Free Trade Areas and Multinational Corporations on Central America


Having been a loyal consumer of Gap Inc.'s products since childhood, I was not surprised to one day ascertain that 64 percent of my sweaters had been manufactured by the conglomerate. As I rummaged back and forth in my closet, I determined that I had become the "loyal shopper" - purchasing many of my articles of clothing from the Gap and its sister brands, Banana Republic and Old Navy. Perhaps the reason I had invested so much of my capital into the brand was due to the darker hues used to make the sweatshirts, the rich textiles to comprise the cardigans, and the smooth stitching of the pullovers. Yet, I was definitely not a devoted customer because of the way in which the corporation produces its clothing. By reading the inner labels of each piece, I realized that fourteen of the eighteen sweaters were "made" in Central America - thus, southern Mexico, Nicaragua, Belize, El Salvador, Honduras, Guatemala, Panama, or Costa Rica. This generated one of my greatest investigations in trying to answer one question: why is so much of Gap Inc.'s clothing made in one particular region? But the findings were not all pleasant, bringing light upon hidden truths within the apparel industry.

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After compiling careful research on the factories in the region, it is evident that many of these countries contain sweatshops in which workers' rights are continuously abused (Anderson 2000: 8). By using the US Department of Labour's definition, it is understood that a sweatshop is "any factory that violates more than one of the fundamental US labour laws" (Sweatshops FAQ). The fundamental US labour laws are listed here as: paying a minimum wage, keeping a timecard, paying overtime, and paying on time (ibid).

This essay will explore the conditions in existence within sweatshops, the causes for these factories, the effects they create, and how to avoid them. Considering all the facts derived from extensive research, it is obvious that the proliferation of sweatshops in Central America has devastating effects on the workers. Furthermore, the regimes are clearly connected to and a consequence of free trade areas (FTAs) and multinational corporations (MNCs). Yet this hazardous practise found throughout Central America can be put an end to with restructuring management and unionization, which of course is not an easy, but essential process.

In 1996, Gap Inc. delved into a crisis as its El Salvadorian factory, "Mandarin", which employed 1000 workers, was exposed as a sweatshop (Anderson 2000: 7). When the story emerged in the media, the North American public was astounded to learn that men and women making clothing for the Gap, Gap Kids, and Banana Republic were being paid approximately 27 cents per hour (ibid). Making matters even worse for the MNC, the workers were not all adults; as it was revealed that 13 percent of the factory's employees were children - at most of twelve years of age (ibid). It was further shown that 27 percent of the workers had been physically abused by their supervisors, or had witnessed abuse (ibid). Although this disturbing sweatshop was identified as a component of the Gap's manufacturing system, the Gap itself is not the only MNC to employ destructive workplaces that produce their items. As a matter fact, they are only part of the bigger problem in which MNCs (such as Nike, Levi Stauss, and Adidas, to name a few) continuously rely on sweatshops for manufactured goods (Wells 2003: 9).

In many of these factories, labourers are consistently harassed to work at the absolute fastest and most efficient pace possible. While many workers in Central America take the work voluntarily, there are numerous incidences of forced labour (ibid). This forced labour could be either prison labour in which an individual is obligated to work due to no pre-existing conditions; or it could be a debt bondage situation in which the individual is trying to work off his or her own, or their family's collective debt (ibid). Those who try to rise against higher management or establish workers' unions often find themselves fired, beaten, blacklisted, tortured (as deterrence and for information), or sometimes even killed because they are seen as a threat (ibid: 10). Certain supervisors even force the consumption of amphetamines such as "speed" so workers can produce for 48 hours straight without requiring a break or sleep (ibid). In specific cases, it has been proven that labourers were injected with contraceptives, and supervisors pressured pregnant women to have abortions so that they would continue to work in the factories (ibid).

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However, the day-to-day conditions for workers are not any better either. As Judith Yanira Viera witnessed in an El Salvadoran sweatshop for the Gap, Eddie Bauer, and J.C. Penney, the workers often had to succumb to grotesque living standards (NACLA 1996: 36). Viera herself had to work fourteen to twenty-one hours a day, and the most she was ever paid was US $43 per month (ibid). The workers at this sweatshop, like at many others, were paid per piece, therefore, in this circumstance US $.18 for every shirt they made (ibid). During the long hours, if the workers needed sleep they were forced to stay in the factory and sleep on the floor (ibid: 37). Viera and others in the factory were only allowed to go to the bathroom twice during these long shifts, and there was no accessible purified water, as she states, "the drinking water they give us is contaminated" (ibid). The minors (ages 14-16) who also worked at the sweatshop were required to commit to the same shifts as the adults and were forbidden by the factory owners to continue their studies in school, thus they ended their education in fear of losing work (ibid). Many wonder why workers such as Viera stay at the sweatshops and allow themselves to be taken advantage of. But when the national unemployment averages of Central American countries often stands at approximately 16 percent, the workers need to accept any form of employment they can find to provide for their families (Werner and Bair 2009: 6).

However debated the topics surrounding sweatshops are, the problem itself is due to FTAs and MNCs, but also desperate governments and unfortunate histories. In the 20th and 21st centuries, the growth of predominant US mega corporations have led to further globalization (the spread of work and production beyond national borders) (Sweatshops FAQ). Thus, because corporations are now such a dominating component of world markets and consumption, they are in need of more and more inexpensive production costs - which they can easily find in foreign nations. Thus, FTAs such as NAFTA (North American Free Trade Agreement) and FTAA (Free Trade Area of the Americas) are incredibly beneficial to international conglomerates with regard to low-cost production (Werner and Bair 2009: 2). As Esbenshade (2008: 455) states, the emergence of the vast amount of sweatshops is directly linked to free trade which also allows for greater privatization and deregulation. When a country such as Mexico joins NAFTA, it allows for the emergence of an "investors' rights" treaty, therefore, federal or local governments will not interfere with the corporations' production in their own country (Sweatshops FAQ). Or, when a country like Guatemala joins the FTAA, its government cannot often request great social accountability from corporations for their workforce because they have finally attracted the foreign investment they seek, and now allow the corporation to run their business as they see fit (ibid).

These nations first experienced the wave of sweatshops with the neo-liberal policies of the International Monetary Fund (IMF) and the World Bank in the 1980s (Esbenshade 2008: 457). These two global institutions strongly encouraged the indebted governments of third world countries to adopt development plans that revolved around "export-oriented production" and "foreign investment" (ibid). The effects of this dominant discourse within the last thirty years have been severe on the Central American nations: not only promoting the infestation of sweatshops throughout the countries, but also creating societies where individuals are reliant on export-oriented employment as privatization minimizes the amount of government jobs and services (ibid). Hereby a cycle is created in which because there are so many export-oriented jobs, the sector becomes stronger, and more and more emerge.

Therefore now, due to FTAs, corporations have the freedom to locate in any country that provides the lowest wage floor and the most lax regulations, which in turn allows the country to keep its costs significantly low (Sweatshops FAQ). Countries such as Belize and Costa Rica wish to be a part of FTAA not because their workers are maltreated, but because they have seen the employment rates increase in other nations when corporations set up their factories, and the government itself can attract foreign investment and raise their GDP (ibid). It is very hard for a smaller nation to expand their country's economy and they thereby implement low standards upon signing these agreements to have an opportunity to do so.

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MNCs are of course another large factor continuing the problem - owning the actual sweatshops in which the workers are employed. MNCs have power over the individual working in the factory and over the governments of the Central American nations. Over the individual, MNCs have power because: they decide their day-to-day working conditions, can authorize or dismantle any possible unions or organizations, and also decide how much capital to give to the factory owner who then has to pay the workers (Glyn, Meth, and Willis 2009: 118). But, in many incidents, the corporations have shown great hospitality to the factory owners, trying to become friends with them so that they will undermine some national protocols for safety or minor labour rights (Kaufman and Gonzalez 2001). Moreover, the MNCs have immense power over the government because they can threaten to set up an even larger production chain in the neighbouring country and the country it does not want to co-operate with will lose an investment opportunity (Glyn, Meth and Willis 2009: 118). Hence, corporations have in the very least a moderate amount of power over a government if they employ a considerable portion of the working people. Their power in the system must not be overlooked in any way as the corporation itself is the one who arranges the factories in the very beginning.

The governments of Central American nations are also partly responsible for the excessive amount of sweatshops in the region. Although they need the investment, governments continue to drop nation-wide wage floors in hopes of attracting more corporate interests. This was most evident in recent times when Honduras drastically dropped its wage floor to compete with neighbouring Nicaragua (Werner, and Bair 2009: 5). However, sometimes the countries in this region do not even work to compete with one another but their East Asian rivalries such as China, Taiwan, and Indonesia (ibid: 2). From the years of 2005 to 2008, Guatemala experienced a 23 percent decrease in exports to the US, while Costa Rica experienced a 37 percent decrease (ibid). Although the US was in the midst of a great recession in 2008, exports have not exactly increased since, and the outlook does not appear too well for these countries (ibid). MNCs are finding it easier to operate sweatshops in countries such as China because they have even more relaxed labour and environmental regulations (Sweatshops FAQ). Additionally, while corporations with sweatshops in Honduras may have to pay US $.43 per hour, in China a sweatshop employee can earn as low as US $.12 (Anderson 2000:9).

Another factor for the explosion in the rate of sweatshops in Central America rests upon the region's shattering civil wars. Over the course of the 1970s, major Central American countries such as Guatemala, Nicaragua, El Salvador, and Honduras experienced extremely disruptive civil wars and social unrest (Peceny and Stanley 2001:150). The violence in these nations persisted for a decade, if not more in certain areas - in El Salvador for instance, a country with not too large of a population, lost at least 75, 000 people in its civil war (Kaufman and Gonzalez 2001). Although this is only an example of one nation's losses in an intensely hostile conflict, the surrounding countries also lost considerable proportions of their populations (ibid). These wars in the four before mentioned countries alone disillusioned corporations from respectfully utilizing Central American factories, and instead made them believe that the war torn countries would be even easier to exploit (ibid). Thus the horrific civil wars not only killed thousands upon thousands of people, destroyed infrastructure and land, but also increased the risk of abuse from corporations (ibid).

There is no doubt that the conditions labourers face in sweatshops are very detrimental to their health, but it is possible to prevent perilous workplace environments - if certain key factors are in place. In fact, to completely eradicate Central American countries of these sweatshops which utterly discount workers' rights, a restructuring of the operational system within the factories must take place, thus workers' right to freely found labour unions. In many of the countries in this vicinity, unions are not only discouraged, but if a factory owner suspects anything the person(s) trying to organize a union are often immediately fired and blacklisted (Anderson 2000:8). In reality, in all of El Salvador - a country containing over 200 major factories - there is only one factory which has a union (ibid: 9). However if the people of the sweatshops wish to improve their working situations, they must collectively push toward unions with what Frundt (1999) calls the "fishbowl" approach (89). This approach includes: subtle selection and recruitment of leaders; comprehensive training of leadership committee; rapid campaign instigation (preferably full-blown within a week) to recruit a large support base followed by home visits and rallies; inside the workplace action to demonstrate movement's support; completion of necessary legal work for a strike (often the most difficult portion of task); and continuous use of militant tactics (ibid).

Although these previous actions are not often easily carried out, if they are all completed, then the chance to actualize a union is very possible. The early stages often prove to be most difficult when individuals try to establish leadership. In this part of the overall plan, the group needs to be in consensus, and designate a leadership role to not only someone who is passionate about their cause, but also invariably committed (ibid: 92). Yet once the first key courses of action have been taken, the group must combine clandestine efforts with legal procedures (ibid: 95). The clandestine efforts are vital to gain an underground following, in which even those that cannot rise against management by themselves can quietly be part of the movement (ibid). However, to gain legitimacy and respect from domestic and international governments, the group is definitely required to carry out all the imperative legal procedures (ibid).

Due to the fact that many factories have zero tolerance for unions, it is also crucial for the group to gain media attention, hopefully from international press. Attracting international media to cover the stories on sweatshop abuses amplifies the news within the state to cover it twice as much, while also mobilizing people and thus building a greater support system (Werner, and Bair 2009: 6). The international support often times grows from university and college campuses in North America and further develops into communal, and then possibly nation-wide support for sweatshop workers and against the conglomerates that control them (Arnold and Hartman 2006: 676).

Conclusively, to those who research sweatshops in this pocket of the world find that the vast array of disastrous circumstances within the factories is currently an unavoidable component to the Central American labour sector. The answer is not to shut down all the factories which employ workers within the unhealthy environments, but to reform the system in which said factories function. It is impossible to shut down the sweatshops because they employ thousands of people in desperate need of work and bring foreign investment to poorer nations. But they also put lives at stake every day, and harm nearly all working within them. Restructuring the workplace and introducing unions is critical for permanent stable, secure conditions for workers.

In the end there are only two possible outcomes for the sweatshops in this zone: one, no one ever rises against their oppressors, and all remain doomed to experience unjust treatment at work for decades to come; or two, people assemble and demand change from the institutions they have been enslaved under. Yet, questions remain: Who will be brave enough to risk their work and possibly lives? Will the international community ever care enough to cause a big enough commotion and muster support? Who will ensure that the rights finally gained will be maintained? But in the midst of all these questions the truth remains that something must be done in order to finally put an end to the obstruction of rights that has occurred for far too long in Central America.