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The textile industry
Today the textile and clothing industry is a sector which is determined by the huge brand-name companies operating on a worldwide scale. Production takes place for the most part in developing countries and economies in transition where local conditions, wage and working conditions are especially favourable to the company. Around 80 percent of the garments sold in Germany today are made in Eastern Europe or the Far East. In the countries of the North in which most clothing is sold hardly any is produced by local firms.
Global alterations in textile production over the last forty years
In the seventies, millions of jobs in the textile and clothing industry were moved away from the industrialised countries to the developing and transforming countries. In these countries so-called Free Export Zones (FEZ) were created, offering considerable privileges to companies setting up business there. Not only do they provide the infrastructure, reduction of customs and tax charges and subsidies for water and electricity, international textile companies operating there are often guaranteed free return of profits to the mother country.
With the creation of these FEZs, the developing countries aimed to improve structurally weak regions, reduce unemployment, boost the local economy and gain training for those employed. Today it can be seen that these high expectations connected with the creation of the FEZs have not been fulfilled in any country with the exception of China.
As globalisation has developed rapidly and fashions have been changing faster and faster, strong competition has built up between the companies operating on a worldwide scale and they have been passing the pressure directly on to the producers in the FEZs. By means of licenced contracts, the large brand-name companies pass their orders on to various subcontractors worldwide, which in their turn anonymously offer the contracts for bidding. The company producing the goods most cheaply gets the orders.
The most important criteria for the major companies are cheap wages, reliable quality and delivery even for orders at short notice. It is particularly true in the fashion trade that the periods for reaction and production have been drastically shortened. When new trends in fashion are presented in Paris and Rome, cheap copies are available at H&M or C&A only two weeks later. Fashions as consumer goods have meanwhile reached a stage where they are almost as quickly out of fashion as perishable foods go bad.
Working conditions in the Free Export Zones
The female workforce are mercilessly subjected to the pressures of time and competition in the textile and clothing industry. In this trade 80 % of the workers are women. Wages are minimal and often do not even cover the basics for existence. Protective regulations under industrial law are generally annulled. Membership or even the foundation of a trade union is almost always forbidden. In addition to dismissals with immediate effect, punishments and bullying, sexual harassment by superiors are not unusual. Physical complaints and severe illnesses are frequent as the activities carried out by the workers in these textile factories are extremely detrimental to their health in the long term.
Those are the conditions under which the majority of clothing sold today all over the world is produced. This not only applies to cheap discount clothing but also to expensive brand-name articles. GAP, Adidas, Nike and most other brand-name companies also have their textiles and shoes produced in the Free Trade Zones. This is what brings them their gigantic profits. This is how it is possible that when a pair of sports shoes is sold in the shop for 75 Euros only 30 cents were paid in wages for their production! And the wage costs of a T-shirt purchased at Tchibo are only around 1 % of the purchase price.
The contrast between the working conditions at the production sites and the image of the branded item in a beautiful unspoilt world has now taken on completely absurd forms.
The establishment of codes of conduct
In order to improve working conditions in the international textiles industry, the International Labor Organisation (ILO) and a large group of international non-governmental organisations (www.suedwind-institut.de) joined together in the Clean Clothes Campaign (CCC), have started various initiatives and activities (www.saubere-kleidung.de). Their activities centre around a catalogue with codes of conduct specially developed for the textile industry. This contains the prohibition of forced labour, discrimination and the employment of children and calls for the observance of the freedom of association, limitation of working hours, wages above the securing of basic existence, contractual regulation of working conditions, work safety and health protection and independent controls of the observance of these codes.
Despite massive resistance from the textile trade, the ILO and the campaign for clean clothing have achieved their first successes in direct negotiations with the companies. Individual textile companies have already taken on parts of the codes of conduct and are ensuring that the local subcontractors keep to these rules when they are awarded the contracts and this improvement is mostly due to the successful lobbying work of the campaigns. The campaign for clean clothes repeatedly approved and published research carried out in various countries where textiles are produced. The international companies were challenged to take a stand and postcard campaigns were made to give the consumers the opportunity to protest against the outrageous conditions of production. Altogether these measures have led to some big companies making concessions, particularly in view of the threat of loss of image. There are various reasons why a large number of the regulations accepted by the companies themselves are still not being fully observed. Some companies point out that local producers get around the agreed regulations and that the observance of the required standards cannot be effectively checked at production sites spread around the world.
The ILO and the campaign for clean clothing have nevertheless achieved some successes which could be considerably more effective if the consumers took more part in the various activities.
Following the expiry of the World Textiles Agreement at the end of 2004, the international textile business is undergoing a new massive process of restructuring. The changes that can be expected to take place are shown here with the example of the textile industry in Bangladesh.
Bangladesh
Bangladesh is an agricultural state. The population is mostly Muslim and around 80% live in rural areas. The export trade consists almost exclusively of textiles which are produced on behalf of foreign companies at low wage rates. Almost all the brand names and major companies have their goods produced in Bangladesh: from Karstadt-Quelle, Otto mail order, Tchibo to Hennes &Mauritz.
In Bangladesh there are at present around 3,000 clothing factories with about two million employees, and a further 1,5 million jobs depend indirectly on this trade. The exports of the clothing industry, most recently around 5 million dollars, account for about 75% of the total exports of the country.
The gigantic increase in the clothing industry in Bangladesh is due on the one hand to the low wage costs and to the miserable social standards. However, as the textile trades in almost all developing countries are producing goods under comparable conditions, the high export rates in Bangladesh could only be achieved as the European Union and the USA granted this country, which is one of the poorest in the world, free access to their markets. That means that textile imports from Bangladesh were not subject to any quotas or customs duties such as have been applied to textiles from other regions up to now.
However, with the end of the World Textile Agreement at the end of 2004, the boom in the clothing industry is likely to collapse, as the country will lose the privileges it has had. From the beginning of 2005 trading in textiles and garments will be subject to the regulations set down by the World Trade Organisation (WTO). That means: import quotas with which the industrial countries used to protect their markets from cheap imports will be reduced or removed altogether. The industrial countries are finally abandoning their protectionist measures and opening their markets to imports.
The consequences for the textile industry in Bangladesh will be that it will have to maintain its position on the international market against competition from many other developing countries, in particular from China.
It can already be proved that the only country to profit from this development will be China. The Chinese textile industry is now able to sell its textile products more cheaply than any competitors in the whole world. The advantages in competition that China has in comparison to all the other countries result from the technologically advanced state of the country. In the last ten years, China has bought every other loom produced in the world and can now offer all textiles from materials to garments at high quality and at low prices.
The fears of many experts that all the other countries whose exports to the industrial countries have been regulated by quota up to now will have great difficulties are now becoming reality. In Indonesia, Sri Lanka and Bangladesh many textile factories have already been closed because China has increased its exports hugely in the last few months.
Africa
The effects of the expiry of the World Textile Agreement are already being felt in Africa. The original position there, however, is completely different.
Production has tended to be informal - the processing of cotton, dyeing, weaving, trading in textiles and tailoring - whereas the industrial production of textiles has never been as extensive in Africa as in other countries in Asia and Latin America. The setting up of FEZs failed in many African countries due to the lack of infrastructure. Transport facilities and costs and the lack of production equipment would have meant high rates of investment and the capital was often not available. That is why most African textile factories are in South Africa and in some of the countries of East Africa and they produce almost exclusively for export.
In many countries of West Africa where it is traditional that cotton is produced and processed by the producers, the local textile industry is almost at a standstill. Since the USA began to provide huge subsidies for its cotton producers, the price of cotton on the world market has sunk drastically with the result that income from exports sank. As investments were not made, today the machines which would be necessary for the local independent textile and clothing industry to develop are just not available. As a result, Mali, the largest producer of cotton in Africa, has to export its cotton to be processed in Germany and Austria. At the same time the African market was flooded with cheap garments from Asia and second-hand clothes from Europe. This has caused further damage to the local textile trade in some countries.
With the expiry of the World Textile Agreement, the situation is getting worse. As many of the African countries could not achieve the quotas allocated to them, Chinese businesses made use of the quotas of these countries to export from there to Europe and the USA. In this way Chinese capital has funded large textile factories in Kenya and Lesotho, for example. These sites have already been abandoned with the expiry of the quotas. A more dramatic development is that the entire African market is now being flooded with cheaply produced Chinese products.
The competition is continuing to displace further businesses: now even the second-hand clothes traders are complaining that they are doing less business. When Africans are now able to buy more and more new clothing from China instead of second-hand clothes from Europe, that is in itself a welcome development, but the cheap imports are hastening the bankruptcy of the African textile industry.
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