping

services. Some retailers who sell their own private labels go beyond their

traditional role as distributors and become directly involved in the design and

sourcing of garments from manufacturers and contractors.

C. Codes of Conduct in the U.S. Apparel Industry

In order to gather information on the extent and implementation of U.S.

garment importers’ codes of conduct containing child labor provisions, the Department of Labor conducted a voluntary survey of the largest U.S. retailers and apparel

manufacturers, based on their level of sales in 1995 as reported in publicly available

documents.

• A questionnaire on import sourcing and child labor policies was sent to 48

companies, representing U.S. apparel manufacturers, department stores, mass

retailers, specialty stores, and non-store direct marketers (mail order and

electronic home shopping).

• Forty-five companies responded to the questionnaire, three of whom said

that they regard all information provided as confidential. The remaining 42

companies all indicated that they acquire foreign-produced apparel, the majority as direct importers (i.e., purchasing apparel directly from abroad for

their own account), others as indirect importers (i.e., purchasing apparel

domestically from U.S. companies that have imported the goods), or in both

forms. Follow-up telephone interviews were conducted with respondents to

obtain additional information.
iv

1. Existence and Scope of Codes of Conduct

Thirty-six of the 42 companies indicated that they have adopted a policy

specifically prohibiting the use of child labor in the manufacture of goods they import from abroad. These policies take different forms:

• special documents (typically referred to as “codes of conduct”) outlining their

values and guidelines in a variety of areas, including child labor. These

documents are a means for companies to clearly and publicly state the way

in which they intend to do business to their suppliers, customers, consumers

and shareholders;

• letters stating their policies on child labor circulated to all suppliers, contractors and/or buying agents;

• compliance certificates, which typically require suppliers, buying agents, or

contractors to certify in writing that they abide by the company’s stated standards prohibiting the employment of children;

• clauses in formal documents such as purchase orders or letters of credit,

which make compliance with the policy a contractual obligation for

suppliers;

• a combination of the above.

Corporate codes of conduct that address labor standards vary from company

to company with regard to the specific labor standards included. Some or all of the

following elements are found in various codes: (1) prohibitions on child labor; (2)

prohibitions on forced labor; (3) prohibitions on discrimination based on race, religion, or ethnic origin; (4) requirements to ensure the health and safety of the workplace; (5) provisions on wages, usually based on local laws regarding minimum

wage or prevailing wage levels in the local industry; (6) provisions regarding limits

on working hours, including forced overtime, in accordance with local laws; and (7)

support for freedom of association and the right to organize and bargain collectively.

U.S. corporate codes of conduct in the garment industry also differ with

respect to how the labor standards are defined. The standards used to define child

labor vary significantly from company to company. For example, a company’s policy

statement may:

• state a minimum age for all workers who make their products;

• refer to the national laws of the host country regarding the minimum age of

employment or compulsory schooling;

• refer to international standards (e.g., ILO Convention 138); or

• use some combination of the three.
v

In some cases, companies’ policies prohibiting child labor in the production of their

goods do not contain any definition of child labor.

2. Transparency

An important issue regarding implementation of corporate codes is their transparency, or the extent to which foreign contractors and subcontractors, workers, the

public, NGOs and governments are aware of their existence and meaning. Transparency reinforces the message of codes and leads to more credible implementation.

When transparency is lacking, interested parties cannot benefit fully from a code of

conduct.

• Most of the respondents with child-labor policies indicated that they had

distributed copies of their policies to all suppliers, but few stated that they

had communicated their existence to a wider audience or engaged in educational efforts. Many respondents stated that they did not know whether

workers were aware of the existence of their codes.

• A small group of companies indicated that they have tried to ensure that

production workers in overseas facilities know about their code or policy by

specifically requiring that copies of such a statement be posted in the foreign

factories from which they purchase.

• Only a few respondents solicited input from international organizations, labor unions, NGOs, or government agencies in developing or implementing

their codes of conduct.

3. Monitoring

Monitoring is critical to the success of a code of conduct; it also gives the

code credibility. Yet, most of the codes of the respondents do not contain detailed

provisions for monitoring and implementation, and many of these companies do not

have a reliable monitoring system in place.

Respondents indicated that they utilize a variety of means to monitor that

their codes of conduct or policies on child labor are respected by their suppliers.

• Some companies use a form of active monitoring, which involves site visits

and inspections, by company staff, buyer agents or other parties, to verify

that suppliers are actually implementing the importing company’s policy on

child labor.

• Some use contractual monitoring, whereby they rely on the guarantees made

by suppliers, usually through contractual agreements or certification, that

they are respecting a company’s policy and not using any child labor in

production. This may be seen as “self-certification” by contractors or suppliers. Companies that use contractual monitoring in some cases have no mechanism for ensuring compliance.

• Some respondents indicated that they use a combination of active and con-
vi

tractual monitoring.

Active monitoring may be done through regular checks, formal audits or

evaluations, or special visits by corporate staff. The frequency and intensity of visits

vary greatly from company to company. For example, some companies may focus

their site visits on their larger suppliers or suppliers where there have been alleged

problems, or may only monitor those facilities from which they import directly or

which manufacture their private-label merchandise.

Contractual monitoring shifts at least part of the burden of responsibility for

ensuring compliance with codes of conduct onto the foreign manufacturer, the supplier or the buying agent. Even when monitoring is primarily contractual, there are

instances in which the U.S. corporation requires documentary proof of compliance

or reserves the right to carry out on-site inspections.

While technically not a monitoring activity, evaluation of prospective contractors with regard to labor standards is becoming an important aspect of code

implementation. Seventeen of the companies that responded to the survey stated

that they have a process in place to evaluate overseas facilities before they establish

a business relationship with them. Such on-site evaluations or inspections have long

been made primarily to verify whether the facilities have the physical capacity to

meet quality and quantity specifications. Increasingly, the working conditions and

employment practices of prospective contractors are also being evaluated, screening

out companies that are violators or have the potential for being so in the future.

• Several of the companies that conduct such evaluations indicated that compliance with their policies on working conditions is an important factor in the

decision to place a production program with a contractor. These evaluations,

according to many, enable them to screen out contractors who do not comply with applicable legal or company standards.

• A few respondents indicated that such pre-contract inspections had enabled

them to avoid doing business with a facility that appeared to employ underage children, but most reported that when facilities were rejected, it is usually

for other reasons.

4. Enforcement

Enforcement of codes of conduct refers to how U.S. companies respond to

violations of their codes of conduct. The vast majority of respondents stated that

they have never found any violation of the child labor provisions of their codes;

some companies attributed this to their efforts to evaluate and carefully select suppliers before entering into contracts with them, while others indicated that child labor

violations of their codes are less common than other types of violations, such as

safety and health.

Most respondents stated that, faced with an allegation of violation of their

code of conduct, they would first investigate to confirm the use of child labor and

then impose enforcement measures. Enforcement policies range from the more

severe — immediate termination of the business relationship — to more tempered
vii

responses, including demand for corrective action (e.g., dismissal of under-age workers), cancellation of specific orders, and placement of the violating supplier on probation.

D. Implementation Experiences of Codes of Conduct in

the U.S. Apparel Industry

Department of Labor officials visited six countries where there is extensive

production of garments for the U.S. market — the Dominican Republic, El Salvador,

Guatemala, Honduras, India, and the Philippines. The objective of the visits was to

learn about foreign suppliers’ approaches to the implementation of the established

child labor policies of U.S. importers. Interviews were held with as many relevant

persons or organizations as possible associated with the apparel industry, i.e., Labor

Ministry officials, manufacturers, plant managers, buyers, trade associations, unions,

workers, community activists, human rights groups, organizations concerned with

children’s issues, and other NGOs. At the beginning of each interview, Department

of Labor officials indicated that the purpose of the interview was to gather information for a public report, and any information collected could be used for that purpose.

The central element of the field visits was the opportunity to discuss matters

related to the existence and implementation of codes of conduct with managers and

workers of plants producing apparel for the U.S. market. Department of Labor

officials visited 74 apparel-producing plants and 20 export processing zones and met

with key representatives of the garment industry — and more specifically of the

garment export industry — in all six countries. The results of interviews regarding

the 70 plants determined to be exporting to the U.S. market at the present time are

reported in the study.

1. Child Labor in the Apparel Industry

The consensus of government officials, industry representatives, unions and

NGOs interviewed by the Department of Labor in the Dominican Republic, El Salvador, Guatemala, and Honduras is that child labor is not now prevalent in their garment export industries. In the very few cases where child labor was mentioned, the

children were 14 or older. However, the use of workers 15 to 17 is common and

there may be extensive violations of local laws limiting the hours for workers under

18.

There was some anecdotal information about the prior use of child labor in

the garment industry in Central America. Labor union representatives stated that

about two years ago, the garment export industry began to dismiss young workers to

avoid adverse publicity in importing countries. Often plant managers no longer hire

young workers (14-17 years of age) even if they meet domestic labor law or company code of conduct requirements. However, there are also some reports of fraudulent

proof-of-age documents being used by child workers to seek jobs in the garment

industry. There continue to be allegations in Guatemala of children working for

small subcontractors or in homework in the San Pedro de Sacatepequez area.
viii

Meanwhile, it is clear that children continue to work for subcontractors and

in homework in the Philippines and India. They perform sewing, trimming, embroidering and pleating tasks. It is also the case that children are not prevalent in the

larger factories in the Philippines, and that recently plant managers in India have

become more concerned about not using child labor.

2. Transparency

While most survey respondents indicated they have distributed their code of

conduct to all suppliers, many said they were not certain if workers knew about their

code. Field visits in six countries revealed that:

• Managers of two-thirds of the plants visited indicated that they were aware of

codes of conduct prohibiting the use of child labor, particularly of the codes

issued by their U.S. customers. However, not all of the companies that

indicated they were aware of codes of conduct had available a copy of the

code of conduct (or contractual provision) that they could show and discuss

with the visiting Department of Labor official.

• Formal training of plant managers and supervisors about the codes of conduct was not common in the six countries visited. About 30 percent of the

facilities visited where managers indicated awareness about codes of conduct stated that they had received some formal training regarding the U.S.

companies’ code of conduct. However, more than half of these facilities

produced for just two companies. Also, it was evident that the intensity of

the training varied widely from company to company.

• Posting of a U.S. garment importer’s code of conduct is not commonplace in

most of the countries visited. In all, 21 of the 70 plants visited by the Department of Labor officials had posted a code of conduct of a U.S. customer; 7 of

such plants (out of 8 visited in that country) were in El Salvador. The number

of plants visited in each of the other countries where codes of conduct were

posted was: Dominican Republic, 2; Honduras, 1; Guatemala, 2; India, 2; and

the Philippines, 7.

• Although a significant number of suppliers knew about the U.S. corporate

codes of conduct, and codes were posted at 30 percent of the plants visited,

meetings with workers and their representatives in the six countries suggested that relatively few workers are aware of the existence of codes of

conduct, and even fewer understand their implications.

• Department of Labor officials found a mixed record regarding the extent to

which host governments, NGOs, and business organizations were familiar

with codes of conduct and their implications.

3. Monitoring

While most respondents monitor foreign suppliers for quality of product and

scheduling coordination, monitoring of child labor policies is far less common. Field
ix

visits revealed that:

• All plants exporting garments to the U.S. that were visited confirmed that

they are subject to regular visits by their U.S. customers or their agents to

verify product quality and to coordinate production and delivery schedules.

About 90 percent of the companies visited stated that monitors/inspectors

verifying product quality generally also examined “working conditions” in

the plant, with emphasis on safety and health issues (climate control, ventilation systems, fire escapes, etc.).

• Monitoring for compliance with provisions of the codes of conduct of U.S.

garment importers dealing with labor standards — and child labor in particular — is less common. Foreign suppliers that are wholly owned by a U.S.

corporation, or contract directly with a U.S. corporation with a presence

abroad, seem to be subject to the most frequent and most thorough monitoring of codes of conduct, including child labor and other labor standards.

• A few U.S. corporations — particularly manufacturers — tended to have

structured monitoring of all aspects of their codes of conduct and subjected

their foreign subsidiaries to such disciplines.

• There was also evidence from the field visits of numerous instances of contractual monitoring of codes of conduct. A reliance upon a form of contractual monitoring is most prevalent in the case of U.S. retailers which do not

have a significant presence abroad. In these situations, the burden of monitoring compliance with the U.S. importer’s child labor policies rests with the

foreign agent, contractor or subcontractor, typically through a certification

process. The role of the U.S. importers in monitoring these situations is

minimal.

• Site visits confirmed that some U.S. importers screen foreign garment contractors prior to entering into a supply relationship.

4. Enforcement

Foreign plant managers said factories that have passed the screening process

and have become contractors of U.S. apparel importers may face a range of corrective measures should they fall short in complying with codes of conduct. Examples

of corrective measures cited included changes to the physical plant (improvement of

bathrooms, eating facilities, lighting, ventilation), monetary penalties, immediate dismissal of young workers, and termination of contracts.

Foreign plant managers and other industry officials stated continued access

to the U.S. market is a very large incentive for overseas garment producers to meet

quality/timeliness requirements and comply with codes of conduct.

E. Conclusions and Recommendations
x

Based upon the information collected from the voluntary survey of 48 U.S.

apparel importers and site visits to six countries producing garments for the U.S.

market, the Department of Labor found that codes of conduct can be a positive factor

in solving the global child labor problem. Most of the large U.S. apparel importers

responding to the voluntary questionnaire have adopted codes prohibiting child

labor in garment production and some are clearly committed to their implementation. This is a remarkable change in a matter of just a few years.

Codes of conduct are not a panacea. Child labor remains a serious problem,

with hundreds of millions of working children around the world. However, the

presence of children in the garment export industry may be reduced by the implementation of codes of conduct. It is also possible that changes induced by codes of

conduct could have positive spillover effects for children more generally, e.g., a

greater commitment of a foreign country to compulsory education for children.

However, this relationship requires further study.

Finally, because codes of conduct seem to be tools used by large apparel

importers, there may remain smaller importers without codes of conduct still willing

to overlook the working conditions of the plants in countries from where they purchase their garments. This question also deserves further study.

Consistent with the important efforts already undertaken by many U.S. apparel importers, the Department of Labor recommends that U.S. companies consider

whether some additional voluntary steps might be appropriate:

1. All actors in the apparel industry, including manufacturers, retailers,

buying agents and merchandisers, should consider the adoption of a code of

conduct.

If all elements of the apparel industry have a similar commitment to eliminating child labor, this would have a reinforcing impact on the efforts that the leaders in

the industry have made. Trade associations should consider whether they could

increase their technical assistance to help assure that the smaller companies in the

industry can achieve this objective.

2. All parties should consider whether there would be any additional

benefits to adopting more standardized codes of conduct.

There is a proliferation of codes of conduct. Some foreign companies and

producer associations are even drafting their own codes. The definition of child

labor differs from code to code, thereby creating some uncertainty for business partners and workers as to what standard is applicable.
xi

3. U.S. apparel importers should consider further measures to monitor

subcontractors and homeworkers.

Since most of the violations of labor standards, including child labor, occur in

small subcontracting facilities or homework, U.S. apparel importers should consider

further measures to monitor subcontractors more closely.

4. U.S. garment importers — particularly retailers — should consider

taking a more active role in the monitoring/implementation of their codes of

conduct.

The implementation of codes of conduct is a complex matter, and a relatively

recent endeavor. Implementation seems best — and most credible — when U.S.

companies get directly involved in the monitoring. There is little incentive for foreign companies to comply with a U.S. importer’s code of conduct if there is no

verification of actual behavior.

5. All parties, particularly workers, should be adequately informed about

codes of conduct so that the codes can fully serve their purpose.

In the supplying countries, managers of enterprises are generally familiar

with the codes of their clients. Workers, however, are seldom aware of codes of

conduct of the U.S. corporations for which they make garments. NGOs and foreign

governments are also not fully informed about codes of conduct.
1

I. Introduction

Child labor is almost invisible to most people, but child workers are legion in

the world. Sold or exchanged as cheap merchandise, many children cannot escape

bonded labor or prostitution. Others suffer, and may only barely survive, the long

hours of work, the heavy burdens, the dangerous tools, the poisonous chemicals. The

strongest will go on, forever bearing the physical and emotional scars of premature

labor. At a time when they should be at school and preparing for a productive adulthood, young boys and girls are losing their childhood and, with it, the promise for a

better future.

It is true that all over the world there is increasing awareness of this problem.

Nevertheless, a wall of silence still surrounds the worst forms of child labor; and other

barriers of ignorance and self-interest tend to perpetuate it. Only a clear perception of

the problem and the firm resolve to combat it will finally eradicate the evil of child

labor.1

A. Overview

In 1993, the United States Congress provided for the Department of Labor’s

Bureau of International Labor Affairs (ILAB) to establish a special unit to research the

use of child labor worldwide and publish reports on child labor issues.

This report is the third volume in ILAB’s international child labor series.2

ILAB’s two previous reports documented the use of child labor in the production of

U.S. imports, as well as situations of forced and bonded child labor. The present

report focuses on the use of child labor in the production of apparel for the U.S.

market, and reviews the extent to which U.S. apparel importers have established and

are implementing codes of conduct or other business guidelines prohibiting the use

of child labor in the production of the clothing they sell.3

A development of the last few years, corporate codes of conduct and other

business guidelines prohibiting the use of child labor are becoming more common,

as consumers as well as religious, labor and human rights groups are increasingly

calling on companies to take responsibility for the conditions under which the goods

they sell are being manufactured. The term “code of conduct” is used generically in

1 International Programme on the Elimination of Child Labour (IPEC) (Geneva: International Labor Organization)

1996 [hereinafter IPEC Brochure].

2

 ILAB’s first two reports are titled, By the Sweat and Toil of Children (Volume I): The Use of Child Labor in U.S.

Manufacturing and Mining Imports (1994), and By the Sweat and Toil of Children (Volume II): The Use of Child

Labor in U.S. Agricultural Imports & Forced and Bonded Child Labor (1995). In addition, in March 1996, ILAB

published Forced Labor: The Prostitution of Children, the proceedings of a symposium on the sexual exploitation

of children held at the Department of Labor in September 1995.

3 See Omnibus Consolidated Rescissions and Appropriations Act of 1996, P.L. 104-134 (April 26, 1996); S. Rpt.

104-145, Departments of Labor, Health and Human Services, and Education and Related Agencies Appropriation

Bill, 1996.
2

this report to refer to various types of corporate documents establishing policies and

standards on child labor and other working conditions. These instruments take different forms — codes of conduct, statements of company policy in the form of letters

to suppliers, provisions in purchase orders or letters of credit, and/or compliance

certificates.

Chapter II provides an overview of the U.S. apparel industry, U.S. apparel

imports, major U.S. retailers and manufacturers of apparel and their codes of conduct.4

 An analysis follows of how apparel companies implement the child labor

protections of their codes — using transparency, monitoring, and enforcement as

benchmarks. This analysis is drawn from information provided to ILAB by the companies themselves. Chapter III uses information gathered by Department of Labor

officials in six countries that export garments to the U.S. market to describe how the

codes of conduct are being implemented abroad. Chapter IV contains conclusions

on codes of conduct gathered from the review of company policies prohibiting child

labor as well as the country visits.

The remainder of this introduction will place the discussion of codes of conduct in the broader context of child labor throughout the world. It will give some

background on existing international child labor standards and current estimates of

child workers. It also will provide some observations on recent child labor trends in

the garment industry, and explain why codes of conduct have come to be seen by

some as a partial response to the international child labor problem.

B. International Child Labor

The International Labor Organization (ILO) establishes and supervises the

application of international labor standards — including child labor standards. Its

basic philosophy on child labor was set in the early part of this century: “Under a

certain age children should not need to engage in an economic activity.”5

The term “child labor” generally refers to any economic activity performed

by a person under the age of 15. Not all work performed by children is detrimental

or exploitative. Child labor does not usually refer to performing “light work” after

school or legitimate apprenticeship opportunities. Nor does it refer to young people

helping out in the family business or on the family farm. Rather, the “child labor” of

concern is generally employment that prevents effective school attendance, and which

is often performed under conditions hazardous to the physical and mental health of

the child.

International standards provide guidelines on the minimum age for employment, allowing for exceptions based on the conditions of work. ILO Convention 138

on the Minimum Age for Employment, adopted in 1973, states: “The minimum age

4 For purposes of this report, the terms “apparel” and “garment” are used interchangeably.

5 Child Labour: What is to be done? Document for discussion at the Informal Tripartite Meeting at the Ministerial

Level (Geneva: International Labor Office) ITM/1/1996, June 12, 1996, 26 [hereinafter Child Labour: What is to be

done?].
3

. . . should not be less than the age of compulsory schooling and, in any case, shall

not be less than 15 years.” Convention 138 allows countries whose economy and

educational facilities are insufficiently developed to initially specify a minimum age

of 14 years and reduce from 13 years to 12 years the minimum age for light work.6

Convention 138 defines “light work” as work that is not likely to harm the

child’s health or development, or prejudice his/her attendance at school. Convention 138 also prohibits any child under the age of 18 from undertaking dangerous

work — that is, work that is likely to jeopardize the health, safety or morals of young

persons.

Partly due to the focus on the child labor issue in the last few years, there

have been further discussions about more clearly defining what constitutes “exploitative” child labor that violates the human rights of a child and for which a strong

international consensus exists for immediate abolition.7

 The ILO has begun the

effort to adopt a new standard on the abolition of the most “intolerable forms” of

child labor by 1999.

In the meanwhile, the ILO’s International Programme on the Elimination of

Child Labor (IPEC), established in 1992 to assist countries in the phased elimination

of child labor, refers to certain categories of child labor as “intolerable”: children

working under forced labor conditions and in bondage; children in hazardous working conditions and occupations; and very young working children (under 12 years of

age).8

Whether child labor is defined by age or conditions of work, no reliable

information exists on the actual number of children working throughout the world.

Most available data — and it is partial — only covers economic activity of children

between the ages of 10 and 14. The ILO estimates that there are at least 73 million

economically active children in this age group.9

 The number of child workers under

10 is thought to be significant — in the millions.10 However, according to the ILO,

the probable total number of child workers around the world today may be in the

“hundreds of millions.”11

6

 See Child Labour: What is to be done? at 27.

7

 See Trade, Employment and Labour Standards: A Study of Core Workers’ Rights and International Trade (Paris:

Organisation for Economic Cooperation and Development) May 14, 1996, 19-21.

8 IPEC Brochure.

9 Child Labour Today: Facts and Figures (Geneva: International Labor Organization, ILO/CLK/1) June 10, 1996

[hereinafter Child Labour Today: Facts and Figures].

10 Child Labour Today: Facts and Figures.

11 Child Labour Today: Facts and Figures. The ILO is currently working to develop better statistical information

on child labor. Experimental statistical surveys have been carried out by the ILO in four countries: Ghana, India,

Indonesia and Senegal. See Child Labour Surveys, Results of methodological experiments in four countries 1992-

93 (Geneva: International Labor Office) 1996. The ILO’s IPEC program is now utilizing its survey techniques in

other countries — Turkey, Pakistan and the Philippines (funded by the U.S. Department of Labor).
4

C. Child Labor in the Apparel Sector

There are no reliable statistics on the rate of employment of children in any

particular economic activity, including the garment sector. Therefore, most information on child labor in the garment industry comes from eyewitness accounts, nongovernmental organization (NGO) and academic studies, journalists, and ILO reports.

The Department of Labor’s 1994 international child labor study, By the Sweat

and Toil of Children (Volume I): The Use of Child Labor in U.S. Manufactured and

Mined Imports, catalogued existing information on child labor in the garment industries of Bangladesh, Brazil, China, Guatemala, India, Indonesia, Lesotho, Morocco,

the Philippines, Portugal and Thailand. While the report noted that more research

was necessary to confirm the extent and working conditions of child workers, in

some cases it stated that children were involved in the production of garments for

export to the United States.

With the exception of Bangladesh, where children regularly worked in largescale, formal factories, the report found that children were more likely to work in

small subcontracting shops or homework situations. In some cases, children were

found to work in locked shops, with armed guards preventing entrance and exit

during work hours. Children worked on tasks such as sewing buttons, cutting and

trimming threads, folding, moving and packing garments. In small shops and homesites

in the Philippines, children were also found embroidering and smocking (making

pleats). In some cases, children worked long hours — sometimes six or seven days

a week. Some children received less than the minimum wage and were not paid for

overtime work.

Today, two years after our initial findings, children continue to work in the

apparel sector. A 1996 ILO study states that “...there is no denying that child labor is

still very much a reality” in the apparel sector, although it is “extremely difficult to

give exact figures, particularly for the segment involved in world markets, because of

the complex subcontracting arrangements in operation.”12 The same ILO study also

notes positive developments that may have contributed to the shifting of some children out of the garment sector: increased international concern about the conditions

under which labor-intensive goods such as clothing are produced, and initiatives by

some developing countries to eliminate child labor in order to improve the image of

their industries.

Anecdotal information gathered during the preparation of this report also

indicates that fewer children may be working on garment exports for the U.S. market

— at least in some countries — in 1996 than in 1994. This conclusion, however, is

based mainly on anecdotal evidence in the six countries where Department of Labor

officials visited. More research is necessary to confirm that a downward trend in the

12 Globalization of the footwear, textiles and clothing industries: Report for discussion at the Tripartite Meeting on

the Globalization of the Footwear, Textiles and Clothing Industries: Effects on Employment and Working Conditions (Geneva: International Labor Organization) 1996, 75 [hereinafter ILO Textile Report].
5

use of child labor in garment production is a universal phenomenon.13 This is no

small task since a total of 168 countries export apparel to the U.S. market, many of

them small suppliers. There are reports of child labor in some newer suppliers to the

U.S. market.14

There are several reasons which might explain a potential downward trend

in the use of child labor in garment-exporting countries.

First, any potential downward trend may be partly due to the widespread

adoption in the last several years of U.S. company codes of conduct prohibiting child

labor.

Second, public awareness of child labor and reports of its use in export

industries, including the garment industry, may be a substantial contributing factor to

a declining use of child labor. There has been a whirlwind of media accounts and

public pressure concerning child labor during the past few years. Investigative journalists have broadcast or published numerous reports of working children, particularly in developing countries, making products sold in the United States and other

industrialized nations. In some cases, news reports have named the companies

whose products were shown to be made by young workers.

For example, in 1993 an American television newsmagazine reported a story

of young Bangladeshi children making garments sold at Wal-Mart stores. News

accounts also reported that young girls were producing garments at an independent

Bangladeshi contractor facility supplying Levi Strauss & Company. More recently, an

NGO accused The Gap of selling clothing made in Salvadoran sweatshops that used

young workers.15 In 1996, the same group charged that Honduran children produced clothing bearing the Kathie Lee Gifford label and sold in Wal-Mart stores.16

13 In the case of the People’s Republic of China — the second largest exporter of garments to the U. S. in 1995 —

documenting labor practices, including child labor, remains extremely difficult. The 1994 study noted newspaper

reports and other anecdotal accounts of children 12 to 15 years old working 15 hours a day in garment factories.

It is not known whether there has been any demonstrable change in the number or situation of child workers in

the Chinese apparel industry.

14 For example, there is a recent report on possible child labor in a Cambodian garment factory. See American

Embassy - Phnom Penh, unclassified telegram no. 2594, September 16, 1996.

15 In June 1995, the National Labor Committee (NLC) alleged that more than 100 workers at the Mandarin

International garment manufacturing plant in El Salvador producing garments for The Gap were between the ages

of 14 and 17. Although the employment of the young workers seemed to comply with Salvadoran law and The

Gap’s code of conduct, it was alleged that the young workers were forced to work longer hours than allowed by

law. In December 1995, The Gap signed an agreement consenting to independent monitoring of its code of

conduct. It also agreed to re-approve the Mandarin factory as a contractor when the factory could effectively

implement The Gap’s code. The independent monitoring group consists of local volunteers from Salvadoran

NGOs.

16 In April 1996, the NLC presented testimony at a Congressional hearing alleging that clothing bearing the Kathie

Lee Gifford label sold at Wal-Mart was made by illegal child labor in Honduras. The NLC claimed that the Global

Fashion factory employed workers as young as 13 and forced them to work long overtime hours, and sometimes

through the night. The NLC asserted that, during peak production times, the girls were not permitted to attend

night school because they were forced to stay at work. A letter sent to Ms. Gifford outlining these allegations,

requested her to publicly disavow the use of child labor and allow independent human rights monitors access to

plants producing Kathie Lee clothing. Ms. Gifford’s first response was to distance herself from the allegations,

saying that she had no knowledge of illegal labor practices and no means to oversee the employment practices in

the overseas production of her clothing. Later, she announced that she would take responsibility for ensuring that

no children produced garments bearing her label, and encouraged other companies and celebrity endorsers to do

the same. Ms. Gifford has announced her intention to hire an independent monitor to ensure that her clothing is

made under appropriate labor conditions.
6

Third, in some countries, such as the Philippines, increasing numbers of

larger factories may be squeezing smaller subcontracting shops — which are more

likely to employ children — out of work. Professor Rosario del Rosario, a child labor

expert who recently concluded a survey on child labor in the Philippines’ garment

sector, told Department of Labor officials that although there is still some child labor

used in subcontracting levels of the garment industry, the numbers of child workers

has decreased since the late 1980s. She said that subcontractors who once employed

children have reported that larger exporting factories have markedly decreased their

orders for the garments that they had traditionally supplied.17 While this is not necessarily the case everywhere, the Philippine experience illustrates that a decline in the

use of subcontracting arrangements may cause a decline in the use of child labor.18

A related development that may help explain a downward trend in the use of

child labor in some circumstances is the strategic decision by some large U.S. importers to prevent or restrict subcontracting by foreign suppliers and to consolidate their

sourcing with a smaller number of larger factories.

Fourth, garment manufacturers may be responding to concerns that importing countries could enact legislation banning the importation of products made by

children. Such legislation has been introduced in recent U.S. Congresses.

There are also cases where children have been displaced from the garment

sector, as business practices have reacted to market pressures to reduce the use of

child labor. One of the most dramatic examples involves Bangladesh, where large

numbers of children worked in garment factories as recently as 1994 (see Box I-1).

International media attention and threats of boycotts and cancelled work orders led

to the dismissal of thousands of child workers from the garment sector — unfortunately in this instance with no safety net in place for them.

In response to concerns for the dismissed child workers, a memorandum of

understanding was negotiated between the Bangladesh Garment Manufacturers and

Exporters Association and the ILO and Unicef — with the active support of the U.S.

Embassy and the U.S. Department of Labor — to place the children in schools, and

to offer their jobs to older family members.

Thus, it is possible that in the absence of government programs to assist

children, the precipitous dismissal of child workers can endanger, rather than protect

them.19 More research is needed so that governments, industry, international organizations, and others concerned with the welfare of children are better equipped to

17 U.S. Embassy - Manila unclassified telegram no. 12371, September 17, 1996.

18 In contrast to the Philippines experience, a 1996 ILO study on the textile, clothing and footwear sector notes a

trend towards outsourcing. The ILO reports that this is reflected in the use of homework and in recourse to

moonlighting in small enterprises and clandestine workshops. Such practices tend to undermine basic employment and working conditions. See ILO Textile Report at 64.

19 A recent article on labor conditions in Honduran garment factories states: “Union leaders and workers say

factory owners have also been reviewing their personnel records and dismissing all employees who are minors.

But that does not mean the dismissed youngsters are returning to school. On the contrary, management and labor

agree that most of the children have instead sought new jobs outside the assembly sector that are lower paying

and more physically demanding or are buying fake documents in an effort to sneak their way back into the

apparel plants.” Larry Rohter, “Hondurans in ‘Sweatshops’ See Opportunity,” The New York Times, July 13, 1996

[hereinafter “Hondurans in Sweatshops”].
7

BANGLADESH CASE STUDY

In 1993, an American television newsmagazine — “NBC Dateline” — broadcast a

story of young Bangladeshi children making garments sold at Wal-Mart stores. This

put pressure on Wal-Mart to cancel its contracts with Bangladeshi manufacturers.

Other companies informed their Bangladesh partners that the use of child labor was

creating negative press and was bad for business. At the same time, the Bangladesh

Garment Manufacturers and Exporters Association (BGMEA) learned of proposed

legislation that could restrict the U.S. import of items made with child labor, potentially closing the American market to Bangladeshi garments if children were found in

the factories. Garment exports are the single largest export industry in Bangladesh —

with over 50 percent of garment exports going to the U.S. Obviously, should

Bangladesh no longer be able to sell its garments to the U.S., its national economy

would be seriously affected.

This pressure led to action. On July 4, 1994, the BGMEA announced that it would

eliminate child labor in the garment industry by October 31, 1994. Thousands of

children were reportedly dismissed from the factories as a result.

Some reports indicated the children removed from the garment factories were forced

to resort to more dangerous and lesser paid work in the informal sector. Rumors

circulated that many of the children ended up as street beggars, domestic servants,

or were forced into prostitution. Other reports noted that the children were hired by

underground subcontractors, working in hidden garment sweatshops under worse

conditions than before. While there is no clear evidence describing what happened

to the children, it is clear that the government of Bangladesh was not providing

adequate schools or other programs for them.

Once it became apparent that there was no safety net for the dismissed children,

representatives of the ILO, Unicef, the Asian-American Free Labor Institute (AAFLI)

and officials of the U.S. Embassy, asked the BGMEA to cease firing underage workers until a school system and other measures were in place. After a year of extended

negotiations, a Memorandum of Understanding (MOU) was signed on July 4, 1995

between the BGMEA, the ILO and Unicef. The MOU provides that all child workers

in the garment sector be removed from the factories and enrolled in schools. It

forbids any new hiring of underage workers, as well as any retention of children

once all MOU schools have opened. A monitoring and verification system developed by the ILO oversees compliance; and monitoring teams make unannounced

visits to factories and schools, reporting violations to a steering committee for action.

The MOU also states that the BGMEA will offer employment to qualified family members of underage workers whose employment is terminated under the agreement and

that former child workers will be offered reemployment once their schooling is completed.

A survey, conducted in the fall of 1995, determined the number and identity of child

workers in BGMEA factories. The survey counted approximately 11,000 children —

a significantly lower number of children than thought to be in the factories a year

earlier. As of September 1996, 130 MOU schools for former child workers have

opened, serving nearly 2300 children. Clearly, progress has been slow. ILO monitoring teams making random, unannounced factory visits continue to encounter obstacles from some producers. They also continue to find additional underage workers that were either missed by the original surveys or are new hires. Furthermore, the

schools are not filled. Unless the industry is fully committed to the MOU, its potential

success may remain unrealized.

B O X I - 1
8

design appropriate programs.20 It is clear, however, that local and national commitments to universal and free education for children are immediate and positive steps

which can and should be taken.

D. Codes of Conduct: A Recent Innovation

Codes of conduct have become increasingly common in recent years, particularly in the apparel sector. While the first codes of conduct in the apparel industry were developed in the early 1990s,21 today, the majority of the major apparel

manufacturers and retailers have developed or are developing codes or business

policies that address child labor and other working conditions. Many companies are

now revising their codes to incorporate lessons learned from their own or other

companies’ experiences. While this report focuses on the child labor provisions of

codes of conduct, many of its findings can be generalized to the other labor provisions that codes often address.

The recent proliferation of codes of conduct can be attributed to several

factors. With media reports and exposés on child labor becoming more frequent,

consumers — and therefore companies — are becoming increasingly concerned

about the conditions under which the garments they purchase are made. Companies’ adoptions of codes of conduct serve to ease consumer concerns — and their

own — that they may be contributing to the exploitation of child labor. Often companies adopt codes to project a positive image and protect their brand-name or

quality reputation. Some are motivated by good intentions; some by bottom-line

considerations — many by both.

 The analysis of codes of conduct contained in this report is based on a

voluntary survey and follow-up telephone interviews with the largest U.S. retailers

and manufacturers of apparel. In its review of the extent and effectiveness of codes

of conduct in the apparel industry, the report has benefitted from the input of representatives of industry, human rights groups, religious groups, trade unions, workers,

academics and other governments.22 Appendices B and C list the companies surveyed and reproduce the codes of conduct they provided. Site visits were undertaken to six countries — the Dominican Republic, El Salvador, Guatemala, Honduras,

India, and the Philippines — that produce garments for the U.S. market in an attempt

to learn more about how codes of conduct are implemented on the local level.

Appendix D provides additional information on countries visited and persons and

organizations with whom Department of Labor officials met.

Companies with codes of conduct or policies prohibiting the use of child

labor in overseas production facilities use a variety of methods to define child labor.

Some companies refer to “national law” or “international standards.” Some compa20 Child Labour: Report to the ILO Committee on Employment and Social Policy (Geneva: International Labor

Office) ILO Doc. GB.264/ESP/1, November 1995, 18.

21 According to Levi Strauss & Co., its Global Sourcing & Operating Guidelines adopted in 1991, were the first ever

developed.

22 See International Child Labor Hearing (Washington, DC: U.S. Department of Labor) June 28, 1996.
9

nies, in an effort to avoid adverse publicity, even require their suppliers to comply

with minimum age requirements that are above the minimum age mandated by

national law or international standards. This is because there is no certainty of what

minimum age for employment is “publicly acceptable,” and some companies are

prohibiting the employment of “teenagers” in the 14 - 17 age bracket to avoid workers who could be considered “children.”

While many companies have adopted codes either to prevent, or in response

to, adverse publicity, having a code of conduct can, ironically, make companies

more vulnerable to criticism if conditions are found that violate their code. Indeed,

some companies still consider it “safer” to avoid any public declaration of their

standards through a code of conduct.

Furthermore, the most important developments today do not lie so much in

adopting codes, which are already widespread, but in the ways companies are devising to implement those codes. Some companies have adopted codes before fully

developing methods to implement them. As Chapter II notes, the international apparel industry is complex, with many U.S. companies sourcing from hundreds or

thousands of overseas buying agents, contractors and subcontractors. For this reason, implementation presents definite challenges for many importers.

Some companies require their quality control personnel to double as social

auditors, while others are engaging outside firms to survey compliance. Still others

ask their contractors to sign a contract certifying that they do not hire children, and

then rely on the word of the contractor without further verification. Some companies

are experimenting with new approaches, literally learning as they go. Some have

begun working with unions, human rights and religious groups to establish a monitoring system.

Credibility is the critical element for codes of conduct. Without it, the promises contained in a code are hollow and the credibility of the company falters. Companies’ success in assuring the public that their policies on labor practices abroad are

indeed being followed will depend on the three key elements of implementation that

are discussed in detail in Chapters II and III — (1) transparency, (2) monitoring, and

(3) enforcement.

First, codes of conduct cannot be effectively implemented without transparency. It is critical that all actors affected by a code — buying agents, contractors,

subcontractors, union representatives and the workers themselves — be aware of its

provisions. Research conducted for this report suggests that codes of conduct conceived in the headquarters of U.S. apparel importers are not necessarily well known

in the overseas facilities that produce their garments.

Second, while a credible system of monitoring — to verify that a code is

indeed being followed in practice — is essential, there is no agreement on the best

way to conduct monitoring. Some companies only monitor their largest contractors

or contractors that produce private-label merchandise for them and rely on buyer

agents or self-monitoring for other facilities. Several methods of monitoring are

currently being used and developed, including monitoring by outside auditors and

local and international NGOs. The most effective type of monitoring may vary
10

according to the characteristics of the importing company, such as whether it has a

strong presence abroad or whether it is vertically integrated. It appears that the

closer a company is to the production, the more leverage it has to ensure that the

conditions at manufacturing facilities comply with its policies. There also appears to

be some dispute among retailers, manufacturers, overseas contractors and other parties as to who has the ultimate responsibility for monitoring.

Third, the issue of enforcement presents some complex issues. If a company

discovers child workers in a facility, the quickest and perhaps easiest way to resolve

the problem is to require their immediate dismissal. A small number of companies

have strived to come up with more comprehensive solutions to the problem — such

as providing financial support for the education of the children.

These are some of the pitfalls and challenges that companies face in attempting to enforce their code of conduct in overseas facilities. An effective implementation program can be time-consuming and financially burdensome. But just as companies invest in the quality of their clothes, they are now learning how to effectively

invest in the quality of their labor conditions.
11

II. Codes of Conduct in the U.S. Apparel Industry

A. Introduction

The United States is the world’s largest importer of garments. In 1994, it

accounted for 28 percent of world imports of such products.1

 The garment industry

is a global industry, with American companies importing clothing for the United

States market from all over the world. Along with globalization have come increased

concerns from companies and consumer, labor and human rights groups regarding

the labor conditions under which garments are made. These concerns pertain to

health and safety conditions in garment factories, wage and hour issues, trade union

rights, and, perhaps most commonly, child labor and forced labor.

In response, many U.S. garment manufacturers and retailers have voluntarily

developed codes of conduct, or policy statements, requiring factories with which

they do business — in the U.S. and abroad — to meet certain legal and ethical

standards. These codes of conduct address a variety of worker rights issues. Provisions prohibiting child labor are one of the most common elements of these codes.

While codes of conduct have been adopted by many companies in the garment industry, they are also a recent phenomenon. A small number of companies in

the garment industry first introduced formal codes of conduct in the early 1990s and

have been implementing them for several years.2

 Most firms, however, have developed codes in the past two or three years.

This chapter will examine the use of codes of conduct by large U.S. importers

of garments, specifically with respect to provisions prohibiting the use of child labor

in overseas production.3

 It will describe the extent to which large U.S. retailers and

apparel manufacturers have adopted codes of conduct with provisions on child labor, the content of these codes, and how companies are implementing them.4

Part B of this chapter provides a brief overview of codes of conduct. Part C

describes the U.S. garment industry and U.S. imports of garments. Part D explains

which apparel manufacturers and retailers were surveyed regarding their importing

practices and codes of conduct with respect to child labor. Part E describes the

extent, form, content and elements of child labor provisions in garment importers’

codes of conduct. Part F describes the various ways in which garment importers

implement the child labor provisions of their codes and discusses issues surrounding

code implementation.

1 Sri Ram Khanna, “Trends in US and EU Textile and Clothing Imports,” Textile Outlook International, January

1996, 80 [hereinafter Trends in US and EU Textile and Clothing Imports].

2 According to Levi Strauss & Co., its “Global Sourcing & Operating Guidelines,” adopted in 1991, were the first

ever developed.

3 This study focuses on the child labor issue, although other labor standard aspects of code of conduct are also

controversial and require further review.

4 This study examines the foreign implementation of codes of conduct, not domestic application — although

many companies have similar policies for garment production and sourcing within the United States.
12

B. Corporate Codes of Conduct

Corporate codes of conduct are policy statements that define ethical standards for companies. Corporations voluntarily develop such codes to inform consumers about the principles that they follow in the production of the goods and

services they manufacture or sell. Corporate codes of conduct usually address many

workplace issues — including child labor —and, according to some observers, are

part of a broader movement toward corporate social responsibility.5

1. Earlier Origins of Codes of Conduct

In the early 1970s, multinational corporations or multinational enterprises

(MNEs) were widely criticized for their behavior in developing countries.6

 Host

governments, as well as labor organizations, said that multinational corporations

failed “to operate in harmony with local economic, social and political objectives.”7

For their part, many corporations resisted arguments that they had a social purpose

to pursue in their overseas activities.

In response to pressure from developing countries and human rights groups,

several international organizations developed ethical guidelines addressing the conduct of MNEs. Examples include the draft United Nations Code of Conduct for Multinational Corporations,8

 the OECD Guidelines for Multinational Enterprises,9 and the

ILO Tripartite Declaration on Principles concerning Multinational Enterprises and

Social Policy.10 These multilateral codes of conduct covered MNE behavior on a

range of topics, including labor standards.

Although the OECD guidelines and the ILO Declaration of Principles contain

mechanisms for reporting abuses and problems, neither organization enforces its

guidelines since they are voluntary and not legally binding.11 However, both continue to serve as examples for efforts by private groups and corporations to develop

codes of conduct. The U.N. Code of Conduct for Multinational Enterprises was never

formally adopted and, therefore, remains merely a statement of principles.

Private groups have also developed voluntary codes of conduct aimed at the

operations of U.S. corporations in specific countries or with regard to specific issues.

5 Lance Compa and Tashia Hinchliffe-Darricarrere, “Enforcing International Labor Rights Through Corporate

Codes of Conduct,” Columbia Journal of Transnational Law 33 (1995), 663-668 [hereinafter Compa and HinchliffeDarricarrere].

6 The OECD Declaration and Decisions on International Investment and Multinational Enterprises, 1991 Review

(Paris: Organization for Economic Cooperation and Development, 1992), 39.

7 See James Michael Zimmerman, Extraterritorial Employment Standards of the United States: The Regulation of

the Overseas Workplace (New York: Quorum Books, 1992).

8 Development and International Economic Cooperation: Transnational Corporations, U.N. Economic and Social

Council, 2nd Session, Agenda Item 7(d), U.N. Doc. E/1990/94 (1990), 1.

9 The OECD Declaration and Decisions on International Investment and Multinational Enterprises, 1991 Review

(Paris: Organization for Economic Cooperation and Development, 1992), 39.

10 Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, 2d ed., (Geneva:

International Labor Office, 1991)[hereinafter ILO Declaration of Principles].

11 See Compa and Hinchliffe-Darricarrere at 670-71.
13

Among these codes, the Sullivan Principles (South Africa)12 and the MacBride Principles (Northern Ireland)13 dealt primarily with labor standards issues, while the Slepak

Principles (Soviet Union)14 and the Maquiladora Standards of Conduct (Mexico/Central America),15 dealt with a broader set of topics, with labor standards playing a

prominent part. As is the case with the multilateral codes, these privately developed

codes of conduct provide models for corporations to develop their own codes of

conduct addressing labor standards issues, including child labor.

2. Rationale for Adopting Codes of Conduct

United States corporations have adopted corporate codes of conduct for a

variety of reasons, ranging from a sense of social responsibility to pressure from

competitors, labor unions, the media, consumer groups, shareholders and workerrights advocates. The U.S. Government has also encouraged U.S. corporations to

adopt model business principles for their overseas operations.16

Companies that import products from countries whose labor conditions have

received negative publicity regarding child labor or abusive working conditions may

develop codes of conduct in order to prevent further criticism.17 A Hong Kong trade

lawyer stated in a recent article that many importers “just think it’s wrong to have

their goods made under conditions considered offensive. Others...don’t want to be

exposed on 60 Minutes or 20/20.”18

Companies who spend hundreds of millions of dollars on advertising and

whose sales depend heavily on brand image and consumer goodwill are particularly

responsive to allegations that their operations exploit children or violate other labor

standards. Some have cited positive correlations between responsible business be12 The Sullivan Principles, developed by the Reverend Leon H. Sullivan in 1977, were aimed at U.S. corporations

doing business in South Africa within the apartheid legal system. They were intended to apply pressure on the

South African government to end apartheid by promoting employment practices in U.S. corporations that ensured

racial equality. See Leon H. Sullivan, “The Sullivan Principles and Change in South Africa,” in Business in the

Contemporary World, Herbert L. Sawyer, ed., (1988), 175.

13 Named after Nobel Prize-winning human rights activist Sean MacBride, the MacBride Principles were developed

in 1984 by the Irish National Caucus to address allegations of anti-Catholic discrimination in employment in

Northern Ireland. See The MacBride Principles (Washington, D.C.: Irish National Caucus, 1984), 2.

14 The Slepak Principles were issued in 1987 by the Slepak Foundation. They were designed to apply to U.S.

corporations doing business in the former Soviet Union. See Jorge F. Perez-Lopez, “Promoting Respect for Worker

Rights Through Business Codes of Conduct,” Fordham International Law Journal 17 (1993), 13.

15 Maquiladoras are plants that assemble parts and components into a finished product for export. Maquiladoras

are located in Mexico, Central America and the Caribbean, and assemble U.S.-made parts and components into

finished goods that are exported to the United States. The Maquiladora Standards of Conduct were issued in 1991

by the Coalition for Justice in the Maquiladoras. See “Maquiladora Standards of Conduct,” in The CJM Newsletter

(San Antonio, Texas: Coalition for Justice in the Maquiladoras, 1992), 1.

16 In 1995, the Clinton Administration encouraged U.S. corporations and organizations to develop their own

voluntary codes of conduct for their foreign operations based on a set of Model Business Principles. See Model

Business Principles (U.S. Department of Commerce International Trade Information Center, 1995). See also “Administration Releases Details on Voluntary Business Principles,” Daily Labor Report, no. 104 (May 31, 1995) A-4.

17 “The Business of Child Labour,” Anti-Slavery Reporter (London: Anti-Slavery International, July 1996) 6.

18 James Cox, “U.S. Retailers Put Pressure on Foreign Factories,” USA Today, September 4, 1996.
14

havior and return-on-investment, stock price, consumer preferences and employee

loyalty. The CEO of Levi Strauss & Co. has said:

I believe — and our company’s experience demonstrates — that a

company cannot sustain success unless it develops ways to anticipate

and address ethical issues as they arise. Doing the right thing from

day one helps avoid future setbacks and regrets. Addressing ethical

dilemmas when they arise may save your business from serious financial or reputational harm.19

Some companies adopt codes as a direct response to public pressure. For

example, when Starbucks Coffee Company received hundreds of letters from consumers and investors demanding an improvement in working conditions on Guatemalan coffee plantations, it decided to introduce a code of conduct for all of its

coffee bean suppliers. A Starbucks executive admitted that the protesters had “prodded” the company into developing a code.20

Corporations may adopt codes of conduct in order to demonstrate that they

are good corporate citizens, or to earn the label of a “socially responsible” company.21 By incorporating the concept of social responsibility into their normal business dealings, companies may develop corporate philosophies that combine “altruism and enlightened self-interest.”22

3. Extent of Usage of Codes of Conduct

There is no information on the exact extent to which U.S. corporations have

adopted codes of conduct governing their foreign operations. Press reports and

other publicly available information suggest that a significant number of U.S. corporations and business organizations have done so. Most available information on

codes of conduct is on large corporations.

For example, U.S. companies in such diverse industries as footwear (Nike,

Reebok), personal care products (Gillette), photographic equipment and supplies

(Polaroid), stationery products (Hallmark), hardware products (Home Depot), restaurants (Starbucks), and electronics and computers (Honeywell) are known to have

corporate codes of conduct.

In addition, several business organizations have issued codes of conduct

designed to be used by medium- and small-sized member companies whose corporate structures may not be sufficiently large to develop their own code of conduct.

19 Robert D. Haas, “Ethics — A Global Business Challenge: Character and Courage,” speech to the Conference

Board, New York City (May 4, 1994) Vital Speeches of the Day, 506, 507 (on file with the International Child Labor

Study).

20 Mary Scott, “Can Consumers Change Corporations?” Executive Female, May/June 1996, 43.

21 According to the International Mass Retailers Association, companies should be good corporate citizens but the

responsibility for eliminating child labor lies not with corporations but with local and U.S. governments — “it’s

called law enforcement.” See International Child Labor Hearing, U.S. Department of Labor (June 28, 1996)

(Statement of the International Mass Retailers Association)[hereinafter Statement of IMRA].

22 Dominic Bencivenga, “Human Rights Agenda,” New York Law Journal (July 13, 1995) 5 (quoting Diane F.Orenlicher,

professor of international law at American University).
15

These business organizations include the Athletic Footwear Association, the Toy

Manufacturers of America, and the Asia-Pacific Council of American Chambers of

Commerce.

In the context of the current report, the Department of Labor has identified

more than 35 U.S. manufacturers of apparel or retailers of apparel products that

utilize codes of conduct regarding their foreign operations. In addition, two associations that bring together the bulk of U.S. apparel producers and retailers — the

American Apparel Manufacturers Association (AAMA) and the National Retail Federation (NRF) — have also developed codes of conduct. These codes of conduct are

discussed in more detail below.

C. The Apparel Industry

In reviewing the development of codes of conduct in the garment industry, it

is important to recognize the enormous changes that have occurred in the industry in

recent decades. Once concentrated in the United States and other industrialized

countries, the garment industry has gradually spread in successive waves to countries with lower production costs, becoming a worldwide industry whose geographical distribution is constantly changing.23

A number of factors have contributed to this globalization. Many developing

countries have based or are basing their industrialization on labor-intensive export

sectors, particularly the apparel sector. Developing countries have almost doubled

their share of world clothing exports since the early 1970s to account for more than

60 percent of exports today.24 At the same time, companies in the U.S. and other

industrialized countries have adopted strategies to relocate certain labor-intensive

activities, such as clothing assembly, to low-wage countries through direct investment or outsourcing. Thus, according to the ILO, the industrialized countries have

“promoted the expansion of the clothing industry in the developing countries and

participated actively in the growing globalization of the sector.” 25

1. Structure of the Industry

The garment industry is made up of a complex chain of actors whose roles

often overlap. In very general terms, the industry includes the following entities:

• Apparel manufacturers are primarily engaged in the design, cutting and

sewing of garments from fabric. Some manufacturers are contractors or subcontractors, which generally manufacture apparel from materials owned by

other firms. Larger manufacturers often contract production to many such

contractors or subcontractors in the U.S. and abroad. Some manufacturers

are vertically integrated, producing the textiles from which they make garments, or even operating retail outlets.

23 Recent Developments in the Clothing Industry (Geneva: International Labor Organization, 1995) 7 [hereinafter

Recent Developments].

24 ILO Textile Report at 6.

25 Recent Developments at 7.
16

• Apparel merchandisers generally design and market clothing, but contract

the actual production to manufacturers.

• Buying agents locate, qualify and inspect foreign suppliers/producers of

garments, negotiate with suppliers/producers, and often monitor production

for quality control and compliance with other standards. They may be used

by U.S. companies that do not have a large presence abroad, or in addition to

a U.S. company’s own buying staff.

• Retailers are primarily engaged in the distribution, merchandising, and sale

of garments to consumers. Apparel retailers include department stores, mass

merchandisers, specialty stores, national chains, discount and off-price stores,

outlets, and mail-order companies. A relatively new development is the rise

of electronic forms of retailing such as interactive TV and on-line shopping

services. Some retailers who sell their own private labels go beyond their

traditional role as distributors and become directly involved in the design and

sourcing of garments from manufacturers and contractors.

Figure II-1 illustrates the relationships among these various entities as they

relate to the import of garments.

Intense competition in the U.S. retail sector has resulted in significant restructuring of the industry in recent years. One factor contributing to this trend has been

the rise of mass marketing stores and discount retailers with low overhead costs and

low prices.26 These nontraditional retailers have displaced a significant share of the

sales of traditional apparel retailers such as department and specialty stores.27 There

have been a growing number of bankruptcies and consolidations in the retail sector,

resulting in an increased concentration of large firms at the retail level.28 In 1993, the

five largest retail companies accounted for 48 percent of total retail sales.29

Many experts point to changes in consumer attitudes as a driving force behind the restructuring that is occurring in the retailing industry. Not only have

consumers become more cautious in their buying habits, but they have been reducing the portion of their disposable income that they spend on apparel.30 In addition,

consumers are increasingly demanding quality goods at low prices.31 Retailers have

often been forced to sell merchandise permanently at “sale” prices, with promotions

occurring throughout the year.32 Economists and sociologists have attributed in26 “Dynamic Change in the Garment Industry: How Firms and Workers Can Survive and Thrive,” (U.S. Department

of Labor, Office of the Chief Economist, 1996) 1 [hereinafter Dynamic Change in the Garment Industry].

27 Jackie Jones, “Forces Behind Restructuring in U.S. Apparel Retailing and its Effect on the U.S. Apparel Industry,”

Industry, Trade, and Technology Review (U.S. International Trade Commission, 1995) 23 [hereinafter Forces Behind Restructuring].

28 Ibid.

29 Ibid.

30 Ibid.

31 Carol Warfield, Mary Barry and Dorothy Cavender, “Apparel Retailing in the USA-Part I,” Textile Outlook International (March 1995) 38 [hereinafter Apparel Retailing in the USA - Part I]. See also Forces Behind Restructuring

at 23.

32 Trevor A. Finnie, “Outlook for the US Apparel Industry,” Textile Outlook International (November 1995) 92

[hereinafter Outlook for the US Apparel Industry].
17

Wholly Owned Subsidiary

US Importers

US Retailer

US

Foreign Countries

Contractors

US Manufacturer

Subcontractors

Buyer/

Agent

F I G U R E I I - 1

Structure of Apparel Importing Relationships
18

creasingly volatile consumer demand to growing numbers of new products, the rise

of fashion-consciousness for even the lowest-cost apparel, and more selling seasons.33

In response, retailers are increasingly utilizing new technology to facilitate

communication with suppliers and speed the distribution of goods.34 Apparel manufacturers who wish to remain competitive are having to reduce cycle times for apparel design, manufacture and delivery. Many manufacturers have adopted “quick

response” manufacturing systems that allow retailers to trim inventory, respond more

quickly to changes in consumer preferences, replenish stock almost continually, and

offer a wider choice of clothing styles.

Ebbing consumer demand, combined with higher raw-material costs, have in

turn placed increased pressures on apparel manufacturers.35 Unable to pass higher

costs onto consumers in a market with excess supply, both apparel manufacturers

and retailers have been squeezed by lower margins.36 As retailers have gained growing bargaining power through consolidations, apparel manufacturers have had to

absorb higher costs and live with lower profit margins in order to maintain production.37 Because of these competitive pressures, apparel manufacturers have also

undergone considerable restructuring and consolidation in recent years.38 It is usually the larger manufacturers that can afford the capital investment necessary to

successfully adopt more flexible, “quick response” systems.39

In this increasingly competitive environment, the lines between apparel retailers and manufacturers are being blurred as each takes on new roles and enters

new aspects of the garment industry. Many retailers, for example, have entered

product development and manufacturing as they develop their own private labels.

In some cases, department stores and other retailers are directly contracting goods

from the same factories used by the brand-name producers from which they buy.40

At the same time, many of the most successful apparel manufacturers and

merchandisers have become vertically integrated through the retail level.41 Many

apparel manufacturers, in an effort to generate more sales, are opening factory outlets.42 These outlets are a rapidly growing retail distribution channel in the U.S., and

are used by manufacturers to showcase their merchandise, test market new products

33 Dynamic Change in the Garment Industry at 2.

34 Ibid.

35 Kurt Salmon Associates, “No Quick Fix for ’96,” Bobbin, vol.37, no.4 (December 1995) 68 [hereinafter No Quick

Fix]. See also Outlook for the US Apparel Industry at 71.

36 Ibid.

37 Outlook for the US Apparel Industry at 71, 73; Forces Behind Restructuring at 25.

38 Outlook for the US Apparel Industry at 82.

39 Ibid. at 77.

40 Jules Abend, “Private Labels, Brands Square Off,” Bobbin, vol. 36, no. 10 (June 1995) 68.

41 Outlook for the US Apparel Industry at 84.

42 Forces Behind Restructuring at 26.
19

and distribute excess production.43 Having retail outlets gives apparel manufacturers

more control over their own distribution and sales.44

2. United States Apparel Imports

More than half of the $178 billion worth of garments sold at the retail level in

the U.S. in 1995 was imported.45 By comparison, domestically produced apparel

accounted for 70 percent of apparel sold to U.S. consumers as recently as 1980.46

The U.S. apparel manufacturing industry, which employed an all-time high of 1.45

million workers in 1973, supported 853,000 U.S. jobs as of May 1996.47 In 1995, the

industry included 24,570 establishments, averaging 40 employees each, and produced $87 billion of garments at retail prices.48

United States apparel imports have been increasing steadily since the 1970s.

The U.S. imported nearly $34.7 billion worth of apparel in 1995. During the period

1985-1995, the value of U.S. apparel imports in current dollars increased by 171

percent (see Table II-1).

43 Apparel Retailing in the USA - Part I at 52.

44 Ibid.

45 American Apparel Manufacturers Association, News Release, June 1996.

46 Focus: An Economic Profile of the Apparel Industry (American Apparel Manufacturers Association, 1995) 3.

47 Dynamic Change in the Garment Industry at 2.

48 American Apparel Manufacturers Association, News Release, June 1996.

T A B L E I I - 1

U.S. Apparel Imports, 1985-1995

(In millions of current U.S. dollars)

1 6 985 1 7 98 1 8 98 1 9 98 1 0 98 1 1 99 1 2 99 1 3 99 1 4 99 1 5 99 199 % Total Trade

1985

% Total Trade

1995

T 5 otal 1 7 2,78 1 6 5,14 1 4 8,03 1 7 8,18 2 7 1,04 2 5 1,93 2 3 2,59 2 8 6,71 2 8 8,21 3 9 1,36 3 0 4,64 1 0 00. 100.

A 8 sia 9 7 ,31 1 3 0,90 1 5 3,94 1 3 3,50 1 2 5,76 1 0 6,23 1 9 6,43 1 6 8,87 1 2 9,00 2 5 0,38 2 9 0,99 7 6 2. 60.

A 7 mericas 1 1 ,88 2 7 ,29 1 5 ,84 2 1 ,40 2 1 ,89 3 5 ,11 3 2 ,85 5 0 ,09 6 9 ,17 7 9 ,36 9 8 ,43 1 2 4. 27.

E 4 urope 1 5 ,42 1 4 ,72 1 7 ,95 1 2 ,90 1 9 ,93 1 1 ,96 1 1 ,68 1 9 ,81 1 9 ,88 2 0 ,26 2 1 ,67 1 7 1. 7.

Australia

New Zealand 1 9 1 1 82 42 62 73 65 24 24 94 55 1 0 2 . 0.

Middle East

Africa 1 2 41 1 1 9 2 6 5 3 1 3 4 4 3 5 0 8 5 4 7 8 1 8 1 3 ,08 1 5 ,31 1 1 ,48 1 3 . 4.

Under domestic law and the rules of the international Multifiber Arrangement

(MFA) of the General Agreement on Tariffs and Trade (GATT), the United States has

limited the growth of apparel imports for more than three decades through the

negotiation of bilateral textile and apparel quota agreements. The agreement establishing the World Trade Organization (WTO), however, provides for a 10-year phaseout of the MFA beginning in January 1995. Resulting reductions in tariffs and the
20

eventual elimination of the MFA system of textile and apparel quotas are likely to

accelerate increases in garment imports.49

a. Imports by Source

The United States imports apparel from all regions of the world. In 1995,

Asian countries accounted for 61 percent of the value of total U.S. imports of apparel,

countries in the Americas accounted for 27 percent, European countries for 8 percent, and other countries for 4 percent. (See Table II-1 and Figure II-2).

49 Trends in US and EU Textile and Clothing Imports at 80.

50 Apparel Retailing in the USA - Part I at 38-9.

In 1995, Hong Kong was the largest source of U.S. apparel imports, accounting for $4.2 billion or 12.1 percent of total U.S. apparel imports. The next four largest

sources of U.S. apparel imports in 1995 were China ($3.5 billion or 10.2 percent),

Mexico ($2.6 billion or 7.4 percent), Taiwan ($2.0 billion or 5.9 percent), and the

Dominican Republic ($1.7 billion or 5.0 percent). Figure II-3 shows the top 25

sources of U.S. apparel imports in 1995. In 1995, 168 countries exported apparel to

the United States (See Appendix E).

b. Imports by Type of Importer

Garment manufacturers and retailers increasingly have resorted to imports

from lower cost producers to retain their competitive edge in the United States market. Retailers are developing global alliances with suppliers and directly sourcing

brand-name and private-label merchandise domestically and internationally.50 Many

of the largest retailers also have become the largest importers of apparel. In 1993,

72.9%

14.8%

11.1% 1.1%

60.6%

27.2%

7.7%

4.3%

1985 1995

0.1% 0.2%

Asia Americas Europe Middle East

and Africa

Australia and

New Zealand

F I G U R E I I - 2

U.S. Apparel Imports, by Region

(current dollar value in percentage share)

Source: U.S. Department of Commerce, Office of Textiles and Apparel, Major Shippers Report
21

51 Forces Behind Restructuring at 25.

52 Ibid.

Colombia

Singapore

Jamaica

Pakistan

El Salvador

Turkey

Malaysia

Guatemala

Macau

Costa Rica

Canada

Honduras

Sri Lanka

Italy

Thailand

Bangladesh

India

Indonesia

Phillippines

Korea

Dominican Republic

Taiwan

Mexico

China

Hong Kong

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5

F I G U R E I I - 3

Top 25 Sources of U.S. Apparel Imports, 1995

Source: U.S. Department of Commerce, Office of Textiles and Apparel, Major Shippers Report

Billions of $US

Country

retailers accounted for 48 percent of the total value of imports of the top 100 garment

importers, according to the U.S. Customs Service.51

Apparel manufacturers and retailers are also increasingly turning to low-cost

suppliers abroad to supplement their U.S. production. In some cases, manufacturers

contract out apparel assembly operations to overseas contractors. In other cases,

U.S. apparel manufacturers have shifted production abroad to take advantage of

lower costs and, in some cases, preferential trade programs. To maintain market

share, many U.S. apparel manufacturers are expanding their garment assembly activities in Mexico and the Caribbean Basin to take advantage of preferential trade

programs.52

The North American Free Trade Agreement (NAFTA) provides reduced or

duty-free entry and eliminates most quotas for apparel products from Mexico and

Canada that meet certain rules of origin. Under the Special Regime Program, apparel

assembled in Mexico from U.S.-formed and cut fabric is allowed quota-free and duty-
22

free entry into the United States market. Finally, under the Special Access Program

for the Caribbean, also known as the 807A Program, certain apparel products assembled in participating countries from fabric wholly formed and cut in the U.S. are

afforded quota-free entry and preferential duties upon re-entry into the United States.53

3. Globalization and Working Conditions in Exporting Countries

The cost of producing clothing is largely determined by two components —

the costs of labor and, to a lesser extent, materials. Clothing production is therefore

prone to relocation to countries where labor costs are lower, with the exception of

producers who escape cost competition through “up-market” strategies.54

The ILO has commented on the effect that increasing competition has had on

working conditions in the mass segment of the market:

...the competition between an increasing number of developing countries to win contracts has a downward effect on wages and working

conditions in enterprises specialized in providing low-range articles

— for which the production cost must be as low as possible. Only by

filling a slot in the market for higher-range goods can these enterprises break out of this vicious circle in which production costs must

be compressed for them to remain competitive.55

Some of the newest entrants in the producer market, which are attracting

foreign investors, have mainly developed labor-intensive sewing and assembly activities.56 While some of these newest producer countries currently may be small

suppliers to the U.S. market, they may also be the location of troubling labor practices.57

D. Codes of Conduct of the Largest U.S. Retailers and

Manufacturers of Apparel

1. Survey of U.S. Retailers and Manufacturers of Apparel

In order to gather information on the extent and implementation of U.S.

garment importers’ codes of conduct containing child labor provisions, the Department of Labor conducted a voluntary survey of the largest U.S. retailers and apparel

53 Brenda A. Jacobs, “One From Column B: Choosing the Right Trade Program,” Bobbin, Supplemental Guide on

How to do Business in Latin America (1995) 2.

54 ILO Textile Report at 16.

55 Ibid. at 7, 21.

56 Ibid. at 7.

57 For example, a U.S. Embassy official who recently toured a Cambodian garment factory found “problematic”

working conditions, including workers who appeared to be under age (but who claimed to be above the minimum working age of 16) and forced, unremunerated overtime. American Embassy-Phnom Penh, unclassified

telegram no. 2594, September 16, 1996.
23

B O X I I - 1

Top Retailers & Apparel Manufacturers

Apparel Manufacturers Sales

1. Sara Lee Corporation $7.151 billion

2. Levi Strauss & Co. $6.708 billion

3. VF Corporation $5.062 billion

4. Fruit of the Loom $2.403 billion

5. Liz Claiborne $2.082 billion

6. Phillips-Van Heusen $1.464 billion

7. Kellwood Company $1.365 billion

8. Russell Corporation $1.153 billion

9. Warnaco Group $ 916 million

10. Nike, Inc. $ 897 million

11. Jones Apparel Group $ 776 million

12. Oxford Industries $ 657 million

13. Hartmarx Corporation $ 595 million

14. Tultex Corporation $ 585 million

15. Salant Corporation $ 501 million

Department Stores Sales

1. Sears Roebuck & Company $31.035 billion

2. JCPenney Company $20.562 billion

3. Federated Department Stores $15.049 billion

4. May Department Stores $10.507 billion

5. Montgomery Ward Holding Company $ 7.085 billion

6. Dillard Department Stores $ 5.918 billion

7. Nordstrom $ 4.113 billion

8. Mercantile Stores Company $ 2.944 billion

9. Kohl’s Corporation $ 1.926 billion

10. Neiman Marcus Group $ 1.888 billion

Mass Merchandisers Sales

1. Wal-Mart Stores $93.627 billion

2. Kmart Corporation $34.389 billion

3. Dayton Hudson Corporation $23.516 billion

4. Price/Costco $17.906 billion

5. Waban Inc. $ 3.978 billion

6. Ames Department Stores $ 2.120 billion

7. Venture Stores $ 1.929 billion

8. Shopko Stores $ 1.853 billion

9. Dollar General Corporation $ 1.764 billion

10. Family Dollar Stores $ 1.547 billion
24

B O X I I - 1 ( C O N T. )

Top Retailers & Apparel Manufacturers

Specialty Stores Sales

1. Woolworth Corporation $8.224 billion

2. The Limited $7.881 billion

3. The Marmaxx Group $4.448 billion

4. The Gap $4.395 billion

5. Burlington Coat Factory $1.585 billion

6. Ross Stores, Inc. $1.426 billion

7. The Talbots, Inc. $ 981 million

8. Stage Stores, Inc. $ 683 million

9. County Seat Stores, Inc. $ 619 million

10. The Dress Barn, Inc. $ 501 million

Non-Store/Direct Apparel Marketers Sales

1. Spiegel, Inc. $2.886 billion

2. Home Shopping Network, Inc. $1.019 billion

3. Land’s End, Inc. $1.031 billion

(Source: Kurt Salmon Associates, Financial Profile for Fiscal Year 1995, July 1996)

manufacturers, based on 1995 annual sales figures.58 The companies included in the

survey were chosen on the basis of public annual sales data obtained from Kurt

Salmon Associates (KSA), a consulting firm specializing in retailing, apparel, textiles,

and other consumer products.59

A questionnaire on import sourcing and child labor policies was sent to the

48 U.S. retailers and manufacturers of apparel listed in Box II-1. (See Appendix B for

a copy of the questionnaire.) Survey recipients included the largest companies in the

following categories: apparel manufacturers, department stores, mass merchandisers, specialty stores, and non-store direct marketers (mail order and electronic home

shopping). This chapter’s analysis of codes of conduct is based primarily on information voluntarily provided by the companies surveyed.

2. Survey Response

Forty-five companies responded to the survey.60 Of the 45 responses, 42

58 Retailers’ sales figures are total sales, not limited to apparel sales.

59 Kurt Salmon Associates, Financial Profile for Fiscal Year 1995 (July 1996). The Profile includes only those

companies that file public documents with the Securities and Exchange Commission (SEC).

60 The three companies that did not respond are County Seat, May Department Stores and Neiman Marcus Group.
25

were reportable because three companies regard all information provided as confidential.61

Many respondents indicated that they are significant importers — some importing more than half of the merchandise they sell — while others said that their

dependence on imports was much lower, in some cases less than 10 percent. Nearly

all respondents are direct importers of apparel, i.e., they purchase apparel directly

from abroad for their own account. Most are also indirect importers, i.e., they purchase products domestically that have been manufactured overseas and imported

into the U.S. by another party.

a. Manufacturers

Of the 15 manufacturers who responded, all but three (Nike, Inc., Liz Claiborne

and Russell Corporation) own or have ownership interest in overseas production

facilities. Most of these facilities are in Latin America, Mexico, Canada and the Caribbean, but a few are in Asia (China, Sri Lanka, and the Philippines). Some of the

manufacturers (Oxford Industries, Sara Lee Corporation, and VF Corporation) indicated that the majority of their imports come from wholly owned plants. Virtually all

of the manufacturers surveyed also contract out at least some of their overseas production to non-company-owned facilities. Some manufacturers have close ties to

certain contractors, and account for a large share, if not all, of the merchandise that

they manufacture. In other cases, they may use a contractor facility for only a short

time, and account for a small share of that manufacturer’s production.

Some of the manufacturers referred to the advantages of spreading their

production across many countries in order to avail themselves of available import

quota. Nike, Inc. (‘Nike’) for example, stated that it is constantly seeking out new

apparel suppliers due to the limited amount of quota available in each country for

importing apparel into the United States. Others indicated that they source from only

a few countries.

Most of the manufacturers also use local buying agents. Only three (Levi

Strauss & Co., Fruit of the Loom, and Nike) specifically stated that they do not use

buying agents. A few manufacturers indicated that they mainly use buying agents in

countries where they do not have their own production facilities or extensive knowledge of the countries’ garment industry.

b. Retailers

None of the retailers responding to the survey indicated that they own or

have an ownership interest in overseas production facilities. Many of them import

from a very large number of suppliers and contractors in many countries. JCPenney

Company, for example, contracts with more than 2,000 suppliers in more than 80

countries. Retailers who sell private-label merchandise often deal directly with overseas contractors, who manufacture merchandise to their specifications. Other retailers, who do not carry private label garments, indicated that they purchase imported

goods that are already made from a variety of suppliers in the U.S. or abroad.

61 These three companies are Kohl’s Corporation, the Marmaxx Group and Shopko Stores.
26

Several of the retailers surveyed (Ames Department Stores, Dress Barn, Inc.,

Home Shopping Network, Inc., Mercantile Stores Company, Ross Stores, Inc., Stage

Stores, Inc.,62 Venture Stores and Woolworth Corporation) indicated that they purchase all or most imports through one or more buying agents or suppliers located in

the U.S. and/or abroad. One retailer (BJ’s Wholesale Club, a division of Waban, Inc.)

indicated that it only buys imported apparel domestically from wholesalers and distributors.

3. Survey Results

Of the 42 companies that provided reportable responses to the survey, 36

have adopted some form of policy specifically prohibiting the use of child labor in

overseas production facilities. Thirty-four have developed their own policies, and

two have adopted the policy of their association or buyer. Appendix C contains the

current codes, policies and other documents that were provided by survey respondents.63

a. Manufacturers

Questionnaires were sent to 15 garment manufacturers, all of which responded

(Box II-2).

• All 15 manufacturers — Fruit of the Loom, Hartmarx Corporation, Jones Apparel Group, Kellwood Company, Levi Strauss & Co., Liz Claiborne, Nike,

Inc., Oxford Industries, Phillips-Van Heusen, Russell Corporation, Salant Corporation, Sara Lee Corporation, Tultex Corporation, VF Corporation and

Warnaco Group — have adopted some form of policy prohibiting child labor

in overseas production facilities.

* Fourteen of the 15 manufacturers have developed their own policies,

most of which are in the form of codes of conduct, statements of

principles, vendor requirements, or terms of engagement.

* Hartmarx subscribes to a “Statement of Responsibility” developed by

the American Apparel Manufacturers’ Association (AAMA), which contains a provision on child labor.

• Two manufacturers — Levi Strauss & Co. (‘Levi Strauss’) and Warnaco Group

(‘Warnaco’) — also have guidelines for selecting the countries where they

produce garments based on political, social and human rights concerns, among

others. Levi Strauss, for example, does not do business in Burma.64

62 Stage Stores, Inc. (‘Stage Stores’) is the new name of Specialty Retailers, to whom the original questionnaire was

sent.

63 Appendix C does not contain those policies that respondents designated confidential.

64 International Child Labor Hearing, U.S. Department of Labor (June 28, 1996)(Statement of Levi Strauss).

Spiegel, Inc. (‘Spiegel’) and Liz Claiborne, while they do not have formal guidelines for country selection, said in

telephone interviews that they decided to sever contracts with producers in Burma because of human rights

violations.
27

b. Department Stores

Questionnaires were sent to 10 department stores, eight of which responded

(Box II-3).65 Seven of the eight responses were reportable.66

• Six of the seven department stores that provided reportable responses to the

survey — Dillard Department Stores, Federated Department Stores, JCPenney,

B O X I I - 2

Apparel Manufacturers

Fruit of the Loom

Hartmarx Corporation

Jones Apparel Group

Kellwood Company

Levi Strauss & Co.

Liz Claiborne

Nike, Inc.

Oxford Industries

Phillips-Van Heusen

Russell Corporation

Salant Corporation

Sara Lee Corporation

Tultex Corporation

VF Corporation

Warnaco Group

65 Neiman Marcus and May Department Stores did not respond to the survey.

66 Kohl’s Corporation responded to the survey but regards all information provided as confidential.

B O X I I - 3

Department Stores

Dillard Department Stores

Federated Department Stores

JCPenney Company

Kohl’s Corporation (Response not reportable)

May Department Stores (Did not respond)

Mercantile Stores Company

Montgomery Ward Holding Company

Neiman Marcus Group (Did not respond)

Nordstrom

Sears Roebuck & Company
28

Mercantile Stores Company, Nordstrom and Sears Roebuck & Co. — have

adopted some form of policy statement that specifically addresses child labor

in overseas production facilities.

* All of the seven have developed their own policies on this subject.

• Montgomery Ward said that it does not tolerate the use of child labor in the

manufacture of imported goods, but did not provide the Department of Labor with documentation of a formal policy. The Company subscribes to the

National Retail Federation’s code, which does not specifically mention child

labor.

c. Mass Merchandisers

All 10 mass merchandisers who were sent questionnaires responded (Box II4). Nine of the responses were reportable.67

• Six mass merchandisers — Dayton Hudson Corporation, Dollar General Corporation,68 Kmart Corporation, Price/Costco, Inc., Venture Stores and WalMart Stores — have adopted policies specifically addressing child labor in

overseas production facilities.

* All of these six have developed their own policies on child labor.

• Three mass merchandisers — Ames Department Stores, Family Dollar Stores

and Waban, Inc. — indicated that they do not have a policy specifically

addressing child labor in overseas facilities.

67 Shopko Stores responded to the survey but regards all information provided as confidential.

68 Dolgencorp, a Dollar General subsidiary that imports apparel, responded on behalf of Dollar General.

B O X I I - 4

Mass Merchandisers

Ames Department Stores

Dayton Hudson Corporation

Dollar General Corporation

Family Dollar Stores

Kmart Corporation

Price/Costco

Shopko Stores (Response not reportable)

Venture Stores

Waban Inc.

Wal-Mart Stores
29

* Ames Department Stores (‘Ames’) indicated that all purchase orders

issued on behalf of Ames or any of its affiliates require compliance

with, among other laws, the U.S. Fair Labor Standards Act (FLSA) and

the “Federal Child Labor Act.”69 It is not clear whether Ames’ purchase orders contain any language on international production.

* Family Dollar Stores (‘Family Dollar’) indicated that its purchase orders include a requirement that vendors comply with all labor laws.

The company also indicated that it utilizes the National Retail

Federation’s (NRF) “Statement of Principles on Supplier Legal Compliance,” which does not contain a provision specifically addressing

child labor.

* Waban, Inc. (‘Waban’) indicated that it does not have a code of conduct regarding labor practices in overseas production, but generally

requires that vendors comply with all applicable laws.

d. Specialty Stores

Surveys were sent to ten specialty stores, nine of which responded (Box II5).70 Of the nine responses, eight were reportable.71

• Six specialty stores — the Dress Barn, Inc., The Gap, The Limited, Stage

Stores, The Talbots, Inc. and Woolworth Corporation — indicated that they

have adopted policies specifically addressing child labor in overseas production facilities.

69 There is no Federal Child Labor Act. Child labor provisions of federal law are contained in the FLSA.

70 County Seat did not respond to the survey.

71 The Marmaxx Group (formerly known as TJ Maxx) responded, but regards all information provided as confidential.

B O X I I - 5

Specialty Stores

Burlington Coat Factory

County Seat Stores, Inc. (Did not respond)

Ross Stores, Inc.

Stage Stores, Inc.

The Talbots, Inc.

The Limited

The Dress Barn, Inc.

The Gap

The Marmaxx Group (Response not reportable)

Woolworth Corporation
30

* Of the six, all but Stage Stores have developed their own policy.

Stage Stores indicated that it purchases all imported merchandise

through the Associated Merchandising Corporation (AMC) and uses

AMC’s code, which contains a provision on child labor. Stage

Stores also stated that it is in the process of developing its own

code.

• Two specialty stores — Burlington Coat Factory and Ross Stores, Inc. — do

not have a policy specifically addressing child labor in overseas production

facilities.

* Burlington Coat Factory does not have a policy specifically addressing child labor in overseas production facilities, but does have a provision in its purchase orders requiring vendors to comply with all

applicable laws, including the Fair Labor Standards Act.

* Ross Stores has guidelines in its purchase orders that require compliance with all applicable federal, state and local laws and regulations,

including the federal child labor law,72 but these guidelines do not

appear to address international production. Ross Stores is currently

reviewing its importing process, however, and considering revising

its “Conditions of Contract.”

e. Non-Store/Direct Apparel Marketers

All three Non-Store/Direct Apparel Marketers who were surveyed responded

(Box II-6).

• Home Shopping Network, Land’s End, Inc. and Spiegel all have developed

their own policies specifically addressing child labor in overseas production.

B O X I I - 6

Non-Store/Direct Apparel Marketers

Home Shopping Network, Inc.

Land’s End, Inc.

Spiegel, Inc.

72 As noted earlier, child labor provisions of federal law are contained in the FLSA.
31

E. Development of Apparel Industry Codes of Conduct

1. Form and method of development of codes of conduct

The form that companies’ policies take, and how they were developed, varies widely from company to company:

• Some companies have developed special documents (which they typically

refer to as “codes of conduct”) outlining their values, principles and guidelines in a variety of areas, including child labor. These documents are a

means for companies to clearly and publicly state the way in which they

intend to do business to their suppliers, customers, consumers and shareholders. Some are intended for wide distribution, including posting in workplaces.

• Other companies surveyed do not have a formal code of conduct, but have

circulated letters stating their policies on child labor to all suppliers, contractors and/or buying agents.

• Compliance certificates are yet another vehicle used by companies to state

their policies regarding child labor. These certificates generally require suppliers, buying agents, or contractors to certify in writing that they abide by

the company’s stated standards prohibiting the employment of children.

• Still others state their child labor policies in formal documents such as purchase orders or letters of credit, making compliance with the policy a contractual obligation for suppliers.

• Some companies have both formal codes of conduct and contractual clauses

or a certification form. Others’ policies on child labor are exclusively contained in contracts or certification forms rather than in a formal code of

conduct.

There are also differences among companies in how they have created their

codes of conduct. Some of the pioneer companies in establishing codes of conduct

designed their own codes independently, based on their needs and experiences and

sometimes drawing on existing models such as multilateral codes of conduct (e.g.,

ILO and OECD), private sector initiatives (e.g., the maquiladora standards), and internationally-recognized labor standards set by the ILO. United States corporations

that have adopted codes of conduct more recently have benefitted from the experiences of corporations that took this path earlier. In other instances, companies

reported that they utilize the code of conduct or policy of a trade association or

buying agent — either in lieu of, or in addition to, their own.

Based on the information provided by the respondents to the survey, including follow-up telephone interviews:

• Thirty-three out of 42 companies that provided reportable responses have

corporate codes of conduct, statements of principles, or compliance certifi-
32

cates specifically addressing child labor in overseas production;73

• Twelve respondents do the same through contract requirements contained in

purchase orders, letters of credit, or buying agent agreements;

• Nine respondents use a combination of both type of policy; and

• Six respondents have no policy on overseas child labor.

Table II-2 shows what type of policy has been adopted by respondents. It should be

noted that the categorization in Table II-2 is based upon the information provided by

the respondents to the Department of Labor. Policies may also have evolved since

the time of the survey and follow-up interviews.

The survey results also suggest that the development of codes of conduct is

a dynamic field, with quite a bit of experimentation going on:

• Some companies have policies that are applied to both domestic and international production, while others have policies that only refer to domestic production and have not yet developed a comparable policy for overseas manufacturing.

• Many of the companies have recently revised their codes of conduct or policies, usually expanding them to include new features, such as implementation strategies. These revisions reflect the fact that many companies are

learning how to promote and implement a code as they go along.

• Several companies indicated that they are in the process of reviewing their

existing code or considering the introduction of a code.

2. Basic Elements/Standards of Codes of Conduct

Corporate codes that address labor standards vary from company to company with regard to the specific labor standards included. All or some of the following elements are found in various corporate codes:

• prohibitions on child labor;

• prohibitions on forced labor;

• prohibitions on discrimination based on race, religion, or ethnic origin;

• requirements to ensure the health and safety of the workplace environment;

• provisions on wages, usually based on local laws regarding minimum wage

or prevailing level in the local industry;

73 Includes companies that subscribe to another organization’s code (that of an association or buyer).
33

T A B L E I I - 2

Type of Policy Prohibiting Child Labor

(Based on Responses to Department of Labor Questionnaire)

Code or Statement

of Principles a

Purchase Order

Requirement b None c

Ames Deparment Stores •

Burlington Coat Factory •

County Seat Stores, Inc.*

Dayton Hudson

Corporation •

Dillard Department Stores • •

Dollar General

Corporation •

The Dress Barn, Inc. •

Family Dollar Stores •1

Federated Department

Stores •

Fruit of the Loom •

The Gap •

Hartmarx Corporation •2

Home Shopping Network,

Inc. • •

JC Penney Company •

Jones Apparel Group •

Kellwood Company •

Kmart Corporation • •

Kohl's Corporation**

Land's End, Inc. •

Levi Strauss & Co. • •

The Limited •

Liz Claiborne •

The Marmaxx Group**

May Department Stores*

Mercantile Stores

Company •

Montgomery Ward

Holding Company •3

Neiman Marcus Group*
34

T A B L E I I - 2 ( C O N T. )

* No response received.

**Designated as business confidential and therefore information not reportable.

a Company has a formal code of conduct, statement of principles or compliance certificate.

b Company has a purchase order, letter of credit, or buying agent agreement, which

contains a specific prohibition on child labor in overseas production.

c Company has no specific prohibition on child labor in overseas production in any

document, although it may have a general reference to compliance with all applicable

laws or U.S. labor laws in its purchase order.

1 Company subscribes to the National Retail Federation (NRF) code, which does not

specifically mention child labor.

2 Company subscribes to the American Apparel Manufacturers Association (AAMA) code.

Code or Statement

of Principles a

Purchase Order

Requirement b None c

Nike, Inc. •

Nordstrom • •

Oxford Industries •

Phillips-VanHeusen •

Price/Costco •

Ross Stores, Inc. •

Russell Corporation •

Salant Corporation •

Sara Lee Corporation • •

Sears Roebuck &

Company • •

Shopko Stores**

Spiegel, Inc. •

Stage Stores, Inc. •4

The Talbots, Inc. • •

Tultex Corporation •

Venture Stores • •

VF Corporation •

Waban Inc. •

Wal-Mart Stores •

Warnaco Group •

Woolworth Corporation •
35

• provisions regarding limits on working hours, including forced overtime, in

accordance with local laws; and

• support for freedom of association and the right to organize and bargain

collectively.

3. Definitions

Although many of the corporate codes of conduct address the same set of

labor standards, there are significant differences on how these standards are defined.

In some instances, the corporate codes follow international definitions of labor standards (e.g., those promulgated in ILO Conventions). In other instances, the corporate codes of conduct themselves define the standard. In still other instances, the

codes of conduct do not provide any guidance on the definition of the standard.

Almost all of the companies responding to the survey have a general policy

requiring their business partners to comply with all applicable laws and standards of

the host country and/or industry. Most of the companies’ child labor policies also

define what is meant by child labor and require that business partners comply with

this standard.

However, the definition of child labor varies from company to company. For

example, a company’s policy statement may: (1) state a minimum age that must be

met by all employees who produce their products, (2) refer to the national laws of

the host country regarding the minimum age of employment or compulsory schooling, (3) refer to international standards,74 or (4) use some combination of the three.

In some cases, companies’ policies prohibiting child labor in the production of their

goods do not contain any definition of child labor at all, leaving the standard open

for interpretation by their business partners. Table II-3 describes how respondents

to the survey define child labor in their policies.

a. Minimum Age

• The policies of three of the respondents — Salant Corporation, Sara Lee

T A B L E I I - 2 ( C O N T. )

3 Company says that it does not tolerate the use of child labor in the manufacture of

imported goods and has put its vendors on notice that they are bound by that policy, but

did not provide any documentation. Also subscribes to NRF code, which does not specifically mention child labor.

4 Company subscribes to the Associated Merchandising Corporation (AMC) code.

74 Appendix F contains ILO Convention 138 on Minimum Age for Employment — the most commonly cited

international standard on child labor.
36

T A B L E I I - 3

Company Definitions of Child Labor

(Based on Responses to Department of Labor Questionnaire)

Company

Own

Definition a

Law of Host

Country b

International

Standard c

No

Definition d

Ames Department Stores •

Burlington Coat Factory •

County Seat Stores, Inc.*

Dayton Hudson

Corporation (14) •

Dillard Department

Stores •

Dollar General

Corporation •

The Dress Barn, Inc. (15) •

Family Dollar Stores •

Federated Department

Stores •

Fruit of the Loom

(15) and not

under

compulsory age

ofschooling

•

The Gap (14) •

Hartmarx Corporation •1

Home Shopping

Network, Inc. •

JCPenney Company •

Jones Apparel Group • •

Kellwood Company

(14) and not

under

compulsory age

ofschooling

•

Kmart Corporation •

Kohl's Corporation**

Land's End, Inc. •

Levi Strauss & Company

(14) and not

under

compulsory age

ofschooling

•

The Limited •

Liz Claiborne (15) •

The Marmaxx Group**

May Department Stores*

Own Law of Host International No
37

T A B L E I I - 3 ( C O N T. )

Company

Own

Definition a

Law of Host

Country b

International

Standard c

No

Definition d

Mercantile Stores

Company •

Montgomery Ward

Holding Company •

Neiman Marcus Group*

Nike, Inc. •

Nordstrom

not under

compulsory age

ofschooling

•

Oxford Industries •

Phillips-Van Heusen (14) •

Price/Costco •

Ross Stores, Inc. •

Russell Corporation •

Salant Corporation (16) •

Sara Lee Corporation (16) •

Sears Roebuck &

Company •

Shopko Stores**

Spiegel, Inc. • •

Stage Stores, Inc.

(14) not under

compulsory age

ofschooling 2

•

The Talbots, Inc. (15) •

Tultex Corporation •

Venture Stores •

VF Corporation

(14) not under

compulsory age

ofschooling

•

Waban Inc. •

Wal-Mart Stores

(15) not under

compulsory age

ofschooling

•

Warnaco Group

(16) not under

compulsory age

ofschooling

•

Woolworth Corporation •
38

Corporation75 and Warnaco76 — require that workers producing goods for

them be at least 16 years of age.

 * Salant Corporation’s (‘Salant’) policy, which is in the form of a Vendor

Compliance Certificate, also requires vendors to comply with all applicable child labor laws, rules and regulations.

 * Warnaco also requires that workers be older than the compulsory age

to be in school.

• Dress Barn, Inc. (‘Dress Barn’), Fruit of the Loom, Liz Claiborne, The Talbots,

Inc. (‘Talbots’) and Wal-Mart (‘Wal-Mart’) all require that workers in facilities

that produce for them be at least 15 years of age.

 * Dress Barn similarly refers to the higher of local law and age 15.

 * Fruit of the Loom also requires that workers be over the age of compulsory schooling in the country of manufacture.

T A B L E I I - 3 ( C O N T. )

* No response received.

** Designated as business confidential and therefore information not reportable.

a The company’s policy specifies a minimum age and/or other specific definition of child

labor.

b The company refers to the host country’s law in defining child labor.

c The company refers to an international standard - most often United Nations conventions -

to define child labor.

d The company has no policy on child labor, or has a policy but does not define child

labor, or subscribes to the National Retail Federation (NRF) code, which does not mention

child labor.

1 Company subscribes to the American Apparel Manufacturers Association (AAMA) code,

which mentions but does not define child labor.

2 Company subscribes to the Associated Merchandising Corporation (AMC) code.

75 In a clause Sara Lee Corporation (‘Sara Lee’) provided from an agreement with a former buyer agent, however,

Sara Lee required compliance with national laws on child labor. Furthermore, a Sara Lee supplier in the Dominican Republic (BRATEX Dominicana) provided a Department of Labor official with Sara Lee’s “Supplier Selection

Guidelines,” which state that Sara Lee will not procure goods or services from firms employing workers under age

15.

76 This is the standard contained in Warnaco’s Business Partner Terms of Engagement, which is used only for

contractors’ facilities. For its wholly owned plants, Warnaco indicated that it uses U.S. labor standards with

respect to all aspects of labor law excluding wages.
39

 * Wal-Mart first refers to the national laws of the country on minimum

age and compulsory schooling, but has its own minimum age of 15 if

the national laws permit work at a younger age or if national laws

contain no provisions on child labor.

• Six respondents (Dayton Hudson Corporation, The Gap, Kellwood Company, Levi Strauss, Phillips-Van Heusen and VF Corporation), as well as Associated Merchandising Corporation (AMC), whose code is used by Stage Stores,

require that employees in overseas facilities that produce for them be at least

14 years of age.

 * Kellwood Company (‘Kellwood’) also requires that workers comply

with the national minimum age for employment and the compulsory

age to be in school, whichever is higher.

 * Levi Strauss, VF Corporation and AMC also require that workers be

over the compulsory age to be in school, if that is higher than 14.

* Phillips-Van Heusen, Dayton Hudson Corporation and The Gap require that workers be over the applicable minimum legal age requirement in addition to being at least 14.

• Another group of respondents (Dillard Department Stores, Federated Department Stores, Home Shopping Network, JCPenney, Land’s End, The Limited,

Mercantile Stores Company, Nike, Oxford Industries, Price/Costco, Inc., Russell

Corporation, Sears Roebuck & Co., Tultex Corporation and Venture Stores)

require compliance with the applicable child labor law in the host country.

Nordstrom requires that employees be over the national age for completing

compulsory education.

• Other respondents (Jones Apparel Group and Spiegel) require that their business partners comply with the host country’s child labor law or United Nations standards, whichever is higher. Dollar General Corporation (‘Dollar

General’) refers to international and human rights laws recognized by the

United States or the United Nations.

• Finally, the policy statements of a few respondents (Kmart Corporation and

Woolworth), as well as the AAMA’s “Statement of Responsibility,” used by

Hartmarx Corporation (‘Hartmarx’), do not define child labor.

b. Additional Elements of the Child Labor Policies

Policies of some respondents go beyond prohibiting the employment of children and contain clauses specifying how the policy is to be implemented or what

steps are to be taken in the case of non-compliance. In some instances, the policies

also encourage additional efforts on behalf of children or youths. However, some

companies that do not explicitly state these elements in their code may in practice

require the same of their vendors.
40

• The Gap and Phillips-Van Heusen’s policies both contain clauses requiring

that factories not only respect a minimum age, but also comply with all

applicable child labor laws, such as those relating to hiring, wages, hours

worked, overtime and working conditions.

• Some companies’ policies contain provisions specifying how factories are to

document that none of their employees are underage, or requiring factories

to make employment records available at all times for inspection.

 * The Gap, for example, requires that factories maintain official documentation verifying the date of birth for each worker or to use an

“appropriate and reliable” assessment method in countries where such

official documents are not available.

 * Land’s End, Spiegel and VF Corporation, among others, state in their

policies that they require business partners to provide them full access to their production facilities and relevant employment records.

• Several companies, including Sears Roebuck & Co. (‘Sears’) and Dayton

Hudson Corporation (‘Dayton Hudson’), indicate in their policy statements

that they reserve the right to inspect the facilities where their goods are

produced.

• Some policies, such as those of Federated, Kmart Corporation, and

Nordstrom, set out the consequences that vendors will face if they violate

the policy.

• Several companies’ codes also contain clauses encouraging business

partners to support special educational opportunities for young workers.

Several companies’ policies on child labor also include provisions in

support of legitimate workplace apprenticeship programs for younger

persons.

 * Dayton Hudson, Levi Strauss, VF Corporation, Wal-Mart and Warnaco,

as well as AMC, whose code is used by Stage Stores, all state their

support of such apprenticeship programs. Both Dayton Hudson and

AMC qualify their support of apprenticeship programs with the caveat that the child must not be exploited or given jobs that are dangerous to his/her health or safety.

 * The Gap encourages factories to develop “lawful workplace apprenticeship programs for the educational benefit of their workers,” as

long as all participants are at least 14 and comply with the minimum

legal age requirement.

 * The Gap and Phillips-Van Heusen’s codes contain a clause encouraging vendors to support night classes and work-study programs for

young workers.
41

• Four of the companies that responded to the questionnaire — Dress Barn,

Levi Strauss, Liz Claiborne and Phillips-Van Heusen — provided a formal

audit or survey form that contains all the information that is gathered from

contractors and suppliers to determine whether they are in compliance with

the company’s labor policy, including the child labor provisions. These add

transparency to the process in that they indicate how the companies are

making their decisions on compliance.

• Levi Strauss’ Guidelines contain a statement of its commitment to continuous

improvement in their implementation: “As we apply these standards throughout the world, we will acquire greater experience. As has always been our

practice, we will continue to take into account all pertinent information that

helps us better address issues of concern, meet new challenges, and update

our tools, methods and Guidelines.”

F. Implementation of Apparel Industry Codes of

Conduct

Fundamentally, a code of conduct relies on its credibility; the extent

to which it is taken seriously by industry, unions, consumers and government. 77

Implementation is a crucial determinant of a code’s credibility. This section

will describe the various ways that companies attempt to ensure that their stated

policy on child labor is adhered to in the facilities that produce their apparel overseas. It will begin with a general discussion of the challenges that companies face in

implementing a code of conduct or policy with provisions on labor standards. Next,

it will review the various elements of code implementation that are employed by the

importers of garments who responded to the survey. These elements include efforts

by manufacturers and retailers to streamline their supplier base, efforts to increase

transparency of implementation, active inspection and monitoring programs, the use

of certification of compliance or contractual language with suppliers and inspection,

and research on prospective contractors. The section will conclude with a discussion of the various ways that the respondents have handled or plan to handle violations of their child labor policies.

1. Implementation Challenges

a. Organization of production

The challenges of implementing a child labor policy for a given company in

the apparel industry differ greatly and depend on how production is organized.

Generally, the closer the relationship between the importer and the company actually producing the items, the greater the ability to influence labor conditions, including prohibitions on child labor, in the production facilities. Conversely, the longer

77 Report on Labour Standards in the Asia-Pacific Region (Canberra: Government of Australia Tripartite Working

Party on Labour Standards, February 1996) 75-76.
42

the chain of production, and the more levels of contractors, subcontractors and

buying agents used, the more complex and challenging is the implementation. If,

however, there is commitment to effective implementation, this can be accomplished

under any organization of production.

To illustrate, a manufacturing company that produces most of its imports in

wholly-owned facilities abroad has more control over production conditions and can

more easily implement its child labor policy than can a firm whose production takes

place in the facilities of hundreds or even thousands of contractors and subcontractors. Some of the manufacturers surveyed have different policies for wholly owned

plants and contractors. A manufacturer or retailer with an ongoing relationship with

a contractor and that accounts for a large percentage if not all of that contractor’s

orders can more easily ensure its child labor policy is being respected by that contractor than can a manufacturer or retailer that only uses that contractor for an occasional order.

Retailers are often — but not always — more removed from the production

process than are manufacturers. However, the large retailers, because of the enormous bargaining power they wield over suppliers, also have the ability to require

vendor compliance with any child labor standard they develop. In addition, retailers

that directly contract out the manufacture of private-label merchandise overseas can

directly influence the labor conditions in the contractors’ facilities.

Often, entities all along the garment production chain — retailers, domesticbased manufacturers, buying agents and foreign manufacturers — each have their

own policy regarding child labor in overseas production. For example, members of

the apparel export industry of Guatemala have developed a code of conduct intended to apply to all exporters in the country.78 Apparel manufacturers’ associations

in Honduras and El Salvador are also developing their own codes of conduct. On

the one hand, the development of many different codes — with differing standards

on child labor — may be confusing and complicate implementation. On the other

hand, the proliferation of codes creates growing opportunities for cooperation among

the various actors along the supply chain in developing and implementing standards

on child labor and other working condition issues.

b. Streamlining of supplier base

As discussed earlier, U.S. manufacturers and retailers often procure apparel

products from hundreds, even thousands, of suppliers all over the world. These

suppliers may also subcontract parts of the production to other manufacturers or

sewing shops. The sheer numbers of contractors used — as well as the use of

subcontractors — present definite challenges to companies with codes of conduct or

policies banning the use of child labor in the production of the apparel they sell.

Many companies that responded to the survey indicated that they expect subcontrac78 The code is called “Labor and Environmental Principles to be Observed by the Members of the Apparel and

Textile Industry Commission of the Association of Exporters of Non-Traditional Products,” and was developed by

the Apparel and Textile Industry Commission (VESTEX). VESTEX recently retained the services of an outside

auditing firm to monitor compliance of member companies with the code. Any manufacturer may choose to adopt

the code, but is responsible for paying to be audited.
43

tors to comply with their policies, but often did not specify how this was to be

achieved.

Some of the companies that responded to the survey have sought to tighten

their control over the production process through streamlining their supplier base —

limiting or even eliminating the use of subcontractors, reducing the number of contractors they use, and in some cases, establishing long-term relationships with their

suppliers. While, at times, these efforts have come about as a result of the development and implementation of codes of conduct, some companies indicated that they

are part of their normal business decisions and make the most sense from a quality

and efficiency standpoint.

• Two manufacturers (Kellwood and VF Corporation) specifically stated that

they do not allow any subcontracting because they want to control production as much as possible.

• Several respondents (Dillard Department Stores, Fruit of the Loom, The Gap,

Liz Claiborne, Nordstrom, Phillips-Van Heusen, Salant, Sara Lee, Sears, Spiegel

and Talbots) indicated that they do not permit contractors to subcontract any

production without their prior approval.

 * Fruit of the Loom stated that, while it avoids contractors who engage

in subcontracting, occasionally it must permit subcontracting because

a contractor might not have the right type of equipment to perform a

particular operation. In those cases where Fruit of the Loom allows

subcontracting, it noted that before granting approval, the subcontractor is expected to agree in writing to Fruit of the Loom’s code of

conduct.

 * Some companies (Sara Lee and Talbots) reported that they prohibit

the use of any subcontracting facility that they have not first inspected.

 * Liz Claiborne stated that it discourages subcontracting since it creates

special problems with regard to the application of Liz Claiborne’s

code.

 * Some respondents (Phillips-Van Heusen and Nordstrom) stated that

they submit subcontractors to the same audit and inspection procedures as contractors.

• Some respondents (Fruit of the Loom, JCPenney, and Kmart) indicated that it

is the responsibility of the contractor or supplier to verify or take the necessary steps to ensure that their subcontractors are in compliance with their

policy.

• Nike stated that it does not currently require its subcontractors to agree to its

code of conduct, but intends to in the future.
44

Some companies are reducing the number of suppliers they use:

• Kmart Corporation, Liz Claiborne and Salant reported a reduction in the number

of vendors they use in order to gain better control over production.

• Levi Strauss reported that, in an effort to be more efficient and to rationalize

their sourcing, they have gone from about 700 contractors before introducing

their code of conduct to a current level of 450 contractors. As Levi Strauss

explains, “The Company is rationalizing its supplier base, with development

of business partnerships based on terms of engagement, service, financial

stability, community support and long-term mutual profitability, not simply

low cost, as the key objective.”79

Certain respondents stated that they encourage the development of longterm, strategic alliances with vendors:

• Kmart Corporation (‘Kmart’) indicated that it encourages strategic vendor

alliances with established companies that produce high-quality goods and

comply with all laws.

• Oxford Industries (‘Oxford’) said that it generally tries to establish longerterm relationships with its contractors because such relationships usually result in higher quality, more reliable delivery dates and better value for its

customers. Oxford stated, however, that it is not unusual for a contractor to

be used only for one program or season because of its inability to meet

expectations for quality, delivery or price.

• VF Corporation noted that it usually uses buyer agents and plants that have

already established a reputation with VF Corporation.

c. Impact of textile import restrictions

Some companies raised the issue of apparel import quotas, which limit the

amount of merchandise that can be shipped into the United States, and the effects

these quotas have on their choice of contractors.

• Levi Strauss stated that quotas limit its ability to freely choose foreign contractors with whom to do business, as individual foreign producers “own” and

control certain allocations of quota. According to Levi Strauss, this system

results in a limited choice of apparel contractors with which it can do business. Because of this limited choice, Levi Strauss stressed the importance of

establishing partnerships with contractors and their communities.

• Nike said that it sources apparel products from numerous factories in several

countries in order to avail itself of open quota. Nike indicated that because

it must produce where quota is available, production is often limited to a

short period of time at any one facility.

79 Levi Strauss Form 10-K report to the Securities and Exchange Commission (February 21, 1996) at 11.
45

2. Transparency

An important issue regarding the implementation of corporate codes is their

transparency, or the extent to which foreign contractors and subcontractors, workers, the public, nongovernmental organizations and governments are aware of their

existence and meaning. Contractors, subcontractors, workers, and other interested

parties who are familiar with codes can enhance their implementation and effectiveness. Transparency reinforces the message of codes and leads to more credible

implementation. When transparency is lacking, interested parties cannot benefit

fully from a code of conduct.

There are several concrete ways by which U.S. companies add transparency

to the implementation of their codes of conduct:

• Some U.S. corporations hold training sessions with foreign suppliers (contractors or subcontractors) to make them aware of their code of conduct and

implementation expectations. Some companies require foreign suppliers to

sign a statement indicating that they have received the code of conduct and

understand its meaning and implementation expectations, including possible

penalties for lack of implementation.

• Some companies also train their own employees or buying agents on their

code of conduct to ensure that individuals at all stages of the purchasing

process are aware of its provisions.

• A small number of U.S. corporations require that the contents of their code of

conduct be posted in production facilities at a location that is accessible to

workers (e.g., a lunch room or entrance to locker room). In some cases, the

U.S. company translates the code into the local language.

• A small number of companies solicit input from outside groups in developing and implementing their code.

a. Education/Communication

Most of the respondents with child labor policies indicated that they have

distributed copies of their policies to all suppliers, but few stated that they had

communicated their existence to a wider audience or engaged in efforts to train

those who are responsible for implementation. Many respondents stated that they

did not know whether workers were aware of the existence of their codes. The

following is an overview of the respondents who indicated that they had actively

engaged in communicating their policies to contractors, plant managers, employees,

and workers:

• Fruit of the Loom, The Gap, Spiegel, and Warnaco indicated that they go over

their codes of conduct with facility managers to ensure these individuals

understand them.

• Liz Claiborne stated that its Chairman periodically meets with key suppliers

to emphasize the company’s expectations with respect to workers’ rights.
46

• Kellwood reported that it periodically brings foreign contractors to the U.S. to

receive training, including on Kellwood’s code.

• Levi Strauss also conducts educational seminars for groups of contractors.

A few respondents indicated that they have special programs to inform their

own managers and/or other employees about their code or policy.

• Federated Department Stores, Levi Strauss, Nike and Oxford all stated that

they train their employees on compliance requirements.

 * Federated Department Stores (‘Federated’) has its corporate counsel,

corporate quality control and overseas offices’ managerial staff conduct training.

 * Oxford, which places responsibility on its own employees to ensure

compliance with its policy, reported that its managers receive training

in compliance with applicable labor laws, and that its corporate human resources department and attorneys answer questions and interpret the laws.

 * Levi Strauss said that it continuously educates its employees — including merchandisers, contract managers, general managers in the

sourcing countries, and other personnel at every level of the organization — on its code.

A few respondents have special training for buyers or internal auditing staff:

• Wal-Mart buyers are required to attend special internal educational seminars

on how to work more closely with manufacturers to ensure their compliance.

• Levi Strauss conducts annual global training programs for its Terms of Engagement audit managers. In June 1996, for example, Levi Strauss conducted

a five-day training program in the Dominican Republic for Terms of Engagement auditors and sourcing managers from around the world.

• Liz Claiborne reported that it has intensified training for sourcing/manufacturing personnel in spotting labor abuses.

• Phillips-Van Heusen is providing training to employees who are on its auditing teams. The company also indicated that it issues regular communications

and newsletters to its off-shore offices, quality and sourcing personnel on

developments and issues concerning workers’ rights, including child labor.

Only a very few respondents indicated that they have tried to ensure that

production workers in overseas facilities know about their code or policy by specifically requiring that copies of such a statement be posted. Only three companies

stated that they unconditionally require contractors to post their code:
47

• The Gap requires that its code, which has been translated into 39 languages,

be posted in each contractor facility.

• Liz Claiborne, which has translated its Standards of Engagement into more

than ten different languages, requires all contractors to post the Standards in

the local language in common areas, such as cafeterias or locker rooms, of

every facility where Liz Claiborne products are made.

• Phillips-Van Heusen stated that it insists that every facility post its “PVH Shared

Commitment” poster, which contains guidelines and standards on worker’s

rights. The poster is printed in English and Spanish, and is sent to Asia with

instructions for it to be translated into local languages.

Nike and Sara Lee stated that their codes are posted at some facilities:

• Nike indicated that its code is posted in all its footwear contractors’ factories

in two or three languages, but this is not necessarily the case for its apparel

contractors. Nike stated that its footwear contractors produce exclusively for

Nike, while its apparel contractors often produce for many other companies.

Nike often uses any one apparel contractor for only a short period of time.

• Sara Lee indicated that it posts notices of employees’ rights at its wholly

owned facilities in English and the host language.

Some companies include information on the posting of who to contact in the

case of problems or questions regarding implementation of the code:

• Liz Claiborne’s Standards direct individuals who have a problem or complaint to get in touch with Liz Claiborne country managers.

• The Gap indicated that at the bottom of its poster, it provides the phone

number of a buying agent or sourcing-compliance personnel.

• Sara Lee’s posters in its wholly owned facilities include information on whom

to see with complaints.

Finally, a few companies have made an effort to communicate information

on their codes of conduct and monitoring programs to the general public, including

their shareholders:

• Levi Strauss and The Gap have sections on their codes of conduct in their

annual reports to shareholders.

b. Transparency of Implementation Process

Many consumer and other non-governmental organizations have stressed the

need for transparency in the process of implementing codes of conduct. Some
48

groups have called on companies to make public the findings of their factory investigations, which are discussed in the monitoring section below.80

Some companies have actively solicited input from international organizations, NGOs, government agencies and academics in developing and implementing

their codes of conduct:

• Levi Strauss stated that it solicited a wide range of ideas from such groups in

developing its Terms of Engagement and Country Guidelines and continues

to do so in their implementation. Levi Strauss’ questionnaire response said:

“By working with various parties, we have improved our ability to verify

facts, craft new solutions, and strengthen implementation of our standards.”

The company also stated that when evaluating a prospective business partner for potential adherence to its code, it relies on advice from outside organizations and community leaders, as well as interviews with workers both

on-site and away from the contractor’s facilities.

• Liz Claiborne and The Gap have worked with U.S.-based and local NGOs to

develop ways to increase transparency in the implementation of their codes,

mainly through NGO monitoring, which is discussed below. Liz Claiborne

also indicated that it has consulted with NGOs during its investigation of

alleged violations of its code.

• Sears indicated that in Bangladesh, at the suggestion of an NGO, it has sent a

letter to a local garment workers’ union directing them to notify Sears if any

problems arise regarding its policy.

3. Monitoring

Monitoring is critical to the success of a code of conduct: it gives the code

credibility in the eyes of consumers and other interested parties. Yet, most of the

policies we have examined do not contain detailed provisions for monitoring and

implementation, and many companies do not have a formal monitoring system in

place.

a. Monitoring of Codes of Conduct in the Apparel Industry

The companies surveyed indicated that they utilize a variety of means to

monitor that their codes of conduct or policies on child labor are respected by their

suppliers. Figure II-4 illustrates the structure of monitoring relationships in the apparel industry.

Few companies have a formal system for monitoring compliance with their

codes of conduct. Monitoring is usually part of a larger process that includes issues

such as quality control and delivery coordination. For this reason, it is not always

clear to what extent site visits focus on the code implementation. A few companies

check employment records and other documents relating to the workforce during

80 International Child Labor Hearing, U.S. Department of Labor (June 28, 1996)(Statement of Jeff Ballinger, Press

for Change).
49

their site visits, but very few companies indicated that they interview workers as part

of monitoring.

Some companies monitor their codes more actively than do others. Active

monitoring may consist of site visits and inspections by company staff, buyer agents

or other parties, to verify that suppliers are actually implementing the importing

Subcontractors

Contractors

Wholly Owned Subsidiary

NGOs/Unions

US Importers

US Manufacturer

Foreign Countries

US

NGOs/Unions

Consultants/ Auditors

US Retailer

Buyer /

Agent

F I G U R E I I - 4

Structure of Monitoring Relationships
50

company’s policy on child labor. Companies also may use contractual monitoring,

whereby they rely on the guarantees made by suppliers, usually through contractual

agreements or certification, that they are respecting a company’s policy and not

using any child labor in production. This may be seen as “self-certification” by

contractors or suppliers. Most of the companies that responded to the survey utilize

a combination of active and contractual monitoring. Some companies, however, rely

exclusively on contractual provisions without any significant active monitoring.

i. Models of Active Monitoring

There are four active monitoring models that are being used by U.S. corporations with respect to their codes of conduct: (i) internal audits by company personnel (who may or may not be trained in monitoring compliance with labor standards),

(ii) external monitoring conducted by buying agents or suppliers, (iii) outside audits

conducted by independent firms hired by the company, and (iv) NGO monitoring,

conducted by human rights, consumer and/or labor groups. These models may be

used in various combinations. (Table II-4 shows the type(s) of monitoring used by

the companies that indicated they have a system of active monitoring.)

Internal Monitoring: A number of companies have developed internal monitoring systems to implement their codes of conduct. These systems use local or

regional company personnel or employees from U.S. corporate offices to monitor

labor practices. Internal monitoring may be used by companies that are reluctant to

grant access to their facilities, procedures and business practices to outside monitors.81 It is most common among large companies that are vertically integrated, i.e.,

those in which the corporation owns or directly controls all steps of the production

process.82 Internal monitoring is less common for companies, particularly retailers,

that do not own or control the factories that make the products they sell. Some

retailers internally monitor only those plants producing private-label merchandise

which they import directly. U.S. retailers and manufacturers who use hundreds or

thousands of foreign contractors may find it a logistical or financial hardship to

monitor all of the facilities from which they source.

External Monitoring: Some U.S. companies rely on their buying agents to

monitor compliance with their corporate code. This procedure avoids the financial

and logistical burden of performing monitoring functions, but also removes the U.S.

corporation from the direct line of control in implementing its policy.

Outside Audits: The central reason for monitoring the implementation of a

corporate code of conduct is generating credibility. Corporations that conduct internal monitoring or depend on monitoring by buying agents or contractors are sometimes seen as having a vested interest in not finding anything wrong in their production systems.

81 International Child Labor Hearing, U.S. Department of Labor (June 28, 1996)(Statement of the Interfaith Center

on Corporate Responsibility)[hereinafter Statement of ICCR].

82 Statement of IMRA.
51

T A B L E I I - 4

Monitoring Strategies for Compliance with International Child Labor Policies

(Based on Responses to Department of Labor Questionnaire)

Internal a External b Outside

Auditor c NGO d NotSpecified e

Ames Department Stores •

Burlington Coat Factory •

County Seat Stores, Inc.*

Dayton Hudson

Corporation •

Dillard Department

Stores •

Dollar General

Corporation •

The Dress Barn, Inc. •

Family Dollar Stores •

Federated Department

Stores •1

Fruit of the Loom •

The Gap • • •

Hartmarx Corporation •

Home Shopping

Network, Inc. •

JCPenney Company • •

Jones Apparel Group • •

Kellwood Company • • •

Kmart Corporation •

Kohl's Corporation**

Land's End, Inc. • •

Levi Strauss & Co. •

The Limited • •

Liz Claiborne • •2

The Marmaxx Group**

May Department Stores*

Mercantile Stores

Company • •

Montgomery Ward

Holding Company •

Neiman Marcus Group*

Nike, Inc. • •

Nordstrom •1 •
52

T A B L E I I - 4 ( C O N T. )

Internal a External b Outside

Auditor c NGO d NotSpecified e

Oxford Industries •

Phillips-VanHeusen • •

Price/Costco •

Ross Stores, Inc. •

Russell Corporation •

Salant Corporation •

Sara Lee Corporation • •

Sears Roebuck &

Company •

Shopko Stores**

Spiegel, Inc. • •

Stage Stores, Inc. •

The Talbots, Inc. • •

Tultex Corporation •

Venture Stores •

VF Corporation • •

Waban Inc. •

Wal-Mart Stores •1 •

Warnaco Group •

Woolworth Corporation • •

* No response received.

** Designated as business confidential and therefore information not reportable.

a Internal Monitoring: Companies use existing personnel or bring in employees who work

for the company in other locations to monitor labor practices, on a regular basis.

b External Monitoring: Companies rely on buying agents to monitor labor practices.

c Outside Audits: Companies use independent accounting, auditing, testing or consulting

firms to monitor - among other things - labor practices.

d NGO Monitoring: Companies use local or international non-governmental organizations to

monitor labor practices.

e

 Not specified: Companies either do not have a policy or did not specify how the implementation of their policy is monitored.

1 Company does internal monitoring in situations where it contracts directly with a manufacturer for production of private-label goods.

2 Company reported that it is developing an independent monitoring capability to be

executed in concert with local NGOs and other organizations.
53

The outside monitoring of another company’s corporate code of conduct is a

relatively new endeavor. Accounting and auditing firms have a long tradition of

making field visits and reviewing financial records of client corporations. Based on

this expertise, some U.S. accounting and auditing firms have expanded their functions to include monitoring of compliance with corporate codes of conduct. Representatives of these companies say that their expertise in examining payroll records,

for instance, gives them a comparative advantage in checking for compliance with

child labor and other provisions of codes of conduct. Other types of companies

offering their services include firms engaged in compliance with safety and health

regulations, investigative consulting firms, and specialized companies that have been

created for this very purpose. However, since all such auditing and consulting firms

are normally hired — and paid for — by the U.S. importer or the vendor being

monitored, their total independence is subject to challenge.

NGO Monitoring: Critics of internal, external and outside auditing point to

the fact that company representatives, buyer agents or outside auditors may not be in

the best position to ascertain that a contractor has violated a company’s code. Aside

from the charge that these auditors may have a vested interest in not finding violations, some have noted that corporate representatives and auditing firms may not

speak the local language, and workers or plant managers may not feel entirely comfortable discussing their work situation with them. To ease these problems, some

companies are developing monitoring systems where they use local and international NGOs, or religious or human rights groups to conduct or assist in monitoring.

Some companies may adopt such monitoring in response to negative publicity or

with the hope of preventing crises from arising. This is a very new practice, however, and has only been tested in a few cases. Furthermore, there are certain issues

— including financial ones — that need to be resolved for this approach to be

sustainable.

ii. Active Monitoring

Active monitoring may be done through regular site checks, formal audits or

evaluations, or special visits by corporate staff. The frequency and intensity of visits

vary greatly from company to company. In addition, some companies may use

different systems of monitoring for different types of facilities. For example, they

may focus their site visits on their larger or more publicized suppliers, or may only

monitor those facilities from which they directly import or which manufacture their

private-label merchandise.

Several respondents indicated that they are currently stepping up their monitoring of overseas and domestic production facilities. Some, such as Jones Apparel

Group (‘Jones’) and Kellwood, indicated that they are in the process of expanding

their extensive domestic monitoring systems to cover international activities.

Respondents had very different views on which type of monitoring is more

desirable:

• Some companies feel very strongly that they can do the best job of monitoring themselves, and have the greatest incentive to do so. They also believe
54

that monitoring internally is the most efficient way, since problems are reported directly to management and can be dealt with more quickly.

• Other companies expressed the view that independent, outside monitors

may be able to get a more accurate picture of labor conditions or may be

more credible than internal monitoring.

Internal monitoring, which employs companies’ own staff to monitor for

compliance, is the most widely utilized form of active monitoring among respondents.83 Internal monitoring is most commonly done by quality control, merchandising or internal auditing staff; country, regional or contract managers; or senior management. Monitoring of labor policies is usually combined with monitoring for quality and other standards. While the personnel conducting the visits are usually specifically trained to monitor for quality control, it is not always clear that they are

trained to monitor compliance with labor policies.

Some respondents, particularly manufacturers, indicated that they have a strong

in-country or regional presence in many of the countries where they manufacture,

making it easier to conduct frequent inspections of contractors’ production facilities:

• Fruit of the Loom, for example, said that contract managers and field personnel visit foreign facilities on at least a weekly basis to check on a number of

production issues. These personnel are also trained to look for code of conduct violations and have forms to red-flag problems for senior management,

from which further scrutiny and a warning may follow. In-country personnel

also make suggestions and recommendations to contractors on how to improve their operations.

• Nike stated that it has extensive personnel located in the countries where it

produces, and that each contractor has specific Nike “in-house” personnel

assigned to it. They visit apparel contractors every two to three days and

report back to headquarters with their findings.

• The Gap reported that, once it places an order with a contractor, its incountry staff is constantly monitoring for quality and compliance with its

code, sometimes three to four times a week. These visits are both announced

and unannounced. The Gap also indicated that its senior field representatives also conduct formal compliance evaluations every 18 months.

• Levi Strauss noted that it has a global infrastructure of people in the communities where it does business. It stressed that its employees have the authority — and the responsibility — to take any steps necessary to ensure compliance, and it has found that in many cases its employees can work with

partners and address issues before they become a problem.

83 The following companies indicated that they use internal staff to monitor for compliance: Federated, Fruit of

the Loom, The Gap, Hartmarx, JCPenney, Jones, Kellwood, Kmart, Land’s End, Levi Strauss, The Limited, Liz

Claiborne, Mercantile Stores, Nike, Nordstrom, Oxford, Phillips-Van Heusen, Russell, Salant, Sara Lee, Sears, Spiegel,

Talbots, Tultex Corporation, VF Corporation, Wal-Mart, Warnaco, Woolworth Corporation.
55

• Sara Lee reported that most of its contractors are located in the same areas as

the plants it owns and are constantly being monitored by Sara Lee personnel.

Sara Lee noted that since its contracts are typically large enough to use entire

plants (rather than partial runs), its personnel have freedom of access to

contracting facilities and often make unannounced visits.

• Liz Claiborne staff does scheduled and unscheduled spot inspections of facilities, and requires all country managers and Liz Claiborne representatives

to complete an annual, 11-page human rights questionnaire for every supplier.

• Tultex Corporation (‘Tultex’) reported that it charges regional managers with

the responsibility of following up with vendors, and that these managers

make frequent visits to their factories.

• VF Corporation has its quality control people check on the manufacturing

process weekly.

Some companies send U.S.-based corporate staff or special auditing staff to

monitor production facilities for compliance with their policies. Again, in

most cases it appears that monitoring is part of a larger process that includes

elements such as quality control.

• Levi Strauss has a team of 50 full-time auditors who are based in the regions

where they work. These auditors and other in-country employees visit contractors on a regular basis to review quality, production processes and Terms

of Engagement issues. Levi Strauss said that all contractors and subcontractors are audited at least once a year, unless problems are found, in which

case they are done more frequently — sometimes three and four times a

year. Audits often include interviews with employees, both at the factory and

away from the factory.

• Jones, for example, reported that its U.S.-based quality control staff, which

visit overseas facilities, have been instructed to make sure Jones’ policies are

implemented. Jones also indicated that in 1997 its domestic in-house auditing staff will be sent to visit all of Jones’ larger suppliers. Jones anticipated

that while the visits are to be unannounced, Jones’ buying agents will probably be advised of the auditing teams’ presence in their country.

• JCPenney Company (‘JCPenney’) reported that it has instructed its associates

and buyers to watch for and report any legal violations or questionable conduct to management for follow-up and, when necessary, corrective action.

• Fruit of the Loom reported that senior management and/or corporate counsel

conduct on-site contractor audits to confirm compliance with the company’s

code and other agreements. These audits include a review of employment

and labor practices, including an on-site confirmation that workers are of

legal working age.
56

• Kmart stated that it is increasing its regular and surprise on-site inspections of

manufacturing facilities. Last year, Kmart conducted 45,000 visits worldwide

through its Quality Assurance Department. Kmart investigators have a checklist

of what to look for during inspections.

• Land’s End’s quality assurance team and agents visit existing vendors to monitor

standards and assure quality of products.

• The Limited reported that its quality assurance and internal audit teams make

regular and unannounced on-site inspections of facilities.

• Liz Claiborne is requiring non-sourcing senior managers and employees who

visit factories to evaluate working conditions and fill out a “report card.”

• In addition to auditing by quality control personnel, Phillips-Van Heusen

recently organized an Employment Practices/Workers’ Rights Task Force, made

up of employees who are not directly involved with production sourcing.

These employees, on a part-time basis, periodically visit contractors worldwide, inspect facilities, and compare their findings to evaluations done by

sourcing personnel. According to PVH, the task force does not attempt to

reach all factories, but tries to reach representative vendors in all regions.

The task force does not reveal which vendors will be visited. Inspections

include a review of facility documents, and contractors are asked to provide

proof of age.

• Warnaco indicated that its personnel occasionally make unannounced visits

of foreign contractors to monitor for compliance with its Business Partner

Terms of Engagement.

Some retailers indicated that they concentrate internal monitoring efforts on

those facilities that produce private-label merchandise or brands sold exclusively at

their stores:

• Federated stated that it routinely inspects all facilities that produce privatelabel products for Federated for compliance with laws on child labor, as well

as safety and health standards.

• Nordstrom reported that it conducts random inspections of contractor facilities in cases where it contracts directly with a manufacturer for the production of private-label merchandise. These visits, both announced and unannounced, monitor for compliance with all applicable laws and confirm that

no child or forced labor is used.

• Wal-Mart indicated it is increasing its inspections of domestic and overseas

factories, focusing on those factories that produce lines sold exclusively at

Wal-Mart, such as the Kathie Lee line.
57

Implementation of child labor policies may differ, depending on whether

goods are produced at wholly owned facilities or contractor facilities, or purchased

through buying agents:

• Oxford stated that it is quite confident of its own facilities’ adherence to all

laws, and made a distinction between implementation in wholly owned facilities versus contractor facilities. Oxford Industries utilizes its internal audit

staff to periodically check compliance with applicable laws and Oxford policy

in all of its wholly-owned facilities. For contractors, Oxford reports that it is

the responsibility of the Oxford contract manager or employee who hires the

contractor to take reasonable steps to ascertain that the contractor is in compliance and to document those steps. Oxford also indicated that qualitycontrol staff and higher-level managers visit contractor facilities during production runs a couple of times a year. Oxford stated that while quality

control staff is in plants more frequently, it does not have the same clout as

managers to exact immediate change.

• Sara Lee stated that through its direct control and management of its whollyowned facilities, it is able to ensure that its Operating Principles are being

implemented and followed at those facilities. When Sara Lee purchases apparel from a domestic supplier that has secured the products from a subcontractor, it expects the supplier to meet the requirements of those principles.

External monitoring, or monitoring of suppliers’ production facilities by buying agents, is used by at least nineteen respondents.84 While some of these respondents rely on buying agents for most of their imports, others only use buying agents

in certain cases.

• Dillard Department Stores (‘Dillard’) charges its buying agents with the responsibility of periodically monitoring production, to ensure that quality goals

and Dillard’s policies are realized, including that on child labor. These inspections are done three to four times a year, and agents are required to

return a form indicating their findings.

• Dress Barn requires its buying agents to monitor production facilities during

the manufacturing process for goods specifically ordered by Dress Barn. The

agents are required to examine a range of labor and employment practices,

and use an extensive audit form during the visit. This audit form includes

questions specifically addressing child labor.

• Mercantile Stores Company (‘Mercantile’) reported that its buying agent is

responsible for implementation of its child labor policy and is instructed to

be vigilant regarding child labor. Mercantile believes that its vendors are

aware of its child labor policy because they are required to sign it.

84 These companies are: Dillard Department Stores, Dollar General, Dress Barn, The Gap, JCPenney, Jones,

Kellwood, Land’s End, The Limited, Mercantile Stores Company, Nordstrom, Phillips-Van Heusen, Sara Lee,

Spiegel, Stage Stores, The Talbots, Venture Stores, VF Corporation and Woolworth Corporation.
58

• Stage Stores, which currently uses AMC’s code (but is developing its own

code), did not specify its monitoring system. However, AMC — a buyer’s

cooperative which orders imported merchandise on behalf of its retail shareholders — indicated that AMC vendors are “aware” of its code, which contains provisions prohibiting child labor. Vendors go through an annual certification process, which includes a variety of quality assurance issues and

meeting AMC’s code. AMC said that it has employees in most countries from

which it orders apparel.85 In a few countries where AMC orders are small it

relies on “commissionaires,” who act as buyer agents.

• Venture Stores (‘Venture’) purchases essentially all imported apparel through

a buying agent. The agent is aware of Venture’s policy not to purchase

merchandise from foreign vendors who use child labor and is required to

comply with this policy. While Venture requires its buying agent to certify

that child labor was not used in the manufacture of any merchandise, it does

not indicate how it ensures compliance, other than through visits by Venture

personnel when feasible.

• VF Corporation and Sara Lee, when using buying agents, have them inspect

production facilities. VF Corporation’s buying agents go to plants two to

three times during the course of production — for an initial audit, a final

audit, and often one in-between.

Kellwood, Nike, Price/Costco, Inc. and Wal-Mart all indicated that they currently use or have in the past hired outside auditing, accounting or consulting firms

to monitor compliance with their codes of conduct:

• Nike stated that every Nike contractor is subject to unannounced spot checks

by the consulting firm Ernst & Young. Nike reported that Ernst & Young has

been doing audits for several years, and indicated that while all of its footwear facilities have been audited by Ernst & Young, not all apparel contractors, particularly those where Nike has very little production, have been audited. Ernst & Young reviews the contractors’ books and interviews employees, according to Nike. On child labor, the auditors look at birth certificates

or other evidence, if available. Nike says the auditors conduct interviews

with employees away from their managers. When violations are found, Nike

asks the factory manager to set up a timetable for remedying the problem.

• Kellwood said that it recently began using Ernst & Young and Contractor

Services Compliance Corporation to conduct outside monitoring overseas.86

Kellwood indicated that the initial visits are scheduled, but once the system is

in place the outside monitors will also do unannounced visits on a regular

basis. The monitors do a random sampling of interviews with workers, according to Kellwood. Kellwood stated that it deals with the finest retailers,

and wants them to feel confident that they are getting a product of value,

85 According to AMC, its retail shareholders includes such other stores as Bloomingdale’s, Saks Fifth Avenue,

Dayton Hudson, Bradlee’s, Marshall’s, Target and Filene’s Basement.

86 Kellwood indicated that it may expand its monitoring to use another Big Six accounting firm in the future.
59

made in accordance with national laws and moral and ethical standards. It

believes outside monitoring is part of the “cost of doing business.”

• Price/Costco, Inc. (‘Price/Costco’) reported that as part of its quality-assurance program, which has been in place since 1995, it uses an outside auditor

to inspect vendors’ facilities. These outside audits are only done where

Price/Costco buys through a U.S. wholesaler — not where Price/Costco is

the importer of record, in which case it does its own monitoring. The outside

auditors look at labor conditions and labor force make-up, in addition to a

variety of quality-assurance issues. Price/Costco indicated that the outside

audits are paid for by the vendors.

• Wal-Mart hires a third-party agency to conduct routine visits of overseas factories with which Wal-Mart contracts directly.

The Gap and Liz Claiborne are currently experimenting with NGO monitoring at some of the contractor facilities from which they import:

• The Gap, in cooperation with a number of NGOs, has worked to develop an

NGO monitoring mechanism at Mandarin International, an independent contractor in El Salvador.

* The developments that led up to this third-party monitoring pilot

began with alleged violations at Mandarin, including the use of child

labor, forced overtime, unsafe working conditions, intimidation of

workers to prevent union organizing and firing of union leaders.87

* When The Gap’s own investigation of the allegations regarding Mandarin did not come up with any evidence to corroborate the complaints, NGOs and human rights groups called for the use of “independent” monitors. After considering cancelling its contracts with

Mandarin and pulling out of El Salvador, The Gap instead signed an

agreement in which it consented to explore the viability of an independent monitoring program in El Salvador and agreed to re-approve

the Mandarin plant as a Gap contractor once it felt confident that the

plant could effectively implement its code.88

* In January 1996, The Gap and some NGOs formed an Independent

Monitoring Working Group (IMWG). Members of the IMWG traveled

to El Salvador to visit the Mandarin plant, met with various parties,

and solicited input from more than 75 U.S. and international human

rights, labor, religious, academic and business groups to develop a

working model for independent monitoring.

* The IMWG developed the following definition of independent monitoring: “An effective process of direct observation and information87 Statement of ICCR.

88 See Bob Herbert, “In Deep Denial,” The New York Times, October 13, 1995. See also National Labor Committee

press releases of October 18, 1995, November 21, 1995 and December 16, 1995.
60

gathering by credible and respected institutions and individuals to

ensure compliance with corporate codes of conduct and applicable

laws to prevent violations, process grievances, and promote humane,

harmonious, and productive workplace conditions.”89

* In March 1996, Mandarin managers, workers, and current and former

union leaders signed a resolution that included, among other elements, the formation of an independent monitoring team in El Salvador — the Independent Monitoring Group of El Salvador (IMGES).

With these developments, The Gap re-approved Mandarin for the

production of its goods. The team of monitors, made up of volunteers of local human rights organizations, is based near the plant, has

regular access to it, and can receive and investigate complaints from

workers without fear of reprisal.90

• Liz Claiborne is currently developing its own NGO monitoring pilot program

with the expectation that such a monitoring capacity will improve reporting

on compliance with its Standards of Engagement.

* Liz Claiborne reported that monitors will listen to the concerns of

workers and management, review compliance with local laws, compare factory practices with its standards, and create mechanisms for

workers to report grievances in privacy, including telephone numbers to call or locked drop-off boxes for written complaints.

* According to Liz Claiborne’s survey response, “key elements for the

program will be independence and an understanding of local issues.”

Liz Claiborne also noted that it expects to adapt and improve the

program based on data and input from the pilot effort, the monitors,

and involved NGOs and governments.

iii. Contractual Monitoring

Many respondents require their suppliers, buying agents or contractors to

abide by their policy on child labor through contractual agreements or some form of

certification process. These contractual obligations are an expression by manufacturers and retailers of their expectation that the contractors’ or suppliers’ business relationship with them is based on full compliance with their policy or code. The

incorporation of child labor policies into contractual obligations in many cases shifts

at least part of the burden of responsibility for ensuring compliance onto the contractor, supplier or buying agent. In addition, such contractual obligations provide a

legal avenue for terminating agreements on the basis of violations.

89 Interfaith Center on Corporate Responsibility, “Independent Monitoring Working Group Progress Report,” (April

19, 1996) [hereinafter ICCR report].

90 Statement of ICCR. According to Mark Anner, of the Center for Labor Studies (CENTRA), who coordinates the

NGO monitoring team, the experience has been very positive, with most problems already resolved at the Mandarin plant. He expressed concern, however, regarding the long-term sustainability of NGO monitoring since the

monitors are all volunteers (with full-time jobs elsewhere) and raise their own budget.
61

Some companies, particularly retailers, may have general language in their

purchase order or vendor contracts requiring vendors to comply with applicable

laws but have no mechanisms for monitoring compliance. In certain cases, respondents indicated that they have no knowledge of how or where imported goods they

purchase are produced.

• A number of respondents indicated that compliance with their corporate

code of conduct or policy is part of their purchase orders or other contracts.

• Other respondents (Dollar General, Venture and Woolworth Corporation)

also indicated that their letters of credit contain provisions on child labor.

 * Woolworth Corporation (‘Woolworth’) reported that its manufacturers must complete a Certificate of Product Manufacture and Inspection — certifying that a said factory was truly used to produce the

garments and that no child labor was used in their production —

before letters of credit can be drawn down.

• Price/Costco’s Import Vendor Agreement states that the vendor must secure a

written and signed confirmation from the owner of the “prime factory” that

the factory and all subcontractor facilities used are in compliance with its

child labor policy.

Several companies require written acknowledgment by their contractors, suppliers or buying agents that they have read and understood their policies on child

labor. This is usually done through requiring contractors to review and sign a code

of conduct or a special certification form.

• Federated indicated that it requires its “core vendors” to acknowledge annually in writing their understanding of Federated’s policies requiring full compliance with applicable laws, including those relating to child labor. It reported that relationships are immediately terminated with manufacturers and

suppliers who fail to do so.

• The Limited also requires every supplier to periodically certify their compliance and that of their subcontractors with its’s policy, which includes provisions on child labor.

• Mercantile indicated that it decided to put its child labor policy in a standalone certification form that suppliers must sign because it did not want that

policy to be lost within a larger contract.

• Oxford reported that it is implementing a computerized tracking system to

ensure that each contractor has read and understood Oxford’s sourcing policy

and acknowledged that it will be terminated in the case of violations of that

policy, which includes provisions on child labor.

• Talbots, as part of a new program (effective September 1996), requires all of

its international suppliers to furnish a signed, notarized statement confirming

adherence to its policies on child labor and other standards. Talbots stated
62

that it will require suppliers to re-certify their adherence annually and will

not place new orders with any companies that fail to complete the certification.

Some respondents require certification on shipping documents:

• JCPenney, requires that foreign and U.S. suppliers of imported merchandise

obtain a manufacturer’s certificate for each shipment certifying that the merchandise was manufactured at a specific factory (identified by name, country

and location) and that no illegal child labor was employed in its manufacture.

• Talbots requires all international manufacturers to include a statement on

their shipping documents accompanying imported merchandise confirming

their adherence to the company’s policy.

Some respondents require contractors to take on certain responsibilities or

actions themselves to ensure that the policy is not violated:

• Fruit of the Loom indicated that in signing its code of conduct, contractors

agree to require all their employees who are responsible for implementing

the code to review and familiarize themselves with it.

• JCPenney’s purchase contracts require suppliers to impose the same standards on their contractors as the company places on them (including certification that no forced, indentured or illegal child labor was employed in the

manufacture of the merchandise).

• Kmart’s purchase order requires suppliers to contractually agree that they

have “ascertained and financially warranted” that no child labor was utilized

in the manufacture of merchandise, and obligates them to be responsible for

and inspect their subcontractors. Vendors also must sign Kmart’s Certificate

of Compliance (introduced in June 1996), certifying that they will increase

their factory inspections and take vigilant action to prevent problems. Vendors’ signature of this Certificate also binds them to make a payment, equivalent of 50 percent of Kmart’s order, to a local human rights or children’s

organization in case of failure to comply.

• Talbots requires its vendors to certify in their shipping documents that they

have a program in effect for monitoring their contractors.

Some respondents who utilize buying agents contractually obligate these

agents to implement their policies on child labor:

• Dollar General requires buying agents to warrant that merchandised purchased for the company is not manufactured in violation of any human rights

resolutions.

• Spiegel requires its buying agents to implement its code.
63

Some companies require documentary proof of compliance or reserve the

right to carry out on-site inspections:

• Phillips-Van Heusen’s contracts require facilities to have on-site such documents as proof of age or wages paid.

• Fruit of the Loom requires contractors to provide proof of compliance, including proof that all employees meet the minimum age.

• For some companies (e.g., Fruit of the Loom and Jones), endorsement of a

code or policy is also an authorization to allow the contracting company free

access to contractors’ facilities and any information requested in order to

monitor for compliance.91

• Vendors who sign Russell Corporation’s (‘Russell’) Vendor Policy give Russell

the right to conduct on-site inspections.

Some companies, although they have specific language prohibiting child labor or general contract language requiring adherence to applicable laws, do not

appear to have any mechanism for compliance. The contractual language, in these

cases, is the only visible means by which these companies implement their policies

with regard to imported apparel.

• Ames’ purchase order requires vendors to comply with all applicable labor

laws and states that failure to comply would result in cancellation. Ames’

buyers are instructed to stay alert to any indication that goods are being

made under unacceptable conditions, and states that if any such problems

exist, it would take action. However, Ames said that it uses agents for the

purchase of its imports and it generally has no knowledge or control over

where the goods are manufactured.

• BJ’s Wholesale Club, a division of Waban, indicated that any imported apparel it sells is purchased domestically, and it has no control over which

countries or facilities that apparel comes from. Furthermore, it stated that it

has no knowledge of the workforce in those facilities.

• In its purchase order, Burlington Coat Factory requires that vendors comply

with all applicable laws, but no further compliance action is taken.

• Family Dollar indicated that its purchase orders have always required vendors to comply with all applicable labor laws. However, Family Dollar gave

no indication of any compliance process.

• Home Shopping Network includes specific language prohibiting the use of

child labor in its purchase order terms and conditions as well as a vendorpractices agreement. However, it gave no indication of how it implements

those provisions.

91 Fruit of the Loom also requires access to subcontractor facilities used.
64

• Ross Stores’ purchase order requires its vendors to comply with all applicable

laws and regulations. The company stated that it would not knowingly purchase goods that are made by children or exploited workers, but does not

visit any manufacturing sites or have any other system for monitoring compliance. However, Ross Stores indicated that it is reviewing its purchasing

process regarding foreign suppliers.

b. Evaluation of Prospective Contractors

While technically not a monitoring activity, evaluation of prospective contractors with regard to labor standards is becoming an important aspect of code

implementation. At least seventeen of the companies that responded to the survey

stated that they have a process in place to evaluate overseas facilities before they

establish a business relationship with them.92 Such on-site evaluations or inspections

have long been made primarily to verify whether the facilities have the physical

capacity to meet quality and quantity specifications. Increasingly, the working conditions and employment practices of prospective contractors are also being evaluated, screening out companies that are violators or have the potential for being so in

the future.

• Several of the companies that conduct such evaluations indicated that compliance with their policies on working conditions is an important factor in the

decision to place a production program with a contractor. These evaluations,

according to many, enable them to screen out contractors who do not comply with applicable legal standards or who do not meet a company’s own

standards.

• A few respondents indicated that such pre-contract inspections had enabled

them to avoid doing business with a facility that appeared to employ underage children, but most reported that when facilities are rejected, it is usually

for other reasons.

The evaluations typically involve an inspection of the physical plant and

include other elements such as reviewing company records (including employment

records), evaluating the workforce, and explaining company policies and expectations.

• Some companies use a standard checklist or questionnaire that includes specific questions or criteria related to working conditions and employment practices, including questions on the age of workers.

• Other companies, such as Land’s End, indicated that they have an intricate

process to qualify vendors, but did not disclose what the process entails.

92 These companies are Federated, Fruit of the Loom, The Gap, Land’s End, Levi Strauss, Liz Claiborne, Montgomery Ward, Nike, Oxford, Phillips-Van Heusen, Price/Costco, Salant, Sara Lee, Spiegel, VF Corporation, Wal-Mart

and Warnaco. Several other companies, including Dillard and JCPenney, indicated that they seek out suppliers

with established reputations for quality that comply with all applicable laws, but did not state that they conduct

on-site evaluations.
65

• Levi Strauss’ initial evaluation of potential business partners is done by a

team of employees representing different divisions of the company and includes one of its 50 specially trained auditors.93 Levi Strauss indicated that

the evaluations take at least two full days to complete, and auditors use a 20-

page form to evaluate the policies, practices, and conditions of the contractors. They also review payroll, personnel and other records and check health

and safety conditions. To get a “full picture of a potential contractor’s adherence to the Terms of Engagement standards,” the team also relies on unannounced visits, advice from outside organizations and community leaders,

and interviews with workers both on-site and away from the facility.

• Fruit of the Loom reviews potential contractors’ management experience and

financial condition to ascertain whether they can deliver quality products in

compliance with Fruit of the Loom’s standards and all applicable laws.

• Salant reported that it looks for workers who appear underage or malnourished during evaluations, and utilizes a checklist that includes a question on

whether contractors keep age records of all employees.

Two of the retailers who conduct pre-contract inspections of potential contractors use an external organization to do them:

• When Wal-Mart contracts directly with an overseas manufacturer to produce

goods, it hires an outside agency to inspect factory conditions before work

begins. Wal-Mart indicated that this process has identified more than 105

factories that failed to comply with Wal-Mart’s standards — and therefore are

not eligible for contracts with Wal-Mart.

• Price/Costco has an outside audit done of every new foreign facility in cases

where it uses a U.S. wholesaler who sells imported goods. These audits

include a site visit and evaluation of quality and volume capabilities, as well

as working conditions and labor force composition. Price/Costco indicated

that the vendor pays for the audits.

Some companies, such as VF Corporation, re-inspect facilities that they have

not used for few a seasons to ensure that they still comply with its standards.

• Federated maintains a database that includes all approved suppliers as well

as a “red-flagged list” of vendors that have been rejected.

4. Enforcement

Enforcement of corporate codes of conduct refers to how U.S. companies

respond to violations of their codes. Enforcement is essential to the success of a

corporate code. As a report on codes of conduct has stated, “without adequate

93 These auditors are based in the region where they work. While they are specially trained in enforcing Levi

Strauss’ “Guidelines,” they also do work pertaining to quality control and sourcing activities.
66

enforcement, codes can be mere public-relations ploys, misleading consumers that

workers’ rights are actually respected in production.”94

Information from those respondents who outlined their policies on enforcement indicates that there are various levels of response to violations of child labor

policies. Most companies stated that they would first investigate all allegations to

confirm the use of child labor.95 Most also indicated that they use graduated responses to confirmed violations, which include: a) monetary fines or penalties; b)

probationary status; c) demand of corrective action; d) support of educational projects

(particularly where child labor violations are involved); e) cancellation of an individual contract; and f) severance of the relationship. Positive reinforcement includes: a) retention of current contracts; and b) awarding of additional contracts.

While termination of a contractual relationship may send the strongest signal

regarding intolerance of child labor, a zero-tolerance policy has immediate effects for

the factory management and for the workers who would lose their jobs when factory

orders are canceled.

Resolution of the problem of child labor means different things for different

companies. In most cases, it simply means dismissal of the child workers. For others,

resolution occurs when the supplier puts satisfactory monitoring systems in place.

To a very few companies, such as Levi Strauss, resolving the problem might mean

contributing resources, if necessary, to achieve sustained change. Some companies

indicated that they believe their ability to modify contractors’ behavior depends greatly

on the amount of leverage they can exercise on those contractors. Companies have

far less leverage with contractors where they only have small production runs.

The vast majority of companies that responded to the survey reported that

they have never found any violations of the child labor provisions of their code or

policy. Some companies attributed this to their efforts to evaluate and carefully

select suppliers before entering into contracts with them. Others indicated that child

labor violations of their codes are less common than other types of violations, such

as health and safety.

Of the companies that responded to the survey, only four — The Gap, Levi

Strauss, Phillips-Van Heusen, and Sears — have confirmed instances of child labor in

overseas production facilities that were producing garments for their account.96 In all

of these instances, the plant employing underage workers was an independent contractor.

• The Gap reported that, when it has discovered child labor in a facility producing its merchandise, it took immediate action to either correct the problem or terminate the business relationship with the facility.

94 Richard Rothstein, “The Starbucks Solution: Can Voluntary Codes Raise Global Living Standards?,” The American Prospect 27 (July/Aug. 1996) 36 - 37.

95 Most also indicated that, should they receive notification by a governmental authority of a violation, they would

cooperate and act immediately.

96 Kellwood reported that it suspected child labor in a facility that it subsequently decided not to use as a source.
67

• Levi Strauss reported that when it first began implementing its Terms of Engagement, about five percent of its contractors were terminated due to a

variety of conditions, including the use of child labor. However, during

initial Terms of Engagement evaluations in Bangladesh, it found several underage girls working in two contractor facilities. Levi Strauss stated that,

rather than having the underage workers discharged, it persuaded the contractors to stop employing underage children, but to continue paying the

girls even though they no longer worked. Levi Strauss paid for the former

underage workers’ tuition, books and uniforms to attend school, and the

contractors agreed to employ the girls once they had finished school.

• Phillips-Van Heusen reported that it has found child labor in several off-shore

facilities.97 The company said that in such instances, it has discussed the

problem with the contractor and allowed 30 to 90 days to discharge the

underage workers. In three instances, the contractors complied. In the one

instance that the contractor did not comply, Phillips-Van Heusen discontinued its relationship with the contractor. In one case, where it had a large

concentration of production with multiple contractors and sewing shops in

one area, Phillips-Van Heusen observed children in manufacturing areas who

were not in school. The company determined that educational opportunities

were lacking, and made a commitment to a multi-year project to improve the

educational system. Phillips-Van Heusen has built classrooms, provided for a

well, electricity and additional teachers, and purchased desks and supplies.

• Sears reported that in late 1994, the BBC brought to its attention that it had

found children working in a manufacturing facility in India that produced

garments for Sears. Sears subsequently contacted the U.S. importer that was

procuring the garments, and that importer denied that child labor was being

used. Sears demanded that child labor not be used, and asked that documentation of age be required. The importer provided Sears with such documentation, which contained a Government of India certification stamp. When

Sears received a videotape of a BBC broadcast, which clearly showed children working at the facility, Sears demanded that its garments no longer be

made there. Sears later terminated the importer when it was found to still be

using the facility (although Sears pointed out that no goods from the facility

were supplied to Sears).

Other companies have received allegations of violations of their policies on

child labor:

• JCPenney stated that it had received allegations of underage workers by its

associates but determined after its own investigation that there had been no

violation.

• Liz Claiborne reported that after recently uncovering an alleged breach in a

Middle Eastern country, it is investigating the allegation in cooperation with a

U.S.-based human-rights organization.

97 Phillips-Van Heusen reported that its quality control staff has in most cases discovered the child workers.
68

Only a few companies — Kmart, Montgomery Ward, Salant and Venture —

reported that they would respond to violations of their child labor policy with immediate terminations of the business relationship. Many others, including Fruit of the

Loom, The Limited, Nordstrom, Oxford and Ross Stores, indicated that violations

could be punished with terminations, but not unconditionally or before other approaches were tried. Most companies outlined an incremental response to violators.

Following are some examples of stated enforcement policies:

• Federated stated that if it is notified by a governmental authority or determines on its own a serious violation of its policy, it will immediately suspend

all shipments from the subject factory and discontinue further business until

that factory institutes the monitoring programs necessary to ensure compliance. If notified of a violation by another party, Federated will immediately

suspend further shipments, pending the supplier’s explanation and commitment to take satisfactory remedial action. Federated stated that it may also

take legal action.

• JCPenney reported that if, after full investigation, it determines that misconduct has occurred, it would take appropriate corrective actions, which could

include canceling the affected order, prohibiting the supplier’s future use of

the factory where the violation took place, or terminating JCPenney’s relationship with the supplier. If informed by a government of violation of labor

laws, it will immediately suspend shipments from the factory, with any resumed shipments conditioned on verification that the supplier has put the

monitoring programs in place to ensure compliance.

• Jones indicated that it will generally first try to get remediation of the problem before withdrawing. But it will take appropriate actions as warranted,

ranging from canceling the affected purchase contract or terminating its relationship with the supplier.

• Kmart stated that if a supplier is found to be in violation, it will cancel the

order, with the supplier bearing the burden of any loss and responsible for

other damages. Furthermore, Kmart stated that it will sever its relationship

with the vendor, who will be assessed a payment, worth 50 percent of the

contract, to be donated to a human rights or children’s organization in the

community where a violation occurred.98

• Liz Claiborne stated that it will first investigate reported violations to find out

the scope and nature of the problem, and the status of the workers involved.

It requests contractors to address the situation in a humane manner, while

ensuring that the facility be brought up to standards.

• Nike indicated that when a problem on an issue other than child labor has

been found, Nike has asked the factory manager to set up a timetable for

remedying the problem.

98 According to Kmart, this last provision was added by its new Chief Executive Officer.
69

• VF Corporation reported that it would first do its own investigation of allegations. If a violation were confirmed, it would try to first work with contractors to correct deficiencies. If that does not work, VF Corporation stated that

it would terminate the relationship.
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71

III. Implementation Experiences of Codes of

Conduct in the U.S. Apparel Industry

A. Introduction

As has been reported in Chapter II, 36 of the 42 U.S. retailers and manufacturers of apparel which provided reportable responses to the Department of Labor

voluntary survey stated that they had adopted some sort of policy prohibiting child

labor in overseas production facilities. These policies takes different forms, from

formal public codes of conduct to provisions banning the use of child labor in

contracts between the foreign producer and the importing U.S. corporation.

The fact that U.S. retailers and manufacturers of apparel have adopted policies against the use of child labor in the production of garments is a positive step

toward the objective of eliminating the use of child labor. Clearly, for such policies

to be truly effective, there has to be a commitment on the part of all interested parties

to implement them. Consequently, a central objective of this study is to assess the

implementation practices of U.S. apparel importers that have policies regarding child

labor.

Through the voluntary responses to the survey instrument sent out to U.S.

manufacturers and retailers of apparel and follow-up phone interviews with respondents, the Department of Labor learned a great deal about the implementation of

codes of conduct from the perspective of the U.S. companies that import the garments and originate the codes. Although these companies have generally been

cooperative, company officials responding to the inquiries were not always able to

provide definitive explanations regarding specific aspects of the implementation of

their policies.

To further review the actual implementation of codes of conduct, Department of Labor officials visited six countries where there is extensive production of

garments for the U.S. market. This chapter describes the field visits and summarizes

their findings regarding transparency, monitoring and enforcement of codes of conduct — the primary elements identified in Chapter II.

B. Field Visits

For a two-week period in September 1996,1 Department of Labor officials

traveled to six countries — the Dominican Republic, El Salvador, Guatemala, Honduras, India, and the Philippines — that produce garments for the U.S. market. The

objective of the visits was to learn about the approaches of foreign garment suppliers

1 The majority of the field visits took place over the period September 3-14, 1996.
72

to the implementation of the established child labor policies of U.S. importers. Interviews were held with as many relevant persons or organizations as possible associated with the apparel industry, i.e., labor ministry officials, manufacturers, plant managers, buyers, trade associations, unions, workers, community activists, human rights

groups, organizations concerned with children’s issues, and other non-governmental

organizations (NGOs).

1. Planning of Field Visits

In planning the field visits, Department of Labor officials met in Washington

with a variety of organizations and individuals. Where meetings were not practical,

consultations were held by telephone. Among others, the Department of Labor

consulted with representatives of U.S. garment importers, labor organizations, the

Department of State, and Washington-based diplomatic representatives of the countries being visited.

a. U.S. Apparel Importers

Department of Labor officials met with representatives of the International

Mass Retailers Association (IMRA), the National Retail Federation (NRF) and the

American Apparel Manufacturers’ Association (AAMA) to discuss the objectives of

the field visits. The Department of Labor sought input from the three business

organizations on specific individuals and companies in each of the foreign countries

who should be contacted. All three organizations indicated that they would inform

their members about the mission and, where appropriate, suggested specific individuals and corporations that should be contacted in each country.

b. Labor Organizations

Department of Labor officials consulted with representatives of organized

labor in the United States in preparation for the foreign visits.

• Department of Labor officials met with representatives of the American Institute for Free Labor Development (AIFLD) and the Asian-American Free Labor

Institute (AAFLI), the entities within the AFL-CIO responsible for Latin American and Asian affairs, respectively. These entities provided advice on individuals/organizations that Department of Labor officials should visit in each

country and informed their overseas contacts about the mission.

• Department of Labor officials also consulted with the Union of Needletrades,

Industrial and Textile Employees (UNITE), the main U.S. labor union in the

garment industry, for the same purpose.

c. Department of State

The U.S. Embassy in the capital of each country was requested to assist in the

identification of all relevant individuals and organizations with whom the Department of Labor officials should meet and, where possible, make appointments for

such visits.
73

d. Foreign Governments

The Department of Labor requested from U.S. Embassies in the six foreign

countries that an appointment be made with high-level officials of the Department of

Labor (or appropriate department) in each country to discuss the objectives and

methodology of the mission.

2. Conduct of Field Visits

Organizations and persons interviewed by the Department of Labor officials

in each of the six countries are listed in Appendix D. The categories of individuals

interviewed were: government officials (including legislators), employers, workers,

and NGOs. U.S. Embassy personnel in each of the countries generally accompanied

the Department of Labor officials. At the beginning of each interview, Department of

Labor officials indicated the purpose of the interview was to gather information for a

public report, and any information collected could be used for that purpose.

3. Plant Visits

The central element of the field visits was the opportunity to discuss matters

related to the existence and implementation of codes of conduct with managers and

workers of plants producing apparel for the U.S. market.

Information is not publicly available on the universe of foreign subsidiaries,

contractors, and subcontractors of U.S. garment importers. Information which is

available (e.g., membership lists of apparel manufacturers associations) may not

cover the entire industry. Moreover, publicly available information may be out of

date, thereby not reflecting the current structure of supplier networks of U.S. garment importers.

For these reasons, Department of Labor officials in each country developed a

sample of garment plants to be visited using information obtained from garment

manufacturers or exporters associations in each of the countries, U.S. Embassy officials familiar with the garment industry of the given country, and recommendations

from U.S. labor union representatives and NGOs. U.S. business organizations —

particularly the AAMA — also assisted in this task.

Department of Labor officials sought to visit a representative sample of the

following types of garment plants producing for the U.S. market:

• U.S.-owned subsidiaries of the 48 companies surveyed;

• U.S. or host country-owned contractors or subcontractors; and

• Third party-owned (e.g., Korea, Taiwan) contractors or subcontractors.

Boxes III-1 through III-6 list plants, trade associations, and other garment

industry representatives visited by the Department of Labor in each country:
74

Dominican Republic

Plant Visits/Meetings with Apparel Industry Representatives

Export Processing Zones: Zona Franca Los Alcarrizos

Zona Franca Villa Mella

Zona Franca Las Américas

Zona Franca Santiago

Zona Franca La Vega

Zona Franca San Pedro de Macorís

Zona Franca Bonao

Plants: High Quality Products (Los Alcarrizos)

BRATEX Dominicana (Villa Mella)

Hanes Caribe (Las Américas)

Grupo M (Santiago)

Tejidos Flex (Santiago)

Interamericana Products (Santiago)

D’Clase Corporation (Santiago)

Polanco Fashion International (La Vega)

RK Fashion (La Vega)

Manufactura Borinqueña (San Pedro de Macorís)

Undergarment Fashions (San Pedro de Macorís)

Toscana Corporation (San Pedro de Macorís)

Pons, San Pedro (San Pedro de Macorís)

Denisse Fashions (San Pedro de Macorís)

Bi Bong Apparel (Bonao)

Woo Chang Dominican Ind. Co. (Bonao)

Bonahan Apparel (Bonao)

Hingshing Textile (Bonao)

Trade Associations: Dominican Association of Free Trade Zones

(ADOZONA)

American Chamber of Commerce of the

Dominican Republic

Free Trade Zones Association (Santiago)

Free Trade Zones Association

(San Pedro de Macorís)

B O X I I I - 1

• In the Dominican Republic, the Department of Labor visited eighteen garment plants in seven Export Processing Zones (EPZs) and met with representatives of the Dominican Association of Free Trade Zones, the American Chamber of Commerce of the Dominican Republic, the Free Trade Zones Association in Santiago and San Pedro de Macorís, and other organizations connected to the apparel export industry (Box III-1).
75

• In El Salvador, eight plants in five EPZs were visited, and meetings were held

with the Salvadoran Association for the Garment Industry and other garment

industry representatives (Box III-2).

El Salvador

Plant Visits/Meetings with Apparel Industry Representatives

Export Processing Zones: Zona Franca El Pedregal

Zona Franca San Marcos

Zona Franca San Bartolo

Export Salva Free Zone

American Park Free Zone

Plants: Confecciones El Pedregal (El Pedregal)

Lindotex (San Marcos)

Mandarin (San Marcos)

C.M.T. Industries (San Bartolo)

Primo Industries (San Bartolo)

Textiles Lourdes Limitadas (Export Salva)

Hilasal (Export Salva)

Industrias Caribbean Apparel, S.A.

(Incasa) (American Park)

Trade Associations: Salvadoran Association of the Garment

Industry (ASIC)

Other: Hampton Industries

RAMADA, S.A.

Provocaciones, S.A.

T&T Systems, S.A.

Sara Lee Intimates

AMERITEX

B O X I I I - 2
76

• In Guatemala, visits were made to nine plants in Guatemala City,

Chimaltenango, and San Pedro de Sacatepequez, and meetings were held

with representatives of the Apparel Manufacturers Exporters Committee, the

Non Traditional Products Exporters Association, the Commission for Coordination of Agricultural, Industrial, Commercial, and Financial Associations,

and other garment industry representatives (Box III-3).

B O X I I I - 3

Plant Visits/Meetings with Apparel Industry Representatives

Plants: Don Sang (Chimaltenango)

Dong Bang (Chimaltenango)

Lindotex (Chimaltenango)

Maquila Cardiz (Guatemala City)

Confecciones Caribe (Guatemala City)

Camisas Modernas I (Guatemala City)

Villa Exportadora (San Pedro de

 Sacatepequez) (14 shops)

Industrias G & V (San Pedro de

 Sacatepequez)

Mundivest (San Pedro de

 Sacatepequez)

Trade Associations: Non Traditional Products Exporters

 Association (GEXPRONT)

Apparel Manufacturer Exporters

 Commission (VESTEX)

Committee for Coordination of

 Agricultural, Industrial,

 Commercial, and Financial

 Associations (CACIF)

Guatemalan Chamber of Business

Guatemala
77

• In Honduras, visits were made to twelve plants, ten in five EPZs and two

outside of the zones; meetings were held with the Foundation for Investment

and Development of Exports, the Honduran American Chamber of Commerce, and the Honduran Association of Maquilas as well as with other organizations connected with the apparel export industry (Box III-4).

Honduras

Plant Visits/Meetings with Apparel Industry Representatives

Export Processing Zones: Parque Industrial Inhdelva (Choloma)

Zonas Industriales Continental (La Lima)

ZIP Búfalo Industrial Park (Villanueva)

Zona Libre Choloma

Galaxy Industrial Park

Plants: Mainta-OshKosh B’Gosh (Inhdelva)

Exportaciones Textiles Exportex (Inhdelva)

Certified Apparel Services of Honduras (San

Pedro Sula)

KIMI of Honduras (La Lima)

EuroModa (San Pedro Sula)

Confecciones Dos Caminos I-Fruit of the Loom

(ZIP Búfalo)

Confecciones Dos Caminos II-Fruit of the Loom

(ZIP Búfalo)

Fabena Fashions (ZIP Búfalo)

Olga de Villanueva-Warnaco (ZIP Búfalo)

Global Fashions (Zona Libre Choloma)

Cosmo Co. (Galaxy)

Fénix Co. (Galaxy)

Trade Associations: Foundation for Investment and Development of

Exports (FIDE)

Honduran American Chamber of Commerce

Honduran Association of Maquilas

Other: Marssol International

Fashion Mart of Honduras

Manufactura Textil MATEX

ZIP Buena Vista

Inter Fashions

Banco Ficohsa

B O X I I I - 4
78

• In India, Department of Labor officials visited nine plants and met with the

American Business Council, the Federation of Indian Chambers of Commerce

and Industry, the Apparel Export Promotion Council, and other garment industry representatives in New Delhi, Bombay, Madras, Calcutta, Chandigarh

and Tirupur (Box III-5).

India

Plant Visits/Meetings with Apparel Industry Representatives

Plants: Duke Fabrics Ltd. (Ludhiana)

R.B. Knit Exports (Ludhiana)

Ambattur Clothing Company Pvt. Ltd. (Madras)

Zoro Garments Pvt. Ltd. (Madras)

Orient Craft Ltd. (New Delhi)

Pankaj Enterprises (New Delhi)

Chenduran Textiles (Tirupur)

Ms. Poppys Knitwear (Tirupur)

Yuvraj International (Tirupur)

Trade Associations: American Business Council (Bombay, Madras,

New Delhi)

Federation of Indian Chambers of Commerce and

Industry (New Delhi)

All India Employers Association (New Delhi)

Delhi Factory Owners’ Federation (New Delhi)

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

(Chandigarh and New Delhi)

Bengal Chamber of Commerce and Industry

(Calcutta)

Tirupur Exporters’ Association (Tirupur)

Apparel Export Promotion Council (Madras and

New Delhi)

Other: Triburg Consultants Pvt. Ltd. (New Delhi)

Associated Indian Exports Buying Office (New

Delhi)

B O X I I I - 5
79

• In the Philippines, visits were made to eighteen plants and three EPZs, and

meetings were held with the Garment Industry Subcommittee of the American Chamber of Commerce and several other apparel industry representatives (Box III-6).

Philippines

Plant Visits/Meetings with Apparel Industry Representatives

Export Processing Zones: Cavite Export Processing Zone

Clark Export Processing Zone

Mactan Export Processing Zone (Cebu)

Plants: Jordache Industries (Cavite EPZ)

Castleberry Fashions (Manila)

Castleberry Subcontractor (Santa Rita, Batangas)

Castleberry Subcontractor

(Batangas City, Batangas)

Castleberry Subcontractor (San Jose, Batangas)

V.T. Fashions (Cavite EPZ)

All Asia Fashions (Quezon City)

Woo Chang Co. (Cavite EPZ)

L&T International (Clark EPZ)

A La Mode Garments (Quezon City)

Levi Strauss, Philippines (Makati)

Mate International (Cebu)

Ten Bears, Inc. (Cebu)

Go Thong, Inc. (Cebu)

Prego-Praxis (Cebu)

Mactan Apparel (Cebu)

Globalwear Manufacturing Corp. (Cebu)

Tokyo Dress, Cebu Corp. (Cebu)

Trade Association: American Chamber of Commerce, Garment

Industry Sub-Committee

Other: Robelin Resources (Makati, Manila)

Renzo

Gelmart Fashions

Everfit Manufacturing (Paranaque)

Liz Claiborne, International (Makati)

B O X I I I - 6
80

In all, Department of Labor officials visited 74 apparel-producing plants and

20 export processing zones. They also met with key officials of the garment industry

— and more particularly of the garment export industry — in all six countries.

Four of the 74 plants visited by Department of Labor officials were found not

to be exporting at the present time to the U.S. market and were determined to be

outside of the scope of the present study.2

 The observations made in this chapter

with regard to the implementation experiences of foreign suppliers with codes of

conduct of U.S. importers that address child labor are therefore based on the 70 plant

visits that fell within the scope of the study. Nine of the 74 plants visited, or 12

percent of the total, were subcontractors to foreign companies that exported garments to the United States.3

C. Child Labor in the Apparel Industry

The consensus of government officials, industry representatives, unions and

NGOs interviewed by the Department of Labor in the Dominican Republic, El Salvador, Guatemala, and Honduras is that child labor is not now prevalent in their garment export industries. In the very few cases where child labor was mentioned, the

children were 14 or older.4

 In India and the Philippines, it was generally acknowledged that most of the child labor in the garment industry is found in subcontracting

shops or in homework situations.

There was some anecdotal information about the prior use of child labor

times in the garment export industry and currently in subcontracting and homework:

• Labor union representatives in Honduras stated that up until about two years

ago, child labor was used in the garment export industry. At that time,

because of a well-publicized case of an under-age worker,5

 maquila opera2 The companies found not to be exporting apparel to the United States at this time (or at least no doing so

directly) are Duke Fabrics and R.B. Knit Exports, both located in Ludhiana, India, and Tokyo Dress Corporation

and Ten Bears, Inc, located in Cebu, the Philippines.

3 Three of the subcontracting firms were located in Guatemala and the other six in the Philippines. In Guatemala,

they were sub-maquilas producing for Camisas Modernas, a contractor for Phillips-Van Heusen. In the Philippines, three subcontracting firms did sewing for Castleberry, a contractor to JCPenney; A La Mode Garments was

a subcontractor to Triumph, Ltd., in Hong Kong, which sells to The Gap; Ten Bears and Go-Thong are subcontractors to Nike. Ten Bears was not producing for export to the United States at the time the company was visited. See

Boxes III-3 and III-6.

4 ILO Convention 138 states that the minimum age for work should be not less than the age of compulsory

schooling, and in any case not less than 15 years for developed nations and 14 years for developing nations (with

some exceptions regarding conditions and hours of work). See Appendix F for full text of ILO Convention 138.

5 In 1994, Lesly Rodriguez, a fifteen year old who had been working for two years in a Honduran maquiladora

producing for Liz Claiborne, traveled to the United States under the auspices of the National Labor Committee to

present testimony at a Congressional hearing about labor practices in the Honduran garment industry. At the

hearing, information was provided that 2% of the Honduran maquila workforce were between the ages of 12-13;

11% were between the ages of 14-15. The figures were based upon a survey of women maquila workers conducted by the Honduran Committee for the Defense of Human Rights (CODEH) between November 1992 and

March 1993.
81

tors dismissed about 2,000 under-age workers.6 Department of Labor officials received no reports of child labor in the Honduran garment industry at

the present time.

• Labor union representatives stated that the garment export industry of El

Salvador fears adverse publicity from the use of child labor. Several plant

managers explained that they will not hire workers under 18 because they

believe that this is the policy of U.S. retailers. For example, Mr. Lee Miles, of

Primo Industries commented that because U.S. retailers are concerned about

child labor, so are the Salvadoran producers. Plant managers in El Salvador

have apparently begun to refuse to hire workers under 18 years of age,

despite the fact that workers can legally begin working at age 14.

• In Guatemala, the leader of a major labor confederation stated that very

young workers are no longer prevalent in the garment maquilas — that is,

workers below the minimum age of 14. It was claimed that there are quite a

number of adolescents (14 - 18 years old) working in some maquilas; however, the restrictions on the number of hours that adolescents are legally

allowed to work are not observed.7

 A Unicef representative confirmed this

problem, adding that adolescents often are paid less than adults, and are

forced to work overtime. Adolescent workers from the Sunbelt plant in

Guatemala City and the Sam Lucas plant in Chimaltenango also confirmed

that all employees worked the same hours, including overtime.

 * Three young women working at the Lindotex plant in Guatemala

reported that the youngest workers in the plant are now 15-16 years

old and that in January 1996 all workers under fifteen were fired.

• Kailash Satyarthi, Chairperson of the South Asian Coalition on Child Servitude, reported that children in the Indian apparel export industry may be

found making T-shirts in Tirupur, woolen garments in Ludhiana, and some

embroidery, lace, and folkloric garments in cottage industries and small shops

around New Delhi.

• In Tirupur, India, the owner of Chenduran Textiles mentioned that young

boys may often work as tailor’s helpers in small, local garment shops. SAVE,

a local NGO in Tirupur, sponsors a night school for children between the

ages of 8 and 17. The children work as tailor’s helpers during the day and

attend school in the evening.

6 In September 1996, representatives of CODEH told a Department of Labor official that there has been a significant reduction recently in the use of 14-15 year olds, and that most maquilas now hire teenagers 17 years or older.

A recent New York Times article on the labor situation in the Honduran garment industry supports the observation

that children have been removed from the industry over the past two years. See Larry Rohter, “Hondurans in

‘Sweatshops’ See Opportunity,” The New York Times, July 13, 1996 [hereinafter “Hondurans in Sweatshops”].

7 Guatemalan labor law provides that 14-15 year olds may work a maximum of six hours per day; 16-17 year olds

a maximum of seven hours per day. The labor code prohibits unhealthy or dangerous work by children under 16,

as well as night work and overtime.
82

• Nearly all persons interviewed in India mentioned that there is an increased

sensitivity and awareness of the issue of child labor in the past 2-3 years.

The head of Associated Indian Exports, an apparel buying office in New

Delhi, Bangalore, and Bombay, acknowledged that more (foreign) customers

are now asking about the use of child labor in the production of garments in

India and requiring that none be used.

• An academic expert on child labor in the Philippines garment industry told

Department of Labor officials that while the use of child labor in garment

production has declined in the last few years, some children are still found in

subcontracting units and homework.

The field visits also revealed some problems in these countries with the

systems normally used to verify the age of workers. In some countries, birth registries are not common and therefore there is no demonstrable method to determine

age. In other countries, youths below the legal minimum age procure fraudulent

identification cards or fake government permits required to prove that they have

permission to work.8

• Department of Labor officials were informed by a plant manager in Madras

that in southern India, birth registries — as known in Western countries —

do not exist. Therefore it is extremely difficult to determine the exact age of

a young worker. A medical doctor’s certificate or school records may be the

only ways to determine a person’s age.

• In the Dominican Republic, plant managers indicated that falsification of the

National Identification Card (“cédula de identidad”) and other proof of age

documents to show an older age and therefore be legally eligible for employment is not uncommon.

• The general manager of a maquila in Guatemala (Lindotex, a contractor to

JCPenney and Wal-Mart) stated that some young workers try to get jobs using

the age documentation of an older sibling. He said his company checks age

documents very carefully and conducts a thorough interview to ensure that

workers under the age of 16 are not hired. It was generally acknowledged by

plant managers and owners that falsified documentation of age was an issue

of concern.

• The representative of an NGO (Friederich Ebert Foundation) in Guatemala

stated that it was quite easy to buy a fake identification card in that country

and that young people who want to work — but find that the jobs in the

garment maquilas are only available to adults — often use false identification

to try to get a job. In some maquilas, management verifies age records and

turns down those young applicants with faked documents, but some others

are willing to accept them.

8 This was observed in Honduras by a New York Times reporter who wrote that “ . . . children . . . are buying fake

documents in an effort to sneak their way back into the apparel plants.” See “Hondurans in Sweatshops.”
83

• In the Philippines, a plant manager in the Cavite Export Processing Zone

stated that birth certificates, normally used to verify the age of job applicants,

can be forged or altered. Due to the difficulty in determining age, he said that

many employers ultimately rely on the word of the employee. Others require more substantive proof of age.

• Two NGOs in El Salvador, CENTRA and the Olof Palme Foundation, commented that although children under 14 are no longer found in the maquilas,

some adolescents acquire false documents in order to work. Many adolescents are required to work overtime, in contravention of Salvadoran law.9

As stated in Chapter I, the ILO notes that children still work in the garment

industry worldwide. However, it is more common to find children in small workshops or in homework. Working conditions are generally worse than in larger formal

factories, and the number of hours may be more and amount of pay less. During the

course of the Department of Labor field visits, a number of allegations were made

that children work in these smaller operations.

• Labor leaders in Guatemala had little knowledge of child labor in sub-maquilas,

homework situations, or small local production facilities feeding the export

market because they only concentrate on conditions in the maquilas. They

did note that when larger maquilas make arrangements with smaller shops or

subcontractors they do not assume any responsibility for labor conditions.

• The Secretary General of the Confederación de Unidad Sindical de Guatemala (CUSG) stated that the larger garment maquilas subcontract work to

smaller businesses, particularly in the San Pedro de Sacatepequez area. This

area is described as so notorious that is called “the cradle” or “the city of

maquila” because in every home there are women and children sewing “without any rights or legal protections.” A few workers interviewed repeated

these allegations, as did Guatemalan sociologist Edgar Patres.

• The Director of an Indian NGO, Youth for Unity and Voluntary Action (YUVA),

stated that in Bhiwande (near Bombay) children may be found in houses

used both as dwellings and garment factories. In some of these factories,

power looms are operated by children. Dr. Joyce Shankaran, Secretary of the

Maharashta, Bombay Department of Labor, confirmed that children work on

the looms in Bhiwande. She said that the looms are found within the home,

where entire families take on piecework. Dr. Shankaran remarked that the

children do not work full-time on the looms, but help after school.

• Mr. A. Sakthivel, owner of Poppy’s, a Tirupur (India) garment firm, and

President of the Tirupur Exporters Association, estimated that at least 5 per9 The minimum age for work in El Salvador is 14, with a few exceptions. Children under 16 are only permitted to

work 6 hours per day, 34 hours per week. Night work is not permitted for children under eighteen.
84

cent of the Tirupur apparel firms are family-oriented with knitting machines

located in the homes. Operations such as sewing buttons and other trimmings are also conducted as part of this homework.

• The head of Yuvraj International, another apparel plant in Tirupur (India),

said that child labor in the garment industry takes place in more remote

areas. Children perform low-skill duties such as cleaning and sweeping. He

estimated that small-scale shops or cottage industry constitute 10 percent of

the factories in Tirupur.

• Most persons interviewed in the Philippines, including government and labor

officials and representatives of the American Chamber of Commerce Garment Industry Committee, acknowledged that although child labor is not

found in significant numbers in the large garment factories, children do work

in subcontracting operations and in homework situations.10 NGOs such as

the National Homeworker’s Network (PATAMBA) and the Kamalayan Development Center, a children’s advocacy group, confirmed that this is the case.

PATAMBA explained that children work as unpaid family labor, assisting their

parents at home or accompanying a parent to assist in the factory. The

children trim garments and do embroidery and smocking (pleating) as well.

PATAMBA officials stated that these children do attend school; however, their

grades are poor due to inadequate study time, and they tend to suffer poor

health. When production deadlines approach and quotas must be met, pressure to meet an order leads to high rates of school absenteeism as the children stay home to work.

• The Personnel Manager of A La Mode, a garment manufacturer in Quezon

City, the Philippines, noted that although his firm tries to comply with child

labor laws, he cannot personnally vouch for subcontractors. A La Mode

produces for Triumph, Ltd, a Hong Kong-based buyer which purchases garments for a number of U.S. brand name apparel firms, including The Gap.

 D. Transparency

As has been stated in Chapter II, an important issue regarding the implementation of codes of conduct is their transparency, or the extent to which foreign

contractors and subcontractors, workers, the public, NGOs and governments are

aware of their existence and meaning.

10 A 1996 ILO study reported that in the Filipino clothing industry, “there are an estimated 214,000 workers in

small family enterprises, mostly clandestine, in addition to the 450,000 to 500,000 homeworkers who also work in

local subcontracting systems for national export industries.” See ILO Textile Report at 72. There is no oversight of

these firms because they are clandestine; labor conditions are notoriously worse in these areas than in the formal

factories. The actual number of children found in garment subcontracting shops and in home settings needs

further investigation.
85

Information gathered by Department of Labor officials during field visits regarding transparency of U.S. corporate codes of conduct is reported in this section,

grouped around the following issues:

• Is the foreign supplier aware of codes of conduct developed by U.S. garment

importers? Is the supplier familiar with the code of conduct of the U.S. garment importer for which it is producing?

• Does the U.S. company that originated the code of conduct hold training

sessions with foreign suppliers (contractors, subcontractors, buying agents)

to explain the code? Does the U.S. garment importer require a signed statement/certificate of compliance from the foreign supplier indicating that the

code has been received and understood?

• Are codes posted in the factory in places accessible to workers? If the code

is posted, is it in English or in the native language of the workers?

• Is there a requirement to inform workers about the code? If so, do workers

have to be informed in writing, orally, or both?

• How well has information about the codes of conduct been disseminated to

foreign government officials, NGOs and the public in general? Have there

been efforts to inform the public about the codes of conduct?

1. Foreign Suppliers’ Awareness About Codes of Conduct

The voluntary survey of U.S. retailers and garment manufacturers indicated

that most U.S. corporations with policies regarding labor standards and child labor

had distributed them to their suppliers. A smaller set of respondents indicated that

they had actively engaged in communicating their policies to contractors, plant managers, employees, and workers.

In the six countries, Department of Labor officials visited 70 producers of

garments currently exporting — or producing for contractors who are exporting —

to the United States to learn their degree of awareness about codes of conduct. The

majority of the suppliers interviewed produced for one or more U.S. importers identified — either from the survey described in Chapter II or from other public information — as having codes of conduct.

Managers of two-thirds (47 out of 70) of the plants visited that currently

export to the United States indicated that they were aware of codes of conduct

prohibiting the use of child labor, particularly of the codes issued by their U.S. customers. Based on the company visits, awareness among managers about codes of

conduct was highest in El Salvador (all 8 companies visited knew about the codes)

and Guatemala (6 out of 9 companies knew); in three other countries visited — the

Dominican Republic, Honduras, and the Philippines — managers interviewed were

more evenly divided between those who were aware and those who were not; in

India, only 2 out of 7 producers visited were aware of U.S. codes of conduct. However, only 34 of the 47 companies that indicated they were aware of codes of conduct had available a copy of the code of conduct (or contractual provision) that they
86

could show and discuss with the visiting Department of Labor official. Thus, managers at less than half of the plants visited were able to produce a code of conduct

upon request.

• An observation from Guatemala — which seems to be applicable to other

countries as well — is that a contractor’s specific awareness of codes of

conduct seemed to be a function of the U.S. company for which they produced.

 * Contractors and some subcontractors producing for JCPenney and

Phillips-Van Heusen had knowledge of the U.S. companies’ codes of

conduct or policies on child labor and some of them had copies

available.

 * Meanwhile, the manager of Don Sang, a Korean-owned maquila that

produces mostly for Paul Solary and Marcraft Apparel Group in New

York stated that he had never heard of the concept of U.S. company

codes of conduct or policies.

• In El Salvador, managers of all eight plants visited by the Department of

Labor were aware of U.S. codes of conduct and were able either to show a

copy of the code of conduct to the Department of Labor officials or had

copies of the document posted in public places at the factory.

• In Honduras, managers of plants producing under contract for JCPenney,

Sears, The Gap, Macy’s, Rothschilds and Oxford Industries were aware of the

codes of conduct of these corporations and had copies of those commitments.

 * Managers of plants wholly owned by Fruit of the Loom and Warnaco

were similarly aware of those companies’ codes of conduct; the manager of two Fruit of the Loom factories (Confecciones Dos Caminos I

and II) had a copy of the U.S. corporation’s “Contractor Code of

Conduct” and the Warnaco subsidiary posted their internal regulations in the cafeteria and three workplace areas. The internal regulations contained the Warnaco code of conduct.

 * In contrast, Cosmo and Fénix, two Korean-owned plants producing

for Target (Dayton-Hudson), Kmart, Wal-Mart, and Montgomery Ward

stated that they did not know about the codes of conduct of their

customers.

 * Two other plants visited in Honduras, OshKosh B’Gosh and

Exportadores Textiles, stated that they were not aware of codes of

conduct or whether their U.S. customers have codes of conduct.

• In the Dominican Republic, contractors for Levi Strauss (RK Fashions,

Interamericana Products, D’Clase Corporation, and Grupo M), Sara Lee Corporation (BRATEX Dominicana), and JCPenney (Polanco Fashion Interna-
87

tional) were aware of the codes of conduct of their U.S. customers and had

copies of the codes available.

 * In contrast, Toscana Corporation and Pons San Pedro, two U.S.-owned

companies in Zona Franca San Pedro de Macorís which subcontract

for Kmart, Wal-Mart and Target (Dayton-Hudson), did not know

whether their U.S. customers had codes of conduct and were not able

to provide any documents that set out the operating policies of the

U.S. garment importing companies.

 * Finally, Bonahan Apparel and Hingshing Textiles, Korean-owned

corporations producing garments for the U.S. market — under the

labels Chaus, Smooth, B&B, Tuxedo Junction, Harmony Clothes,

Neema Clothing, Luscasini, First Nighter, and Jacob Sigel — were not

aware of codes of conduct at all.11

• In the Philippines, managers’ knowledge about codes of conduct was mixed.

 * The manager of a plant wholly owned by Levi Strauss was familiar

with that company’s code of conduct and had copies of the document available.

 * Several plants that contract all or a large portion of their production

to Liz Claiborne (U.S. Fashion Image, All Asia Fashions, Woo Chang,

and L&T International) were also familiar with the codes of conduct

of the U.S. importer and had copies available.

 * Two Nike suppliers, Go-Thong and Mactan Apparel Incorporated,

both located in Cebu, were aware of Nike’s code of conduct and had

copies of it.

 * Management of Castleberry, a contractor to JCPenney, became familiar with that company’s code of conduct only recently and had a copy

available; three of Castleberry’s subcontractors, also visited by the

Department of Labor, were not aware of JCPenney’s code of conduct,

however.

 * Similarly, A La Mode Garments, a subcontractor to The Gap, was not

aware of The Gap’s code of conduct for suppliers.

11 Although these producers indicated that they were not aware of the concept of codes of conduct, two workers

— and union officials — at these two plants said to a Department of Labor official that they had provided copies

of the “Codes for [Korean] Overseas Investment Companies” to the managers of the two plants. The “Codes of

Conduct for [Korean] Overseas Investment Companies” were adopted by the Economic Organizations Council of

Korea on February 23, 1996. The five economic organizations forming the Council are the National Businessmen

Association, Korea Commercial and Industrial Office, Korea Trade Association, Center of the Medium/Small-Sized

Enterprises Cooperative, and the Korea Employers’ Federation. Department of Labor officials learned that representatives of the American Institute for Free Labor Development (AIFLD) made this document available to the

Federation of Unionized Workers of Honduras (FESITRANH).
88

• In India, Department of Labor officials found only two companies — Ambattur

Clothing Company and Orient Craft — that were aware of the codes of conduct of U.S. apparel importers, and both had copies. These companies produced for large U.S. apparel suppliers Liz Claiborne, The Gap, Ralph Lauren,

Sears, and JCPenney.

 * The five other Indian plants that were visited which produced for the

U.S. market were not aware of U.S. codes of conduct.12

2. Training and Supplier Certification

Several U.S. corporations responding to the survey said that they held training sessions with suppliers about their codes of conduct. Others — particularly

retailers — said they inform foreign contractors about their policies/codes of conduct

and require each foreign producer to sign a document stating that it has been informed about the code of conduct and its meaning.

Department of Labor officials found that formal training of plant managers

and supervisors about the codes of conduct was not common in the six countries

visited. Only 14 out of the 47 companies visited where managers indicated awareness about codes of conduct stated that they had received some formal training

regarding the U.S. companies’ codes of conduct, although it was evident that the

intensity of the training varied widely from company to company.13

• The clearest example of a formal training program was in the Dominican

Republic, where contractors stated that Levi Strauss had conducted training

on codes of conduct for managers and supervisors of plants throughout the

country and had provided the information in both English and Spanish.

 * For example, RK Fashion is a Dominican-owned plant located in Zona

Franca La Vega that produces only for Levi Strauss; different levels of

managers/supervisors received — and continue to receive — periodic training from Levi Strauss on the implementation of that company’s

code of conduct.

• In India, Triburg Consultants, an Indian agent, administers Liz Claiborne’s

human rights guidelines. Triburg conveys the guidelines to the supplying

company and discusses them with management. Some of Triburg’s staff have

gone to New York for orientation sessions and total quality management

12 However, all seven Indian apparel exporters (as distinguished from manufacturers) visited were aware of U.S.

buyers’ policies that child labor not be used.

13 The companies indicating they received some training in the codes of conduct from U.S. importers are: Dominican Republic — Hanes Caribe, Grupo M, Interamericana Products, D’Clase Corporation, and RK Fashions; El

Salvador — Textiles Lourdes Limitadas; Guatemala — Camisas Modernas and Villa Exportadora; India — Ambattur

Clothing Company and Orient Craft; and Philippines — Levi Strauss, Prago-Praxis, Mactan Apparels, and Globalwear

Manufacturing.
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programs conducted by Liz Claiborne. Upon their return, they communicate

the information to the Liz Claiborne contractors.

Some suppliers indicated that they had to certify in writing to their U.S.

clients that they had received and understood the codes and agreed to abide by

them.14 For example:

• In the Philippines, several Liz Claiborne contractors interviewed in Manila

stated that they had signed certificates of compliance with Liz Claiborne’s

Standards of Engagement which, among other things, prohibit child labor.

These contractors also supply Ralph Lauren, Eddie Bauer (Spiegel), May

Department Stores, Tommy Hilfiger, and The Gap.

• In India, Triburg Consultants, an agent for Liz Claiborne and others, stated

that they receive human rights guidelines and mission statements from Liz

Claiborne. Agents discuss the guidelines with the suppliers and a common

understanding is reached. Suppliers then agree on the guidelines and each

signs a document stating that it understands them.

 * Associated Indian Exports, an agent for Sears and other U.S. companies, followed similar procedures regarding the implementation of

Sears’ Vendor Certification.

3. Posting of Codes of Conduct

A concrete example of transparency of codes of conduct is the voluntary

posting of codes of conduct at the workplace, preferably in the native language of

the workers. In two of the countries visited — El Salvador15 and Honduras — there

is a legal requirement that companies post their internal regulations, including starting and ending time, rest periods, and disciplinary rules. These internal regulations

tend to be very detailed and instruct workers on a range of issues such as rest

periods, talking, use of bathroom facilities, and penalties for offenses such as tardiness, absences, or not meeting their production quotas. Thus, workers perceive

internal regulations as rules to which they are bound in the workplace.

The plant visits by Department of Labor officials suggest that while posting of

a U.S. garment importer’s codes of conduct seems to be common practice in El

14 In a short plant visit, it was difficult for Department of Labor officials to determine how seriously the foreign

producers took this certification step. Some companies interviewed had difficulty finding copies of the applicable

codes of conduct or the certificates they signed. In the Dominican Republic, for example, Denisse Fashion,

located in the Zona Franca San Francisco de Macorís, and Polanco Fashion, located in Zona Franca La Vega, stated

that they signed and faxed to their U.S. purchaser [Dave Goldberg Industries] a document certifying that they were

aware of, and had complied with, the code of conduct. However, company officials stated that they had not

retained copies of the signed document.

15 The Labor Code of El Salvador requires that every private sector employer with more than 10 employees as well

as government organizations develop internal work rules, which have to be approved by the Ministry of Labor

(Article 302). Rules must be in accord with the Labor Code (Article 303) and address the following topics: a) hours

of work; b) rest periods; c) place and time for receiving pay; d) person with whom complaints may be filed; e)

disciplinary provisions; f) activities that women and children may not perform; g) medical examinations; h) safety

and health; and i) other topics that the Ministry of Labor might direct. Employers are required to inform workers

about the rules and post them in places that are easily accessible to workers (Article 306).
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Salvador, it is not the norm in the garment industries of the other countries visited. In

all, 21 of the 70 plants visited by the Department of Labor officials had posted a code

of conduct of a U.S. customer; 7 of such plants (out of 8 visited in that country) were

in El Salvador. The number of plants visited in each of the other countries where

codes of conduct were posted was: Dominican Republic, 2; Honduras, 1; Guatemala,

2; India, 2; and the Philippines, 7.16

• As noted above, posting of codes of conduct was common in El Salvador.

Department of Labor officials viewed codes of conduct — in Spanish — in

the following plants:

 * Lindotex, a Korean-owned company, produces under contract for

Hampton, Capitol Mercury, Wal-Mart, The Gap, JCPenney, and Sears.

JCPenney, Hampton, and Capitol Mercury each account for approximately 25 percent of production. Wal-Mart, The Gap, JCPenney, and

Sears have codes of conduct, which Lindotex orally explains to the

workers. Hampton’s code of conduct is posted at the entrances.

 * Mandarin, a Taiwanese owned and financed factory supplies garments to Eddie Bauer (Spiegel), The Limited, Liz Claiborne, JCPenney,

Casual Corner, and The Gap,17 among others. The Gap, JCPenney

and Eddie Bauer account for 70 percent of production. The Gap’s

code of conduct is posted at the entrances to the plant.

 * Textiles Lourdes Limitadas, a subsidiary of Fruit of the Loom, exports

all of its production to the United States. Fruit of the Loom’s code of

conduct is posted at the plant.

 * Hilasal, located in the Export Salva Free Trade Zone, Santa Ana, is a

joint venture (50-50) between U.S. and Salvadoran investors. The

plant manufactures for Sears, Liz Claiborne, and Hampton Industries;

Hampton accounts for 80 percent of the plant’s production. Hampton’s

code of conduct — in Spanish — is posted at the entrances.

 * Codes of conduct were also posted at Industrias Caribbean Apparel,

S.A. (JCPenney’s code of conduct), C.M.T. Industries (Lily of France’s

and VF Corporation’s codes of conduct), and Primo Industries (Liz

Claiborne’s code of conduct).

 * The only plant of eight visited in this country where a code of conduct was not posted was Confecciones El Pedregal, a subsidiary of

Sara Lee.

16 Department of Labor officials conducting the field visits did not ascertain for how long the codes of conduct had

been posted. In some instances, the copies that they viewed appeared to be very new, suggesting that posting

might have been a recent action.

17 In the summer of 1995, the U.S.-based National Labor Committee publicized allegations of violations of worker

rights in the Mandarin plant. As a result of the adverse publicity generated, The Gap and other U.S. companies

sourcing from Mandarin canceled their orders. In December 1995, The Gap agreed to source again from Mandarin

under a system of safeguards that includes independent monitoring for its code of conduct.
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• In Guatemala, two of the companies visited by the Department of Labor had

codes of conduct posted in the plant:

 * Maquila Cardiz, S.A., a contractor to Phillips-Van Heusen, had that

company’s code of conduct posted on the factory wall — both in

English and Spanish.

 * Camisas Modernas, another Phillips-Van Heusen contractor, followed

the same practice.

 * Meanwhile, the manager of a Korean-owned maquila (Lindotex) located in Chimaltenango that produces for JCPenney and Wal-Mart

said that he normally had his customers’ codes of conduct (both

JCPenney and Wal-Mart) posted at the plant, but they had been recently taken down while the walls were being repainted.

• In Honduras, KIMI, a Korean-owned contractor to The Gap, located in the

Continental Park, La Lima, was the only company visited by the Department

of Labor that posted a code of conduct. KIMI posted The Gap’s code of

conduct — in Spanish — in two plant locations.

 * Certified Apparel Services, located in San Pedro Sula, produces for

Wal-Mart, Sears, Mervyn’s (Dayton-Hudson), JCPenney, Target (Dayton-Hudson), Kmart, William Carter, Bradlees and Meijer. While WalMart, Sears and JCPenney have codes of conduct, copies were not

available at Certified Apparel Services in San Pedro Sula. According

to the manager, signed copies of the codes of conduct are available in

corporate headquarters in Florida (Certified Apparel Services is a subsidiary of Kleinerts, based in Tampa, Florida). He also stated that

workers and union leaders have been advised of the corporate codes

of conduct, but copies of the documents were not available and they

were not posted on factory walls.

• In India, only two of the plants visited by Department of Labor officials

posted a code of conduct:

 * Ambattur Clothing Company, located in Madras, which used to produce garments for The Limited and currently does so for The Gap,

Banana Republic (The Gap), Eddie Bauer (Spiegel), J. Crew, and Liz

Claiborne, posted Liz Claiborne’s code of conduct — in Hindi — at

the factory.

 * Orient Craft, located near New Delhi, which produces garments for

Liz Claiborne and Ralph Lauren also posted Liz Claiborne’s code of

conduct in Hindi outside the factory lunchroom.

• In the Philippines, seven plants visited by the Department of Labor had posted

a code of conduct.
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 * The Liz Claiborne Human Rights Statement, in Tagalog, was posted at

the worksites of the four contractors of that company visited.

 * At the wholly owned Levi Strauss subsidiary in Makati, the company’s

Statement of Aspirations was prominently posted in Tagalog and English.

 * Mactan Apparel and Globalwear, two contractors for Nike in Cebu,

posted copies of the Nike code of conduct.

• In the Dominican Republic, Hanes Caribe, a U.S.-owned corporation producing for Sara Lee, and Grupo M, a Dominican-owned corporation producing

for Levi Strauss, Liz Claiborne, Fruit of the Loom, Kellwood, Tommy Hilfiger,

Polo, and Oxford, both had posted codes of conduct in Spanish and English

at their plants; Hanes Caribe posted the Sara Lee code of conduct, while

Grupo M displayed the Levi Strauss code of conduct.

 * Two other companies visited, Manufactura Borinqueña (Zona Franca

San Pedro de Macorís) and Woo Chang Dominican Industry (Zona

Franca Bonao), stated that they used to post their companies’ internal

policies (not codes of conducts per se, but statements to the effect

that they complied with domestic laws) but they had stopped this

practice a number of years ago because “the companies had been in

operation for a long time and workers already knew the rules.” These

two companies supply garments to U.S. corporations New Age Intimates, Sears, Kmart, and Wal-Mart, among others.

Some foreign producers with multiple U.S. clients each with different codes

of conduct stated that the proliferation of codes of conduct — often with different

definitions of standards and monitoring requirements — created confusion with

regard to implementation. This view was expressed most clearly in the Dominican

Republic:

• D’Clase Corporation, a Dominican-owned company located in Zona Franca

Santiago, which assembles garments for Levi Strauss, Eddie Bauer (Spiegel),

Oxford Industries, Haggar Clothing, JCPenney, Lee (VF Corporation), Wrangler (VF Corporation), and Ralph Lauren-Polo, took elements from different

U.S. corporate codes of conduct and developed a code of conduct for D’Clase

Corporation. D’Clase posts its own code of conduct rather than the codes of

its U.S. clients. (D’Clase Corporation’s code of conduct includes provisions

on working conditions and employment practices and a prohibition on the

use of child labor and forced labor.)

• Undergarment Fashions, a U.S.-owned contractor for JCPenney, Victoria’s

Secret (The Limited), Sears, Wal-Mart, and Kmart, located in the Zona Franca San

Pedro de Macorís, did not have knowledge of the codes of conduct of its clients, but

had developed — and posted — its own code of conduct (“Best Form Foundation”),

which includes provisions prohibiting child labor.
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4. Workers’ Awareness of Codes of Conduct

Although a significant number of suppliers knew about the U.S. corporate

codes of conduct, meetings with workers and their representatives in the six countries suggested that relatively few workers are aware of the existence of codes of

conduct, and even fewer understand their implications.

The lack of awareness on the part of workers about codes of conduct may be

in part attributable to the relatively low level of effort on the part of producers to

inform their workers about the codes. Management regards codes of conduct — and

compliance with labor law — to be a management problem, and approaches monitoring and supervision of these matters as management responsibilities. Workers are

not seen by management as having a role in these activities.

Department of Labor officials were told by management of 22 of the companies visited that they informed their workers about codes of conduct; 13 of the

companies indicated that they inform their workers about codes of conduct orally,

while only 9 stated that they do so both orally and in writing.

Out of all of the plants that were visited in the six countries, there was only

one example of a producer that had an explicit policy of informing workers about

the code of conduct of its U.S. customer:

• As part of a strategy to keep workers informed about company policies and

developments, in the Dominican Republic, Mr. Víctor Polanco, the manager

of Hanes Caribe, a subsidiary of Sara Lee, stated that Hanes Caribe had provided copies of Sara Lee’s code of conduct — in Spanish — to each worker;

held several meetings to discuss the contents and implications of the code;

and required that workers attending the meetings sign an attendance sheet

acknowledging receipt of the code of conduct.

 * This was confirmed by Mrs. Yokalty Malmolejos Uribe, a former worker

at Hanes Caribe, who stated that in addition to providing information

on Sara Lee’s code of conduct, Hanes Caribe’s personnel specialists

also made available to workers copies of the Dominican Labor Code

and referred to these materials during discussions with workers.

The following examples illustrate the general lack of awareness about the

codes of conduct among workers in the six countries visited:

• In El Salvador, representatives of major labor organizations [National Federation of Salvadoran Workers (FENASTRAS), Federation of Labor Unions of El

Salvador (FESTRAES), National Unity of Salvadoran Workers (UNTS), and

Union of Textiles and Related Industry Workers of El Salvador (STITAS)] stated

that most workers — and even some labor leaders — do not know about

codes of conduct. In addition:

 * Representatives of CENTRA (Centro de Estudios del Trabajo), an organization that conducts research on labor issues in El Salvador, stated
94

that a survey of one thousand 16-17 year old workers conducted in

June-July 1995 found that not a single person had ever heard of a

code of conduct.18

 * Interviews of workers conducted by the Department of Labor officials confirmed the workers’ lack of knowledge about codes of conduct. For example, of a dozen workers interviewed outside of the

San Marcos Free Trade Zone, only one said she knew about codes of

conduct. In three interviews of maquila workers held in a small

neighborhood near a free trade zone, two of the workers had never

heard of a code of conduct, and one had heard about it from a friend

who worked in the free trade zone. The worker interviewed “knew”

that only women over 18 years of age were hired in the zone.19

• In the Dominican Republic, workers had very little knowledge about the

codes of conduct of U.S. companies whose garments they produced.

 * Most workers appeared to be surprised that such policies exist at all,

and had never seen or heard of codes of conduct prior to being

interviewed. Some workers expressed frustration at the disregard for

their right to have access to information which may improve the general environment in which they worked.

 * The workers best informed about codes of conducts were those participating or involved in labor union organizing. Labor unions, such

as the National Federation of Free Trade Zones Workers

(FENATRAZONA), provided workers with general information on codes

of conduct and worker rights.

• In Honduras, workers of the KIMI plant, a Korean-owned company that

contracts with The Gap, are aware of The Gap’s code of conduct. A representative from The Gap explained its code of conduct to KIMI’s workers, but

no specific training was provided. As was discussed in the previous section,

KIMI was the only one out of twelve plants visited in Honduras that posted

the code of conduct of a U.S. customer.

 * The national leadership of two major union organizations interviewed

[Central General of Workers (CGT) and Confederation of Workers of

Honduras (CTH)] was aware of The Gap’s code of conduct, but not

of the fact that other U.S. importers had similar codes.

18 This startling result may be explained by two factors: 1) workers in the age group that was surveyed by CENTRA

typically have very short job tenure and may not yet have been exposed to codes of conduct in their workplace;

and 2) the study may have posed the question about codes of conduct using the term “códigos de conducta,”

which young workers may have interpreted as a code of ethical behavior of workers in the workplace rather than

as guidelines on the behavior of employers.

19 As mentioned above, the policy of only hiring workers who are 18 or over seems to be a voluntary decision

taken by El Salvador’s garment export industry and is higher than the legal minimum age for employment set out

in the Salvadoran Labor Code.
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• In Guatemala, representatives of UNSITRAGUA (Union of Labor Organizations of Guatemala), the main confederation of workers in the country, had

limited knowledge and understanding of the codes of conduct of U.S. companies due to information received from U.S. labor unions, and believed that

Guatemalan workers are completely unaware of them.

 * Mr. Juan Francisco Alfaro, Secretary General of the Guatemalan Confederation of Labor Unity (CUSG), seemed somewhat knowledgeable

that corporate codes of conduct existed in the United States, but stated

that they are not known in Guatemala; if some maquilas know of

them, he does not believe they are effectively implemented and he

believes that the workers are not informed.

 * Representatives of the Central General of Guatemalan Workers (CGTG)

were not aware of any U.S. corporate codes of conduct.

 * Meetings with garment workers conducted outside of plants in Guatemala City, Chimaltenango and San Pedro de Sacatepequez demonstrated that these workers are unaware of any U.S. company code of

conduct or policy on child labor, although they are aware of the

maquila industry’s move not to hire under-age workers.

 * A representative of the garment industry stated that some maquila

managers are aware of U.S. corporate codes of conduct; even if workers

in these plants do not know about the codes of conduct, the codes

are playing a positive role as they are being implemented and companies are conducting audits to monitor behavior.

 * The manager of a maquila plant (Confecciones Caribe, S.A.) stated

that there was no need to inform the workers about the codes because they should already know the Guatemalan labor code and the

corporate codes do not add anything new to the country’s labor law.

• In India, trade union representatives in Tirupur (from the Janatha Dal Labor

Federation) were not aware of any U.S. corporate code of conduct or terms

of engagement for garment exporting companies.

• In the Philippines, some workers at subsidiaries of U.S. corporations or large

contractors for major U.S. corporations were aware of codes of conduct through

posting at the worksites.

The alleged low literacy level of garment workers is sometimes used to justify

the non-posting of codes of conduct within factories. In the case of the Dominican

Republic, Mr. Eddy Martínez, Executive Director, Dominican Association of Free Trade

Zones (ADOZONA), stated that since the literacy level of free trade zone workers is

low, communication is often conducted orally. This sentiment is obviously held by

many free trade zone employers; seven out of 10 companies (70 percent) visited in

the Dominican Republic that informed workers about codes of conduct did so orally.

In contrast with these statements, employers also stated that they prefer to hire
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workers who are able to read and write, as they are better equipped to follow

directions.

In fact, all workers interviewed by the Department of Labor official in the

Dominican Republic were shown copies of a sample code of conduct and their

reading skills were sufficient to understand its contents. Although the argument of

illiteracy as a reason for not making copies of codes of conduct available to workers

has been raised in the case of the Dominican Republic, it is clear that it is a pervasive

one and probably applies to the garment industries of most developing countries.

Whether it has merit, however, is doubtful.

As was discussed in the previous section, codes of conduct are sometimes

posted in factories. Yet discussions with workers and their representatives revealed

a lack of awareness of codes of conduct and their implications for workers. Possible

explanations for this apparent contradiction may be that:

• the posting of the codes is a very recent phenomenon, and workers have not

had time to learn about their existence and absorb their contents;

• workers put in long hours — particularly when transportation time to and

from their jobs is taken into account — and have very little unstructured time

while they are within the plants to read materials posted on bulletin boards;

and

• workers generally read bulletin boards for the rules they must follow — and

disciplinary consequences if they fail to do so — and equate materials posted

by management with work rules. They may not have grasped that corporate

codes of conduct refer to the behavior of employers rather than their own.

It is quite clear from the field visits that posting of codes of conduct alone has not

had the desirable effect of making workers aware of their existence, and active steps

to educate workers about the codes of conduct is required.

5. Dissemination of Codes of Conduct

While it is most critical that overseas contractors, subcontractors and their

workers be familiar with corporate codes of conduct, knowledge about their existence and implications by others — host governments, NGOs, business organizations

— can also be helpful in enhancing their effectiveness. Department of Labor officials

found a mixed record regarding the extent to which these entities were familiar with

codes of conduct and their implications.

• In the Dominican Republic, Secretary of Labor Rafael Alburquerque was knowledgeable about codes of conduct and their use as a tool to improve working

conditions. As the author of the Dominican Labor Code of 1992, Secretary

Alburquerque was also very familiar with the current provisions regulating

the employment of minors in the Dominican Republic. He stated that the

Ministry of Labor had engaged in a public awareness campaign to disseminate information on labor standards; the Ministry published and distributed

copies of the new labor code to employers, labor unions, and many NGOs.
97

 * Most NGOs interviewed were knowledgeable about the existence

and content of codes of conduct in the garment industry. The American Institute for Free Labor Development (AIFLD) representatives in

the Dominican Republic work closely with local labor unions and

NGOs in providing information on codes of conduct and international labor standards.

 * Other NGOs, such as the Research Center for Female Action (CIPAF)

and OXFAM-UK, have also taken active roles by developing a public

awareness campaign to call attention to working conditions in the

FTZs and the use of codes of conduct to improve the well-being of

these workers. A joint publication by CIPAF and OXFAM, entitled En

el Paraíso/In Paradise, established as one of its goals the need: “to

make local entrepreneurs and large international corporations aware

of the need to formulate and enforce codes of conduct that proclaim

the companies’ sense of responsibility towards their workers.”

 * In contrast, the American Chamber of Commerce in the Dominican

Republic was unaware of the existence of codes of conduct for the

garment industry or how these codes were being implemented in the

FTZs. Mr. Arthur E. Valdez, Executive Vice President, stated that his

member companies have not provided the Chamber with copies of

U.S. companies’ codes of conduct and requested such information

from the visiting Department of Labor official.

• In the Philippines, government officials and political leaders who met with

Department of Labor officials were somewhat aware of corporate codes of

conduct. When informed further, they thought that the codes could have a

positive impact.

 * NGOs which met with Department of Labor officials seemed vaguely

aware of corporate codes of conduct.

 * Most of the union leaders interviewed were not familiar with corporate codes of conduct.

 * However, the Chairman of the American Chamber of Commerce Garment Industry Committee, Mr. Robert Robbins, and representatives of

Levi Strauss, Liz Claiborne, Gelmart (which produces for Playtex) and

two contractors that produce for Renzo, a U.S. importer for JCPenney

and other U.S. retailers and name brands, stated that the Chamber

takes the issue of codes of conduct seriously and tries to keep its

members informed.

• In El Salvador, the Minister of Labor indicated familiarity with codes of conduct, emphasizing that they were strictly private agreements between the

U.S. apparel importers and their manufacturers. The Minister of Labor expressed no objection to codes of conduct, but stated that since they were not

national law, they were not enforced by his Ministry.
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 * Several NGOs interviewed [FOES (Salvadoran Worker/Management

Foundation), PROCIPOTES (Project to Integrate Children into Work,

Education and Health), and Olof Palme Foundation] indicated a lack

of knowledge about codes of conduct.

 * Representatives from CODYDES (Organization of Fired and Unemployed Workers of El Salvador), a maquila worker rights organization, indicated that they had first learned about codes of conduct in

February 1995 but had actually never seen one.

• In India, Mr. Bajpai, Executive Director, American Business Council in New

Delhi, who represents the interests of U.S. companies in India, indicated that

he was not aware of buyers’ codes of conduct, and requested more information on them.

 * Mr. Anand, Federation of Indian Chambers of Commerce and Industry (FICCI) in New Delhi, said codes of conduct are not shared at the

Chamber of Commerce level. However, at the factory level, companies are trying to comply and implement the codes.

 * In the Punjab, all people interviewed — including government officials, factory owners and managers, union officials and workers —

did not know anything about U.S. companies’ codes of conduct, policies or guidelines.

• In Honduras, the Vice President of the Honduras American Chamber of Commerce (HAMCHAM), Mr. Raymond Maalouf, was not aware of U.S. corporate

codes of conduct. HAMCHAM, however, leaves all matters related to the

apparel industry to the Honduran Association of Maquilas.

 * The National Commission on Human Rights (CNDH) was aware of

The Gap’s code of conduct and had a meeting with officials of Liz

Claiborne to discuss child labor and codes of conduct. According to

Lic. Rolando Arturo Milla of CNDH, Liz Claiborne representatives stated

that it was their intention to name a representative in Honduras to

monitor its code of conduct.

 * The Committee for the Defense of Human Rights of Honduras

(CODEH) was aware of The Gap’s code of conduct and was disappointed that CODEH had not been requested by any company to

monitor a code of conduct.

• In Guatemala, government officials were aware of a code of conduct being

developed in the country by the domestic apparel export industry,21 but had

little awareness of U.S. corporate codes of conduct. Most NGOs had little

knowledge about U.S. corporate codes of conduct, but opined that they would

be beneficial if properly implemented and monitored.
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E. Monitoring

U.S. corporations responding to the Department of Labor survey described a

variety of ways their codes of conduct were monitored. Several of the respondents

referred to “pre-contract” evaluation of prospective contractors to identify and screen

out potential violators of codes of conduct. Others referred to active monitoring

schemes conducted internally, externally, and by outside auditors or NGOs. Still

other respondents said that monitoring of their codes of conduct is carried out through

contractual arrangements, whereby the contractor guarantees or certifies (in writing)

that the goods have been produced in accord with the child labor policy of the

importing firm.

Information regarding the monitoring of codes of conduct gathered by the

Department of Labor during field visits is reported in this section, clustered around

the following issues:

• Are the labor standards components of the codes of conduct, including child

labor, monitored? How is the monitoring carried out?

• Are foreign plants subject to on-site internal visits (i.e., visits by U.S. company

personnel to subsidiaries and foreign contractors), external visits (i.e., visits

by U.S. importers and foreign buyers/agents to foreign contractors) or auditor visits (i.e., visits by paid auditors or consultants) to monitor their production facilities? What is the purpose of such monitoring? Are monitoring visits

announced or unannounced?

• With whom do monitors speak during visits? Do they speak with managerial

personnel only, or do they also speak with workers? If they speak with

workers, where do they do it? Are managers present when monitors speak to

workers? Do monitors speak the native language? Are interpreters used?

1. Monitoring for Quality

Monitoring of foreign producers — including plant visits — by U.S. importers

is a routine procedure in many industries. The garment industry, where the appearance of a product and timeliness of orders are critical, is well-known for the close

monitoring of foreign producers by importers and their agents.

a. Purpose of Monitoring

All 70 plants exporting garments to the United States visited by Department

of Labor officials confirmed that they are subject to regular visits by their U.S. customers or their agents to verify product quality and to coordinate production and

21 The reference is to the code being developed by the Apparel and Textile Industry Commission of the Association of Exporters of Non-Traditional Products (VESTEX).
100

delivery schedules. About 90 percent of the companies visited stated that monitors/

inspectors verifying product quality generally also examined working conditions in

the plant, with emphasis on safety and health issues (climate control, ventilation

systems, fire escapes, etc.). Among the exceptions were:

• In the Dominican Republic, Bonahan Apparel and Hingshing Textile companies, located in Zona Franca Bonao, received visits from their U.S. customers,

including Chaus, Tuxedo Junction, and Jacob Sigel. According to the companies’ administrator, Mr. Chunciob Lim, these visits were only related to product quality and did not address working conditions.

• In India, Pankaj Enterprises (located in New Delhi) and Chenduran Textiles,

Poppys Knitwear, and Yavraj International (located in Tirupur) stated that

visits from U.S. customers or their agents were focused exclusively on product quality. Zoro Garments (located in Madras) stated that monitoring dealt

only marginally with working conditions and no checklist was used.

b. Previous Knowledge About Monitoring Visits

Whether monitoring visits are announced or unannounced differs widely

from company to company. In 41 of the companies interviewed (58 percent), monitoring visits by the U.S. importer or its agent or representatives were announced in

advance, in 13 (18 percent) they were unannounced, and in 16 (23 percent) there

were both announced and unannounced visits.

c. Pre-Contract Inspections

Consistent with the information provided by U.S. garment importers (Chapter

II), foreign producers interviewed that operate as contractors indicated that, prior to

receiving an order from a U.S. corporation, they were subjected to qualification

inspection, which extended to working conditions. For example:

• In Guatemala, Dong Bang, located in Chimaltenango, reported that JCPenney

inspected their facilities — including working conditions — prior to entry

into a contract. Once they became contractors, JCPenney had again conducted inspections and given them written ratings based on a point system.

 * Maquila Cardiz reported that JCPenney inspected its current facility

before it could change locations and made recommendations for the

new facility.

 * Confecciones Caribe had been subjected to a pre-contract inspection

by JCPenney and received a point rating.

• A similar experience with the JCPenney point rating system was brought up

by management of Undergarment Fashions, a plant located in the Zona Franca

San Pedro de Macorís in the Dominican Republic.
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2. Monitoring for Codes of Conduct

While monitoring for product quality, and even for health and safety conditions, is customary in the garment industry, the field visits by Department of Labor

officials suggest that monitoring for compliance with provisions of the codes of

conduct of U.S. garment importers dealing with other labor standards — and child

labor in particular — is not. Where it does occur, the degree to which such monitoring extends to all labor standards addressed by the codes — as opposed to exclusively safety and health issues — seems to vary widely across suppliers. Foreign

suppliers that are wholly owned by a U.S. corporation, or contract directly with a

U.S. corporation with a presence abroad, seem to be subject to the most frequent

and most thorough monitoring of codes of conduct, including child labor and other

labor standards.

Monitoring for implementation of child labor provisions of codes of conduct

is a very challenging undertaking. As has been discussed in Chapter II, the garment

industry is made up of a complex chain of actors, domestic and foreign.

• On the domestic front, there are apparel manufacturers (which may be producers or buyers of cloth, contractors or subcontractors, and also retailers of

finished product), apparel merchandisers, buying agents (which may be located domestically or abroad), and retailers (which may be department stores,

mass merchants, specialty stores, national chains, discount, off-price stores,

etc.).

• On the foreign front, there are buying agents, company representatives, wholly

owned subsidiaries of U.S. companies, U.S.- or foreign-owned contractors

that have an established relationship with a U.S. importer (“captive” contractors), contractors which have relationships with more than one U.S. importer,

and subcontractors.

Implementation of the child labor policies of U.S. apparel importers involves

communication and interaction between many of these actors. The very long chain

of actors and transactions in U.S. importers’ procurement of foreign apparel products

is illustrated in Box III-7 with an example drawn from the field visit by the Department of Labor to the Philippines. In the example, the procurement/manufacturing

process of apparel imported by a U.S. retailer involved five different actors, each

farther removed from the U.S. importer.

Generally, the closer the relationship between a U.S. company importing

garments and the actual producer of the items, the greater the ability of the U.S.

company to influence labor standards, including prohibitions on child labor, in the

production process. Conversely, the longer the chain of procurement/production

(five steps in the above example drawn from the Philippines), and the more levels of

buying agents, contractors, and subcontractors, the more complex and challenging is

the implementation of the labor standards policies and the less the ability of the U.S.

importers to influence them.
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Organization of Production and Implementation of Codes of Conduct:

An Example from the Philippines

U.S. retailer JCPenney has “Foreign Sourcing Requirements” that apply to all of its

suppliers. Among other provisions, the sourcing requirements state that “JCPenney

will not knowingly allow the importation into the United States of merchandise

manufactured with illegal child labor.” With regard to the Philippines:

1. JCPenney purchases infant and children’s apparel from Renzo, a U.S.-

based importer. Pursuant to its sourcing requirements, JCPenney requires Renzo to

certify that its imports are not made with child labor.

2. Renzo imports from its Philippines agent, Robillard Resources. Renzo

communicates to Robillard the JCPenney sourcing requirements and its obligations

and requires Robillard to sign a certificate that its products are not made with child

labor.

3. Robillard purchases from a number of contractors in the Philippines, one

of which is Castleberry. Robillard requires Castleberry to certify that its products

are not made with child labor. The owner of Robillard visits Castleberry from time

to time monitoring for quality control, but also for compliance with the sourcing

requirements. Occasionally, a representative from JCPenney also visits.

4. Contractor Castleberry does cutting, finishing, and packing. It subcontracts sewing to about thirty plants.

5. The thirty or so subcontractors who do the sewing do not sign a

certificate stating that no child labor has been used, but are supervised by

Castleberry line supervisors, who are each responsible for several subcontractors.

They spend almost their entire time with the subcontractors. Occasionally, a

production supervisor from Castleberry also visits. It is apparent that their primary

interest is quality control, but they also monitor compliance with other standards,

including child labor requirements. It is safe to say, however, that none of these

supervisors are familiar with the code of conduct other than an understanding that

they are not supposed to allow child labor. Embroidery and “smocking” (a form

of very small and intricate pleating, sometimes combined with embroideries) is

subcontracted out to home workers; some is done within the plants as well.

6. Homework contracts — piece work contracts — are made with heads

of households. Children may help their parents with some of the simpler embroidery and smocking and with the trimming. This is not monitored by any company.

B O X I I I - 7
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a. Monitoring Methods

As discussed in Chapter II, U.S. companies utilize a variety of means to monitor their codes of conduct or policies on labor standards and child labor.

• Many companies use some form of active monitoring — which might include

site visits and inspections by company staff, buyer agents or other parties —

to verify that suppliers are actually implementing the provisions on labor

standards and child labor.

• Companies may also use contractual monitoring, whereby they rely on the

guarantees made by suppliers, typically through contractual agreements or

certification, that they are respecting the U.S. company’s policy and not using

any child labor in production. This latter form may be seen as self-certification.

• Some companies use a combination of the two forms of monitoring, typically

relying on contractual monitoring backed up with visits and inspections.

All three of these monitoring strategies were found in the field visits.

b. Active Monitoring

A few U.S. corporations — particularly manufacturers — tended to have

structured monitoring of all aspects of their codes of conduct and subjected their

foreign subsidiaries to such disciplines. Based on the plant visits, instances of active

monitoring by U.S. corporations of their foreign subsidiaries include:

• In the Dominican Republic, Hanes Caribe (Zona Franca Las Américas) and

Tejidos Flex (Zona Franca Santiago) were subjected to structured monitoring.

 * Both companies received periodic visits, sometimes as often as every

2-3 weeks, by upper level managers and occasional visits by Vice

Presidents of Sara Lee Corporation.

• In Honduras, Fruit of the Loom owns five plants (Confecciones Dos Caminos,

2 plants; Manufacturas Villanueva; El Porvenir; and Productos San José). A

Senior Vice President makes monthly monitoring visits.

• In the Philippines, Levi Strauss regularly monitors its subsidiary.

Some U.S. companies (manufacturers or retailers) that contract directly with

foreign suppliers also appear to play an active role in monitoring their codes of

conduct. In some instances, companies interviewed said that the monitoring activities by the U.S. importer covered all aspects of codes of conduct, including child

labor policies. Responses from others were less categorical, suggesting that the

emphasis of monitoring may have been only on safety and health issues.
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• In the Dominican Republic, Levi Strauss’ contractors received periodic visits

to their facilities to monitor compliance with all aspects of codes of conduct.

Levi Strauss has an office in Santiago which is responsible for overseeing its

Dominican operations.22

 * Some companies also received visits by U.S. importers or retailers.

The General Manager of Undergarment Fashions, Inc. (Zona Franca

San Pedro de Macorís) stated that JCPenney makes periodic monitoring visits to the company.

• EuroModa is a Honduran company producing shirts for Oxford Industries,

Tommy Hilfiger, May Department Stores, Dillard Stores, JCPenney-Stafford

Executive, Polo Boys and Brooks Brothers. Oxford Industries monitors compliance with its “Contractor Sourcing Policy”; May Department Stores and

JCPenney send their own inspectors for contract compliance; each label owner

will have someone make visits 2 or 3 times per year for contract compliance.

• Also in Honduras, The Gap has a country representative who makes weekly

unannounced visits to KIMI, a contractor for The Gap, to monitor compliance

with all aspects of the Code of Vendor Conduct.

• However, another Honduran company, Certified Apparel Services, that produces for Wal-Mart, Sears, Mervyn’s (Dayton-Hudson), JCPenney, Target (Dayton-Hudson), Kmart and other U.S. companies with codes of conduct, stated

a regional representative of JCPenney made one announced visit regarding

compliance with its code of conduct. Wal-Mart also made one announced

visit to determine compliance with its code. According to this company, there

is no systematic verification of compliance with codes of conduct by purchasers.

• In India, the Department of Labor officials found an example of monitoring

of codes of conduct by an outside monitor on behalf of a U.S. importer:

 * Triburg Consultants is an Indian company located near New Delhi

which implements the terms of engagement and quality control requirements of U.S. garment importers. Triburg’s clients include The

Gap (for the last 12 years), Liz Claiborne, Banana Republic (The Gap),

Polo Jeans, Sun Apparel of Texas, and Ralph Lauren.

 * Triburg administers Liz Claiborne’s human rights guidelines: it conveys the guidelines to the supplier company, discusses them with the

company, and confirms that the supplier abides by the guidelines.

Triburg also conducts surprise visits to monitor compliance. Triburg

hires a welfare officer to conduct programs for the children of workers and check on wages, food subsidies, and medical facilities.

22 During an interview with Mr. Francisco Polanco, Human Resources Manager of RK Fashion (Zona Franca La

Vega) — a Levi Strauss contractor — he stated that Levi Strauss’ monitors have asked many of the same questions

regarding the implementation of its code of conduct as the Department of Labor official visiting the plant.
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While most monitoring visits by U.S. corporations or their agents appear to

be regularly scheduled or announced in advance, there are some instances of unannounced visits:

• In Guatemala, a Department of Labor official was consistently told that

JCPenney conducted unannounced inspections of contractors. Unannounced

monitoring visits of contractors by Kmart personnel were also reported by

Dong Bang, a Korean-owned facility located in Chimaltenango, and

Confecciones Caribe, a U.S.-owned company located in Mixco. According to

Dong Bang officials, Kmart personnel recently completed the second unannounced visit to this plant in three months.

• In India, Triburg stated that it conducts surprise visits on behalf of U.S. companies (particularly Liz Claiborne) to monitor code compliance by contractors.

• In Honduras, it was reported that the Audits Department of Warnaco audits

contractors three times per year. These audits are unannounced.

• Also in Honduras, weekly visits by the representative of The Gap to KIMI are

unannounced.

• However, in the Dominican Republic, Interamericana Products (Zona Franca

Santiago) stated that they had requested, and Levi Strauss representatives had

agreed, to stop making unannounced visits to monitor compliance with codes

of conduct. Interamericana Products indicated that under the agreement Levi

Strauss would give at least a week’s notice prior to any visits to the plant.

c. Contractual Monitoring

There was also evidence from the field visits of numerous instances of contractual monitoring of codes of conduct. Contractual monitoring of codes of conduct

is most prevalent in the case of U.S. retailers which do not have a significant presence abroad.

In these situations, the burden of monitoring compliance with the U.S.

importer’s child labor policies rests with the foreign agent, contractor or subcontractor, typically through a self-certification process. In these instances, the role of the

U.S. importers in monitoring compliance of their codes of conduct is minimal.23 For

example:

• In Honduras, Fabena Fashions is required by Macy’s and Wal-Mart to sign a

contract which includes a no child labor clause.

23 U.S. companies interviewed in Chapter II stated that even where there is contractual monitoring, representatives

of the importer verifying quality of product would get involved in addressing violations of labor standards that

might come to the inspector’s attention during the visit.
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• In India, Chenduran Textiles, located in Tirupur, exports about one-half of its

output to the United States. The main U.S. customer is Tropic Textiles of

New York City, a supplier to Wal-Mart. Tropic requires Chenduran to certify

that no slave labor or child labor was used in the production of the goods

through a paragraph in the contract/bill of lading. Tropic accepts Chenduran’s

self-certification of the clause and does not have any in-country monitoring,

education, implementation, or enforcement programs.

• Also in India, Pankaj Enterprises, New Delhi, is an exporter of mid-grade

apparel items. Pankaj’s U.S. buyers require that no child labor be used in the

manufacture of garments. Pankaj buys fabric and guarantees that no child

labor is used in the production of garments through self-certification; there is

no monitoring from the importer or its agents.

d. Contractual and Active Monitoring

In some instances, U.S. importers use a combination of contractual and active

monitoring, using auditors from the U.S. importer (or its agents) to verify compliance.

• In the Philippines, Liz Claiborne has a policy of monitoring and supervising

its contractors. Contractors must certify that they are in compliance with the

code of conduct. In addition, they are subject to frequent visits from the

Philippines office of Liz Claiborne, which monitors implementation of the

code of conduct as well as quality control.

• Warnaco, which requires that contractors certify that child labor has not been

used, also audits suppliers in Honduras for full compliance with its child

labor policies, including age verification.

 * Macy’s, Wal-Mart, and The Limited have checked personnel records

at Fabena Fashions to verify the age of workers.

• In India, Zoro Garments supplies 75 percent of its production to the U.S.

market. Zoro’s major U.S. customers are Rustic River, Quick Silver, Blue

Print, and JCPenney (Phillips-Van Heusen is a former customer).

 * According to Zoro’s management, occasionally representatives from

the U.S. customers have visited Zoro’s factory to check on quality

control. Most of these visits were walk-throughs with some general

questions raised about the use of child labor, but no checklist of

requirements was administered.

 * Two or three years ago, Phillips-Van Heusen raised the subject of

codes of conduct with Zoro’s management and asked the company

to fill out a questionnaire. When Zoro was producing for Phillips-Van

Heusen, there was a clause in its contract related to child labor.
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• In El Salvador, Primo Industries, a contractor for Liz Claiborne, Land’s End,

Polo and JCPenney, met with Liz Claiborne several years ago to discuss and

sign the Liz Claiborne code of conduct. The plant manager told Department

of Labor officials that Liz Claiborne is “the toughest on child labor.” He also

said that American inspectors visit the plant approximately twice a month to

check on quality control and see whether their rules and regulations are

being implemented.

3. Monitoring Procedures

Closely related to the above issues is how the monitoring of the codes of

conduct is undertaken, specifically whether workers and members of the community

in which plants are located are also approached by the monitors, whether monitors

are able to speak with workers outside the presence of company officials, the ability

of monitors to speak the language of the host country and workers, and the extent to

which monitors are trained to review implementation of labor standards.

Based on the field visits, it appears that most monitoring conducted by U.S.

corporations primarily covers quality control issues. As such, there seems to be

relatively little interaction between, on the one hand, monitors, and on the other

hand, workers and the local community. It also appears that monitors have a technical background in production and quality control and are relatively untrained with

regard to implementation of labor standards.

Department of Labor officials found the following exceptions to these generalizations, however:

• In the Dominican Republic, managers of plants contracting for Liz Claiborne

(Grupo M) and Levi Strauss (Grupo M, Interamericana Products, and D’Clase

Corporation) stated that monitors routinely speak with workers inside the

plant regarding both product quality and working conditions. Monitors talk

to workers about their ages when appropriate.

 * Mr. Roberto Rodríguez of Hanes Caribe stated that internal auditors

from Sara Lee Corporation often meet with workers in private.

 * D’Clase Corporation stated that for a recent contract negotiated with

the Kellwood Corporation, an outside firm had been hired by Kellwood

to monitor compliance with quality and labor standards matters.

Monitors would be expected to talk to the workers to verify age,

among other matters.24

 * The General Manager of Woo Chang Dominican Industry (Zona Franca

Bonao), a plant which sells to Samsung Corporation, stated that when

Samsung representatives visit the plant, they ask the workers how

they are being treated.

24 In a follow-up telephone interview with management of D’Clase Corporation, the Department of Labor was

informed that California Safety Compliance Corporation (CSCC) had been hired to audit the Kellwood contract.

CSCC auditors have already interviewed 8 workers at the D’Clase plant.
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• In El Salvador, management of CTM Corporation, a contractor to VF Corporation, indicated that the U.S. purchaser monitors the facilities approximately

every six months. In the context of these visits, VF personnel review working

conditions in the plant, and check on child labor by looking around and

asking workers; occasionally they conduct private interviews with workers.

 * However, some workers at the same plant interviewed by the Department of Labor officials said that the (foreign) monitors do not speak

with workers; they believe the monitors do not speak Spanish.

• In Honduras, the country-based investigator for The Gap said that he monitors implementation of the company’s code of conduct at different locations,

saying that he talks to workers during plant visits.

• In the Philippines, managers of two plants producing for Nike (Mactan Apparel and Globalwear Manufacturing, Inc.) as well as a representative from

Nike stated that its auditors talk to workers and inform them about its corporate code of conduct and Filipino labor law.

• In contrast, workers interviewed outside the Sam Lucas plant in Chimaltenango,

in Guatemala, stated that they had never seen an inspector talking to a

worker. They could not be certain that representatives from a U.S. corporation had ever visited the plant.

F. Enforcement

As discussed in Chapter II, enforcement of corporate codes of conduct depends on the system used by U.S. corporations to ensure compliance. Corporations

responding to the survey indicated that they used a graduated system to respond to

violations, including: a) monetary fines or penalties; b) probationary status; c) demand for corrective action; d) providing education (particularly where child labor

violations are involved); e) cancellation of an individual contract; and f) severance of

the relationship. Positive reinforcement included: a) retention of current contracts;

and b) awarding of additional contracts.

Information regarding enforcement of codes of conduct is reported in this

section, arranged around the following issues:

• What corrective measures do U.S. corporations use to address violations of

their codes of conducts by foreign suppliers?

• What specific mechanisms are used by U.S. corporations to reward suppliers

which comply with codes of conduct?

1. Corrective Measures

As has been discussed above, Department of Labor officials learned that

many U.S. corporations engage in extensive screening of foreign garment contractors

prior to entering into a supply relationship. The purpose of the screening process is
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primarily to set aside companies that did not have the ways and means to carry out

quality production. The contractor’s ability to comply with labor standards provisions in codes of conduct — and child labor provisions in particular — is increasingly part of the screening process.

• For example, in El Salvador, Lindotex representatives stated that before starting production for a new foreign purchaser, representatives of the purchaser

come to El Salvador and inspect local companies to see if they qualify. These

inspectors look at whether companies comply with national laws with regard

to pay, overtime, child labor, bathrooms per worker, occupational hazards,

etc. Workers must show a birth certificate or other official document showing age to be hired.

• In India, Associated Indian Exports, an apparel-buying office located in New

Delhi with regional offices in Bangalore and Bombay, operates as a middleman or facilitator between foreign purchasers and Indian producers and currently represents Sears, Wheat Seal, and Casual Corner. Most of its U.S.

customers require that the Indian producers sign a declaration containing a

statement that no child labor was used in the production of the item. (If a

contractor uses a subcontractor, it must also certify for the subcontractor.)

 * For example, Sears has a 20-page survey questionnaire that the Indian supplier must sign; other U.S. importers have a 2 to 5-page agreement. For each potential supplier to Sears, Associated Indian Exports

administers the 20-page questionnaire/evaluation form, including the

taking of photographs of the production area. Sears’ central office

must be satisfied with the results of the supplier survey before it

enters into a contract.

 * If a potential Sears supplier is rejected, the supplier is told why and

what needs to be done to correct any deficiencies. There is no regular inspection or monitoring of the requirements of a supplier once it

is certified, but each supplier must undergo re-certification every 3

years.

Companies that have passed the screening process and have become contractors of U.S. corporations may face a range of corrective measures should they fall

short in complying with the code of conduct. For example:

• In Guatemala, although garment contractors and subcontractors were unable to articulate the U.S. companies’ policies to address violations of their

codes of conduct, they expressed great concern about the possibility of losing their contracts if they were found to have child labor problems.

 * At Lindotex, an inspector from The Gap recently recommended that

the company provide more fire extinguishers.

 * A representative of Phillips-Van Heusen stated that in May 1996, his

company had identified three young workers (under 15 years of age)
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in a plant operated by a subcontractor in San Pedro de Sacatepequez.

Upon learning of their presence, Phillips-Van Heusen required the

company to dismiss the three young workers immediately.

• In the Dominican Republic, many companies stated that U.S. clients had

requested changes in the physical conditions of the factories during their

visits to the companies. These changes often included requirements for eating facilities, bathrooms, and more lighting or ventilation. In most cases,

changes with regard to working conditions, were related to safety and health

issues. Most of the companies that had contracts with Levi Strauss in the

Santiago Zona Franca said that Levi Strauss requested all companies to reinforce, move, or rebuild wooden mezzanines — where sewing machines were

stationed — as a fire safety precaution.

 * Undergarment Fashions mentioned that JCPenney, in addition to performing periodic visits to the plant, also had a rating system to evaluate the contractor’s performance. Under this rating system, a company must receive at least 50 points in order to maintain its current

contract. If the company does not obtain a satisfactory rating, it is put

on probation and given a reasonable period of time to make the

requested changes.

 * High Quality Products, located in Zona Franca Los Alcarrizos, a contractor for the Jones Apparel Group, said that Jones Apparel terminated a contract with Bonahan Apparel (Zona Franca Bonao) because of Bonahan’s refusal to recognize the establishment of a union

in its plant.

• In Honduras, Rothschilds made a number of recommendations regarding

clean toilets, lighting, ventilation, drinking water, and hours of work for 14-

and 15-year-old workers at Global Fashions.

2. Positive Reinforcement

Respondents to the voluntary survey of U.S. retailers and garment manufacturers made extensive reference to the streamlining of the supplier base that is taking

place in the industry. In part because of the priority to improve quality, but also

because of a concern about violations of labor standards — and child labor provisions more specifically — U.S. garment importers have cut back sharply on subcontracting and also reduced the number of their foreign suppliers. From the point of

view of foreign garment producers, the streamlining of suppliers carried out by the

U.S. garment industry has resulted in clear winners and losers.

• On the one hand, suppliers to the U.S. market that can meet quality and

timeliness of product considerations and comply with codes of conduct have

been rewarded with continuation of orders and with additional orders diverted to them from producers that rely on subcontracting schemes.
111

• On the other hand, marginal suppliers — in terms of quality and timeliness of

output, physical plant, or ability to comply with labor standards — have been

shunned, losing their contracts with U.S. importers and having to resort to

sales to other less-profitable markets, including their own domestic market.

Continued access to the U.S. market is a very large incentive for overseas

garment producers to meet quality/timeliness requirements and comply with codes

of conduct. Thus, the prospect of the continued ability to ship to the U.S. market

reinforces compliance with appropriate standards. Foreign countries also have a

great deal at stake, as unused quota allocations translate into the loss of export

revenue to the nations in the short term and loss of quota in the longer term.
112
113

IV. Conclusion

Corporate codes of conduct are a new and promising approach that can

contribute to the elimination of child labor in the global garment industry. They

involve the private sector — rather than governments and international organizations

— in developing solutions to this complex problem.

It is important to keep in mind, however, that codes of conduct are not a

panacea. Child labor remains a serious problem — with hundreds of millions of

children working around the world. However, their presence in export industries

may be reduced by the implementation of codes of conduct. It is also possible that

changes induced by codes of conduct could have positive spillover effects for children more generally — e.g., a greater commitment of a foreign country to compulsory education for children. However, this relationship requires further study.

Finally, because codes of conduct seem to be tools used by large apparel

importers, there may remain smaller importers without codes of conduct still willing

to overlook the working conditions in the plants of countries from which they purchase their garments. This question also deserves further study.

A. Child Labor in the Apparel Industry

There is a growing public awareness of the exploitation of child labor. Much

attention has focused on children working in the export sector of developing countries. This awareness has contributed to the development and increased use of

codes of conduct by apparel importers in the United States.

The consensus of government officials, industry representatives, unions and

NGOs interviewed by the Department of Labor in the Dominican Republic, El Salvador, Guatemala and Honduras is that child labor is currently not prevalent in their

garment export industries. In the very few cases where child labor was mentioned,

the children were 14 or older. However, the use of workers 15-17 is common, and

there may be extensive violations of local laws limiting the hours for workers under

18.

There was some anecdotal information about the prior use of child labor in

the garment industry in Central America. For example, in Honduras, labor union

representatives said that about two years ago, the garment export industry began to

dismiss young workers to avoid adverse publicity in importing countries. Often

plant managers no longer hire young workers (14-17 years of age) even if they meet

domestic labor law or company code of conduct requirements. However, there are

also some reports of fraudulent proof-of-age documents being used by child workers

to seek jobs in the garment industry. There continue to be allegations in Guatemala

of children working for small subcontractors or in homework in the San Pedro de

Sacatepequez area.
114

Meanwhile, it is clear that children continue to work for subcontractors and

in homework in the Philippines and India. They perform sewing, trimming, embroidering and pleating tasks. It is also the case that children are not prevalent in the

larger factories in the Philippines, and that plant managers in India recently have

become more concerned about not using child labor.

B. Codes of Conduct in the U.S. Apparel Industry

There is a growing awareness among many of the largest U.S. apparel importers about the conditions under which apparel sold in the U.S. market is produced. This is a major change from just a few years ago, when importers were more

inclined to avoid any responsibility on this matter. Codes of conduct are increasingly

common in the U.S. apparel industry. This is a positive sign.

Thirty-six of the 42 U.S. retailers and apparel manufacturers that provided

reportable responses to the survey conducted for this study indicated that they have

adopted a policy specifically prohibiting the use of child labor in the manufacture of

goods they import from abroad. These policies take different forms — codes of

conduct, statements of company policy in the form of letters to suppliers, provisions

in purchase orders or letters of credit, compliance certificates.

There are marked differences in the codes of conduct prohibiting the use of

child labor among the U.S. companies responding to the survey. A primary difference with regard to such codes is their definition of child labor.

• The standards used to define child labor vary significantly from company to

company. For example, a company’s policy statement may:

* state a minimum age for all workers who make their products;

* refer to the national laws of the host country regarding the minimum

age of employment or compulsory schooling;

* refer to international standards (e.g., ILO Convention 138); or

* use some combination of the three.

In some cases, companies’ policies prohibiting child labor in the production

of their goods do not contain any definition of child labor.

• A small number of codes specifically describe how a policy prohibiting child

labor is to be implemented and enforced.

A proliferation of codes, with differences in some key areas (e.g., the definition of child labor), leads to some uncertainty. This is particularly a problem where

foreign contractors produce garments for more than one U.S. importer. During field

visits conducted as part of this study, Department of Labor officials were informed by

foreign suppliers that the variety of codes can cause confusion. Some multi-cus-
115

tomer suppliers said that to address this problem they are coming up with their own

codes of conduct.

It also emerged from the field visits that there is confusion among suppliers

about whether national labor law or a company’s policy (as set out in a code of

conduct) should be applied. This is highlighted in cases where the company standard is more rigorous than national law. The problem is compounded by the fact

that in some instances, owners and plant managers are not familiar with the national

law on child labor, despite the fact that their customers’ codes stipulate they must

follow national law.

C. Transparency of Codes of Conduct in the

Apparel Industry

Most survey respondents who have child labor policies indicated that they

have distributed copies of their policies to all suppliers, including contractors and

subcontractors. A few said they also communicate the policy to a wider audience.

On the other hand, many respondents said they were not certain whether workers

know about their codes of conduct.

Field visits conducted in six countries revealed that:

• Managers at two-thirds of the export-oriented plants visited indicated they

were aware of codes of conduct prohibiting child labor, particularly codes

issued by U.S. customers.

• Formal training about codes of conduct was not common. Approximately 30

percent of the facilities visited where managers knew about codes reported

that they received formal training from the U.S. corporation issuing the code.

However, more than half of these facilities produced for just two corporations.

• Meetings with workers and their representatives suggested that relatively few

workers making garments for U.S. companies are aware of the existence of

codes of conduct and even fewer understand their implications.

 * This confirms information received from U.S. companies through responses to the survey and follow-up telephone interviews that they

were not aware how — or if — their policy is communicated to

workers making their products.

• The lack of awareness among workers about codes of conduct may be in

part attributable to the relatively low level of effort by producers to inform

their workers about the codes. Only 22 of the plants visited informed their

workers about codes of conduct; 13 of the companies indicated that they

informed their workers about codes of conduct orally, while only nine stated

that they did so both orally and in writing.
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 * In many cases where plant managers told Department of Labor officials that they had informed workers orally about company policies,

workers denied having ever been so informed.

• Posting of the codes of conduct at the workplace for the benefit of the workers —preferably in their own language — was not the rule in the garment

industries of most of the countries visited. In all, 21 of the 70 plants visited by

the Department of Labor officials had posted a code of conduct of a U.S.

customer; 7 of such plants (out of 8 visited in that country) were in El Salvador. The number of plants visited in each of the other countries where codes

of conduct were posted was: Dominican Republic, 2; Honduras, 1; Guatemala, 2; India, 2; and the Philippines, 7.

 * Some managers stated that they do not post codes because all they

do is repeat domestic law. However, not all codes define child labor

by existing domestic law.

 * Others have also used as an excuse the illiteracy of workers, even

though managers contradict this by stating that they are seeking to

employ better-educated workers. Many workers had no trouble reading codes of conduct shown to them by Department of Labor officials.

• While it is most critical that overseas contractors, subcontractors and their

workers be familiar with corporate codes of conduct, knowledge about their

existence and implications by others — host governments, NGOs, business

organizations — also can be helpful in enhancing their effectiveness. The

record was mixed with respect to the extent to which these entities were

familiar with codes of conduct and their implications.

D. Monitoring and Enforcement of Codes of Conduct in

the Apparel Industry

Creating a corporate code of conduct is an easy task. There are many models

— developed by individual companies or trade associations — to draw upon. Monitoring and enforcement are much more complicated. Yet all parties recognize that

monitoring and enforcement are key to the success of a code of conduct. Without

credible monitoring and enforcement, corporate codes of conduct are little more

than expressions of good intentions.

By far the most frequent monitoring of foreign contractors that occurs in the

industry is for quality of product and scheduling coordination. All of the foreign

plants visited stated that they are visited by the representative of a U.S. company, a

buying agent, or someone else for these purposes. Most (about 90 percent in the

case of the plants visited by Department of Labor officials) also monitor for safety

and health conditions. In far fewer instances is there any clear evidence of monitoring of child labor policies contained in codes of conduct.
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Apparel importers responding to the survey revealed that they use several

means to monitor their codes of conduct.

• Some companies use a form of active monitoring — by conducting site visits

and inspections by company staff, buyer agents or other parties — to verify

that suppliers are actually implementing the provisions on child labor and

other labor standards.

• Companies may also use contractual monitoring, whereby they rely on the

written guarantees made by suppliers, typically through contractual agreements or certification, that they are respecting the U.S. company’s policy and

not using any child labor. This latter form of monitoring may be seen as

“self-certification,” and is often the only type of monitoring used by U.S.

retailers who responded to the survey.

• Some companies use a combination of the two forms of monitoring, typically

relying on contractual monitoring backed up with visits and inspections.

Generally, the closer the relationship between a U.S. company importing

garments and the one actually producing the items, the greater the ability of the U.S.

company to influence labor conditions, including prohibitions on child labor. Conversely, the longer the chain of production, and the more levels of contractors,

subcontractors and buying agents used, the more complex and challenging is the

implementation.

Plant visits (inspections) are one of the main monitoring mechanisms of codes

of conduct by U.S. garment importers. Visits are most likely announced in advance,

but sometimes are unannounced. However, when checking for codes of conduct,

monitors often do not speak with workers — either inside or outside the worksite.

Among subcontractors, the evidence suggests that monitoring of codes of

conduct is spotty. This confirms statements from industry representatives that U.S.

importers exert less control over the labor practices of subcontractors.

Many questions remain about the practice of contractual monitoring. In

some instances, contractual monitoring seems to be tantamount to self-certification.

If there is no active, on-site monitoring to verify conditions, it is not clear that there

is an incentive to change behavior.

 * Some U.S. companies — generally retailers — require a contractor to

sign a document ensuring that the clothing is not produced with child

labor. The U.S. company then points to a signed contract/agreement

with their overseas contractor or buyer agent to show that no children have been used in garment production. Implementation ends

there — it is now the responsibility of the contractor to adhere to the

signed promise. In many instances, the U.S. importer does not verify

compliance beyond checking that the signed contract/agreement is

on file.
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Many U.S. corporations have made it clear to suppliers that willful violations

of codes of conduct — including child labor provisions — can lead to monetary

penalties, cancellation of contracts, or severing of a relationship. The main motivation for compliance by foreign suppliers is the fear of losing access to the U.S.

market, a form of enlightened self-interest. A potential loss of revenue from the

lucrative U.S. market arguably far outweighs any potential gain to be made by hiring

lower-cost child labor.

E. Recommendations

Based upon the information collected from the voluntary survey of 48 U.S.

apparel importers and site visits to six countries producing garments for the U.S.

market, the Department of Labor found that codes of conduct can be a positive factor

in solving the global child labor problem. Consistent with the important efforts

already undertaken by many U.S. apparel importers, the Department of Labor recommends that U.S. companies consider whether some additional voluntary steps

might be appropriate:

1. All actors in the apparel industry, including manufacturers, retailers,

buying agents and merchandisers, should consider the adoption of a code of

conduct.

If all elements of the apparel industry have a similar commitment to eliminating child labor, this would have a reinforcing impact on the efforts that the leaders in

the industry have made. Trade associations should consider whether they could

increase their technical assistance to help assure that the smaller companies in the

industry can achieve this objective.

2. All parties should consider whether there would be any additional

benefits to adopting more standardized codes of conduct.

There is a proliferation of codes of conduct. Some foreign companies and

producer associations are even drafting their own codes. The definition of child

labor differs from code to code, thereby creating some uncertainty for business partners and workers as to what standard is applicable.

3. U.S. apparel importers should implement further measures to monitor subcontractors and homeworkers.

Since most of the violations of labor standards, including child labor, occur in

small subcontracting facilities or homework, U.S. apparel importers should consider

further measures to monitor subcontractors more closely.
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4. U.S. garment importers — particularly retailers — should consider

taking a more active role in the monitoring/implementation of their codes of

conduct.

The implementation of codes of conduct is a complex matter, and a relatively

recent endeavor. Implementation seems best — and most credible — when U.S.

companies get directly involved in the monitoring. There is little incentive for foreign companies to comply with a U.S. importer’s code of conduct if there is no

verification of actual behavior.

5. All parties, particularly workers, should be adequately informed about

codes of conduct so that the codes can fully serve their purpose.

In the supplying countries, managers of enterprises are generally familiar

with the codes of their clients. Workers, however, are seldom aware of codes of

conduct of the U.S. corporations for which they make garments. NGOs and foreign

governments are also not fully informed about codes of conduct.
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V. Appendices

Appendix A: List of Companies Surveyed

Appendix B: Company Questionnaire

Appendix C: Codes of Conduct Provided by Companies Surveyed

Appendix D: Site Visits

Appendix E: U.S. Apparel Imports, by Region and Country (1985-1995)

Appendix F: ILO Convention 138
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Appendix A: List of Companies Surveyed

Top U.S. Retailers and Manufacturers of Apparel

(Source: Kurt Salmon Associates, Financial Profile for Fiscal Year 1995, July 1996)

Apparel Manufacturers

1. Fruit of the Loom

2. Hartmarx Corporation

3. Jones Apparel Group

4. Kellwood Company

5. Levi Strauss & Company

6. Liz Claiborne

7. Nike

8. Oxford Industries

9. Phillips-Van Heusen

10. Russell Corporation

11. Salant Corporation

12. Sara Lee Corporation

13. Tultex Corporation

14. VF Corporation

15. Warnaco Group

Department Stores

1. Dillard Department Stores

2. Federated Department Stores

3. J.C. Penney Company

4. Kohl’s Corporation

5. May Department Stores

6. Mercantile Stores Company

7. Montgomery Ward Holding Co.

8. Neiman Marcus Group

9. Nordstrom

10. Sears Roebuck & Company

Mass Merchandisers

1. Ames Department Stores

2. Dayton Hudson Corporation

3. Dollar General Corporation

4. Family Dollar Stores

5. Kmart Corporation

6. Price Costco

7. ShopKo Stores

8. Venture Stores

9. Waban Inc.

10. Wal-Mart Stores

Specialty Stores

1. Burlington Coat Factory

2. County Seat Stores, Inc.

3. The Dress Barn, Inc.

4. The Gap

5. The Limited

6. The Marmaxx Group

7. Ross Stores, Inc.

8. Stage Stores, Inc.

9. The Talbots, Inc.

10. Woolworth Corporation

Non-Store/Direct Apparel Marketers

1. Home Shopping Network, Inc.

2. Land’s End, Inc.

3. Spiegel, Inc.
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Appendix B: Company Questionnaire

Company Name:________________________________

Address:________________________________________

Contact Person:________________________________

Telephone:________________

1. Approximately how much apparel do you import annually (in dollar

value)?

2. From what countries do you import apparel?

3. Can you provide us with the names and locations of:

(i) foreign facilities that you own or have an ownership interest in from

which you import apparel;

(ii) foreign contractors and subcontractors from which you import apparel.

4. Does your company have a code of conduct or policy regarding labor practices in overseas production? Does it contain a provision on child labor? If

so, please provide us with a copy.

5. If you use a third party purchaser to import apparel for you, do you require

them to comply with or enforce your code of conduct or policy on child

labor? Do you know if your third party purchaser has its own code of conduct or policy on child labor?

6. How does your company implement your code of conduct or policy on child

labor? Do you monitor overseas production facilities for compliance with

your code of conduct or policy on child labor? Who does the monitoring for

your company, how is monitoring carried out, and how often is it done?

What problems have you encountered in implementing your code of conduct or policy on child labor?

7. Has your company ever found child labor in any overseas production facilities from which you import? If so, please provide specific instances and the

actions that you took.

Please send us your most recent annual report.
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Appendix C: Codes of Conduct Provided

by Companies Surveyed

Dayton Hudson Corporation

Dillard Department Stores

The Dress Barn, Inc.

Family Dollar Stores

Federated Department Stores

Fruit of the Loom

The Gap

Hartmarx Corporation

JC Penney Company

Jones Apparel Group

Kellwood Company

Kmart Corporation

Land’s End, Inc.

Levi Strauss & Company

The Limited

Liz Claiborne

Mercantile Stores Company

Montgomery Ward Holding Company

Nike

Nordstrom

Oxford Industries

Phillips-Van Heusen

Price Costco

Ross Stores, Inc.

Russell Corporation

Salant Corporation

Sara Lee Corporation

Sears Roebuck & Company

Spiegel, Inc.

Stage Stores, Inc.

The Talbots, Inc.

Tultex Corporation

Venture Stores

VF Corporation

Wal-Mart Stores

Warnaco Group

Woolworth Corporation
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Dayton Hudson Corporation

Standards of Vendor Engagement

Dayton Hudson Corporation has a tradition of conducting its business in an ethical

manner that reflects our respect for the public franchise under which we operate. As

such we are concerned with the worldwide state of being of human rights and

environmental degradation. We expect that the vendors with whom we source our

products to share these same ethical concerns as well. Dayton Hudson Corporation

will use the following Standards of Vendor Engagement in selecting vendors and will

seek compliance with these standards by our contractors, subcontractors, suppliers

and other businesses.

Dayton Hudson Corporation will seek vendors that will allow us full knowledge of

the facilities used in production. We reserve the right to undertake affirmative measures, such as on-site inspection of production facilities in order to implement and

monitor these standards. Any effort to suppress any of these standards will be met

with strong objection on our part and we will take into account any such actions on

the part of our vendors when reviewing and evaluating our business relationships.

Safe and Healthy Workplace

Dayton Hudson will seek vendors who provide their employees with a safe and

healthy workplace in compliance with local laws.

Forced or Compulsory Labor

Dayton Hudson will not knowingly work with vendors that use forced or other

compulsory labor in the manufacture of products intended for our stores. This

includes labor that is required as a means of political coercion or as punishment for

holding or for peacefully expressing political views.

Disciplinary Practices

Dayton Hudson will not knowingly use vendors who use corporal punishment or

other forms of mental or physical coercion.

Non-discrimination

Dayton Hudson recognizes and respects the cultural differences found in the worldwide marketplace. However, we believe that workers should be employed on the

basis of their ability to carry out the duties of a particular job, rather than on the basis

of personal characteristics or beliefs. We will seek vendors who share this belief.
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Working Hours and Overtime

Dayton Hudson will seek vendors who do not require more than 60 hour work

weeks on a regularly scheduled basis, except for appropriately compensated overtime in compliance with local laws.

Fair Wages

Dayton Hudson will seek vendors who share our commitment to the betterment of

wage and benefit levels that address the basic needs of workers and their families so

far as possible and appropriate in light of national practices and conditions.

Child Labor

Dayton Hudson will seek vendors who do not use child labor. Dayton Hudson will

expect its vendors to comply with the law of the country of origin in defining the

term “child”, but we will not knowingly use vendors that use labor from persons

under the age of 14 regardless of the law of the country of origin. Dayton Hudson

will support the development of legitimate workplace apprenticeship programs for

the educational benefit of younger people as long as the child is not being exploited

or given jobs that are dangerous to the child’s health or safety.
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Dillard Department Stores Business Policy

TO: ALL DILLARD VENDORS & SUPPLIERS

DATE: JANUARY 12,1996

RE: DILLARD BUSINESS POLICY

As we begin a new year, we at Dillard’s believe it is appropriate to restate and

reiterate the principles upon which our relationship with vendors and suppliers will

be based.

For many years, Dillard’s business relationship with its vendors and suppliers has

been governed by terms and conditions contained on our purchase order form as

supplemented by communications with our merchants. These terms and conditions

have also been applicable to electronic transactions. The terms and conditions have

historically contained various commercial requirements as well as directives requiring compliance with various laws. These various business conditions have been reevaluated and have resulted in the preparation of a document entitled Dillard Department Stores, Inc. Purchase Order Terms, Conditions and Instructions, a copy of

which is attached hereto. These terms apply to all orders placed with you; and

acceptance of Dillard purchase orders, whether in writing or by electronic means,

expressly constitutes your acceptance, as a vendor or supplier, of the terms, conditions, and instructions contained in the attached document as it may be supplemented from time to time. Without strict compliance with the elements of the attached Dillard Department Stores, Inc. Purchase Order Terms, Conditions and Instructions, we will be unable to establish or continue a business relationship.

Dillard’s particularly calls to your attention the portion of the attached which deals

with the manner in which our merchandise is manufactured and shipped. Recent

negative industry publicity has motivated us to restate and emphasize our longstanding

philosophy and policy that all Dillard merchandise must be manufactured and shipped

in compliance with all laws. We particularly wish to emphasize to all of our domestic and foreign vendors and suppliers that no Dillard merchandise will be manufactured or shipped by use of illegal forced labor, illegal convict labor, or illegal child

labor. Further, all domestic or foreign suppliers of Dillard merchandise must conduct

their business in compliance with all other laws and regulations relative to employment, manufacturing, shipping, customs and environment practices.

Compatible with the above, we are also re-negotiating our agreements with our

foreign buying agents. These new buying agency agreements will include prohibitions against illegal child labor and other forms of illegal employment, manufacturing, shipping, customs and environmental practices identical to those contained in

the enclosed. Our buying agents will be required to periodically spot check compliance with these standards. In addition, corporate representatives of Dillard’s will be

making periodic inspections of manufacturing facilities to insure compliance.

We believe that these high standards are compatible with our philosophy of bringing

quality products to our customers.
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The Dress Barn Policy and Standards of Engagement

Human Rights Policy Statement

The Dress Barn, Inc. and its subsidiaries are committed to producing high quality

products at a good value to our consumer. The Company not only follows the letter

and spirit of all applicable laws, but maintains a high standard of business ethics and

regard for human rights. Moreover, we require sound business ethics from our

suppliers.

The Dress Barn, Inc. and its Subsidiaries

Standards of Engagement

1. Legal Requirements. Suppliers must observe all applicable laws of their country, including laws relating to employment, discrimination, the environment,

safety and the apparel and related fields. Moreover, suppliers must comply

with applicable United States laws relating to the import of products, including country of origin labeling, product labeling and fabric and product testing. If local or industry practices exceed local legal requirements, this higher

standard should be met.

2. Health and Safety. Conditions must be safe, clean and acceptable throughout

all work and residential facilities.

3. Employment Practices. We will only support businesses who are fair to their

employees:

• Suppliers must pay wages and benefits and provide compensation

for overtime consistent with local laws.

• Suppliers must adopt working hours that do not exceed prevailing

local law. One day in seven should be regularly encouraged as a day

off.

• Suppliers must not use child labor as defined by local law (however,

workers must be at least 15 years of age), forced labor or prison

labor.

• Suppliers must not use corporal punishment or other mental or physical

disciplinary actions or engage in sexual harassment.

• We favor suppliers who do not discriminate based upon race, religion, national origin, political affiliation or sex, and who encourage

free association and freedom of expression.

4. Environmental Practices. We favor suppliers who practice environmental

protection.
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5. Ethical Conduct. We will encourage our suppliers to embrace ethical standards in the conduct of their businesses. We will not support or participate in

any way in any local, regional or national war or armed conflict in any country in which we do business and will seek to minimize our business risk

where conflict exists, emphasizing the safety of our employees and representatives.

If you believe that these Standards of Engagement are not being upheld or if you

have any questions regarding these Standards of Engagement, please contact the

General Merchandise Manager of Dress Barn. Your identity will be kept in confidence.
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Family Dollar Stores

(Subscribes to policy of the National Retail Federation,

NRF)

NRF

STATEMENT OF PRINCIPLES ON SUPPLIER LEGAL COMPLIANCE

1. We are committed to legal compliance and ethical business practices in all

our operations.

2. We choose suppliers who we believe share that commitment.

3. In our purchase contracts, we require our suppliers to comply with all

applicable laws and regulations.

4. If it is found that a factory used by a supplier for the production of our

merchandise has committed legal violations, we will take appropriate

action, which may include cancelling the affected purchase contract(s),

terminating our relationship with the supplier, commencing legal actions

against the supplier, or other actions as warranted.

5. We support effective law enforcement and cooperate with law enforcement

authorities in the proper execution of their responsibilities.

6. We support educational efforts designed to enhance legal compliance on

the part of the U.S. apparel manufacturing industry.
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Federated Department Stores Statement of Corporate Policy

Federated Department Stores, Inc. and its subsidiaries are firm in their resolve to do

business only with those manufacturers and suppliers that share the company’s commitment to fair labor practices, including adherence to laws that protect workers and

their salaries, both in the United States and abroad.

As a condition of doing business with Federated, it is required that manufacturers

comply with all laws applicable to the country in which the merchandise is manufactured, including but not limited to laws against child or forced labor and unsafe

working conditions. This condition is reiterated on every purchase order issued by

the company; the purchase order contractually commits product manufacturers to

adhere to applicable laws in the fulfillment of the order, providing Federated with an

avenue of legal recourse should the contract be violated.

To further the objective of ensuring the protection of workers, Federated requires its

core vendors annually to acknowledge in writing their understanding of the company’s

policies requiring full compliance with all applicable laws in the manufacture of

products to be carried to Federated stores. Relationships with manufacturers and

suppliers who do not sign this agreement are immediately terminated by Federated.

In the manufacture of private label products being made exclusively for Federated,

the company routinely inspects factories for contractual compliance, as well as compliance with laws and regulations dealing with child or forced labor and unsafe

working conditions.

Upon learning of a potential or actual violation of law by either a supplier of merchandise to Federated or a subcontractor hired by such a supplier, Federated will

take the following actions:

1 . When notified by the U.S. Department of Labor or any state or foreign government, or after determining upon its own inspection that a supplier or its

subcontractor has committed a serious violation of law relating to child or

forced labor or unsafe working conditions, Federated will immediately suspend all shipments of merchandise from that factory and will discontinue

further business with the supplier. Federated will demand the supplier institute monitoring programs necessary to ensure compliance with applicable

laws prior to the resumption of any business dealings with that supplier. This

action will be in addition to any contractual or legal remedies available to

Federated pursuant to the purchase contract.

2. Upon notification of a violation of law by a supplier or its subcontractor,

other than as set forth above, Federated shall immediately suspend further

shipments from that factory, pending receipt of a detailed explanation from

the supplier that describes the circumstances surrounding the violation, the

supplier’s position with respect to the violation, and a commitment by the

supplier to take remedial action to Federated’s satisfaction. This action will

be in addition to any contractual or legal remedies available to Federated

pursuant to the purchase contract.
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3. Federated reserves the right to investigate any potential violation of law and,

at its discretion, to suspend, discontinue or terminate its relationship with any

supplier for its failure to comply with any laws applicable to merchandise

produced in the United States or any other country.

Through the establishment of these policies, Federated believes it is most effectively

exercising its economic leverage with manufacturers to encourage their full compliance with laws designed to protect their workers; manufacturers who violate these

laws know the consequences of their actions. In addition to its commitment to fully

enforce its policies with manufacturers, Federated is committed to cooperating with

state and federal agencies who ultimately are responsible for enforcing these laws.
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FPD Business Principles & Vendor Compliance

Overview

The following summarizes Federated Product Development’s business principles as

they relate to our international sourcing strategy and vendor compliance program.

Statement of Principles

1. We are committed to legal compliance and ethical business practices in all of

our operations.

2. We choose suppliers which we believe share the commitment.

3. In our purchase contracts, we require our suppliers to comply with all applicable laws and regulations.

4. If it is found that a factory used by a supplier for the production of our

merchandise has committed legal violations, we will take appropriate action,

which may include taking rehabilitating steps to bring factory back into compliance, cancelling the affected contract(s), terminating our relationship with

the supplier, commencing legal actions against the supplier or other actions

as warranted.

5. We support law enforcement and cooperate with law enforcement authorities in the proper execution of their responsibilities.

6. We support educational efforts designed to enhance legal compliance on the

part of the U.S. apparel manufacturing industry.

Foreign Laws

We are committed to the above principles wherever we have our private brands &

labels manufactured worldwide. While foreign labor laws may differ from country to

country, we first and foremost follow the local law of the country in regard to supporting the minimum age and minimum wage requirements. We follow our policy in

regard to strictly forbidding the use of forced labor and/or ozone depleting substances in the manufacturing of our product. When in our vendor’s facilities, we will

check for common-sense employee safety issues such as fire hazards, clearly marked

and unblocked exits, cleanliness, and poor lighting.

Vendor Approval Process

The most important part of our compliance program is the identification of those

vendors that share in our commitment before any business is transacted. Therefore,

it is our policy that all suppliers and their manufacturing facilities must go through a

formal evaluation and approval process prior to the placement of any orders. Furthermore, these vendors must agree to authorize, in advance, unrestricted access to

their facilities - including the ability to conduct unannounced inspections.
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New vendors can only be approved by senior executive for that Region booking the

order. If the merchandise is to be inspected by another region, then senior executive

for that inspecting Region must also approve the manufacturing facility.

The standard procedures is as follows. Specific examples of the FPD forms and

documentation are included in the Appendices attached.

1. New Vendor/New Facility Approval Request submitted

2. Terms of Engagement Letter notification

3. New Vendor/New Facility Questionnaire completed

4. Factory evaluation conducted and report submitted.

5. Credit & litigation background check performed by an independent, accredited organization

6. Vendor approved (ID number issued) & entered in the MPS system and purchase order creation enabled

7. Rejected vendor/facility summary data maintained on file as part of a Red

Flagged list

8. Purchase order issued with contract terms including compliance requirements

on reverse side

Supplier Monitoring

Assuring vendor compliance includes the following key components and formal

documentation of these activities:

1. Regular in-line and final inspection of all orders with a reporting section

specifically covering observation of legal and policy compliance

2. All purchase orders issued with clearly stated compliance requirements

3. Unannounced factory visits for the express purpose of identifying legal, safety

and policy non-compliance

4. Regular re-certification of all facilities by authorized Quality Control staff

5. Annual notification to all active suppliers of our Terms of Engagement

Violations

FPD personnel look for violations of our policies which would include compliance

with Federal, state and local law. Safety, wage and under-age worker violations are

essential elements of our monitoring process. All documented violations must be

reported to the Corporate Legal Counsel and the President/COO of FM/FPD for

action.
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Authority

Clearly defined levels of authorization have been established and audited for compliance.

1. Inter-regionally: Only Executive Vice President-Asia, Senior Vice PresidentEurope and Vice President Production can approve new vendors and factories.

2. All factory evaluations must be counter-signed by a General Manager or Divisional Vice President

3. All facility approvals must be authorized at the Senior Executive level for that

region

4. New Vendor Approval Requests must be counter-signed by Merchandise,

Production and Control Vice Presidents

Education & Training

Internal training by FPD Corporate Counsel, Corporate Quality Control & Overseas

Offices managerial staff.

State and local government educational seminars and training materials available.

National Retail Federation sponsored seminars & conferences.

Independent Labor & Wage Experts (as available).

1

 North/South America Region requires letter to be signed by an Officer of the Company and returned.

2 Only managerial level or pre-designated Quality Assurance staff are authorized to evaluate factories.

3 US vendors are in an on-line database.

4

 Worldwide roll-out and training completed by October, 1996

5 Example: New York State Apparel Industry Task Force
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Fruit of the Loom Contractor Code of Conduct

BY SIGNING BELOW THE UNDERSIGNED CONTRACTOR (OR CONTRACTOR’S

SUPPLIER OR SUBCONTRACTOR REFERRED TO HEREIN AS CONTRACTOR) ACKNOWLEDGES THAT FRUIT OF THE LOOM (“FRUIT”) DOES NOT CONDONE OR

PERMIT THE VIOLATION OF ANY APPLICABLE DOMESTIC, FOREIGN OR INTERNATIONAL LAWS, RULES OR REGULATIONS, INCLUDING, WITHOUT LIMITATION,

ANY SUCH GOVERNING EMPLOYMENT AND LABOR, THE ENVIRONMENT, THE

PROVISION OF SERVICES AND THE SALE OF GOODS. CONTRACTOR FURTHER

ACKNOWLEDGES THAT FRUIT DOES NOT CONDONE OR PERMIT THE USE OF

CHILD, FORCED, INDENTURED, INVOLUNTARY, PRISON OR UNCOMPENSATED

LABOR UNDER ANY CIRCUMSTANCES, OR ANY ACTIVITIES WHICH ARE IN VIOLATION OF U.S. CUSTOMS LAWS, INTERNATIONAL AGREEMENTS OR FOREIGN

LAWS, INCLUDING, BUT NOT LIMITED TO FALSE DECLARATIONS OF COUNTRY

OF ORIGIN OR OTHER FALSE DOCUMENTATION, COUNTERFEIT VISAS OR ILLEGAL TRANSSHIPMENTS TO EVADE THE TEXTILE QUOTA RESTRAINT AGREEMENTS

NEGOTIATED BETWEEN THE COUNTRY OF EXPORT AND THE UNITED STATES.

CONTRACTOR ACKNOWLEDGES THAT FRUIT MAINTAINS A POLICY AGAINST

ENGAGING IN ANY ILLEGAL ACTIVITIES AND WILL NOT BUY OR SELL PRODUCTS OR SERVICES PROVIDED THROUGH THE USE OF ANY UNLAWFUL OR UNETHICAL PRACTICES.

In furtherance of the foregoing, Contractor represents and warrants that Contractor

is: (1) not engaged in, and will not engage in, any unfair labor, wage or benefits

practice or practices violative of the laws or regulations of the country of manufacture or assembly of products or involving unsanitary, unhealthy and/or unsafe labor

conditions, the employment of child, forced, indentured, involuntary, prison or uncompensated labor, the use of corporal punishment, discrimination based on race,

gender, national origin or religious beliefs, or similar employment activities or conditions; (2) in compliance with, and will continue to comply with, all applicable laws,

rules and regulations, including but not limited to, those pertaining to environmental

matters, in the conduct of its business and the manufacture or assembly of products

for Fruit; (3) in compliance with, and will continue to comply with, all applicable

laws, rules or regulations governing the provision of services or the international sale

of goods and, where applicable, it owns or may legally purchase rights to export

textiles and textile products under the mandatory quota agreements in effect between the country of export and the United States; and (4) not engaged, and will not

engage, in any activity which is in violation of U.S. Customs laws or regulations,

international agreements or foreign laws governing the international sale of goods,

including, but not limited to, false documentation, counterfeit visas or illegal transhipment to evade textile quota restraints negotiated between the country of export

and the U.S. For purposes of this Code of Conduct, “child labor” means the use of

children who are less than the age of compulsory schooling in the country of manufacture and, in any case, shall not be less than 15 years. Note that Fruit condones

and supports legitimate, legally sanctioned, government sponsored workplace apprenticeship and educational programs for persons under such age.

Contractor acknowledges that it is Fruit’s policy to stop and/or prevent known illegal

activities. If Fruit determines that Contractor or any supplier, subcontractor or agent

of Contractor has violated any applicable law, rule, or regulation or has engaged in
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any of the above practices, Fruit may: (a) provide all available information, including

the name of such Contractor, supplier, subcontractor or agent, to applicable government agencies and law enforcement officials for appropriate action; and (b) exercise

its contractual termination rights under the applicable agreement(s) or purchase

order(s).

To assist Fruit in assuring compliance with this Code of Conduct, Contractor agrees

to: (i) require all of its officers and employees who will be responsible for or involved with the implementation of procedures designed to ensure compliance with

this Code of Conduct to review and familiarize themselves with this Code of Conduct; (ii) require all of Contractor’s suppliers, subcontractors and agents to execute

and deliver to Fruit a Code of Conduct on or before execution of an applicable

agreement or purchase order with Fruit; (iii) provide Fruit with access to its and any

Fruit authorized Contractor supplier, subcontractor or agent production facilities to

conduct inspections; (iv) provide, upon request, Fruit with proof of production,

including without limitation, shipping documents, cutting and sewing reports and

similar documentation; and (v) provide, upon request, Fruit with proof of compliance by Contractor and its suppliers, subcontractors or agents with applicable labor

laws and including, without limitation, proof that all employees meet minimum legal

working age and pay requirements and the right to interview such employees regarding the same. Fruit intends to make every available effort to assure the veracity

of all documents it receives and reviews and the authenticity of Contractor’s sources

of supply.

Contractor acknowledges and agrees that Fruit may require Contractor to reaffirm

this Code of Conduct or execute a new Code of Conduct from time to time and that

this Code of Conduct replaces and supplants any prior Code of Conduct governing

Contractor’s relationship with Fruit. As a duly authorized officer or director of Contractor, the undersigned acknowledges that he/she has read this Code of Conduct

and understands that Contractor’s business relationship with Fruit is based on

Contractor’s full compliance with this Code of Conduct. The undersigned understands that Contractor’s failure to abide by the terms of this Code of Conduct may

result in Fruit’s immediate cancellation or termination of any and all outstanding

agreements and purchase orders between Fruit and Contractor, including, without

limitation: (aa) Fruit’s cancellation of orders for goods made while Contractor was

not in compliance with this Code of Conduct or goods in process or scheduled to be

made at the time of cancellation or termination, whether involving raw materials,

work in process or finished goods, or in Contractor’s, Fruit’s or a third party’s possession; and (bb) Contractor’s prompt refund to Fruit of any monies paid in connection

therewith.

Contractor hereby certifies that it proposes to (___)/will not (___) use any suppliers

of component parts, other than Fruit or its affiliates, or subcontractors or agents in

connection with the manufacture and/or assembly of products for Fruit. If Contractor proposes to utilize any suppliers of component parts, subcontractors or agents in

connection with the manufacturer or assembly of products for Fruit, Contractor agrees

to attach to this Code of Conduct: (a) a statement (on the form supplied by Fruit)

disclosing the company name, plant address, telephone and fax numbers and contact names of any such suppliers, subcontractors or agents, all of whom shall be
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subject to review and prior written approval or disapproval by Fruit, and (b) a signed

Fruit of the Loom Contractor Code of Conduct signed by each such person or entity.

Contractor acknowledges and agrees that it is Fruit’s standard policy: (i) for assembly

programs not to approve any subcontractors or agents where Fruit provides component parts for assembly; and (ii) for turn-key sourcing programs not to approve any

subcontractors for suppliers of component parts to contractors or subcontractors or

agents to assist contractors in their assembly operations.

Please indicate whether there are any attachments to this Code of Conduct and their

number:

No (____)/Yes(____) Number of Attachments (if any):

ACCEPTED AND AGREED TO BY:

CONTRACTOR:

By: ______________________________

Name: _______________________________

Title: _______________________________

Dated:______________ 199__
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The Gap Code of Vendor Conduct

This Code of Vendor Conduct applies to all factories that produce goods for Gap,

Inc. or any of its subsidiaries, divisions, affiliates or agents (“Gap”).

While Gap recognizes that there are different legal and cultural environments in

which factories operate throughout the world, this Code sets forth the basic requirements all factories must meet in order to do business with Gap. The Code also

provides the foundation for Gap’s ongoing evaluation of a factory’s employment

practices and environmental compliance.

1. General Principle

Factories that produce goods for Gap shall operate in full compliance with the laws

of their respective countries and with all other applicable laws, rules and regulations.

A. The factory operates in full compliance with all applicable laws, rules and

regulations, including those relating to labor, worker health and safety, and

the environment.

B. The factory allows Gap and/or any of its representatives or agents unrestricted access to its facilities and to all relevant records at all times, whether

or not notice is provided in advance.

II. Environment

Factories must comply with all applicable environmental laws and regulations. Where

such requirements are less stringent than Gap’s own, factories are encouraged to

meet the standards outlined in Gap’s statement of environmental principles.

A. The factory has an environmental management system or plan.

B. The factory has procedures for notifying local community authorities in case

of accidental discharge or release or any other environmental emergency.

III. Discrimination

Factories shall employ workers on the basis of their ability to do the job, not on the

basis of their personal characteristics or beliefs.

A. The factory employs workers without regard to race, color, gender, nationality, religion, age, maternity or marital status.

B. The factory pays workers wages and provides benefits without regard to

race, color, gender, nationality, religion, age, maternity or marital status.
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IV. Forced Labor

Factories shall not use any prison, indentured or forced labor.

A. The factory does not use involuntary labor of any kind, including prison

labor, debt bondage or forced labor by governments.

B. If the factory recruits foreign contract workers, the factory pays agency recruitment commissions and does not require any worker to remain in employment for any period of time against his or her will.

V. Child Labor

Factories shall employ only workers who meet the applicable minimum legal age

requirement or are at least 14 years of age, whichever is greater. Factories must also

comply with all other applicable child labor laws. Factories are encouraged to develop lawful workplace apprenticeship programs for the educational benefit of their

workers, provided that all participants meet both Gap’s minimum age standard of 14

and the minimum legal age requirement.

A. Every worker employed by the factory is at least 14 years of age and meets

the applicable minimum legal age requirement.

B. The factory complies with all applicable child labor laws, including those

related to hiring, wages, hours worked, overtime and working conditions.

C. The factory encourages and allows eligible workers, especially younger workers, to attend night classes and participate in work-study programs and other

government-sponsored educational programs.

D. The factory maintains official documentation for every worker that verifies

the worker’s date of birth. In those countries where official documents are

not available to confirm exact date of birth, the factory confirms age using an

appropriate and reliable assessment method.

VI. Wages & Hours

Factories shall set working hours, wages and overtime pay in compliance with all

applicable laws. Workers shall be paid at least the minimum legal wage or a wage

that meets local industry standards, whichever is greater. While it is understood that

overtime is often required in garment production, factories shall carry out operations

in ways that limit overtime to a level that ensures humane and productive working

conditions.

A. Workers are paid at least the minimum legal wage or the local industry standard, whichever is greater.

B. The factory pays overtime and any incentive (or piece) rates that meet all

legal requirements or the local industry standard, whichever is greater.
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Hourly wage rates for overtime must be higher than the rates for the

regular work shift.

C. The factory does not require, on a regularly scheduled basis, a work week

in excess of 60 hours.

D. Workers may refuse overtime without any threat of penalty, punishment or

dismissal.

E. Workers have at least one day off in seven.

F. The factory provides paid annual leave and holidays as required by law or

which meet the local industry standard, whichever is greater.

G. For each pay period, the factory provides workers an understandable wage

statement which includes days worked, wage or piece rate earned per day,

hours of overtime at each specified rate, bonuses, allowances and legal or

contractual deductions.

VII. Working Conditions

Factories must treat all workers with respect and dignity and provide them with a

safe and healthy environment. Factories shall comply with all applicable laws and

regulations regarding working conditions. Factories shall not use corporal punishment or any other form of physical or psychological coercion. Factories must be

sufficiently lighted and ventilated, aisles accessible, machinery maintained, and hazardous materials sensibly stored and disposed of. Factories providing housing for

workers must keep these facilities clean and safe.

Factory:

A. The factory does not engage in or permit physical acts to punish or coerce

workers.

B. The factory does not engage in or permit psychological coercion or any other

form of non-physical abuse, including threats of violence, sexual harassment,

screaming or other verbal abuse.

C. The factory complies with all applicable laws regarding working conditions,

including worker health and safety, sanitation, fire safety, risk protection, and

electrical, mechanical and structural safety.

D. Work surface lighting in production areas — such as sewing, knitting, pressing and cutting – is sufficient for the safe performance of production activities.

E. The factory is well ventilated. There are windows, fans, air conditioners or

heaters in all work areas for adequate circulation, ventilation and temperature control.
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F. There are sufficient, clearly marked exits allowing for the orderly evacuation

of workers in case of fire or other emergencies. Emergency exit routes are

posted and clearly marked in all sections of the factory.

G. Aisles, exits and stairwells are kept clear at all times of work in process,

finished garments, bolts of fabric, boxes and all other objects that could

obstruct the orderly evacuation of workers in case of fire or other emergencies. The factory indicates with a “yellow box” or other markings that the

areas in front of exits, fire fighting equipment, control panels and potential

fire sources are to be kept clear.

H. Doors and other exits are kept accessible and unlocked during all working

hours for orderly evacuation in case of fire or other emergencies. All main

exit doors open to the outside.

I. Fire extinguishers are appropriate to the types of possible fires in the various

areas of the factory, are regularly maintained and charged, display the date of

their last inspection, and are mounted on walls and columns throughout the

factory so they are visible and accessible to workers in all areas.

J. Fire alarms are on each floor and emergency lights are placed above exits

and on stairwells.

K. Evacuation drills are conducted at least annually.

L. Machinery is equipped with operational safety devices and is inspected and

serviced on a regular basis.

M. Appropriate personal protective equipment — such as masks, gloves, goggles,

ear plugs and rubber boots — is made available at no cost to all workers and

instruction in its use is provided.

N. The factory provides potable water for all workers and allows reasonable

access to it throughout the working day.

0. The factory places at least one well-stocked first aid kit on every factory floor

and trains specific staff in basic first aid. The factory has procedures for

dealing with serious injuries that require medical treatment outside the factory.

P. The factory maintains throughout working hours clean and sanitary toilet

areas and places no unreasonable restrictions on their use.

Q. The factory stores hazardous and combustible materials in secure and ventilated areas and disposes of them in a safe and legal manner.
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Housing (if applicable):

AA. Dormitory facilities meet all applicable laws and regulations related to health

and safety, including fire safety, sanitation, risk protection, and electrical,

mechanical and structural safety.

BB. Sleeping quarters are segregated by sex.

CC. The living space per worker in the sleeping quarters meets both the minimum legal requirement and the local industry standard.

DD. Workers are provided their own individual mats or beds.

EE. Dormitory facilities are well ventilated. There are windows to the outside or

fans and/or air conditioners and/or heaters in all sleeping areas for adequate

circulation, ventilation and temperature control.

FF. Workers are provided their own storage space for their clothes and personal

possessions.

GG. There are at least two clearly marked exits on each floor, and emergency

lighting is installed in halls, stairwells and above each exit.

HH. Halls and exits are kept clear of obstructions for safe and rapid evacuation in

case of fire or other emergencies.

II. Directions for evacuation in case of fire or other emergencies are posted in

all sleeping quarters.

JJ. Fire extinguishers are placed in or accessible to all sleeping quarters.

KK. Hazardous and combustible materials used in the production process are not

stored in the dormitory or in buildings connected to sleeping quarters.

LL. Fire drills are conducted at least every six months.

MM. Sleeping quarters have adequate lighting.

NN. Sufficient toilets and showers or mandis are segregated by sex and provided

in safe, sanitary, accessible and private areas.

00. Potable water or facilities to boil water are available to dormitory residents.

PP. Dormitory residents are free to come and go during their off-hours under

reasonable limitations imposed for their safety and comfort.
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VIII. Freedom of Association

Workers are free to join associations of their own choosing. Factories must not

interfere with workers who wish to lawfully and peacefully associate, organize or

bargain collectively. The decision whether or not to do so should be made solely by

the workers.

A. Workers are free to choose whether or not to lawfully organize and join

associations.

B. The factory does not threaten, penalize, restrict or interfere with workers’

lawful efforts to join associations of their choosing.

Monitoring and Enforcement

As a condition of doing business with Gap, each and every factory must comply with

this Code of Vendor Conduct. Gap will continue to develop monitoring systems to

assess and ensure compliance.

If Gap determines that any factory has violated this Code, Gap may either terminate

its business relationship or require the factory to implement a corrective action plan.

If corrective action is advised but not taken, Gap will suspend placement of future

orders and may terminate current production.
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Hartmarx Corporation Policy

(Subscribe to policy of American Apparel Manufacturers

Association, AAMA)

AAMA Statement of Responsibility

Members of the American Apparel Manufacturers Association (AAMA) are committed

to the fair and rational practice of business in the United States and abroad. Basic to

this commitment is the fair and equitable treatment of employees in wages, working

conditions, and benefits. In no case do we support the use of child labor, prison

labor, discrimination based on age, race, national origin, gender, or religion, the

violation of legal or moral rights of employees, nor destruction or harm to the environment.

The American Apparel Manufacturers Association (AAMA) has established this Statement of Responsibility as a guideline for all member companies for their own facilities and for the facilities where production is contracted. AAMA represents over 70

percent of all domestic apparel production in the United States. Members companies

manufacture all types of apparel and are located in virtually every state in the United

States.
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JCPenney Foreign Sourcing Requirements

Supplier Selection. In selecting suppliers, JCPenney attempts to identify reputable

companies that are committed to compliance with legal requirements relevant to the

conduct of their business.

Legal Requirements. JCPenney requires of its supplier strict compliance with all

contract provisions, as well as all applicable laws and regulations, including those of

the United states and those of the countries of manufacture and exportation.

Country-of-Origin Labeling. JCPenney will not knowingly allow the importation

into the United States of merchandise that does not have accurate country-of-origin

labeling.

Prison Labor. JCPenney will not knowingly allow the importation into the United

States of merchandise manufactured with convict labor, forced labor or indentured

labor.

Child Labor. JCPenney will not knowingly allow the importation into the United

States of merchandise manufactured with illegal child labor.

Manufacturer’s Certificate. To emphasize its insistence on accurate country-oforigin labeling and its particular abhorrence of the use of prison labor and illegal

child labor, JCPenney requires that its foreign suppliers and its U.S. suppliers of

imported merchandise, for each shipment of foreign-produced merchandise, obtain

a manufacturer’s certificate that the merchandise was manufactured at a specified

factory, identified by name, location and country, and the neither convict labor,

forced labor or indentured labor, nor illegal child labor, was employed in the manufacture of the merchandise.

Factory Visits. On visits to foreign factories, for any purpose, JCPenney associates

and buying agents have been asked to be watchful for the apparent use of prison or

forced labor, or illegal child labor, or indication of inaccurate country-of-origin labeling, to take immediate responsive action when necessary and to report questionable

conduct in these areas to their management for follow-up and, when appropriate,

corrective action.

Corrective Action. If it is determined that a foreign factory utilized by a supplier for

the manufacture of merchandise for JCPenney is in violation of these foreign sourcing requirements, JCPenney will take appropriate corrective actions, which may include cancellation of the affected order, prohibiting the supplier’s subsequent use of

the factory or terminating JCPenney’s relationship with the supplier.
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Jones Apparel Group, Inc.

Business Partner Standards

May, 1996

To Our Business Partners:

Jones Apparel Group, Inc. (“Jones”) is committed to legal compliance and ethical

business practices in all of our operations worldwide. We choose suppliers and

contractors who we believe share that commitment. We are considering placing, or

have placed, one or more orders with your company for the manufacture of apparel

or for the performance of services with regard to the manufacture of apparel. We

would like to call your attention to Jones’ policy with regard to legal compliance and

ethical business practices.

In our purchase arrangements, we require our suppliers and contractors to comply

with all applicable laws and regulations of the country, or countries, in which they

are conducting business. Our standards are summarized as follows:

* Our business partners must share our commitment to compliance with all

laws regarding the importation of merchandise into the United States. Our

business partners must respect the U. S. Customs laws for importation and

the laws concerning the transhipment of merchandise. Transhipment is illegal and Jones will not tolerate this type of transaction for purposes of evading

quota or country of origin rules. These are criminal offenses which can carry

penalties up to imprisonment.

* Our business partners must share our commitment to providing a safe and

healthy workplace and to treating employees fairly and in compliance with

local laws. While we recognize that cultural differences exist and standards

may vary by country, we expect our partners to adhere to certain practices.

Health, safety and other workplace standards must meet all local laws and

safety regulations. Worker housing, where provided, must meet the same

standards for health and safety as the workplace. Employees must be compensated fairly for all hours worked and at rates that meet local industry

standards. Employees must not be discriminated against because of personal

characteristics or beliefs.

* Our business partners must not utilize child labor as defined by the United

Nations standards or by national standards, whichever are higher. They must

not utilize forced labor, including prison or other compulsory labor.

* Our business partners must share our commitment to product quality and

to maintaining the operating practices necessary to meet our quality standards.

* Our business partners must adhere to their national laws regarding the

protection and preservation of the environment.
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If it is found that a supplier or contractor for the production of merchandise for Jones

has committed legal violations, or deals with a factory or supplier that has committed

legal violations, or is not in compliance with the standards set forth herein, we will

take appropriate action, which may include canceling the affected purchase contract(s),

terminating our relationship with the supplier or contractor, commencing legal actions against the supplier or contractor, or other actions as warranted. We support

law enforcement and cooperate with law enforcement authorities in the proper execution of their responsibilities.

Your endorsement of this letter will authorize us to send a Jones representative or

agent to your premises from time to time to perform such work as is necessary to

ensure that you are in compliance with our standards. You agree to cooperate fully

and to provide our representative or agent with any and all information requested

which is necessary to prove your compliance with the applicable laws or other

matters reviewed.

Please sign and return to us a copy of this letter, which evidences your agreement to

comply with Jones’ policy, and with the employment standards and legal requirements of your country, with respect to the manufacture of all goods and services

which you supply to us. If you have any questions concerning compliance with the

applicable laws of your country, we suggest that you consult your local attorney.

Please confirm your agreement with all of the foregoing by signing this letter in the

space provided below and returning it to us promptly. A duplicate copy of this letter

is enclosed for your records.

Sincerely,

_______________________

Chief Financial Officer

The foregoing is agreed to and will be complied with:

___________________________________

Signature

____________________________________

Title

_____________________________________

Date
149

Kellwood Policy on Business Conduct

It is the desire of Kellwood Company, its Subsidiaries and Divisions, to not only be a

good citizen of the United States, but also to conduct business in an ethical and

moral manner in all of the countries of the world in which we have the privilege to

work.

As the scope and breadth of Kellwood’s sourcing and customer base expands to

include more diverse cultures, we must insure that the business people and companies that we associate with have the same values that we expect from our own

employees. To achieve this end Kellwood subscribes, and we endeavor to have our

business partners subscribe, to the following principles in conducting business.

Ethical Standards: We endeavor to respect the ethical and moral standards

and beliefs of all peoples and cultures that we deal with. We in turn expect

our business partners to respect our rules and procedures.

Legal Requirements: We expect our employees and business partners to abide

with the laws of the countries in which we conduct business. We also expect

that international law related to the conduct of business between nations be

followed at all times.

Health and Safety: We strive to have a safe and healthy working environment

in all the facilities that Kellwood owns and operates. We also expect that any

business partners that we provide work to will endeavor to provide a safe/

healthy environment for the employees in the workplace, but also in the

living facilities provided to the workers should this be necessary.

Environmental Safekeeping: We understand that the environment that we

live in is ours to maintain and protect. We subscribe to manufacturing practices that insure the safekeeping of our natural resources and ecological surroundings and expect our business partners to also adhere to these principles.

Wages and Benefits: The wage and benefit structure of our suppliers must

comply with the applicable laws of the Country or State.

Working Hours: We expect our suppliers to operate based on prevailing local

work hours. Any time worked over the norm for the area should be compensated at the overtime rate as prescribed by the local labor laws. We encourage our contractors and suppliers to allow workers a reasonable amount of

time off from their duties for rest and being with their families.

Child Labor: The use of child labor is not permissible. For a definition of

“child”, we will look first to the national laws of the country in which business is being conducted. If, however, the laws of that country do not provide

such a definition or if the definition includes individuals below the age of 14,

we will define “child”, for purposes of determining use of illegal child labor,

as any one who is:
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(a) less than 14 years of age; or

(b) younger than the compulsory age to be in school in the country in which business is being conducted, if that age is higher

than 14.

Prison/Forced Labor: We will not knowingly utilize or purchase materials

and/or products manufactured by prison or forced labor.

Discrimination: We recognize and are aware that cultural differences will

exist between various peoples. However, we do believe that people should

be employed based on their ability to perform a needed function not on the

basis of personal beliefs or characteristics.

Disciplinary Practices: We will not condone any type of corporal, mental or

physical punishment by a supplier or an employee.

October 1992

Revised July 1996
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Kmart Corporation Vendor Agreement

June 13, 1996

Dear Kmart Vendor:

The recent public debate and media attention on “sweatshop” allegations in the

apparel manufacturing industry, prompt me to write to you today. Certainly, we are

appalled by sweatshop conditions at any level within the manufacturing or retail

industry. We also believe that innuendoes and unsubstantiated claims that brush

broadly across the retail industry in the zeal to catch headlines are deplorable and

counterproductive. Responsible dialogue and appropriate business conduct must be

our commitment.

For decades, we have insisted on strict compliance with all applicable standards as

part of purchase order terms. And, in fact, Kmart has never been found to be in

violation of any human rights or labor laws in the manufacture of goods sold in our

stores, primarily because we deal only with the most reputable vendors.

As we move forward in realigning our company, none of us can afford to have our

reputations tainted by human rights violations. Therefore, your role in relation to the

sourcing of the merchandise we sell at our stores is of critical importance. Our

policies are clear. Kmart will not do business with any company that violates applicable human rights and labor standards in the manufacture of goods sold at our

stores.

If Kmart finds that any of our vendors, in the United States or abroad, falls short of

our standards, the following actions will be taken:

• We will cancel the orders and sever our relationship with any vendors that

violate these standards.

• Any vendor found in violation of applicable human rights or labor standards

will bear the burden of any loss incurred.

• Additionally, a payment, equivalent to 50 percent of the order, will be assessed to the vendor for donation by Kmart to a human rights or children’s

organization in the community where the violation occurred.

As part of our quality assurance commitment to our customers, we are increasing our

regular and surprise on-site inspections of manufacturing facilities around the world.

We expect the same level of commitment from our vendors.

I trust that you will join Kmart in doing everything you can to help eliminate impermissible and inappropriate labor conditions in the global manufacturing community.

Thank you for your personal attention and commitment to this matter and your

prompt return of the following Certification of Compliance with our policies.
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June 13,1996

All Kmart Vendors:

Kmart is strongly committed to full compliance with human rights and labor standards as related to the manufacturing of all merchandise sold at our stores. As a

vendor to Kmart, you must ensure that there is no misstatement as to the true country

of origin of your merchandise, and that none of your merchandise is made in whole

or in part using any child, forced or prison labor. This obligation applies not only to

your own company, but to any subcontractors you may use in producing goods for

Kmart.

If Kmart learns that a factory used by any of our vendors for the production of

merchandise has committed legal violations, or failed to comply with our standard

Kmart order terms, we will:

• Cancel the affected order(s)

• Terminate our relationship with the vendor

• Take legal action or pursue other equitable remedies to recoup any financial

losses incurred by Kmart

• Assess a payment to the vendor, equivalent to 50 percent of the order(s), that

Kmart will donate to a human rights or children’s organization.

With our current and planned growth in global sourcing, Kmart is increasing our

quality control staff to ensure compliance with all applicable human rights and labor

standards as well as other critical elements of quality assurance. Consistent with

these actions, we expect all of our vendors to increase their factory inspections and

take vigilant and immediate action to prevent any problems from occurring.

Please sign and return the following Certification of Compliance to Director of Vendor Development, 3100 W. Big Beaver, Troy, Mich. 48084 by July 15, 1996. Thank

you for your prompt attention and personal commitment to this very important matter.

Sincerely,

Executive Vice President, President,

General Merchandise Manager, U.S. Kmart Stores

####
153

Certification of Compliance

“By my signature below, as chief executive officer, and on behalf of my company, I

acknowledge receipt of the above letter, and do hereby certify and agree that the

company will comply with all applicable labor laws and the order terms and conditions set forth on the back of this agreement for any and all goods supplied to Kmart

regardless of country of origin. My company also agrees to make the above assessed

payment for donation by Kmart to a human rights or children’s organization in the

event of failure to comply with any of the above requirements.

_________________________________________________________________

(Print) Name & Title - Chief Executive Officer Signature Date

_________________________________________________________________

Company Name & Address
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Lands’ End Standards of Business Conduct

As direct merchants, we go anywhere in the world to find partners who are able to

give us the best combination of quality, price and service that will allow us to deliver

honest value to our customers. In this global environment, we take an interest in the

standards of our business partners around the world.

In developing this policy, we have sought to use standards that are appropriate to

diverse cultures and encourage workers to take pride in their work. We have found

that these standards result in higher quality working environments and in higher

quality products.

Compliance with our standards is a condition for becoming and remaining a business partner of Lands’ End. We have established procedures to review all issues as

they come to our attention.

In all of our dealings with our partners, we comply with our own Lands’ End Code of

Conduct and the Foreign Corrupt Practices Act. We take special care in selecting

partners who follow fair, decent and legal labor practices and agree to our Standards

of Business Conduct. We initiate and maintain relationships only with partners who:

* Compensate their employees fairly for normal work hours and overtime.

* Believe that workers should be employed based on their ability to perform

the job, rather than discriminating on the basis of race, creed, gender, politics, or other personal characteristics or beliefs.

* Respect basic human rights and place our production where there is no

unusual risk to our employees or business interests.

* Provide their employees with a safe and healthy work place, including their

residential facilities, if provided.

* Share our concern for the environment and adhere to their local and national

laws regarding the protection and preservation of the environment.

* Are knowledgeable of, and in compliance with, all the legal requirements

involved in conducting their business.

We will terminate our relationship with any business partner who is found to

be involved in the use of.

• Forced or Compulsory Labor.

• Child Labor below the minimum working age in the host country.

• Corporal Punishment or other forms of mental or physical coercion.

Our business partners are required to provide full access to their facilities

and to relevant records relating to employment practices. We will conduct

on-site inspections of facilities to monitor these standards and assure the

quality of our products.
155

Levi Strauss & Co. Global Sourcing & Operating Guidelines

Levi Strauss & Co. seeks to conduct its business in a responsible manner. We believe

this is an important element of our corporate reputation which contributes to the

strength of our commercial success. As we expand our marketing activities abroad,

and work with contractors and suppliers throughout the world to help meet our

customers’ needs, it is important to protect our Company’s reputation in selecting

where and with whom to do business.

Levi Strauss & Co.’s Global Sourcing & Operating Guidelines include two parts: the

Business Partner Terms of Engagement, which address workplace issues that are

substantially controllable by individual business partners; and the Country Assessment Guidelines, which address larger, external issues beyond the control of individual business partners.

Business Partner Terms of Engagement

The Terms of Engagement are tools that help protect Levi Strauss & Co.’s

corporate reputation and, therefore, its commercial success. They assist us in

selecting business partners that follow work place standards and business

practices consistent with our Company’s policies. As a set of guiding principles, they also help identify potential problems so that we can work with

our business partners to address issues of concern as they arise.

Specifically, we expect our business partners to operate workplaces where

the following standards and practices are followed:

1. ETHICAL STANDARDS

We will seek to identify and utilize business partners who aspire as individuals and in the conduct of all their businesses to a set of ethical standards not

incompatible with our own.

2. LEGAL REQUIREMENTS

We expect our business partners to be law abiding as individuals and to

comply with legal requirements relevant to the conduct of all their businesses.

3. ENVIRONMENTAL REQUIREMENTS

We will only do business with partners who share our commitment to the

environment and who conduct their business in a way that is consistent with

Levi Strauss & Co.’s Environmental Philosophy and Guiding Principles.

4. COMMUNITY INVOLVEMENT

We will favor business partners who share our commitment to contribute to

improving community conditions.
156

5. EMPLOYMENT STANDARDS

We will only do business with partners whose workers are in all cases

present voluntarily, not put at risk of physical harm, fairly compensated,

allowed the right of free association and not exploited in any way. In

addition, the following specific guidelines will be followed:

* Wages and Benefits. We will only do business with partners who

provide wages and benefits that comply with any applicable law and

match the prevailing local manufacturing or finishing Industry practices.

* Working Hours. While permitting flexibility in scheduling, we will

identify prevailing local work hours and seek business partners who

do not exceed them except for appropriately compensated overtime.

While we favor partners who utilize less than sixty-hour work weeks,

we will not use contractors who, on a regularly scheduled basis,

require in excess of a sixty-hour week. Employees should be allowed at least one day off in seven.

* Child Labor. Use of child labor is not permissible. Workers can be

no less than 14 years of age and not younger than the compulsory

age to be in school. We will not utilize partners who use child labor

in any of their facilities. We support the development of legitimate

workplace apprenticeship programs for the educational benefit of

younger people.

* Prison Labor/Forced Labor. We will not utilize prison or forced

labor in contracting relationships in the manufacture and finishing of

our products. We will not utilize or purchase materials from a business partner utilizing prison or forced labor.

* Health & Safety. We will only utilize business partners who provide

workers with a safe and healthy work environment. Business partners who provide residential facilities for their workers must provide

safe and healthy facilities.

* Discrimination. While we recognize and respect cultural differences, we belive that workers should be employed on the basis of

their ability to do the job, rather than on the basis of personal characteristics or beliefs. We will favor business partners who share this

value.

* Disciplinary Practices. We will not utilize business partners who

use corporal punishment or other forms of mental or physical coercion.
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Country Assessment Guidelines

The diverse cultural, social, political, and economic circumstances of the various

countries where Levi Strauss & Co. has existing or future business raise issues that

could subject our corporate reputation and therefore, our business success, to potential harm. The Country Assessment Guidelines are intended to help us assess these

issues. The Guidelines are tools that assist us in making practical and principled

business decisions as we balance the potential risks and opportunities associated

with conducting business in a particular country.

In making these decisions, we consider the degree to which our global corporate

reputation and commercial success may be exposed to unreasonable risk. Specifically, we assess whether the:

BRAND IMAGE would be adversely affected by a country’s perception or image

among our customers and/or consumers;

HEALTH AND SAFETY of our employees and their families, or our company representatives would be exposed to unreasonable risk;

HUMAN RIGHTS ENVIRONMENT would prevent us from conducting business activities in a manner that is consistent with the Global Sourcing Guidelines and other

company policies;

LEGAL SYSTEM would prevent us from adequately protecting our trademarks, investments or other commercial interests, or from implementing the Global Sourcing

Guidelines and other company policies; and

POLITICAL, ECONOMIC AND SOCIAL ENVIRONMENT would threaten the

Company’s reputation and/or commercial interests.

In making these assessments, we take into account the various types of business

activities and objectives proposed (e.g., procurement of fabric and sundries, sourcing, licensing, direct investments in subsidiaries) and, thus, the accompanying level

of risk involved.

Levi Strauss & Co. is committed to continuous improvement in the implementation of

its Global Sourcing & Operating Guidelines. As we apply these standards throughout

the world, we will acquire greater experience. As has always been our practice, we

will continue to take into consideration all pertinent information that helps us better

address issues of concern, meet new challenges and update our Guidelines.

Business partners are contractors and subcontractors who manufacture or finish our

products and suppliers who provide raw materials used in the production of our

products. We have begun applying the Terms of Engagement to business partners

involved in manufacturing and finisbing and plan to extend their application to

suppliers.
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The Limited, Inc. Code of Conduct

What we stand for: Our Relationships with Vendors and Suppliers

Honesty, integrity and fair treatment of our own associates, our customers and our

suppliers have been the basic principles of the business ever since the day I opened

the first Limited store in 1963. I have always insisted that we conduct our business

according to ethical standards that all of us could point to with pride. In a very real

sense, the company has been an extension of our long-standing commitment to the

idea that success requires every person associated with us be treated fairly, and that

every product we offer the public be of the highest quality.

I am determined that The Limited, Inc. conduct its business in accordance with high

ethical standards. The demands of our customers for diverse and affordable merchandise of the highest quality can only be met by the development of a sourcing

base that is increasingly flexible, diverse and global in scope. The continued growth

and internationalization of our activities will inevitably present challenges to the

principles that we hold most dear.

All of our associates are expected to support actively our principles through two

concurrent activities: first, we must be advocates of those standards to our vendors

and their subcontractors, and encourage the development of a supplier base that

constantly seeks to improve its quality and work conditions. Second, we must vigilantly guard against violations of the letter or spirit of our principles.

It’s important that every associate understand the policy that guides our relationships

with vendors and their subcontractors, as outlined in this booklet. Our relationships

with others say a great deal about us, our values and our standards. We all share a

responsibility for improving the world in which we live, and it is up to each one of

us to implement our standards, and to create greater quality and greater opportunity

in every community in which we live and work.

Thank you for your participation in this ongoing effort.

The Limited, Inc.’s vendor policy is quite simple: we will actively seek and favor

suppliers whose standards are compatible with our own, and we will not do business with companies or individuals that do not meet those standards.

Our policy consists of three components:

1) Principles

2) Education

3) Enforcement
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Principles

We expect our suppliers to comply with all applicable laws, regulations and industry

standards. Period.

We also expect our suppliers and subcontractors to

• Promote an environment of dignity, respect and opportunity;

• Provide safe and healthy working conditions;

• Offer fair compensation through wages and other benefits;

• Hire workers of legal age, who accept employment on a voluntary basis;

• Maintain reasonable work hours.

Finally, we require that all suppliers be particularly vigilant about compliance with

country of origin and other requirements of the U.S. Customs Service and related

agencies, and with all similar requirements of other applicable jurisdictions.

Education

We take our responsibilities as a corporate citizen very seriously, and we act decisively to ensure that our policies and standards are understood and adhered to by all

those with whom we do business.

We insist that all associates who come into contact with our suppliers be sensitive to

our concerns, and are therefore required as a matter of job description to report

anything they observe or discover that indicates our standards are not being met. We

encourage compliance with our standards through the maintenance of an ongoing

list of suppliers who consistently meet our expectations. This list of “preferred

suppliers” is regularly updated and supplied to all of our businesses when they are

seeking to source new contracts.

Each of us is expected to be an active proponent of our principles, as each of us must

prove what we stand for by our actions. Every associate with a responsibility for

vendor relationships is asked to acknowledge, in writing, that he or she understands

our standards and principles, and can then act as an active participant in their implementation.

In addition to our internal education procedures, we share our policies with every

direct vendor and supplier and expect them to share the policy with their subcontractors. Each of them is required to acknowledge our policies and standards. While

we recognize that local customs and values profoundly influence individual judgments in many areas covered by these standards, we also support the work of international agencies and organizations that seek to develop internationally recognized

standards for labor practices and business conduct.

Enforcement

We will hold our vendors responsible for the work they do for us, or subcontract on

our behalf. Given the size of our business, we recognize that it’s difficult to live up

to our expectations. In any year we purchase billions of dollars’ worth of apparel
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and other products for our stores from hundreds of suppliers in the U.S. and around

the world. We make it clear to everyone with whom we work that we expect them

to comply with all applicable laws and regulations, as well as our broader business

standards. But some violations are always a possibility.

The size of the task will not deter us from working to enforce our principles. That’s

why we require our suppliers to keep detailed and accurate records, and to permit

our quality assurance and internal audit teams to make both regular and unannounced

on-site inspections of their facilities. These teams regularly review compliance with

our policy as part of their factory evaluation and qualifications inspections, and our

suppliers are expected to replicate these efforts throughout their supply base. Suppliers periodically are required to certify their compliance, and the compliance of

their subcontractors, with this policy. And every supplier with which we do business

must agree to our requirements as a legal part of every job order or contract signed

with us.

A violation of the letter or spirit of our policies constitutes a breach of our relationship, which may result in

* Cancellation of orders;

* Termination of our business relationship;

* Notification of responsible authorities.
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Liz Claiborne

Human Rights Policy Statement

Standards of Engagement

Policy

Liz Claiborne, Inc. and its subsidiaries are committed to producing high quality products at a good value to our consumer. The Company not only follows the letter and

spirit of all applicable laws, but maintains a high standard of business ethics and

regard for human rights. Moreover, we require sound business ethics from our

suppliers.

Liz Claiborne, Inc. and its Subsidiaries

Standards of Engagement

1. Legal Requirements. Suppliers must observe all applicable laws of their

country, including laws relating to employment, discrimination, the environment, safety and the apparel and related fields. Moreover, suppliers must

comply with applicable United States laws relating to the import of products,

including country of origin labelling, product labelling and fabric and product testing. If local or industry practices exceed local legal requirements, this

higher standard should be met.

2. Health and Safety. Conditions must be safe, clean and acceptable throughout all work and residential facilities.

3. Employment Practices. We will only support businesses who are fair to

their employees:

— Suppliers must pay wages and benefits and provide compensation for overtime consistent with local laws.

— Suppliers must adopt working hours that do not exceed prevailing local law. One day in seven should be regularly encouraged as a day off.

— Suppliers must not use child labor as defined by local law

(however, workers must be at least 15 years of age), forced

labor or prison labor.

— Suppliers must not use corporal punishment or other mental

or physical disciplinary actions or engage in sexual harassment.

— We favor suppliers who do not discriminate based upon race,

religion, national origin, political affiliation or sex, and who

encourage free association and freedom of expression.
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4. Environmental Practice. We favor suppliers who practice environmental

protection.

5. Ethical Conduct. We will encourage our suppliers to embrace ethical standards in the conduct of their businesses. We will not support or participate in

any way in any local, regional or national war or armed conflict in any country in which we do business and will seek to minimize our business risk

where conflict exists, emphasizing the safety of our employees and representatives.

If you believe that these Standards of Engagement are not being upheld or if you

have any questions regarding then Standards of Engagement, please contact the Liz

Claiborne country manager. Your identity will be kept in confidence.
163

Mercantile Stores

CHILD LABOR POLICY

Mercantile will not utilize partners who, in violation of local laws, use child labor in

any of their facilities. We will not initiate or renew contractual relationships with any

factory which does not fully support and comply with this policy.

We are asking all our trading partners to indicate their acceptance of and compliance

with this polcy by signing this statement.

FACTORY # _____________

COUNTRY ______________

Company Name _____________________________

Accepted By ______________________________

Date _______________________________
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Montgomery Ward Policy

(Subscribes to policy of the National Retail Federation,

NRF)

NRF

STATEMENT OF PRINCIPLES ON SUPPLIER LEGAL COMPLIANCE

1. We are committed to legal compliance and ethical business practices in all

our operations.

2. We choose suppliers who we believe share that commitment.

3. In our purchase contracts, we require our suppliers to comply with all applicable laws and regulations.

4. If it is found that a factory used by a supplier for the production of our

merchandise has committed legal violations, we will take appropriate action,

which may include cancelling the affected purchase contract(s), terminating

our relationship with the supplier, commencing legal actions against the supplier, or other actions as warranted.

5. We support effective law enforcement and cooperate with law enforcement

authorities in the proper execution of their responsibilities.

6. We support educational efforts designed to enhance legal compliance on the

part of the U.S. apparel manufacturing industry.
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NIKE Policy

Wherever NIKE operates around the globe, the company is guided by the following

Code of Conduct, and binds its business partners to the code’s principles with a

signed Memorandum of Understanding.

THE NIKE CODE OF CONDUCT

NIKE, Inc. was founded on a handshake.

Implicit in that act was the determination that we would build our business with all

of our partners upon trust, teamwork, honesty and mutual respect. We expect all of

our business partners to operate on the same principles.

At the core of the NIKE corporate ethic is the belief that we are a company comprised of many different kinds of people, appreciating individual diversity, and dedicated to equal opportunity for each individual.

NIKE designs, manufactures and markets sports and fitness products. At each step in

that process, we are dedicated to minimizing our impact on the environment. We

seek to implement to the maximum extent possible the three “R’s” of environmental

action: reduce, reuse and recycle.

We seek always to be a leader in our quest to enhance people’s lives through sports

and fitness. That means at every opportunity — whether in the design, manufacturing and marketing of products; in the environment; in the areas of human rights and

equal opportunity; or in our relationships in the communities in which we do business — we seek to do not only what is required, but, whenever possible, what is

expected of a leader.

There Is No Finish Line.

MEMORANDUM OF UNDERSTANDING

(NIKE)

1. Government regulation of business

(Subcontractor/supplier) certifies compliance with all applicable local government regulations regarding minimum wage; overtime; child labor laws;

provisions for pregnancy, menstrual leave; provisions for vacation and holidays; and mandatory retirement benefits.

2. Safety and health

(Subcontractor/supplier) certifies compliance with all applicable local government regulations regarding occupational health and safety.
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3. Worker insurance

(Subcontractor/supplier) certifies compliance with all applicable local laws

providing health insurance, life insurance and worker’s compensation.

4. Forced labor

(Subcontractor/supplier) certifies that it and its suppliers and contractors do

not use any form of forced labor — prison or otherwise.

5. Environment

(Subcontractor/supplier) certifies compliance with all applicable local environmental regulations, and adheres to NIKE’s own broader environmental

practices, including the prohibition on the use of chloro-flouro-carbons (CFCs),

the release of which could contribute to the depletion of the earth’s ozone

layer.

6. Equal opportunity

(Subcontractor/supplier) certifies that it does not discriminate in hiring, salary, benefits, advancement, termination or retirement on the basis of gender,

race, religion, age, sexual orientation or ethnic origin.

7. Documentation and inspection

(Subcontractor/supplier) agrees to maintain on file such documentation as

may be needed to demonstrate compliance with the certifications in this

Memorandum of Understanding, and further agrees to make these documents available for NIKE’s inspection upon request.
167

Nordstrom

Standards and Business Practice Guidelines

We at Nordstrom recognize that our success is based on the quality of our relationships — with customers, employees, manufacturers, vendors and communities. To

maintain the caliber of these relationships — and to achieve our goal of always

providing the best-value product in the most equitable manner — we have established certain standards for our business partners. In setting forth these guidelines, it

is our desire to identify potential partners who share our commitment not only to

quality products, but to quality business and community relationships as well.

The Nordstrom Partnership Guidelines

1. LEGAL REQUIREMENTS

Nordstrom expects all of its partners to comply with the applicable laws and

regulations of the United States and those of the respective country of manufacture or exportation. All products must be accurately labeled and clearly

identified as to their country of origin.

2. HEALTH AND SAFETY REQUIREMENTS

Nordstrom seeks partners who provide safe and healthy work environments

for their workers, including adequate facilities and protections from exposure to hazardous conditions or materials.

3. EMPLOYMENT PRACTICES

Nordstrom firmly believes people are entitled to equal opportunity in employment. Although the company recognizes cultural differences exist,

Nordstrom pursues business partners who do not discriminate and who demonstrate respect for the dignity of all people.

4. ENVIRONMENTAL STANDARDS

Partners must demonstrate a regard for the environment, as well as compliance with local environmental laws. Further, Nordstrom actively seeks partners who demonstrate a commitment to progressive environmental practices

and to preserving the earth’s resources.

5. DOCUMENTATION AND INSPECTION

Nordstrom intends to monitor compliance with our Partnership Guidelines

and to undertake on-site inspection of partners’ facilities. Nordstrom will

review and may terminate its relationship with any partner found to be in

violation of the Partnership Guidelines.
168

FURTHER, NORDSTROM EXPECTS PARTNERS TO ADHERE TO THE FOLLOWING:

WORKING WAGES, HOURS AND OVERTIME

We expect our partners to offer wages, benefits and work conditions which are

consistent with prevailing local industry standards. Nordstrom also expects them to

comply with all applicable wage and hour laws, rules and regulations — including

those related to overtime.

CHILD LABOR

Nordstrom will not enter into partnership with vendors who utilize child labor in the

manufacture of their goods. The term “child” generally refers to a person younger

than the age for completing compulsory education.

PRISON OR FORCED LABOR

Nordstrom will not conduct business with vendors who utilize prison, indentured or

forced labor in the manufacture of its products.

If you have any questions regarding our Partnership Guidelines, please contact:

Nordstrom Public Affairs

1501 Fifth Avenue

Seattle, WA 98101-1603

U.S.A.

(206) 628-2111

Fax (206) 628-1925
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Oxford Industries, Inc. Contractor Sourcing Policy

General Policy: It is the firm policy of Oxford Industries, Inc. and its subsidiaries to

do business only with contractors who adhere to the laws of their host countries. It

is the responsibility of the Oxford contract manager or employee who hires the

contractor (1) to insure that each contractor understands and agrees to abide by

Oxford’s policy in this regard, (2) to take reasonable steps to ascertain that the

contractor is in fact in compliance with Oxford’s policy, and (3) to document the

steps taken to comply with this policy.

Contractors: This policy covers all manufacturing contractors, including, but not

limited to, cutting, sewing, printing, embroidery, finishing, dyeing and laundry contractors. Also covered are manufacturers who sell packages, i.e. completed garments

whose price includes fabric and trim.

Domestic and Foreign Policies: Oxford has two versions of its Sourcing Policy,

one for the United States and another for the rest of the world. The two versions are

attached. The Sourcing Policy (United States) specifically requires adherence to the

Fair Labor Standards Act, and federal, state and local child labor and fair employment

laws. It also prohibits a contractor from hiring a worker who cannot legally work in

the United States. The Sourcing Policy (Worldwide) prohibits the use of prison labor

and addresses the issues of contractor-provided housing and transshipping.

Implementation: It is the responsibility of the contract manager or Oxford employee who hires the contractor to:

1. Explain Oxford’s Sourcing Policy to the contractor’s officers and/or managers.

2. Give a copy of the Sourcing Policy to the contractor.

3. Obtain a copy of the Contractor’s Acknowledgement and Agreement (copy

attached) that has been signed by an officer of the contractor and maintain

this document in a safe and readily accessible place. The relevant version of

the Sourcing Policy should be attached.

4. Periodically remind the contractor of its commitment to adhere to the Sourcing Policy.

5. Take reasonable steps to ascertain the contractor’s compliance with the Sourcing Policy. Depending on the location of facility these steps may include

reviewing the age documentation of workers who appear to be underage,

inspecting contractor-provided housing, speaking directly with workers about

wage payments and other working conditions and randomly checking personnel files.

6. Report all violations and suspicions of violations to the appropriate Oxford

manager.

Questions: Any questions about the Sourcing Policy and its implementation should

be directed to Oxford’s Legal Department.
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OXFORD INDUSTRIES, INC.

SOURCING POLICY

(WORLDWIDE)

Oxford Industries, Inc. expects each of its manufacturing contractors to treat its employees in a fair and equitable manner. To that end Oxford will only employ those

contractors who abide by the following standards:

Children and Prisoners: No contractor shall use prison labor or the labor of

children below the minimum working age in the host country.

Wages and Benefits: Each contractor must pay its employees at least the

minimum required wages and benefits mandated by the laws of the host

country. Wages and benefits must be calculated and paid according to the

laws of the host country.

Health and Safety: Each contractor must provide a safe and healthy workplace to its workers.

Employee Living Conditions: If a contractor provides housing or sustenance to its employees, these shall be at least to the normal standards of

the host country.

Subcontracting: No contractor may subcontract work without the express

written permission of Oxford and then such subcontracting shall only be

permitted to companies that abide by this Sourcing Policy.

Transshipping: All work shall be performed in the country of origin

which has been identified by the contractor.

Violation of this Sourcing Policy may lead to the immediate cancellation of production contracts with the contractor.

ACKNOWLEDGEMENT AND AGREEMENT

____________(“Contractor”), with a facility address of_________________, hereby

acknowledges that it has received and understands the Oxford Industries, Inc. Sourcing Policy, a copy of which is attached to this Acknowledgement and Agreement,

and in consideration of being hired to manufacture certain products for Oxford

Industries, Inc., Contractor agrees to comply in all respects with the requirements of

the Oxford Industries, Inc. Sourcing Policy.

(Name of Contractor)

(Signature)

(Print Name)

(Title)

(Date)
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Phillips-Van Heusen

Requirements for Suppliers, Contractors, Business Partners

A Shared Commitment

The guidelines you are about to read are of utmost importance to the Phillips-Van

Heusen Corporation and to the relationships we form with suppliers, contractors and

business partners.

While we place tremendous importance on these relationships, many of which qualify

as genuine friendships of long standing, certain values and standards have always

been, and will always remain, paramount. Adherence to these values and standards

by the people and companies we do business with is a prerequisite for continuing or

establishing relationships with our company.

Indeed, we cannot do business with any company that fails to adhere to these ideals.

We believe that by working together to see these standards enforced, our company

and its suppliers, contractors and, business partners can help achieve a genuine

improvement in the lives of working people around the world.

This mission has been a guiding principle of our company for more than a century,

and it shall guide us in the future and take precedence over any economic or business concern.

Guidelines for Vendors:

While respecting cultural differences and economic variances that reflect the particular countries where we and our vendors do business, our goal is to create, and

encourage creation of, model facilities that not only provide good jobs at fair wages,

but which also improve conditions in the community at large. Therefore we actively

seek business associations with those who share our concerns.

The following guidelines address issues which are substantially controllable by our

vendors:

• Ethical Standards

We will not do business with any vendor who discriminates based on race,

gender or religion. We will not do business with any vendor who violates

the legal and moral rights of employees in any way.

• Environmental Requirements

A commitment to the environment must be shared by our vendors. While

the apparel and footwear businesses are not among those industry sectors

which are often cited for environmental infringements, there are many

ways in which we can work to nurture a better environment — at our
172

facilities and in the communities in which we operate.

• Legal Requirements

We expect our vendors to be law abiding citizens and to comply with any

and all legal requirements relevant to the conduct of their business.

• Health and Safety Requirements

We will only do business with vendors who provide employees with a safe

and healthy work environment. Vendors should make a responsible

contribution to the health care needs of their employees.

Employment Practices:

We will not do business with any vendor who fails to consistently treat employees

fairly with regard to wages, benefits and working conditions. Specifically, the following guidelines apply:

• We will only do business with vendors who provide reasonable wages and

benefits that match or exceed the prevailing local industry standard.

• While permitting flexibility in scheduling, we will only do business with

vendors who do not exceed prevailing local work hours and who appropriately compensate overtime. No employee should be scheduled for more that

sixty hours of work per week, and we will favor vendors who utilize work

weeks of less than sixty hours. Employees should be allowed at least one

day off per seven day week.

• We will not be associated with any vendor who uses any form of mental or

physical coercion. We will not do business with any vendor who utilizes

prison or forced labor.

• We will not do business with any vendor who denies their employees appropriate access to education, health care, religious observance or family obligations.

• We will favor vendors who share our commitment to contribute to the betterment of the communities in which they operate.

• We will never do business with any company that makes use of child.labor.

Employees of our vendors must be over the applicable minimum legal age

requirement or be at least 14 years old, whichever is greater. Vendors must

observe all child labor laws, particularly those pertaining to hours of work,

wages, minimum education and working conditions. We encourage vendors

to support night classes and work-study programs, especially for younger

workers.
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We have in the past suspended our association with a company that was found to

abuse the rights of employees, and we will not hesitate to do so in the future if any

of the standards outlined above are violated.

The Phillips-Van Heusen Commitment:

• To conduct all business in keeping with the highest moral, ethical and legal

standards.

• To recruit, train, and provide career advancement to all associates without

regard to race, gender or religion. Bigotry, racism and sexual harassment will

not be tolerated.

• To maintain workplace environments that encourage frank and open communications.

• To be concerned with the preservation and improvement of our environment.

• To be ever mindful that our dedication to these standards is absolute and will

not be compromised.
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PriceCostco Policy

(Excerpt from Vendor Agreement)

23. CHILD LABOR LAWS/PRISON LABOR LAWS

a. Vendor hereby certifies that each factory and all subcontractor factories used

in producing the Product Do Not and Will Not:

use any child laborers; or

use any prison or forced laborers.

b. Vendor also agrees that it will comply with the most current labor laws of the

country where the Product is produced.

Vendor will secure a written and signed confirmation from the owner of the prime

factory that said prime factory and all subcontractor factories used are in compliance

with this requirement. If requested, Vendor is to submit this certification to PriceCostco.
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Ross Stores, Inc. Conditions of Contract

1. SHIPMENTS RECEIVED AFTER THE 24TH OF

THE MONTH WILL BE CONSIDERED AS IF

RECEIVED BY PURCHASER ON THE FIRST

DAY OF THE FOLLOWING MONTH.

2. EXCESS TRANSPORTATION CHARGES DUE

TO SPLIT SHIPMENTS OR FAILURE TO COMPLY WITH ROUTING INSTRUCTIONS WILL

BE CHARGED BACK TO SELLER.

3. BASIC TRADE PROVISIONS ADOPTED BY

NRMA ARE INCLUDED IN TERMS OF THIS

ORDER BY REFERENCE THERETO.

4. THE SELLER IN ACCEPTING THIS ORDER

REPRESENTS AND WARRANTS THE MERCHANDISE SHIPPED IS SAFE AND FIT FOR

THE USE FOR WHICH IT IS MANUFACTURED. THAT IT IS FREE FROM ANY DEFECTS OR MATTER INJURIOUS TO PERSONS

OR PROPERTY, AND COMPLIES WITH AND

HAS BEEN OR WILL BE MANUFACTURED IN

STRICT ACCORDANCE WITH THE PROVISIONS OF ALL RELEVANT AND APPLICABLE

FEDERAL, STATE AND LOCAL LAWS AND

REGULATIONS, INCLUDING BUT NOT LIMITED TO EACH AND EVERY ONE OF THE

FOLLOWING:

A)THE PRICE DISCRIMINATION ACT APPROVED JUNE 19, 1936.

B)THE FEDERAL CHILD LABOR LAW,

c)ALL FEDERAL, CALIFORNIA AND LOCAL

LAWS AND REGULATIONS REGULATING

THE MANUFACTURING AND SALE APPLICABLE HERETO.

D)THE WEIGHT, MEASURES AND SIZES AS

REQUIRED BY THE STANDARDS OF THE

GOVERNMENT.

5. THE SELLER REPRESENTS AND WARRANTS

THAT THERE HAS BEEN NO VIOLATION OF

ANY TRADEMARK RIGHTS, COPYRIGHTS

OR PATENT RIGHTS.

6. SELLER ACKNOWLEDGES THAT THE

PROPER GUARANTEE(S) ON THE

INVOICE(s) COVERING THIS ORDER ARE IN

THE FORM REQUIRED UNDER THE ACTS

HEREAFTER ENUMERATED, OR THAT THE

APPROPRIATE CONTINUING GUARANTEE IS

ON FILE WITH THE FEDERAL TRADE COMMISSION OR OTHER ADMINISTRATIVE

AGENCY.

SELLER WARRANTS AND GUARANTEES

THAT THE MERCHANDISE SHIPPED UNDER

THIS ORDER IS LABELED IN ACCORDANCE

WITH AND COMPLIES WITH THE REQUIREMENTS OF THE FOLLOWING,BUT NOT LIMITED TO, FEDERAL WOOL PRODUCTS LABELING ACT, FUR PRODUCTS LABELING

ACT, TEXTILE FIBER PRODUCTS IDENTIFICATION ACT, HAZARDOUS SUBSTANCES

LABELING ACT, FLAMMABLE FABRICS ACT,

FEDERAL FOOD, DRUG & COSMETICS ACT

AND THE CHILD PROTECTION AND TOY

SAFETY ACT, FTC “GUIDES”, TRADE PRACTICE RULES AND REGULATIONS AND ALL

AMENDMENTS THERETO. ALL ELECTRICAL

APPLIANCES WILL COMPLY WITH THE

STANDARDS OF THE UNDERWRITERS

LABORATORIES.

7. SELLER AGREES TO DEFEND, PROTECT AND

HOLD THE PURCHASER HARMLESS FROM

CLAIMS, SUITS, LIABILITIES, DAMAGES OR

EXPENSES ASSERTED AGAINST OR INCURRED BY PURCHASER BY REASON OF

THE USE OF SELLERS MERCHANDISE BY

CUSTOMERS OF PURCHASER OR OTHERS,

AND SELLER AGREES TO SECURE SUITABLE

PRODUCTS AND CONTRACTUAL LIABILITY

INSURANCE FOR THE INVESTIGATION, DEFENSE AND SETTLEMENT OF ANY SUCH

CLAIMS FOR VIOLATIONS OF ANY OF THE

FOREGOING WARRANTIES.

8. A WAIVER OF ANY/OR FAILURE TO PERFORM ANY ONE OR MORE OF THE CONDITIONS OF THIS ORDER SHALL NOT CONSTITUTE A WAIVER OF, NOR AN EXCUSE
176

FOR, NON-PERFORMANCE AS TO ANY

OTHER PART OF THIS OR ANY OTHER ORDER.

9. SELLER AGREES TO SAVE, INDEMNIFY AND

HOLD PURCHASER FREE AND HARMLESS

FROM ANY AND ALL LIABILITIES, CLAIMS,

SUITS AND COSTS INCURRED BY PURCHASER BASED ON VIOLATION OF LAWS,

PATENT INFRINGEMENTS, DEFECTS OR

MATTERS INJURIOUS TO PERSONS OR

PROPERTY.

10. BILLS OF LADING MUST SHOW EXACT ARTICLES (I.E.. SHIRTS, SUITS, PAJAMAS, ETC.)

SHIPPED AND WHAT MATERIAL IS MADE

OF (I.E.. COTTON, RAYON. WOOL, ETC.),

BILLS OF LADING SHOWING CLOTHING,

DRY GOODS, ETC. IS NOT SUFFICIENT,

11. EXCESS COSTS INCURRED BY PURCHASER

DUE TO FAILURE TO SHOW CORRECT

WEIGHT AND FREIGHT DESCRIPTION ON

BILL OF LADING WILL RESULT IN CHARGE

BACK TO SELLER OF SUCH EXCESS COSTS

PLUS HANDLING CHARGES.

12. FAILURE TO INVOICE ALL STORES ON ONE

INVOICE COVERING A SINGLE SHIPMENT

WILL RESULT IN A MINIMUM PENALTY

CHARGE OF $1.00 FOR EACH EXTRA INVOICE.

13. SELLER REPRESENTS TO PURCHASER THAT

SELLER HAS THE RIGHT TO USE ANY AND

ALL TRADEMARKS, TRADE NAMES AND

TRADE ADDRESSES ASSOCIATED WITH THE

MERCHANDISE. SELLER AGREES TO SAVE,

INDEMNIFY AND HOLD PURCHASER FREE

AND HARMLESS FROM ANY AND ALL LIABILITIES, CLAIMS, SUITS AND COSTS INCURRED BY PURCHASER AS RESULT OF THE

BREACH OF SELLER’S REPRESENTATION

AND FURTHER AGREES TO DEFEND PURCHASER, AT SELLER’S EXPENSE, AGAINST

ANY CLAIMS OR SUITS OR OTHER PROCEEDINGS BROUGHT AGAINST PURCHASER AS A RESULT OF ANY SUCH

BREACH.
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Russell Corporation Vendor Policy

Russell Corporation, an Alabama corporation (hereinafter referred to as “Russell”)

founded in 1902, has adopted a vision statement which reads, in part:

“To provide the highest quality branded and private label apparel and textiles with

superior customer value and unparalleled service, globally to consumers of all ages

through selected channels of distribution. We will conduct this endeavor in a manner responsible to our employees, business partners and our environment.”

Russell strives to conduct its business in a manner that reflects this vision and the

corresponding fundamental values. As we expand our sourcing base through strategic alliances, we will only do business with vendors whose practices are compatible

with our vision.

Each of our vendors, including vendors outside the United States, are expected to

support our vision and values and to assure compliance in all contracting, subcontracting or other relationships. To assist Russell in assuring compliance with these

standards, Vendor agrees to require all of its officers and employees who will be

responsible for or involved with the implementation of procedures designed to ensure compliance with these standards to review and familiarize themselves with

these standards.

Legal and Ethical Standards

All vendors shall comply with the legal requirements and standards of their industry

under the national laws of the countries in which the vendors are doing business.

Should the legal requirements and standards of the industry conflict, vendors must,

at a minimum, comply with the legal requirements of the country in which the

products are manufactured. If, however the industry standards exceed the country’s

legal requirements, Russell will favor vendors who meet such industry standards.

Vendors shall comply with all import and export regulations of the U.S. Customs

Service, all U.S. Government agencies and their own national laws.

Russell does not condone or permit any activities which are in violation of U.S.

Customs Laws, International Treaties or Foreign Laws, including, but not limited to,

false declarations of country of origin or other false documentation, counterfeit visas

or illegal transshipment to evade the Textile Quota Restraint Agreements negotiated

between the country of export and the United States.

All merchandise shall be accurately marked or labeled with its country of origin, in

compliance with the laws of the United States and those of the country of manufacture.

All shipments of merchandise will be accompanied by the requisite documentation

issued by the proper governmental authorities, including but not limited to, import

licenses, quota allocations and visas and shall comply with orderly marketing agreements, voluntary restraint agreements and other such agreements in accordance with

U.S. law. The commercial invoice shall accurately describe all the merchandise

contained in the shipment, identify the country of origin of each article contained in

the shipment and shall list all payments, whether direct or indirect to be made for the
178

merchandise, including, but not limited to, any assists, selling commissions or royalty

payments.

Discrimination / Human Rights

Russell does not condone or permit the use of child labor, forced, indentured, involuntary, prison or uncompensated labor under any circumstances. For purposes of

this standard “child labor” shall mean the employment of individuals who are under

the age permitted by applicable law in the State/Country of manufacture. Russell

favors vendors who have a social and political commitment to basic principles of

human rights and who do not discriminate against their employees in hiring practices or any other term or condition of worth on the basis of race, color, national

origin, gender, religion, disability, sexual orientation or political opinion.

Additionally, we will utilize only those vendors who conduct themselves and their

enterprises according to ethical standards compatible with our own.

Workplace Environment

Russell maintains a safe, clean, healthy and productive environment for it’s employees and expects the same from its vendors. Vendors shall provide their employees

with safe and healthy working conditions, adequate medical facilities, fire exits and

safety equipment, well lit and comfortable workstations, clean restrooms and adequate living quarters where necessary. Russell will not do business with any vendor which provides an unhealthy or hazardous work environment or which utilizes

mental or physical disciplinary practices.

We expect our business partners to provide wages and benefits within reason and in

compliance with all applicable local requirements. We will favor those who contribute to the community in areas such as education, health care and other related social

programs.

Environmental Concerns

Russell maintains a proactive stance regarding employee and community issues through

its business practices. As a responsible corporate citizen we will utilize only those

vendors who share our commitment to the community and the environment and

who conform with all local requirements regarding environmental codes and guidelines.

Right of Inspection

To further assure proper implementation of and compliance with the standards set

forth in this Policy, Russell, or a third party designated by Russell, will undertake

affirmative measures such as on-site inspection of production facilities, to implement

and monitor said standards. Any vendor’s failure or refusal to comply with these

standards may result in immediate cancellation by Russell of all its outstanding orders with that vendor as well as termination of the agreement.

As an officer of___________, a vendor of Russell Corporation, I have read the principles and terms described in this document and understand my company’s business

relationship with Russell Corporation is based upon said company being in full compliance with these principles terms. I further understand that failure by a vendor to

abide by any of the terms and conditions stated herein may result in the immediate
179

cancellation by Russell Corporation of all outstanding orders with that vendor and

termination of the Agreement. I am signing this statement, as a corporate representative of ____________ to acknowledge, accept and agree to abide by the standards,

terms and conditions set forth in this Policy between my company and Russell Corporation. I hereby affirm that all actions, legal and corporate, to make this Policy

binding and enforceable against have been completed.

Company name Representative Name:

Address & Telephone Number Typed Name:

Title:

Date:
180

Salant Corporation Compliance Certificate

Dear Salant Vendor:

It is Salant Corporation’s policy to require all vendors to comply with all

applicable wage, hour and child labor laws, rules and regulations, including minimum wage, overtime and maximum, hours. Our vendors may never force anyone to

work against his or her will. Specifically, we will not do business with vendors

employing prison labor or who use corporal punishment or other forms of mental

and physical coercion as a form of discipline. In addition, regardless of the labor

laws, we prohibit the use of child labor (workers under 16 years of age). Any vendor

who violates this policy is subject to immediate terminations.

By signing a copy of this letter, you hereby confirm that you now and will

hereafter comply with all the requirements set forth in this letter.

Very truly yours,

Salant Corporation

Agreed to:

_______________________________

Name of Vendor

________________________________

By:

_________________________________

Date:
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Sara Lee Knit Products

International Operating Principles

Position Statement

The policies that govern our business are based not only on laws and regulations,

but also on dignity and respect for the individual, common sense, fairness, and good

business practices/principles and Sara Lee Knit Products (SLKP) operating philosophies. The policies that have traditionally applied to our domestic operations have

been, for the most part, applied to our international operations as they have been

developed. The only exceptions have been in countries where local laws, regulations, customs or culture have dictated modifications and departures from our domestic practices.

The fundamental principles of our domestic policies, to the greatest extent possible,

extend to our international locations. Our workforce has become more diverse and

our operations now extend to many countries and regions. In addition to our own

international operations, we also buy materials and finished products from international suppliers. The principles that apply to our own operations, also apply, to the

greatest extent possible, to our business relationships with suppliers.

While there is a continued need for development and revision of formal policies, it is

desirable that we restate the principles under which we have operated in the past

and which will continue to apply to our international operations.

Laws and Regulations

SLKP is committed to adherence to laws, practices and regulations which apply to

the areas where we conduct business. SLKP will conduct a thorough due diligence

of all potential sourcing/joint venture parties and will not enter into business agreements, sourcing agreements or joint ventures where parties to such agreements are

in conflict with, or in violation of, local laws or regulations.

Ethical Practice

SLKP believes in conducting all of its business activities with honesty, fair dealing

and in conformance with high ethical standards wherever it operates. The company

will not make or condone illegal payments or other facilitating payments, nor will it

involve itself in activities or practices of questionable ethical standards.

Environment

SLKP is strongly committed to the strict adherence to all environmental rules, regulations and standards that are imposed by local, state and national government authorities. In countries where standards differ from those in force in the United States,

SLKP will observe environmentally sound practices.
182

Wages and Benefits

SLKP prides itself on providing employees with competitive wages and benefits.

Regardless of location, SLKP offers wages which are competitive and which are at or

above wages paid by others within our industry in the area. SLKP believes that an

important way to motivate and retain good employees is to pay them at competitive

levels without causing undue disruptions of local, regional or national economics.

Working Conditions

SLKP believes in providing employees with superior working environments which

are designed, built and equipped to the same high standards everywhere we operate.

Hours worked each day, and days worked each week shall not exceed legal limitations or requirements within each of the countries where we operate.

The company believes that employees are entitled to work in a drug-free environment and is actively implementing an extensive substance abuse policy in accordance with applicable laws to include educational programs, safety sensitive, accident, applicant testing and rehabilitation programs in all places where we operate.

Employee Communications

SLKP operates on the principle that an informed employee is a better employee. The

company actively encourages two-way communications between employees and

supervisors and supplements such communications with timely publications, bulletin board notices, employee meetings and video communications.

Workplace Safety

SLKP is committed to providing a safe working environment. Unsafe practices will

not be tolerated and employees will be trained in safe practices. Safety rules related

to the wearing of safety equipment or devices will be strictly enforced.

Open Door Policy

SLKP believes that employees have a right to present complaints, problems, grievances and comments to receive satisfactory responses. If employees are not satisfied

with responses at the first level of supervision, they are entitled and encouraged to

present their issue to higher levels of the organization.

Labor Unions

SLKP believes in a union-free environment, except where laws and cultures require

us to do otherwise. The company treats people with equity and fairness, and believes that employees themselves are best able to voice their concerns directly to

management. SLKP is committed to the strict observance of laws and regulations

related to union activity and encourages individual freedom and direct dealing be-
183

tween employees and management while actively discouraging union representation

of employees where the law allows.

Equal Opportunity and Employee Training and Development

SLKP is an equal opportunity employer. The company actively seeks and promotes

diversity within its workforce and strictly prohibits discrimination with regard to race,

color, national origin, religion, sex, age or disability.

The company respects employees and believes in the fundamental dignity and worth

of the individual. SLKP offers its employees company-paid or subsidized workrelated training, which enables employees to improve job skills and to qualify for

positions of greater responsibility.

While the legal definition of children sometimes varies from country to country,

SLKP will not employ individuals who are under 16 years of age.

Employee Recognition, Empowerment and Treatment

SLKP believes that employees should be recognized and rewarded for good performance, and actively encourages the adoption of suitable programs for this purpose.

SLKP is committed to employee empowerment in the belief that employees have

good ideas and should be given the opportunity to voice those ideas and to implement better and more productive procedures and methods. SLKP believes that empowerment directly and significantly contributes to the company’s goal of achieving

lowest-cost, highest-quality producer status and that this, in turn, enables the company to effectively compete in world markets.

Community Relations

SLKP believes in being a good corporate citizen in every community, locality and

country where we operate. All of the company’s operating facilities are actively

encouraged to become involved in the life of their communities by participating in

and sponsoring activities that result in community betterment. Involvement has

taken many forms. Some plants have adopted schools; some have promoted drug

education programs; others have adopted orphanages; while still others have helped

establish child-care centers and community child-care homes.

In some less developed areas, plants have helped establish parks, recreational facilities, health care facilities, drug abuse programs and have contributed to the building

of housing and infrastructure. Individual employees are encouraged to become

involved in service organizations, school board, chambers of commerce, industrial

park associations and local government.

Corporate Contributions

In every community where it operates, SLKP actively seeks out opportunities to

contribute money and materials to worthwhile causes. SLKP wants to make the

community a better place for its employees to live and work. SLKP is particularly
184

interested in programs that benefit youth, drug education and abuse programs, health,

welfare, education, family, culture and art.

The above is a summary of key operating principles for our international

operations. For additional detail on covered items, please refer to more

detailed international policies, procedures and human resources plans.
185

Sears, Roebuck and Co.

Import Buying Policy and Procedures

It is the policy of Sears, Roebuck and Co. (“Sears”), when purchasing merchandise

not produced in the United States, to contract only with reputable suppliers of merchandise, the production facilities, business and labor practices, and merchandise of

which comply with all applicable local and United States laws. Strict adherence is

expected to local laws governing the working conditions, wages and minimum age

of the workforce, and to all applicable United States laws and prohibitions.

Willful violation of this policy will result in the termination of the offending supplier.

In furtherance of this policy, Sears will:

1. Distribute a copy of this policy to all Sears domestic and overseas buying

staff members and to all existing and prospective foreign suppliers,

2. Include contractual provisions reflecting this policy in all international buying agreements,

3. Instruct its foreign buying office personnel to visit periodically suppliers’

facilities to monitor compliance with this policy, and

4. Report, under justifiable circumstances, violations by suppliers of foreign

and/or United States law to appropriate law enforcement authorities.

April 23, 1993
186

Spiegel Standards for Business Partnerships

Spiegel is a leading direct marketer of fashionable apparel and home furnishings. As

part of the Spiegel Group, we are committed to providing customers with the highest

quality and value in our products. We believe this commitment is best met through

strong relationships with our associates and by only selecting business partners who

share our ethics and agree to our standards of business conduct.

LEGAL REQUIREMENTS

Our business partners must comply with all applicable legal standards and requirements of the country in which they are doing business, as well as those of the United

States.

PRODUCT QUALITY

Our business partners must share our commitment to product quality and to maintaining the operating practices necessary to meet our quality standards.

ENVIRONMENTAL STANDARDS

Our business partners must adhere to their national laws regarding the protection

and preservation of the environment.

EMPLOYMENT PRACTICES

Our business partners must not utilize child labor as defined by the United Nations

standards or by national standards, whichever are higher. They must not utilize

forced labor, including prison or other compulsory labor.

WORKING CONDITIONS

Our business partners must share our commitment to providing a safe and healthy

workplace and to treating employees fairly and in compliance with local laws. While

we recognize that cultural differences exist and standards may vary by country, we

expect our partners to adhere to the following:

* Health, safety and other workplace standards must meet all local laws and

safety regulations.

* Worker housing, where provided, must meet the same standards for health

and safety as the workplace.

* Employees must be compensated fairly for all hours worked and at rates that

meet local industry standards.

* Employees must not be discriminated against because of personal characteristics or beliefs.
187

Compliance with these standards is a condition for becoming and remaining a business partner of Spiegel and will be agreed to in writing as a term of engagement.

Spiegel will take appropriate action, including termination of our relationship, with

any business partner in violation of our standards.

To facilitate effective monitoring and enforcement, our business partners are expected to provide full access to their production facilities and to relevant records

relating to employment practices. We will undertake affirmative measures, such as

on-site inspection of facilities, to implement and monitor these standards.
188

Stage Stores, Inc. Policy

(Subscribes to policy of the Association Merchandising

Corporation, AMC)

Terms of Engagement for AMC Business Partners:

The Associated Merchandising Corporation is strongly committed to maintaining its

reputation as one of the leading global sourcing and product development companies. Our long history over the past 8 years reflects a high level of integrity and

consistent ethical values - both from AMC employees and AMC suppliers.

As we expand our sourcing base to more diverse countries and cultures, it is important that we select business partners and countries whose practices are not incompatible with AMC values.

AMC’s concerns include the practices of our individual business partners, as well as

the social and political issues in any country where we might consider sourcing.

We have defined business partners as vendors, manufacturers, contractors, subcontractors, and other suppliers who provide labor and/or material including fabric,

sundries, chemicals and trim utilized in the manufacture and finishing of products

that are ordered by or through us.

1. Environmental Requirements

AMC will only do business with partners who share our commitment to protect and

preserve the environment. This specifically includes compliance with local government laws and international standards, the U.S. regulations prohibiting the use of

ozone depleting chemicals (hydrochlorofluorocarbons) and the International Trade

in Endangered Species of Wild Fauna and Flora, as listed in the United States Endangered Species Act of 1973 (and rules and regulations thereunder). In addition, any

modifications to these laws, rules, regulations and standards must be adhered to.

2. Ethical Standards

AMC will seek to identify and work with business partners who aspire as individuals

and in the conduct of their business to a set of ethical standards which are compatible with our own.

3. Health & Safety

AMC will only utilize business partners who provide their workers with a safe and

healthy work environment. Business partners who provide residential facilities for

their workers must provide safe and healthy facilities.

4. Legal Requirements

AMC expects our business partners to be law abiding as individuals and to comply

with all legal requirements relevant to the conduct of their business. This includes
189

compliance with these Terms of Engagement and the terms and conditions of purchase orders issued by or through AMC, and requires special attention to U.S. country of origin regulations which govern quota classification and the marking of merchandise.

 5. Employment Practices

AMC will only do business with partners whose workers are treated fairly and who in

all cases are present voluntarily, not put at risk of physical harm, fairly compensated,

and allowed the right of free association and not exploited in any way.

In addition, AMC business partners must adhere to the following:

• Wages and Benefits:

AMC’s business partners must provide wages and benefits that comply with

any applicable law or match the prevailing local manufacturing or finishing

industry practices. AMC also favors businesses that share our commitment to

contribute to the betterment of community conditions.

• Child Labor:

Use of child labor is not permissible. “Child” is defined as a person who is

within (or younger than) the local age for completing compulsory education

and in no event less than 14 years of age. We will not knowingly utilize

partners who use or permit the use by our partners of child labor in any of

their facilities. We support the development of legitimate, workplace apprenticeship programs for the educational benefit of younger people as long

as the individual is not being exploited or put at risk with regard to health

and safety.

• Prison Labor/Forced Labor:

AMC will not knowingly utilize business partners who use, or permit the use

of prison or forced labor in the manufacture or finishing of products ordered

by or through AMC. Nor will AMC knowingly purchase materials from a

business partner utilizing prison or forced labor. “Forced Labor” is defined as

all work or service which is extracted from any person under the threat of

penalty for its nonperformance and for which the worker does not offer

himself voluntarily. Use of forced labor is not permissible.

• Discrimination:

While AMC recognizes and respects cultural differences, we believe that

workers should be employed on the basis of their ability to do the job, rather

than on a basis of gender, racial characteristics or cultural or religious beliefs.
190

• Disciplinary Practices:

AMC will not knowingly utilize business partners who use, or permit the use

by our partners, of corporal punishment or other forms of mental or physical

coercion.

6. Documentation and Inspection

AMC intends to monitor compliance with our Terms of Engagement and to conduct

on-site inspection of facilities. AMC will review and may terminate its relationship

with any partner found to be in violation with the Terms of Engagement in addition

to exercising any other rights and remedies to which AMC may be entitled under

purchase orders issued by or through it, by law or otherwise.
191

Talbots Vendor Agreement

We at Talbots are proud of our tradition of conducting our business in accordance

with the highest ethical standards and in compliance with the laws of the United

States and other countries in which we do business. Our commitment extends to

assuring that merchandise manufactured for us by independent vendors such as

yourself is produced in a manner that is consistent with our standards (1) with

special emphasis on the wage and hour laws of the country of manufacture; and (2)

without the use of child (under the age of 15), prison or slave labor, even where such

labor is permitted by the laws of the country of manufacture.

Because of the significance of these issues, we are taking this opportunity to (1)

remind you and all of our manufacturers of our corporate policy that we will not do

business with any manufacturer that knowingly violates the labor laws of the country

in which it operates or permits its contract facilities to do so; and (2) announce

strengthened measures we are adopting to help us make certain that the merchandise we receive from you complies with applicable law and our standards. Please

note that our requirements also involve (1) a prohibition on the use of factories

(whether operated by you or other designated contract facilities) without the prior

inspection and written approval of a Talbots employee or authorized agent; and (2)

your adherence to the labelling laws of the United States. Accordingly, effective with

September 15, 1996 onward shipments, we are adopting the following measures:

1. As a precondition to receiving any new orders from Talbots, all manufacturers located outside the United States must have signed and returned to us, a

new certification that (a) all merchandise to be manufactured for us (whether

by the manufacturer or by the manufacturer’s contract sewing shops or other

designated contract facilities) will be produced in compliance with the wage

and hour laws of the country of manufacture and without the use of child

(under the age of 15), prison or slave labor; (b) no factory (whether operated

by the manufacturer itself or by the manufacturer’s contract sewing shops or

other designated contract facilities) shall be used in the production of merchandise for Talbots unless it has been inspected and approved, in writing,

by an authorized employee or agent of Talbots; (c) the manufacturer has in

effect (or will promptly develop) a program of monitoring its contract sewing

shops and other designated contract facilities for compliance with the requirements of clause “(a)” above; and (d) all merchandise shipped to us will

comply with all applicable laws, including, without limitation, the labelling

laws of the United States pertaining to designation of the country of origin of

such merchandise. Although we believe that the details of how the monitoring program referred to above is accomplished are appropriately your responsibility, it is important that you understand our expectation that the program will be meaningful and designed in good faith to assure that your

contract sewing shops and other designated contract facilities are in compliance with the law and our standards with respect to child, prison and slave

labor. The certification we are requiring and a return envelope are enclosed

for your convenience. To assure that there is no interruption in the placement of our orders with you, please return the certification to us by August 1,

1996.
192

2. Your shipping documents which accompany all merchandise you ship to

Talbots must include the following language (either pre-printed or “stamped”):

“We hereby certify that the merchandise covered by this shipment was produced in compliance with all applicable requirements of the wage and hour

laws of the country of manufacture and without the use of child (under the

age of 15), prison or slave labor. We further certify that all merchandise

covered by this shipment was produced solely in factories that were inspected and approved in writing by your authorized representative and we

have in effect a program of monitoring any contract sewing shops and other

designated contract facilities which performed work for us in connection

with the production of such merchandise for compliance with the requirements set forth above.”

Any merchandise shipped by you beginning September 15, 1996 that is not

accompanied by a shipping document bearing the required language will be

subject to denied entry and you will be assuming responsibility for said goods.

3. In the future, we will be sending the certification to you for renewal on an

annual basis.

We value the relationship we enjoy with your company and believe that you

share our concern about these issues. We want to thank you in advance for

your cooperation and we look forward to continuing our relationship with

you.

Sincerely,

Executive Vice President

Vice President, Manufacturing

Chief Operating Officer
193

CERTIFICATION

In consideration of The Talbots, Inc. (“Talbots”) placing orders for the production of merchandise with the undersigned in the future, we hereby certify that (1)

any merchandise (including components thereof) we produce for Talbots that is

manufactured outside the United States will be produced in compliance with the

wage and hour laws of the country of manufacture and without the use of child

(under the age of 15), prison or slave labor; (2) we currently have in effect or will

promptly develop and maintain a program of monitoring any contract sewing shops

and other designated contract facilities which perform work for us outside the United

States for such compliance; (3) the merchandise we manufacture for Talbots shall be

produced solely in factories (whether operated by us, our contract sewing shops or

designated contract facilities) that have been inspected and approved in writing by a

Talbots authorized employee or agent; and (4) all merchandise we ship to Talbots

shall comply with all applicable laws including, without limitation, the labelling laws

of the United States pertaining to designation of the country of origin of such merchandise.

We acknowledge that we are an independent contractor for and a separate

and independent enterprise from Talbots and not an employee, partner or joint

venturer of Talbots for any purpose.

We agree to indemnify and hold Talbots harmless from all losses, injuries or

damages, and wages or overtime compensation due to our employees and the employees of our contract facilities in connection with all merchandise produced by us

and our subcontractors for Talbots.

[Name of your Company]

Date:

By: (Authorized Signature and Company Chop)

Notary Public Seal

Name of Person Signing in English:

Title or Position:

(Signature must be notarized)
194

Tultex Corporation Vendor Requirements

1. In placing programs for contract purchases of products or services, Tultex

will evaluate potential vendors based on several criteria including:

• compliance with legal requirements including those of the United

States and those of the country of manufacture and exportation

• history of community support, labor relations, environmental conduct

• production capabilities, i.e. capacity, facilities, equipment, quality history, delivery history, etc.

2. Vendors must certify that:

• illegal child or forced labor has not been utilized in any facility where

products are produced for Tultex Corporation; and that

• the country of origin labeling is accurate and in compliance with

applicable law in that the country of origin indicated on the label is

indeed the country where the products were manufactured

Tultex Corporation requires strict compliance with all contract provisions and obligations, as well as applicable laws and regulations, including those of the U.S. and the

country of manufacture. Tultex Corporation will not knowingly allow the shipping

or importation of goods manufactured with prison labor, forced labor, or child labor

in violation of applicable law. Also, Tultex Corporation will not knowingly allow the

shipment or importation of goods which do accurately reflect the country of origin.

Tultex Corporation representatives will periodically visit the facilities of any vendor

to insure that the vendor is in compliance with the above.

I hereby certify that I have read the above Tultex Vendor Requirements and that

________, whom I represent, agrees to, and is in compliance with the Tultex Corporation Vendor Requirements.

Signed: Date:
195

Venture Corporate Policy

1. Excerpt from Corporate Policy regarding Import Purchasing:

“Venture will not knowingly purchase merchandise from foreign vendors who utilize

child or forced labor.”

2. Excerpt from Letter of Credit:

“As manufacturer of Venture Stores, Inc. purchase order number (s): , we hereby

certify that the merchandise described in the purchase order(s) noted above was

manufactured wholly or in part at (factory name, factory location) . We certify that

convict labor and/or indentured labor under penal sanctions as defined by USA law

as well as child labor as defined by the laws of the country of origin was not employed in whole or in part in any stage of the production or manufacture of the

merchandise or any material or component thereof. We further certify that this

transaction does not involve transshipment of merchandise for the purpose of

mislabeling, evading quota or country of origin restrictions or avoiding compliance

with forced labor (as defined by USA law) or child labor (as defined by the laws of

:(country of origin)).”
196

VF Corporation

Contractor Terms of Engagement

July 8, 1996

VF Corporation operates under a Code of Business Conduct which sets forth the key

principles under which the Company and its worldwide subsidiaries are required to

operate. The Code of Business Conduct states that the conduct of business with

employees, customers, consumers, suppliers and all others shall be based on an

honest, fair and equitable basis. It has been and will continue to be the Company’s

policy to obey the laws of each country and to honor our obligations to society by

being an economic, intellectual, and social asset to each community and nation in

which the Company operates.

While most of the Company’s products are manufactured in facilities owned by the

Company where compliance with the VF Code of Business Conduct can be directly

assured, the global expansion of our business is resulting in our dealing more regularly with third-party contractors, particularly in foreign countries.

The purpose of these CONTRACTOR TERMS OF ENGAGEMENT is to make clear

that, taking into account differences in cultures and legal requirements, we expect

that wherever our products are manufactured they will be manufactured in a manner

compatible with the high standards that have contributed to the outstanding reputation of our brands and our Company.

1. ETHICAL STANDARDS

We expect those with whom we contract for the manufacture of our products

(“VF Contractors”) to operate within a set of ethical standards compatible

with VF’s Code of Business Conduct.

2. LEGAL REQUIREMENTS

We expect VF Contractors to comply with the applicable laws and regulations of the localities, states, and countries in which they operate.

3. TREATMENT OF EMPLOYEES

All VF Contractors must fairly compensate their employees, by providing, at

a minimum, wages and benefits in compliance with applicable wage and

hour laws and regulations. In selecting contractors, we will favor those whose

policies and practices place reasonable limits on the number of hours that

employees may work on a regularly scheduled basis and who regularly provide reasonable rest periods and days off.

All VF Contractors must provide their employees with a clean, healthful and

safe work environment, and, if applicable, safe and healthy residential facilities.
197

We will not do business with contractors who employ children. For this

purpose, the term “child” generally refers to anyone under the age of 14, or

under the maximum age for compulsory school attendance if that age is

higher than 14, except in the case of legally permissible apprenticeship and

similar programs.

We will not knowingly do business with contractors who use prison or other

forced labor.

We will not knowingly do business with contractors who permit the use of

corporal punishment or other forms of mental or physical intimidation or

coercion.

We will favor contractors who provide equal employment opportunities for

workers based on their ability rather than on the basis of personal characteristics or religious or other beliefs.

4. INTELLECTUAL PROPERTY RIGHTS

We will not do business with contractors who do not respect our intellectual

property rights in our brands.

5. PRODUCT LABELING

All VF Contractors must accurately label our products with their country of

origin in compliance with the laws of the United States and those of the

country of manufacture.

6. MONITORING

VF and its subsidiaries will undertake affirmative measures, such as on-site

inspection of production facilities, to monitor compliance with the above

standards. VF Contractors must allow VF representatives full access to the

contractor’s production facilities and books and records and respond promptly

to reasonable inquiries by VF representatives concerning the operations of

the contractor’s facilities.

7. AGENTS AND SUBCONTRACTORS

We expect the standards set forth above to be observed by agents we engage

to assist in the selection of VF Contractors.

We do not permit subcontracting without our consent. We will not knowingly permit VF Contractors to subcontract our work to subcontractors who

would not qualify as VF Contractors under the above criteria.

VF CORPORATION AND ITS DIVISIONS RESERVE THE RIGHT TO CANCEL

ALL CURRENT PURCHASE ORDERS WITH ANY CONTRACTOR FOUND TO BE IN

VIOLATION OF THE ABOVE STANDARDS
198

CONTRACTOR CERTIFICATION

I have read and fully understand VF’s Contractor Terms of Engagement and certify

that we are in compliance with these terms.

Contractor’s Name:

Contractor’s Representative:

Date:
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AMERICAN APPAREL MANUFACTURERS ASSOCIATION

(submitted by VF Corporation)

AAMA Statement of Responsibility

Members of the American Apparel Manufacturers Association (AAMA) are committed

to the fair and rational practice of business in the United States and abroad. Basic to

this commitment is the fair and equitable treatment of employees in wages, working

conditions, and benefits. In no case do we support the use of child labor, prison

labor, discrimination based on age, race, national origin, gender, or religion, the

violation of legal or moral rights of employees, nor destruction or harm to the environment.

The American Apparel Manufacturers Association (AAMA) has established this Statement of Responsibility as a guideline for all member companies for their own facilities and for the facilities where production is contracted. AAMA represents over 70

percent of all domestic apparel production in the United States. Members companies

manufacture all types of apparel and we are located in virtually every state in the

United States.
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Wal-Mart Stores, Inc.

Standards for Vendor Partners

Wal-Mart Stores, Inc. (‘Wal-Mart”) has enjoyed success by adhering to three basic

principles since its founding in 1962. The first principle is the concept of providing

value and service to our customers by offering quality merchandise at low prices

every day. Wal-Mart has built the relationship with its customers on this basis, and

we believe it is a fundamental reason for the Company’s rapid growth and success.

The second principle is corporate dedication to a partnership between the Company’s

associates (employees), ownership and management. This concept is extended to

Wal-Mart’s Vendor Partners who have increased their business as Wal-Mart has grown.

The third principle is a commitment by Wal-Mart to the United States and the

communities in which stores and distribution centers are located.

Wal-Mart strives to conduct its business in a manner that reflects these three basic

principles and the resultant fundamental values. Each of our Vendor Partners, including our Vendor Partners outside the United States, are expected to conform to

those principles and values and to assure compliance in all contracting, subcontracting or other relationships.

Since Wal-Mart believes that the conduct of its Vendor Partners can be transferred to

Wal-Mart and affect its reputation, Wal-Mart requires that its Vendor Partners conform

to standards of business practices which are consistent with the three principles

described above. More specifically, Wal-Mart requires conformity from its Vendor

Partners with the following standards, and hereby reserves the right to make periodic, unannounced inspections of Vendor Partner’s facilities to satisfy itself of Vendor

Partner’s compliance with these standards:

1. COMPLIANCE WITH APPLICABLE LAWS

All Vendor Partners shall comply with the legal requirements and standards

of their industry under the national laws of the countries in which the Vendor

Partners are doing business. Should the legal requirements and standards of

the industry conflict, Vendor Partners must, at a minimum, be in compliance

with the legal requirements of the country in which the products are manufactured. If, however, the industry standards exceed the country’s legal requirements, Wal-Mart will favor Vendor Partners who meet such industry

standards. Vendor Partners shall comply with all import requirements of the

U.S. Customs Service and all U.S. Government agencies. Necessary invoices

and required documentation must be provided in compliance with U.S. law.

Vendor Partners shall warrant to Wal-Mart that no merchandise sold to WalMart infringes the patents, trademarks or copyrights of others and shall provide to Wal-Mart all necessary licenses for selling merchandise sold to WalMart which is under license from a third party to protect intellectual property

rights in the United States or elsewhere. All merchandise shall be accurately

marked or labeled with its country of origin in compliance with the laws of

the United States and those of the country of manufacture. All shipments of

merchandise will be accompanied by the requisite documentation issued by

the proper governmental authorities, including but not limited to Form A’s,
201

import licenses, quota allocations and visas and shall comply with orderly

marketing agreements, voluntary restraint agreements and other such agreements in accordance with U.S. law. The commercial invoice shall, in English,

accurately describe all the merchandise contained in the shipment, identify

the country of origin of each article contained in the shipment, and shall list

all payments, whether direct or indirect, to be made for the merchandise,

including, but not limited to any assists, selling commissions or royalty payments. Backup documentation, and any Wal-Mart required changes to any

documentation, will be provided by Vendor Partners promptly.

EMPLOYMENT

Wal-Mart is a success because its associates are considered partners and a strong

level of teamwork has developed within the Company. Wal-Mart expects the spirit

of its commitment to be reflected by its Vendor Partners with respect to their employees. At a minimum, Wal-Mart expects its Vendor Partners to meet the following terms

and conditions of employment:

Compensation

Vendor Partners shall fairly compensate their employees by providing wages

and benefits which are in compliance with the national laws of the countries

in which the Vendor Partners are doing business and which are consistent

with the prevailing local standards in the countries in which the Vendor

Partners are doing business, if the prevailing local standards are higher.

Hours of Labor

Vendor Partners shall maintain reasonable employee work hours in compliance with local standards and applicable national laws of the countries in

which the Vendor Partners are doing business. Employees shall not work

more hours in one week than allowable under applicable law, and shall be

compensated as appropriate for overtime work. We favor Vendor Partners

who utilize less than sixty-hour work weeks, and we will not use suppliers

who, on a regularly scheduled basis, require employees to work in excess of

a sixty-hour week. Employees should be permitted reasonable days off (which

we define as meaning at least one day off for every seven-day period — in

other words, the employee would work six days and have at least one day

off during a seven day period) and leave privileges.

Forced Labor/Prison Labor

Vendor Partners shall maintain employment on a voluntary basis. Forced or

prison labor will not be tolerated by Wal-Mart. Wal-Mart will not accept

products from Vendor Partners who utilize in any manner forced labor or

prison labor in the manufacture or in their contracting, subcontracting or

other relationships for the manufacture of their products.
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Child Labor

Wal-Mart will not tolerate the use of child labor in the manufacture of products it sells. We will not accept products from Vendor Partners that utilize in

any manner child labor in their contracting, subcontracting or other relationships for the manufacture of their products. For a definition of “Child”, we

will look first to the national laws of the country in which the Vendor Partner

is doing business. If, however, the laws of that country do not provide such

a definition or if the definition includes individuals below the age of 15, WalMart will define “Child”, for purposes of determining use of illegal child

labor, as any one who is:

a. less than 15 years of age; or

b. younger than the compulsory age to be in school in the country in

which the Vendor Partner is doing business, if that age is higher than

15.

Wal-Mart supports legitimate workplace apprenticeship education programs

for younger persons.

Discrimination/Human Rights

Wal-Mart recognizes that cultural differences exist and different standards

apply in various countries, however, we believe that all terms and conditions

of employment should be based on an individual’s ability to do the job, not

on the basis of personal characteristics or beliefs. Wal-Mart expects its Vendor Partners to have a social and political commitment to basic principles of

human rights and to not discriminate against their employees in hiring practices or any other terms or conditions of work, on the basis of race, color,

national origin, gender, religion, disability, sexual orientation or political opinion.

3. WORKPLACE ENVIRONMENT

Wal-Mart maintains a safe, clean, healthy and productive environment for its associates and expects the same from its Vendor Partners. Vendor Partners shall furnish

employees with safe and healthy working conditions. Factories working on WalMart merchandise shall provide adequate medical facilities, fire exits and safety equipment, well fit and comfortable workstations, clean restrooms, and adequate living

quarters where necessary. Wal-Mart will not do business with any Vendor Partner

which provides an unhealthy or hazardous work environment or which utilizes mental or physical disciplinary practices.

4. CONCERN FOR THE ENVIRONMENT

We believe it is our role to be a leader in protecting our environment. We encourage

our customers and associates to always Reduce, Reuse, and Recycle. We also encourage our Vendor Partners to reduce excess packaging and to use recycled and

non-toxic materials whenever possible. We will favor Vendor Partners who share

our commitment to the environment.
203

5. BUY AMERICAN COMMITMENT

Wal-Mart has a strong commitment to buy as much merchandise made in the United

States as feasible. Vendor Partners are encouraged to buy as many materials and

components from United States sources as possible and communicate this information to Wal-Mart. Further, Vendor Partners are encouraged to establish U.S. manufacturing operations.

6. REGULAR INSPECTION AND CERTIFICATION BY VENDOR PARTNER

Vendor Partner shall designate, on a copy of the Wal-Mart Vendor Partner Inspection

and Certification Form, one or more of its officers to inspect each of its facilities

which produces merchandise sold to Wal-Mart. Such inspections shall be done on at

least a quarterly basis to insure compliance with the standards, terms and conditions

set forth herein. The Vendor Partner Officer designated to perform such inspections

shall certify to Wal-Mart following each inspection that he or she performed such

inspection and that the results reflected on such compliance inspection form are true

and correct.

7. RIGHT OF INSPECTION

To further assure proper implementation of and compliance with the standards set

forth in this Memorandum of Understanding, Wal-Mart or a third party designated by

Wal-Mart will undertake affirmative measures, such as on-site inspection of production facilities, to implement and monitor said standards. Any Vendor Partner which

fails or refuses to comply with these standards is subject to immediate cancellation

by Wal-Mart of all its outstanding orders with that Vendor Partner as well as refusal

by Wal-Mart to continue to do business in any manner with that Vendor Partner.

As an officer of _______________________, a Vendor Partner of Wal-Mart, I have

read the principles and terms described in this document and understand my company’s

business relationship with Wal-Mart is based upon said company being in full compliance with these principles and terms. I further understand that failure by a Vendor

Partner to abide by any of the terms and conditions stated herein may result in the

immediate cancellation by Wal-Mart of all outstanding orders with that Vendor Partner and refusal by Wal-Mart to continue to do business in any manner with said

Vendor Partner. I am signing this statement, as a corporate representative of

_____________________, to acknowledge, accept and agree to abide by the standards, terms and conditions set forth in this Memorandum of Understanding between

my company and Wal-Mart. I hereby affirm that all actions, legal and corporate, to

make this Agreement binding and enforceable against ___________________ have

been completed.

VENDOR PARTNER COMPANY NAME Representative Name:

ADDRESS, TELEPHONE AND FAX NUMBER Title:

Date:
204

WARNACO

Business Partner Terms of Engagement and Guidelines for

Country Selection

Guidelines for Country Selection

1. BRAND IMAGE

We will not initiate or renew contractual relationships in countries where

sourcing would have an adverse effect on our global brand image.

2. HEALTH & SAFETY

We will not initiate or renew contractual relationships in locations where

there is evidence that company employees or representatives would be

exposed to unreasonable risk.

3. HUMAN RIGHTS

We will not initiate or renew contractual relationships in countries where

there are pervasive violations of basic human rights.

4. LEGAL REQUIREMENTS

We will not initiate or renew contractual relationships in countries where

the legal environment creates unreasonable risk to our trademarks or to

other important commercial interest or seriously impedes our ability to

implement these guidelines.

5. POLITICAL OR SOCIAL STABILITY

We will not initiate or renew contractual relationships in countries where

political or social turmoil unreasonably threatens our commercial interests.

Business Partner Terms of Engagement

Our concerns include the practices of individual business partners as well as the

political and social issues in those countries where we might consider sourcing.

We have defined business partners as contractors and suppliers who provide labor

and/or material utilized in the manufacture of our products.

1. ETHICAL STANDARDS

We will seek to identify and utilize business partners who aspire as individuals and in the conduct of their business to a set of ethical standards

not incompatible with our own.

2. HEALTH & SAFETY

We will only utilize business partners who provide workers with a safe and

healthy work environment. Business partners who provide residential

facilities for their workers must provide safe and healthy facilities.
205

3. LEGAL REQUIREMENTS

We expect our business partners to be law abiding as individuals and to

comply with all legal requirements relevant to the conduct of their business.

4. EMPLOYMENT PRACTICES

We will only do business with partners whose workers are in all cases

present voluntarily, not put at risk of physical harm, fairly compensated,

allowed the right of free association and not exploited in anyway. In

addition, the following specific guidelines will be followed.

• Wages and Benefits

We will only do business with partners who provide wages and benefits that comply with any applicable law or match the prevailing

manufacturing industry practices. We will also favor business partners who share our commitment to contribute to the betterment of

community conditions.

• Working Hours

While permitting flexibility in scheduling, we will identify prevailing

local work hours and seek business partners who do not exceed

them except for appropriately compensated overtime. We favor partners who utilize no more than forty-eight-hour regularly scheduled

work weeks. We will not use contractors who, on a regularly scheduled basis, require in excess of forty-eight-hour work weeks. Employees should be allowed one day off in seven days.

• Child Labor

Use of child labor is not permissible. “Child” is defined as less than

16 years of age or younger than the compulsory age to be in school.

We will not utilize partners who use child labor in any of their facilities. We support the development of legitimate workplace apprenticeship programs for the educational benefits of younger people.

• Prison Labor/Forced Labor

We will not knowingly utilize prison or forced labor in contracting or

subcontracting relationships in the manufacture of our products. We

will not knowingly utilize or purchase materials from a business partner utilizing prison or forced labor.

• Discrimination

While we recognize and respect cultural differences, we believe that

workers should be employed on the basis of their ability to do the

job, rather than on the basis of personal characteristics or beliefs. We

will favor business partners who share in this value.

• Disciplinary Practices

We will not utilize business partners who use corporal punishment or

other forms of mental or physical coercion.
206

5. ENVIRONMENTAL REQUIREMENTS

We will only do business with partners who share our commitment to the

environment.
207

Woolworth Corporation Contractor Certificate

BUYING AGENCY:

BUYING AGENT’S NAME:

I have inspected (Factory Name) (Address) (Country)

during the production of and after the completion of the Merchandise described

below.

I attest that the factory has the production capabilities to produce this merchandise

and that during my inspection of the facility I observed the merchandise actually

being produced at this facility.

Furthermore, based upon my observations and personal knowledge of the factory

operation, none of the merchandise governed by this Certificate was produced, manufactured, or distributed with convict, child, indentured, or forced labor in part or

whole.

The following listed merchandise has been inspected by the undersigned and is of

the same quality and specification as the confirmation sample approved by the Buyer.

All cartons and shoes are properly marked with the Country of Origin.

Customer Order No.

Customer SKU

Description

Quantity

Carton Numbers

U.S. $ Amount

Date of Inspection

Place of Inspection

Carton #’s Inspected

It is understood that the final inspection is at the discretion of the Kinney Service

corporation and this signed Certificate in no way relieves the Buying Agent of responsibility should any claim arise concerning this shipment.

This certification has been given voluntarily and willingly on behalf of the (Buyer’s

Representative’s Firm) and shall become a part of the official documents issued for

export purposes.

(Authorized Signature) (Title)
208

Appendix D: Site Visits

U.S. Department of Labor Country Visits

1. Dominican Republic Marcia M. Eugenio, International Program Specialist

Office of International Economic Affairs

2. El Salvador Ana Maria Valdes, International Economist

Office of International Economic Affairs

Daniel Solomon, Agency Liaison Officer

Office of the Executive Secretariat

3. Guatemala Maria Elena Gonzalez, Deputy Secretary

U.S. National Administrative Office

4. Honduras Robert D. Wholey, Area Advisor for Latin America

and the Caribbean, Office of Foreign Relations

5. India Sudha K. Haley, Area Advisor for South Asia, Near

East and North Africa, Office of Foreign Relations

Gregory K. Schoepfle

Director, Division of Foreign Economic Research,

Office of International Economic Affairs

6. Philippines Kelly W. Bryant II, International Economist

Office of International Economic Affairs

James W. Shea, Regulatory Program Specialist

U.S. National Administrative Office
209

DOMINICAN REPUBLIC

SITE VISITS

List of Contacts

GOVERNMENT

Dr. Rafael Alburquerque

Secretary of Labor

Ministry of Labor

INDUSTRY

Associations:

Mr. Eddy Martínez M.

Executive Director

Dominican Association of Free Trade

Zones

(ADOZONA)

Mr. Arthur E. Valdéz

Executive Vice President

American Chamber of Commerce

of the Dominican Republic

Mrs. Jeannette Domínguez

Executive Director

Free Trade Zones Association - Santiago

Mr. Angel Ma. Castillo

President

Free Trade Zones Association - San

Pedro de Macorís

Lic. Alexis Rosanna Del Guidice

Executive Director

Free Trade Zones Association - San

Pedro de Macorís

Plant Visits:

Zona Franca Los Alcarrizos:

Lic. Julio César Pineda

Vice-President

High Quality Products, S.A.

Zona Franca Villa Mella:

Mr. Peter Weinerth

President

BRATEX Dominicana

Mr. W.B. Morey

Vice President, Operations

BRATEX Dominicana

Mr. Jaime L. Pontón

Director, Human Resources

BRATEX Dominicana

Zona Franca Las Américas:

Mr. Roberto R. Rodríguez

Director, Manufacturing Operations

Hanes Caribe, Inc.

Mr. Victor Polanco

Plant Manager

Hanes Caribe, Inc.

Ms. Marisela Lithgow

Country Manager, Human Resources

Hanes Caribe, Inc.

Ms. Margarita Ortiz

Human Resources Manager

Hanes Caribe, Inc.

Mrs. Nelly Rubio

Human Resources Director,

Puerto Rico and Dominican Republic

Hanes Caribe, Inc.

Zona Franca Santiago:

Mr. Fernando A. Capellán

President

Grupo M
210

Mrs. Mercedes C. de Lama

Administrative Manager

Grupo M

Mr. Emigdio Garrido

Plant Manager

Tejidos Flex Corporation

Mrs. Ana María González

Human Resources Manager

Tejidos Flex Corporation

Mr. Oscar Mercado

Plant Manager

Interamericana Products, S.A.

Mrs. Kirsis Lora de Jaquez

Manager, Personnel Department

Interamericana Products, S.A.

Mr. José Clase

President

D’Clase Corporation

Ing. Elpidio Infante

General Manager

D’Clase Corporation

Zona Franca La Vega:

Ing. Jose Fco. Coronado Nivar

General Manager

Polanco Fashion International, S.A.

Mr. Francisco Polanco

Manager, Human Resources

RK Fashion, S.A.

Ing. José Manuel Jiménez A.

Plant Engineer

RK Fashion, S.A.

Zona Franca San Pedro de Macorís:

Mr. Antonio Centeno

General Manager

Vice President

Manufactura Borinqueña

Mr. Wilmer Ruiz

General Manager

Undergarment Fashions, Inc.

Mr. Claudio Ramos

General Manager

Toscana Corporation

Pons, San Pedro, Inc.

Mr. José Orlando Pimentel

Financial Manager

Toscana Corporation

Pons, San Pedro, Inc.

Ing. Fellito Luna

General Manager

Denisse Fashions, Inc.

Zona Franca Bonao:

Mr. Ariel Park

Administrator

Bi Bong Apparel

Mr. Sung Yoon Wi (Jose)

General Manager

Woo Chang Dominican Ind. Co. Ltd.

Mr. Chunciob Lim

Administrator

Bonahan Apparel

Hingshing Textile

LABOR

Mrs. Selma Padrón-Solera

Country Program Director

American Institute for Free Labor

Development (AIFLD)

Ms. Fiol D’Aliza Feliz

National Farmers’ Union

(UNAC- Union Nacional Campesina)

Mr. Jacobo Ramos Crispín

General Secretary

National Federation of Free Trade

Zones Workers (FENATRAZONA)
211

Other Local FENATRAZONA Representatives:

Mr. Alfredo Mieses, Ms. Damas

Aventura,

Mr. Elias Puente, and Mr. Ignacio

Hernández

Dr. Maribel Batista Matos

Legal Consultant

FENATRAZONA and CNTD

Mr. Agustín Vargas Saillant

Secretary, International Relations

Unitary Confederation of Workers

(CTU - Conferación de Trabajadores

Unitaria)

Ms. Rosario Alvarez Leger

Secretary, Women Issues

Unitary Confederation of Workers

(CTU - Conferación de Trabajadores

Unitaria)

NGOs

Mrs. Magaly Pineda

Director

Research Center for Feminist Action

(CIPAF- Centro de Investigación para la

Acción Femenina)

Ms. Estel Hernández

Research Center for Feminist Action

(CIPAF- Centro de Investigación para la

Acción Femenina)

Ms. Arajena Martínez

Children Coordinator

UNICEF, Santo Domingo

Ms. Veronica Guerrero

Program Coordinator- Dominican

Republic

OXFAM- United Kingdom
212

EL SALVADOR

SITE VISITS

List of Contacts

GOVERNMENT

Dr. José Eduardo Tomasimo

Hurtado

Secretary of Labor

Ministry of Labor

Dr. Guillermo A. Palma D.

Director General of Inspection

Ministry of Labor

Dr. Víctor Orellana M.

Director General of Labor

Ministry of Labor

Lic. Rolando Mercado L.

Juridical Assessor

Ministry of Labor

Lic. María Teresa de Mejía

Executive Director

Institute of Minors

Dra. Ruth Anabella Henríquez

Chávez

Adjunct Human Rights Ombudsman

for the Defense of Children

Lic. Antonio Aguilar Martínez

Chief of the Department of Economic

and Social Rights

of the Human Rights Ombudsman

Lic. Alfredo Roberto Morán

General Public Defender for Labor of

the Office of the Attorney General

Lic. Carmen Barrera de Soriano

General Public Defender for Minors of

the Office of Attorney General

Dr. Norman Quijano

Commission Secretary

National Republican Alliance (ARENA)

Mr. Oscar Ortiz A.

Commission Member

Farabundo Martí National

Liberation Front (FMLN)

Mr. Eugenio Chcas M.

Commission President

Farabundo Martí National

Liberation Front (FMLN)

INDUSTRY

Plant Visits (Free Zones):

Martin Norman

General Manager

American Park Free Zone

Jim Woo Choi

Industrial Caribbean Apparel

(Incasa de C.V.)

America Park Free Zone

Ana María de Rivas

Project Manager

Export Salva Free Zone

Salvador Llort B.

Apparel Group Manager

HILASAL

Export Salva Free Zone

Ing. Luis Carlos Gómez Valle

General Manager

Textiles Lourdes Limitadas

(Fruit of the Loom)

Export Salva Free Zone
213

David Wong

President

Mandarin International, S.A.

San Marcos Free Zone

Cecilia Castillo Maida

Merchandiser

Mandarin International, S.A.

San Marcos Free Zone

Wilda de Ponce

General Manager

Mandarin International, S.A.

San Marcos Free Zone

Martin Jung

General Manager

Lindotex, S.A.

San Marcos Free Zone

Antonio Aguilar

Personnel Manager

Lindotex, S.A.

San Marcos Free Zone

Lic. Teffy Escobar de Serrano

Financial Manager

San Marcos Free Zone

Lee Miles

Vice President of Manufacturing

Perry Management Corp., S.A.

(Primo Industries)

San Bartolo Free Zone

Antonio Barraza Guerra

General Manager

C.M.T., S.A.

San Bartolo Free Zone

Francisco Escobar

C.M.T., S.A.

San Bartolo Free Zone

Lic. William E. Sandoval

Plant Manager

Confecciones El Pedregal, S.A.

El Pedregal Free Zone

Associations:

Francisco Escobar

President

Associación Salvadoreña de la Industria

de la Confección (ASIC)

(Salvadorean Association of the Garment Industry)

Lic. Samuel A. Cerna Trabanino

(ASIC Member)

General Manager

Provocaciones, S.A.

San Salvador, El Salvador

Ing. José Antonio García (ASIC

Member)

General Manager

RAMADA, S.A.

Calle Industrial de San Marcos

San Salvador, El Salvador

Liz de Rodezno

Executive Director

ASIC

San Salvador, El Salvador

Luis Arturo Anleu

ASIC

San Salvador, El Salvador

Lic. María Gracia Torres

General Manager

T & T System, S.A.

Paseo General Escalón

El Salvador

Mr. Brian J. McCall

General Manager

Sare Lee Intimates

La Paz, El Salvador

Mr. Ivan S. Seassal

President

AMERITEX

La Paz, El Salvador

Pricilla Gasteazoro

Quality/Sourcing Inspector

Hampton Industries, Inc.
214

Gene Palumbo

Sourcing Compliance Officer Central

America

GAP, GAPKIDS, Banana Republic, and

Old Navy Clothing Co.

LABOR

Unions:

Sarahi Molina

Secretaría de Organización y

Estadísticas

Federación Nacional Sindical de

Trabajadores

 Salvadoreños (FENASTRAS)

Manuel de Jesús Contreras M.

Secretary General

Federation of Worker Unions of El

Salvador (FESTRAES)

Félix Blanco

Secretary General

Confederation of Salvadoran Workers

and Legislative Deputy (CTS)

Juan A. Hernández

Secretary General

Union of Textiles and Related Workers

of El Salvador

(STITAS)

Zoila E. De García

Union of Textiles and Related Workers

of El Salvador

(STITAS)

Julio Cesar García P.

Secretary General

National Unity of Salvadoran Workers

(UNTS)

Edito Genovez

Member (UNTS)

Clemente Hernandéz

Labor Leader (AIFLD)

NGO’s

Candance Bannerman

Director

Integrating Children into Work, Education, and Health Project

(PROCIPOTES)

Lic. Karla de Varela

Director

Children’s Right Program of UNICEF

Lic. Otto Erick Vidaurre

Sub-Executive Director

Salvadoran Worker Management Foundation (FOES)

José Victor Aguilar

Fundacion Nacional para el Desarrollo

(FUNDE)

Susanna Janson

Regional Coordinator

Radda Barnen de Suecia

Lic. Ana Lorena de Orellana

General Coordinator

Radda Barnen de Suecia

Ina Eriksson

Regional Representative

Accion Ecuménica Sueca-DIAKONIA

Krister Adolfsson

Regional Representative

Accion Ecuménica Sueca-DIAKONIA

Lic. Ricardo Quiñones

Director

Olof Palme Foundation

Hector Bernabé Recinos

President

Centro de Estudios del Trabajo (CENTRA)
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GUATEMALA

SITE VISITS

List of Contacts

GOVERNMENT

Mr. Arnoldo Ortíz Moscoso

Minister of Labor

Ministry of Labor

Mr. Carlos Mora

Assistant Inspector General

Ministry of Labor

Ms. Ana Mendoza

Ministry of Labor

Ms. Malvina Armas

Ministry of Labor

Ms. Hilda Morales Trujillo

Ministry of Labor

Congressman Amilcar Méndez

Chairman

Congressional Labor Committee

INDUSTRY

Associations:

Mr. Marcio Cuevas

Apparel and Textile Industry Commission (VESTEX) of the Association of

Exporters of Non-Traditional Products

(GEXPRONT)

Comisión de la Industria del Vestuario y

Textiles - VESTEX of the Non Traditional Products Exporters

Association (GEXPRONT)

Mr. Carlos Arias Maselli

Chairman, Labor Commission of CACIF

and

Chairman of Board of Directors of

Guatemalan

Chamber of Business

Plant Visits:

Mr. Yh Han

Manager

Don Sang

Chimaltenango

Mr. Jae Huem

Executive Director

Dong Bang

Chimaltenango

Ms. Deborah de Castro

Assistant to the Manager

Dong Bang

Chimaltenango

Mr. H. Y. Park

President

Lindotex

Chimaltenango

Mr. Dong Joon Kim

Lindotex

Chimaltenango

Mr. César Kim

Lindotex

Chimaltenango

Mr. Carlos Arias Maselli

Owner and Manager

Maquila Cardiz

Guatemala City

Mr. Severino Mata

General Manager

Confecciones Caribe, S.A.

Guatemala City

Mr. Gerald Tepeu

Villa Exportadora

San Pedro Sacatepequez
216

Mr. Bob Crocco

Executive Vice President

Global Manufacturing and Sourcing

PVH (based in New York)

Guatemala City

Mr. Anthony Mims

Plant Manager

Camisas Modernas I

Guatemala City

Mr. Le Vaughn Seay

Regional Production Manager

Camisas Modernas I

Guatemala City

Ms. Yvonne de Sevilla

Camisas Modernas II

Guatemala City

Mr. Bernandino Granados

Mr. Minor Granados

Co-Owners

Industria G&V

San Pedro de Sacatepequez

Mr. Walter Guacamaya

Manager

Mundivest

San Pedro de Sacatepequez

LABOR

Ms. Olimpia Gatica

Union Sindical de Trabajadores

de Guatemala (UNSITRAGUA)

Mr. Julio Coj

Coordinator, International Relations

Union Sindical de Trabajadores

de Guatemala (UNSITRAGUA)

Mr. Rosa Delia Galicia

Union Sindical de Trabajadores

de Guatemala (UNSITRAGUA)

Mr. Edgar Rolando Portillo

Executive Secretary

Central General of Guatemalan

Workers (CGTG)

Mr. Julian Melchor

Central General of Guatemalan

Workers (CGTG)

Ms. Teresa Casertano

Federación Internacional de

Trabajadores de

Textiles, Vestuario, Cuero y Calzado

(FITTVCC)

Mr. Juan Francisco Alfaro

Secretary General

Confederación de Unión Sindical de

Guatemala (Confederation of Labor

Unity of Guatemala - CUSG)

NGOs

Ms. Ana Raquel Tobar

Children’s Rights Specialist

UNICEF

Mr. Rhett Doumitt

US/Guatemala Labor Education Project

Mr. Ed Palenque

AIFLD/AFL-CIO

Mr. Homero Fuentes

Friederich Ebert Foundation

Mr. Edgar Patres

Sociologist
217

Mr. Alvaro Colón

National Foundation for Peace

(FONAPAZ)

Ms. Marcela Manubens

PVH Consultant

Project New Educational Opportunities

San Pedro de Sacatepequez

Ms. María Caballero

Center for Research, Study and Promotion of Human Rights (CIEPRODEH)

Ms. Julieta Soto

Children’s Issues Coordinator

Center for Human Rights Legal Action

Mr. Frank LaRue

Director

Center for Human Rights Legal Action

Ms. Victoria Ramírez

Association for the Advancement of

Social Sciences in Guatemala

(AVANCSO)

Ms. María Eugenia Villareal

Center for Defense of Children

Ms. Eugenia Mijangos

Attorney, Women’s Issues

Center for Human Rights Legal Action

Mr. William Clark Harrell

Attorney

Center for Human Rights Legal Action
218

HONDURAS

SITE VISITS

List of Contacts

GOVERNMENT

Mr. Cecilio Zavala Mendez

Minister of Labor

Ministry of Labor

Mr. Felipe Elvir Rojas

Vice-Minister of Labor

Ministry of Labor

Lic. Salomón Batres

Inspector General

Ministry of Labor

Lic. Consuelo Atienez

Department of Social Promotion

Ministry of Labor

Mr. Santos Reyes Ayestas

Director San Pedro Sula Regional Office

Ministry of Labor

INDUSTRY

Associations:

Mr. Norman García

Executive President

Foundation for Investment and Development of Exports (FIDE)

Mr. Raymond Maalouf

Vice President

Honduran American Chamber of

Commerce (HAMCHAM)

Meeting with Executive Board Members

of the Honduras Association of

Maquilas (HAM)

Mr. Juan de Diós Herrera

Executive Director

Honduras Association of Maquilas

(HAM)

Mr. Arnoldo Solís

President HAM

President

Marssol International

Mr. Enrique Vitanza

President

Fashion Mart of Honduras

Mr. Antonio Kattan

Manufactura Textil MATEX

Mr. José Molina

Vice President Operations

ZIP Buena Vista

Mr. L. Wayne Gray

General Manager

Certified Apparel Services of Honduras

Division of Kleinerts

Mr. Salomón Leiva

General Manager

Inter Fashions

Mr. Jorge Faraj R.

President

Banco Ficohsa

Plant Visits

Parque Industrial Inhdelva - Choloma

Mr. Scott Schoenleben

Regional Operations Manager

Mainta - OshKosh B’gosh

Mr. Mauricio Kattan

General Manager

Exportaciones Textiles Exportex
219

San Pedro Sula - Barrio La Guardia

Mr. L. Wayne Gray

General Manager

Certified Apparel Services of Honduras

Division of Kleinerts

Mr. Perry Keene

Certified Apparel Services of Honduras

Division of Kleinerts

Zonas Industriales Continental - La Lima

Mr. J. S. Chung

General Manager

KIMI of Honduras

Mr. Emilio Lee

Administrative Manager

KIMI of Honduras

San Pedro Sula - Highway to La Lima

Mr. Nicolas Chahin

General Manager

EuroModa

ZIP Bufalo Industrial Park - Villanueva

Mr. Germán Pineda Leiva

General Manager

Confecciones Dos Caminos - Fruit of

the Loom

Mr. Oscar Bogran

Plant Manager

Confecciones Dos Caminos - Fruit of

the Loom

Mrs. Iris Guevara de Cerella

Manager of Human Resources

Confecciones Dos Caminos - Fruit of

the Loom

Mr. Fernando Yang

Vice President

Fabena Fashions

Mr. Arnaldo Castillo

Administration Manager

Fabena Fashions

Lic. Moritz Hoffman

General Manager

Olga de Villanueva - WARNACO

Mr. Ed Turner

Senior Vice President - Operations

WARNACO

Ms. Phylis Bonanno

Staff Vice President - International

Trade Development

WARNACO

Mr. Randy Griffin

Regional Manager - Honduras, Costa

Rica, Dominican Republic & Mexico

WARNACO

Zona Libre Choloma

Mr. Paul Kim

President

Global Fashions

Mr. Heo

Export/Import

Global Fashions

Mr. Harry Villaltu

Assistant Production Manager

Global Fashions

Galaxy Industrial Park

Mr. Steve Choi

Senior Director

Kunja Industrial Co.

Parent Company for Avvento Co,

Cosmo Co. and Fenix Co.

Mr. Paul Yang

General Manager

Cosmo Co. and Fénix Co.

Mr. Ha Hae Ju (Martin)

Assistant General Manager

Cosmo Co. and Fénix Co.
220

LABOR

Mr. Ed Palenque

Consultant - Guatemala & Honduras

American Institute for Free Labor

Development (AIFLD)

Mrs. Aida Buchalter

Office Manager - Honduras Office

American Institute for Free Labor

Development (AIFLD)

Mr. Felicito Avila Ordonez

Secretary General

Central General of Workers (CGT)

Other National CGT Leaders

Mr. Julio Chávez Paz, Mr. Daniel

Durón Romero, Mr. Marcial Reyes

Caballo and Mr. Marco Tulio

Cartagena

Mr. Efraín Figueroa

Fiscal

Confederation of Workers of Honduras

(CTH)

Mr. Victor Artiles

Advisor

Confederation of Workers of Honduras

(CTH)

Other National CTH Leaders

Ms. Martha Beatriz Zavala, Mr.

Conrado Reneiri and Mr. Julio

Antonio Rodríguez

Mr. Héctor Hernández

Secretary General

Confederation Unitary of Workers of

Honduras (CUTH)

Mr. Mauro González

Secretary General

Federation Sindical of Workers National

of Honduras (FESITRANH)

Mr. Claudio Villafranca

Financial Secretary

Federation Sindical of Workers National

of Honduras (FESITRANH)

Mrs. Bertha Pineda

National Coordinator

Maquila Trade Union Organizing

Campaign

Mrs. Marina Gutiérrez

National Coordinator

Maquila Trade Union Organizing

Campaign

United Nations

Mrs. Juanita Vásquez

Coordinator of Programs

Unicef

NGO’s

Lic. Rolando Arturo Milla

Regional Delegate, North Zone

National Commission of Human Rights

(CNDH)

Mr. Hugo Ramon Maldonado

Regional Coordinator, North Zone

Committee For the Defense of Human

Rights in Honduras (CODEH)

Lic. Maritza Paredes

Coordinator - Maquila Program

Committee For the Defense of Human

Rights in Honduras (CODEH)
221

INDIA

SITE VISITS

List of Contacts

GOVERNMENT

Harbhajan S. Bains

Industrial Advisor

Additional Director of Industry

Department of Industries

Government of the Punjab

Chandigarh

P.K. Bandopadhyay

Joint Secretary

Department of Labor

Government of West Bengal

Calcutta

Prasanta Bhattacharya

Assistant Labor Commissioner

Directorate of Labor

Government of West Bengal

Calcutta

M. Chitrakaran

Joint Regional Director

Apparel Export Promotion Council

Madras

Jayant Dasgupta

Director

Ministry of Textiles

Government of India

New Delhi

Mahaveer Jain

Fellow and Coordinator, Child Labor

Cell

(National Resource Center on Child

Labor)

National Labor Institute

Noida

D. K. Nair

Additional Director General

Apparel Export Promotion Council

New Delhi

R.V. Pillai

Secretary General

National Human Rights Commission

New Delhi

A. Venu Prasad

Additional Deputy Commissioner

Development

Government of Ludhiana

R.K. Saini

Joint Secretary in Charge of Child Labor

Ministry of Labor

Government of India

New Delhi

Debendra Nath Sarangi

Secretary to the Government

Department of Labor

Government of Madras

Sharad T. Sawant

Director

Maharashtra Institute of Labor Studies

Government of Maharashtra

Bombay

Joyce Shankaran

Secretary, Labor and Employment

Government of Maharashtra Industries,

Energy and Labor Department

Bombay

Hardial Singh

Additional Labor Commissioner

Government of the Punjab

Chandigarh
222

INDUSTRY

Associations:

Baldev Arora

Executive Committee

American Business Council/

President and Managing Director

Cyanamid India Limited

Bombay

Ramesh C. Bajpai

Executive Director

American Business Council

New Delhi

R. Das

Secretary-General and Chief Executive

Indian Tea Association

Calcutta

M.K. Garg

Advisor

Federation of Indian Chambers of

Commerce and Industry/

All India Organization of Employers

New Delhi

Michael B. Goldman

American Business Council/

Vam Exports International

Madras

M.A. Hakeem

Secretary General

Standing Conference on Public Enterprises

New Delhi

N. Hamsa

Joint Secretary

Federation of Indian Chambers of

Commerce and Industry

New Delhi

Jose K. Joseph

American Business Council/

Citibank N.A. Global Finance

Madras

D.K. Kapur

Past President

Delhi Factory Owners’ Federation

New Delhi

G.D. Maheshwari

Labor Advisor

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

New Delhi

A.C. Majumdar

Labor Advisor

Bengal Chamber of Commerce and

Industry

Calcutta

Ajay Podar

Managing Committee

Progress Harmony Development (PHD)

Chamber of Commerce and Industry/

Managing Director

Jay Cylinders Ltd.

New Delhi

A. Sakthivel

Senior Vice Chairman

Apparel Export Promotion Council/

President

Tirupur Exporter’s Association/

Head

Ms. Poppys Knitwear

Tirupur

P. K. Sharma

Joint Labor Advisor

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

New Delhi

Beant Singh

Resident Director

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

Chandigarh

H.S. Tandon

Secretary General

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

New Delhi
223

Tanisha Thiara

Resident Officer

Progress Harmony Development (PHD)

Chamber of Commerce and Industry

Chandigarh

Factory Owners and Agents:

K. K. Adya

Partner

R.B. Knit Exports

Ludhiana

I.P. Anand

Shivalik Agro Poly Products Ltd./

Indra Poly Fabs Pvt. Ltd./

Manserve Agencies & Services Pvt. Ltd./

Vipat Investments Pvt. Ltd./

SAP Exim Pvt. Ltd.

New Delhi

A. Thambi Arumugam

Chenduran Textiles

Tirupur

Ravi Dhingra

Director;

Orient Craft Ltd

New Delhi

Gurpreet Anand

General Manager for Merchandising

and Product Development;

Orient Craft Ltd

New Delhi

K.L. Garg

Pankaj Enterprises

New Delhi

Nirmal Jain

Director

Duke Fabrics Ltd.

Ludhiana

Ritu Kataria

Triburg Consultants Pvt. Ltd.

New Delhi

M.M. Sampath Kumar

Managing Partner

Yuvraj International/

Chairman and Managing Director

Yuvraj Denim Apparels Pvt. Ltd./

Tirupur

Vikas Malkani

Director

AVIS International Ltd.

New Delhi

Rajendra Mudaliar

Ambattur Clothing Company Pvt. Ltd.

Madras

D.N. Sood

Buying Office

Associated Indian Exports

New Delhi

M.E. Vacha

Company Secretary

Zoro Garments Pvt. Ltd.

Madras

Factories and Production Facilities

Visited:

Duke Fabrics Ltd.

Ludhiana

R.B. Knit Exports

Ludhiana

Ambattur Clothing Company Pvt. Ltd.

Madras

Zoro Garments Pvt. Ltd.

Madras

Orient Craft Ltd.

New Delhi

Pankaj Enterprises

New Delhi

Chenduran Textiles

Tirupur
224

Ms. Poppys Knitwear

Tirupur

Yuvraj International,

Yuvraj Denim Apparels Pvt. Ltd.

Tirupur

LABOR

Samar Chakraborti

Vice President, West Bengal Branch

Indian National Trade Union Congress/

Vice President

National Federation of Petroleum

Workers

and State Productivity Council—West

Bengal/

Secretary

Nat’l Fed of Engineering Workers—West

Bengal

Calcutta

Ramesh Palta

Secretary

Bharatiya Mazdoor Sangh

Ludhiana

M. Muthupandyan

Central Secretary, Tirupur Assembly

Janatha Dal Labor Federation

Tirupur

Anbu Thangarajan

President

Janatha Dal Labor Federation

Tirupur

Child workers and street children at

evening school

sponsored by SAVE, Tirupur

NGOs

A. Aloysius

Director;

SAVE

Tirupur

Rama Morgan

Associate;

SAVE

Tirupur

A. Albert Aloysius

Director

VANE (Voluntary Action and

New Education) Trust

Kodaikanal

Sujato Bhadra

Association for Peoples’ Democratic

Rights

Calcutta

Ranjana Dasgupta

Coordinator, CLPOA

(City Level Programme of Action)

for Street & Working Children

Calcutta

Joseph Ghatia

Executive Director

Center of Concern for Child Labor

(CCfCL)/

Chairperson

Child Labor Action Network (CLAN)

New Delhi

Bijli Mullick

Assistant Director and Program Officer

Institute of Psychological and Educational Research (IPER)

Calcutta

Rita Panicker

Head

Butterflies (Program for Street and

Working Children)

New Delhi

Kailash Satyarthi

Chairperson

South Asian Coalition on Child Servitude (SACCS)

New Delhi
225

Alpa Vora

Director

Youth for Unity and Voluntary Action

(YUVA)/

Campaign Against Child Labor

Bombay

Richard Young

Chief, Community Development

New Delhi
226

THE PHILIPPINES

SITE VISITS

List of Contacts

GOVERNMENT

Mr. Cresenciano B. Trajano

Under Secretary of Labor

for Workers Protection and Welfare

Department of Labor and Employment

Manila

Ms. Carmela Torres

Assistant Secretary for Policy and

International Affairs

Department of Labor and Employment

Manila

Mr. Reydeluz D. Conferido

Executive Director, Institute for Labor

Studies

Department of Labor and Employment

Manila

Ms. Aurora Rencina,

Chairperson

Commission on Human Rights

Manila

Mr. Vicente P. Sibulo,

Commissioner

Commission on Human Rights

Manila

Mr. Jorge R. Coquia

Commission on Human Rights

Quezon City

Ms. Karen Gomez Dumpit

Head, Child Rights Center

Commission on Human Rights

Cebu City

Mr. A. Alonzo, Director

Commission on Human Rights

Cebu Field Office

Cebu City

Mr. Federico Luchico

Assistant Secretary

Department of Trade and Industry

Manila

Mr. Philip Panlilio

Deputy Executive Director

Garments and Textile Export Board

Makati

Mr. Redentor A. Asprer

Administrator

Cavite Export Processing Zone

Rosario, Cavite

Hon. Pablo Garcia,

Governor

Governor’s Office

Cebu City

Mr. Lourdes Balanon

Director, Bureau of Child and Youth

Welfare

Department of Social Welfare and

Development

Manila

Senate:

Senator Ernesto Herrera

General Secretary of the Trade Union

Congress of the Philippines

Manila

Senator Gloria Macapagal Arroyo

Velco Center, Philippine Senate

Manila
227

INDUSTRY

Associations:

Mr. Robert Robbins

Chairman, Garment Industry SubCommittee

American Chamber of Commerce

Makati

Plant Visits:

Mr. Joe Nakash

Owner

Jordache Industries

Cavite Export Processing Zone

Rosario, Cavite

Mr. Antonio G. Caballero

General Manager

Jordache Industries (Phil.)

Cavite Export Processing Zone

Rosario, Cavite

Ms. Nela Sebastian-Ferrer

Owner

Castleberry Fashions

Manila

Ten Bears, Inc.

Owner

Cebu City

Ms. Prudencio A Mendoza

Manager

DM Garments

Batangas City, Batangas

Go-Thong

Owner

Cebu City

Ms. Maria Theresa L. Parayno

Acting Vice-General Manager

Liz Claiborne International

Makati

Max L.F. Ying

V.P. Production

V.T. Fashion Image and All Asia Fashions

Tri-State Manufacturing

Cavite Export Processing Zone

Rosario, Cavite

H.H. Park

President

Woo Chang Co., Inc

Cavite Export Processing Zone

Rosario, Cavite

L&T International

Met with Plant Manager

Clark Export Processing Zone

A La Mode Garments

Met with Personnel Manager

Quezon City

Joseph M. Farrugia

Manager

Prego Praxis, a British Co.

Cebu Mactan Export Processing Zone

Lapu-lapu, Cebu

Rodolfo Garces

Plant Manager

Mactan Apparels, Inc.

Mactan Export Processing Zone

Lapu-lapu, Cebu

Elsa P. Roska

Director/General Manager

Mate International Corp.

Mactan Export Processing Zone

Lapu-lapu, Cebu

Maria Nora Pahang

Personnel Manager

Globalwear Manufacturing Corp.

Mactan Export Processing Zone

Lapu-lapu, Cebu
228

Iwao Tebaka

Vice President

Tokyo Dress Cebu Corp.

Mactan Export Processing Zone

Lapu-lapu, Cebu

Richard A. Wilson

V.P. Worldwide Human Resources

National Semiconductor Corp.

Mactan Export Processing Zone

Lapu-lapu, Cebu

Ma. Mercedes M. Corrales

General Manager

Levi Strauss

Makati

LABOR

Senator Ernesto Herrera

Secretary General

Trade Union Congress of the Philippines

Manila

Cedric Bagtas

Assistant General Secretary

Trade Union Congress of the Philippines

Manila

Luisa Logan

Child Labor Coordinator

Trade Union Congress of the Philippines

Quezon City

Concepcion Dodd

General Secretary

Confederation of Labor and Allied

Social Services

Trade Union Congress of the Philippines

Manila

Mona Lisa Garina

Confederation of Labor and Allied

Social Services

Trade Union Congress of the Philippines

Manila

Regional Vice-President Sayson and

senior officials

ALU, Trade Union Congress of the

Philippines

Cebu City

Local union leaders at Levi-Strauss

A La Mode, Jordache, and union organizers

Cavite Export Processing Zone

Rosario, Cavite

Lynn M. MacDonald,

Country Program Director

Asian-American Free Labor Institute,

AFL-CIO

Makati

NGOs

Dr. Carlos Medina, Jose Vener C.

Ibarra, and Amparita S. Sta. Maria

Ateneo

Manila University Law School Human

Rights Center

Manila

Dr. Terrel M. Hill, Representative

Ana Maria R. Dionela, Project Officer

Child Labor

Leopoldo M. Moselina, Project Officer

Urban Basic Services and Street Children

Unicef

Makati

Richard Szal,

Director

International Labor Organization

Phillippines
229

Alcestis Abrera-Mangahas,

National Program Coordinator International Program on the Elimination of

Child Labor

Makati

Primar S. Jardeleza, National Coordinator for Education and Training

PATAMBA (National Homeworkers’

Network)

Makati

Atty. Magdalena M.R. Lepiten

Protestant Lawyers League

Cebu City

Mariven Alforque-Castillo

Childrens and Youth Foundation of the

Philippines

Cebu City

Alex Apit

Founder

Kamalayan Development Foundation

Quezon City

Professor Rosario del Rosario

University of the Philippines

Quezon City

Dean Evelina A. Pangalangan

University of the Philippines

Quezon City

Inday Toling-Olayer

Secretary-General.

Philippine Alliance of Human Rights

Advocates

Quezon City

Professor Rosario P. Ballescas

University of the Philippines Cebu

College

Cebu City
230

A P P E N D I X E

U.S. Apparel Imports, 1985-1995, by Region and Country

(In millions of current U.S. dollars)

COUNTRY 1985 1995

WORLD 12785 34649

ASIA 9318 20994

Far East 7039 11433

China 742 3518

Hong Kong 2384 4189

Japan 417 55

Korea 1502 1622

Taiwan 1994 2049

South Asia 2279 9561

Bangladesh 126 1067

Brunei 1 35

Burma 2 64

Fiji 0 62

India 260 1098

Indonesia 196 1183

Kampuchea 0 0

Laos 0 9

Macau 169 757

Malaysia 196 675

Micronesia 0 10

Mongolia 0 18

Nepal 41 81

Pakistan 69 550

Palau 0 6

Philippines 441 1540

Singapore 329 424

Sri Lanka 208 928

Thailand 242 1037

Vietnam 0 17

Appendix E
231

A P P E N D I X E ( C O N T . )

COUNTRY 1985 1995

THE AMERICAS 1877 9439

Central America

and the Caribbean 1130 5432

Antigua 11 0

Barbados 49 4

Belize 29 13

Costa Rica 181 757

Dominica 0 1

Dominican Republic 399 1731

El Salvador 19 582

Guatemala 20 682

Guyana 1 10

Haiti 226 72

Honduras 49 918

Jamaica 94 531

Nicaragua 0 74

Panama 18 30

St. Christopher 12 1

St. Lucia 15 17

St. Vincent 7 3

Trinidad 0 5

South America 224 671

Argentina 2 2

Bolivia 2 10

Brazil 86 113

Chile 2 32

Colombia 72 366

Ecuador 1 10

Paraguay 1 0

Peru 9 125

Uruguay 50 9

Venezuela 0 3
232

A P P E N D I X E ( C O N T . )

Venezuela 0 3

North America 522 3336

Mexico 448 2566

Canada 74 770

EUROPE 1424 2670

Eastern Europe 174 438

Belarus 0 14

Bulgaria 5 41

Croatia 0 3

Czech. Republic 6 14

Estonia 0 3

Hungary 23 52

Lithuania 0 5

Macedonia 0 46

Moldova 0 5

Poland 19 51

Romania 71 56

Russia 0 54

Slovak Republic 0 16

Slovenia 0 12

Ukraine 0 65

Yugoslavia 50 0

Western Europe 1250 2232

Austria 17 15

Belgium 7 8

Cyprus 2 3

Denmark 3 5

Finland 3 2

France 172 155

Germany 64 98

Greece 22 28

Iceland 8 0

COUNTRY 1985 1995
233

A P P E N D I X E ( C O N T . )

Ireland 23 16

Italy 534 967

Malta 2 2

Netherlands 5 2

Norway 2 3

Portugal 71 85

Spain 12 16

Sweden 3 7

Switzerland 13 29

Turkey 82 630

United Kingdom 202 162

AUSTRALIA & NEW ZEALAND 11 55

Australia 4 52

New Zealand 7 3

MIDDLE EAST & AFRICA 141 1485

A a fric 98 442

Algeria 0 0

Botswana 0 0

Cameroon 1 0

Ethiopia 0 1

Ghana 0 2

Kenya 1 34

Lesotho 0 62

Madagascar 0 7

Malawi 0 1

Maldives 5 12

Mauritius 46 191

Morocco 6 42

Mozambique 0 0

Republic of South Africa 38 57

Swaziland 0 12

COUNTRY 1985 1995
234

A P P E N D I X E ( C O N T . )

Tanzania 0 3

Togo 0 1

Zimbabwe 0 13

Middle East 43 1042

Bahrain 0 67

Egypt 1 234

Israel 39 306

Jordan 0 15

Kuwait 0 5

Lebanon 1 1

Oman 0 131

Qatar 0 64

Saudi Arabia 0 9

Syria 0 9

Tunisia 2 12

United Arab Emirates 0 190

NOTE: Countries and territories not included accounted for less than $1 million in U.S. imports each

year in 1985-1995. Those countries that have zeroes in trade in 1985 and 1995, had trade of over

$1 million in intervening years.

Source: U.S. Department of Commerce, Office of Textiles and Apparel, Major Shippers Report

COUNTRY 1985 1995
235

Appendix F - ILO Convention 138

International Labor Organization

C138 Minimum Age Convention, 1973

PREAMBLE

The General Conference of the International Labour Organisation,

Having been convened at Geneva by the Governing Body of the International Labour

Office, and having met in its Fifty-eighth Session on 6 June 1973, and

Having decided upon the adoption of certain proposals with regard to minimum age

for admission to employment, which is the fourth item on the agenda of the session,

and

Noting the terms of the Minimum Age (Industry) Convention, 1919, the Minimum

Age (Sea) Convention, 1920, the Minimum Age (Agriculture) Convention, 1921, the

Minimum Age (Trimmers and Stokers) Convention, 1921, the Minimum Age (NonIndustrial Employment) Convention, 1932 the Minimum Age (Sea) Convention (Revised), 1936, the Minimum Age (Industry) Convention (Revised), 1937, the Minimum

Age (Non-Industrial Employment) Convention (Revised), 1937, the Minimum Age

(Fishermen) Convention, 1959, and the Minimum Age (Underground Work) Convention, 1965, and

Considering that the time has come to establish a general instrument on the subject,

which would gradually replace the existing ones applicable to limited economic

sectors, with a view to achieving the total abolition of child labour, and

Having determined that these proposals shall take the form of an international Convention,

adopts the twenty-sixth day of June of the year one thousand nine hundred and

seventy-three, the following convention, which may be cited as the Minimum Age

Convention, 1973:

Article 1

Each Member for which this Convention is in force undertakes to pursue a national

policy designed to ensure the effective abolition of child labour and to raise progressively the minimum age for admission to employment or work to a level consistent

with the fullest physical and mental development of young persons.
236

Article 2

1. Each Member which ratifies this Convention shall specify, in a declaration

appended to its ratification, a minimum age for admission to employment

or work within its territory and on means of transport registered in its

territory; subject to Articles 4 to 8 of this Convention, no one under that

age shall be admitted to employment or work in any occupation.

2. Each Member which has ratified this Convention may subsequently notify

the Director-General of the International Labour office, by further declarations, that it specifies a minimum age higher than that previously specified.

3. The minimum age specified in pursuance of paragraph 1 of this Article

shall not be less than the age of completion of compulsory schooling and,

in any case, shall not be less than 15 years.

4. Notwithstanding the provisions of paragraph 3 of this Article, a Member

whose economy and educational facilities are insufficiently developed may,

after consultation with the organisations of employers and workers concerned, where such exist, initially specify a minimum age of 14 years.

5. Each Member which has specified a minimum age of 14 years in pursuance

of the provisions of the preceding paragraph shall include in its reports on

the application of this Convention submitted under article 22 of the constitution of the International Labour Organisation a statement—

(a) that its reason for doing so subsists; or

(b) that it renounces its right to avail itself of the provisions

in question as from a stated date.

Article 3

1. The minimum age for admission to any type of employment or work which

by its nature or the circumstances in which it is carried out, is likely to jeopardise

the health, safety or morals of young persons shall not be less than 18 years.

2. The types of employment or work to which paragraph 1 of this Article applies shall be determined by national laws or regulations or by the competent

authority, after consultation with the organisations of employers and workers

concerned, where such exist.

3. Notwithstanding the provisions of paragraph 1 of this Article national laws or

regulations or the competent authority may, after consultation with the

organisations of employers and workers concerned, where such exist, authorise

employment or work as from the age of 16 years on condition that the health,

safety and morals of the young persons concerned are fully protected and

that the young persons have received adequate specific instruction or vocational training in the relevant branch of activity.
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Article 4

1. In so far as necessary, the competent authority, after consultation with the

organisations of employers and workers concerned, where such exist, may

exclude from the application of this Convention limited categories of

employment or work in respect of which special and substantial problems

of application arise.

2. Each Member which ratifies this Convention shall list in its first report on

the application of the Convention submitted under article 22 of the Constitution of the International Labour Organisation any categories which may

have been excluded in pursuance of paragraph 1 of this Article, giving the

reasons for such exclusion, and shall state in subsequent reports the

position of its law and practice in respect of the categories excluded and

the extent to which effect has been given or is proposed to be given to the

Convention in respect of such categories.

3. Employment or work covered by Article 3 of this Convention shall not be

excluded from the application of the Convention in pursuance of this

Article.

Article 5

1. A Member whose economy and administrative facilities are insufficiently

developed may, after consultation with the organisations of employers and

workers concerned, where such exist initially limit the scope of application

of this Convention.

2. Each Member which avails itself of the provisions of paragraph 1 of this

Article shall specify, in a declaration appended to its ratification, the

branches of economic activity or types of undertakings to which it will

apply the provisions of the Convention.

3. The provisions of the Convention shall be applicable as a minimum to the

following: mining and quarrying; manufacturing; construction; electricity,

gas and water; sanitary services; transport, storage and communication; and

plantations and other agricultural undertakings mainly producing for

commercial purposes, but excluding family and small-scale holdings

producing for local consumption and not regularly employing hired workers.

4. Any Member which has limited the scope of application of this Convention

in pursuance of this Article—

 (a) shall indicate in its reports under article 22 of the Constitu tion of

the International Labour Organisation the general position as

regards the employment or work of young persons and children in

the branches of activity which are excluded from the scope of

application of this Convention and any progress which may have

been made towards wider application of the provisions of the

Convention;
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 (b) may at any time formally extend the scope of application by

a declaration addressed to the Director-General of the

International Labour Office.

Article 6

This Convention does not apply to work done by children and young persons in

schools for general, vocational or technical education or in other training institutions,

or to work done by persons at least 14 years of age in undertakings, where such

work is carried out in accordance with conditions prescribed by the competent authority after consultation with the organisations of employers and workers concerned,

where such exist, and is an integral part of-(a) a course of education or training for

which a school or training institution is primarily responsible; (b) a programme of

training mainly or entirely in an undertaking which programme has been approved

by the competent authority; or (c) a programme of guidance or orientation designed

to facilitate the choice of an occupation or of a line of training.

Article 7

1. National laws or regulations may permit the employment or work of persons

13 to 15 years of age on light work which is—

(a) not likely to be harmful to their health or development; and

(b) not such as to prejudice their attendance at school, their participation

in vocational orientation or training programmes approved by the

competent authority or their capacity to benefit from the instruction

received.

 2. National laws or regulations may also permit the employment or work of

persons who are at least 15 years of age but have not yet completed their

compulsory schooling on work which meets the requirements set forth in

sub-paragraphs (a) and (b) of paragraph 1 of this Article.

3. The competent authority shall determine the activities in which employment

or work may be permitted under paragraphs 1 and 2 of this Article and shall

prescribe the number of hours during which and the conditions in which

such employment or work may be undertaken.

4. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, a Member which has availed itself of the provisions of paragraph 4 of Article 2 may,

for as long as it continues to do so substitute the ages 12 and 14 for the ages

13 and 15 in paragraph 1 and the age 14 for the age 15 in paragraph 2 of this

Article.

Article 8

1. After consultation with the organisations of employers and workers concerned, where such exist, the competent authority may, by permits granted

in individual cases, allow exceptions to the prohibition of employment or

work provided for in Article 2 of this Convention, for such purposes as

participation in artistic performances.
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2. Permits so granted shall limit the number of hours during which and prescribe the conditions in which employment or work is allowed.

Article 9

1. All necessary measures, including the provision of appropriate penalties, shall

be taken by the competent authority to ensure the effective enforcement of

the provisions of this Convention.

2. National laws or regulations or the competent authority shall define the persons responsible for compliance with the provisions giving effect to the Convention.

3. National laws or regulations or the competent authority shall prescribe the

registers or other documents which shall be kept and made available by the

employer; such registers or documents shall contain the names and ages or

dates of birth, duly certified wherever possible, of persons whom he employs

or who work for him and who are less than 18 years of age.

Article 10

1. This Convention revises, on the terms set forth in this Article the Minimum

Age (Industry) Convention, 1919, the Minimum Age (Sea) Convention, 1920,

the Minimum Age (Agriculture) Convention, 1921 the Minimum Age (Trimmers and Stokers) Convention, 1921, the Minimum Age (Non-Industrial Employment) Convention, 1932, the Minimum Age (Sea) Convention (Revised),

1936, the Minimum Age (Industry) Convention (Revised), 1937, the Minimum

Age (Non-Industrial Employment) Convention (Revised), 1937, the Minimum

Age (Fishermen) Convention, 1959, and the Minimum Age (Underground

Work) Convention, 1965. The coming into force of this Convention shall not

close the Minimum Age (Sea) Convention (Revised), 1936, the Minimum Age

(Industry) Convention (Revised), 1937, the Minimum Age (Non-Industrial

Employment) Convention (Revised), 1937, the Minimum Age (Fishermen)

Convention, 1959, or the Minimum Age (Underground Work) Convention,

1965, to further ratification.

3. The Minimum Age (Industry) Convention, 1919, the Minimum Age (Sea)

Convention, 1920, the Minimum Age (Agriculture) Convention 1921, and the

Minimum Age (Trimmers and Stokers) Convention, 1921 shall be closed to

further ratification when all the parties thereto have consented to such closing by ratification of this Convention or by a declaration communicated to

the Director-General of the International Labour Office.

4. When the obligations of this Convention are accepted—

 (a) by a Member which is a party to the Minimum Age (Industry) Convention (Revised), 1937, and a minimum age of not less than 15 years

is specified in pursuance of Article 2 of this Convention this shall ipso

jure involve the immediate denunciation of that convention,

 (b) in respect of non-industrial employment as defined in the Minimum

Age (Non-Industrial Employment) Convention, 1932, by a Member
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which is a party to that Convention, this shall ipso jure involve the

immediate denunciation of that Convention,

 (c) in respect of non-industrial employment as defined in the Minimum

Age (Non-Industrial Employment) Convention (Revised), 1937 by a

Member which is a party to that Convention, and a minimum age of

not less than 15 years is specified in pursuance of Article 2 of this

Convention, this shall ipso jure involve the immediate denunciation

of that Convention,

 (d) in respect of maritime employment, by a Member which is a party to

the Minimum Age (Sea) Convention (Revised), 1936, and a minimum

age of not less than 15 years is specified in pursuance of Article 2 of

this Convention or the Member specifies that Article 3 of this convention applies to maritime employment, this shall ipso jure involve the

immediate denunciation of that Convention,

 (e) in respect of employment in maritime fishing, by a Member which is

a party to the Minimum Age (Fishermen) Convention, 1959, and a

minimum age of not less than 15 years is specified in pursuance of

Article 2 of this Convention or the Member specifies that Article 3 of

this Convention applies to employment in maritime fishing, this shall

ipso jure involve the immediate denunciation of that convention,

 (f) by a Member which is a party to the Minimum Age (underground

Work) Convention, 1965, and a minimum age of not less than the age

specified in pursuance of that Convention is specified in pursuance

of Article 2 of this Convention or the Member specifies that such an

age applies to employment underground in mines in virtue of Article

3 of this Convention, this shall ipso jure involve the immediate denunciation of that Convention, if and when this Convention shall

have come into force.

5. Acceptance of the obligations of this Convention—

 (a) shall involve the denunciation of the Minimum Age (Industry) Convention, 1919, in accordance with Article 12 thereof,

 (b) in respect of agriculture shall involve the denunciation of the Minimum Age (Agriculture) Convention, 1921, in accordance with Article

9 thereof,

 (c) in respect of maritime employment shall involve the denunciation of

the Minimum Age (Sea) Convention, 1920, in accordance with Article

10 thereof, and of the Minimum Age (Trimmers and Stokers) Convention, 1921, in accordance with Article 12 thereof, if and when this

Convention shall have come into force.
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FINAL PROVISIONS

Article 11

The formal ratifications of this Convention shall be communicated to the DirectorGeneral of the International Labour office for registration.

Article 12

 1. This Convention shall be binding only upon those Members of the International Labour Organisation whose ratifications have been registered with the

Director-General.

 2. It shall come into force twelve months after the date on which the ratifications of two Members have been registered with the Director-General.

 3. Thereafter, this Convention shall come into force for any Member twelve

months after the date on which its ratifications has been registered.

Article 13

 1. A Member which has ratified this Convention may denounce it after the

expiration of ten years from the date on which the Convention first comes

into force, by an Act communicated to the Director-General of the International Labour Office for registration. Such denunciation should not take

effect until one year after the date on which it is registered.

 2. Each Member which has ratified this Convention and which does not, within

the year following the expiration of the period of ten years mentioned in the

preceding paragraph, exercise the right of denunciation provided for in this

Article, will be bound for another period’of ten years and, thereafter, may

denounce this Convention at the expiration of each period of ten years under

the terms provided for in this Article.

Article 14

 1. The Director-General of the International Labour office shall notify all Members of the International Labour Organisation of the registration of all ratifications and denunciations communicated to him by the Members of the

Organisation.

 2. When notifying the Members of the Organisation of the registration of the

second ratification communicated to him, the Director-General shall draw

the attention of the Members of the Organisation to the date upon which the

Convention will come into force.
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Article 15

The Director-General of the International Labour Office shall communicate to the

Secretary-General of the United Nations for registration in accordance with Article

102 of the Charter of the United Nations full particulars of all ratifications and acts of

denunciation registered by him in accordance with the provisions of the preceding

Articles.

Article 16

At such times as may consider necessary the Governing Body of the International

Labour office shall present to the General Conference a report on the working of this

Convention and shall examine the desirability of placing on the agenda of the Conference the question of its revision in whole or in part.

Article 17

 1. Should the Conference adopt a new Convention revising this Convention in

whole or in part, then, unless the new Convention otherwise provides:

a) the ratification by a Member of the new revising convention shall

ipso jure involve the immediate denunciation of this Convention notwithstanding the provisions of Article 13 above, if and when the new

revising Convention shall have come into force;

b) as from the date when the new revising Convention comes into force

this Convention shall cease to be open to ratification by the Members.

 2. This Convention shall in any case remain in force in its actual form and

content for those Members which have ratified it but have not ratified the

revising Convention.

Article 18

The English and French versions of the text of this Convention are equally authoritative.