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May 12, 2005

Cambodia & a Progressive Trade Policy

With even moderate Democrats opposing the CAFTA trade deal for Central America, Bush's trade policy is in tatters. "Free trade"-- meaning trade with any country, no matter how exploited their workforce or how bad their labor laws -- is on the run.

So what is the alternative?

Not across-the-board protectionism, which would deny all workers in the developing world needed jobs and a chance for economic development.

The best approach is conditioning trade on countries meeting basic international labor standards. Cambodia is the poster-child for a country that has moved from the most horrific labor conditions possible under the Khmer Rouge to being a model of labor conditions, largely due to economic incentives offered by the US and the international community to achieve that result. And the broad anti-sweatshop movement has encouraged many garment companies to buy goods from Cambodia, despite potentially cheaper labor in China, because those companies know that Cambodian labor is less likely to be tainted by illegal labor abuses:

A majority of Cambodia's factories have retained the loyalty of major retailers around the world by appealing not just to their need for low-cost production but also to their desire to avoid the stigma of exploiting poor laborers in distant sweatshops.

Cambodia, while still a very cheap place to produce apparel, has chosen to rely on outside inspectors and to foster unusually strong garment unions that have become an independent political force in a country otherwise awash in corruption and cronyism. The efforts at improvement here may point the way for other nations seeking to avoid a race to the bottom as they struggle to establish or sustain footholds in the global economy.

Cham Prasith, the Cambodian minister of commerce who reached the deal with Washington in 1999, said the benefits had gone beyond anyone's expectations.

"We are extending our labor standards beyond the end of the quotas because we know that is why we continue to have buyers," he said in an interview. "If we didn't respect the unions and the labor standards, we would be killing the goose that lays the golden eggs."

Now, the specific deal with Cambodia could be extended country by country, but a better approach is to build such labor standards directly into all international trade deals.

Essentially, if a country meets minimum international standards of protecting the freedom of workers to form labor unions, they would have unfettered rights to trade with other countries. But countries that abused those labor rights would forfeit those trade privileges and be subject to trade sanctions by any other country.

Posted by Nathan at May 12, 2005 08:51 AM