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.Evaluation: The SASL ignores the fact that the adoption of a codeof conduct at many institutions was in response to campus sit-insand protests, and that there was not a broad representation ofalternative views and faculty expertise and campus-wide studentinvolvement." Worldwide consultation and monitoringSASL assertion:  & the three organizations (WRC, FLA, andSocial Accountability International) bring different strengths to thetask of establishing and monitoring effective labor standards world-wide.Ongoing cooperation and competition between these groupsshould also raise the general performance standard for all three.Evaluation: As we have noted in our earlier discussion, the primaryfocus of the WRC on workers rights and collective bargaining anda living wage, the influence of protectionist labor unions, and theadversarial approach to the business community may serve to limitthe effectiveness of the WRC." Wages, labor costs, and employment opportunities in the globalgarment industrySASL assertion:  While caution is clearly needed in setting mini-mum decent standards for workplace conditions, workers rights,b723_Chapter-17.qxd 7/15/2009 10:02 AM Page 641Effects of Multinational Production on Wages and Working Conditions 641and wage levels, there is still no reason to assume that a country orregion that sets reasonable standards must experience job losses.Evaluation: The fact remains that workers in low-income develop-ing countries are generally being paid wages that are higher thanin alternative employment.Mandatory increased wages and morestringent labor standards may improve the position of some work-ers in the affected industries, but it is almost certain todisadvantage other workers not covered by the mandated changesand may induce firms to seek out lower cost production locations.In our judgment, many of the points raised in the ACIT letterremain valid and have apparently been accepted in the SASL state-ment.We remain critical, however, of the SASL statement on thegrounds that it: (1) glosses over the ways in which the Anti-sweatshopCampaign led by student activists has intimidated the administrationsof many academic institutions; (2) apparently accepts the objectivesand operation of the WRC; and (3) downplays the possibly detri-mental effects of labor-market interventions in low-income countries.The question remains then as to what the most effective ways may beto address the issues of multinational wages and working conditionsin developing countries.One way that we favor and will now consideris the provision of voluntary codes of conduct designed to promotethe social accountability of multinationals.Social Accountability of Multinational FirmsHaving just reviewed the issues involved in the Anti-SweatshopCampaign and the efforts of activist organizations and academic insti-tutions in the United States to address these issues, we now focus onthe options that multinational firms may choose to pursue on mattersof their social accountability.In this connection, it might be argued,with externalities aside, that in a competitive environment all thatmatters to a firm is profit maximization and, to society, the resultantoptimal allocation of resources and increased consumer welfare.Inthis context, competitive firms need not concern themselves withtheir social accountability, although questions might arise about theb723_Chapter-17.qxd 7/15/2009 10:02 AM Page 642642 D.K.Brown, A.V.Deardorff & R.M.Sterndistribution of income.But when there are market failures, includingthe possible exercise of market power by imperfectly competitivefirms, there will be grounds for intervention at the firm or industrylevel, designed to achieve the social optimum.Market failures aside, it appears to us that the thrust of the Anti-Sweatshop Campaign and other antiglobalization activities representsan effort primarily to alter the distribution of income between richand poor countries.Under the circumstances, if there is a desire toreduce international income and related inequalities, the optimal pol-icy is to provide direct income transfers and technical assistance fromthe rich to the poor countries.Furthermore, maintaining and extend-ing open markets for the imports from developing countries will besimilarly beneficial.It will be suboptimal therefore in terms ofresource misallocation if multinational firms are mandated or pres-sured by interest groups to effect income transfers in the guise ofhigher wages to workers in developing countries.And more seriously,there is the real possibility that such measures will transfer income notfrom rich countries to poor countries, but only from workers in poorcountries to workers in rich countries.If the preceding reasoning is accepted, it might be argued that theAnti-Sweatshop Campaign aimed at multinationals is misdirected.22The evidence to be presented in Section IV below generally bears thisout.Nonetheless, multinational firms have come under increasedscrutiny by activist organizations for their alleged violations of socialnorms especially in low-wage, labor-intensive industries.It is essentialtherefore for multinational firms to devise modes of response to alle-gations of the mistreatment of workers so as to ward off consumerreactions that may be detrimental to their sales and profitability.Thisis especially the case for firms whose image in the eyes of consumersis derived from a recognized brand name or private label.As already mentioned, it has become commonplace especially forlarge multinationals to devise codes of conduct.Thus, as noted inMoran (2002, Ch.5, p.5), the Organization for Economic Cooperation22This has led Graham (2000) to entitle his book, Fighting the Wrong Enemy: AntiglobalActivists and Multinational Enterprises.b723_Chapter-17.qxd 7/15/2009 10:02 AM Page 643Effects of Multinational Production on Wages and Working Conditions 643and Development (OECD) had 246 corporate codes in its inventoryin the year 2000 covering a variety of industries.23 This included(p.7) 37 firms in the textile and apparel industry, 25 of which wereU.S.firms.But what should be noted is that a written code of con-duct in itself may not be sufficient.What is needed to complementsuch codes is a monitoring or certification system that is designed toassure code compliance.This is of course what the FLA is intended todo for the apparel industry, and both it and the WRC for univer-sity/college suppliers.As we have noted earlier, there are severaladditional nongovernmental organizations that have been establishedto carry out monitoring and certification, and there are a number ofprivate monitoring groups as well.Moran (2002, Ch.5, p.9) notes that:  movement toward meet-ing the prerequisites for credibility and legitimacy [in monitoring andcertification] has not been smooth. Some of the issues that haveproven troublesome include: circumscribing the availability of infor-mation on plant locations on confidentiality grounds; the use ofbusiness and auditing firms to conduct inspections; public disclosureof alleged code violations and efforts at remediation; and compre-hensiveness of scheduling of monitoring and follow up [ Pobierz całość w formacie PDF ]