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.

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.

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.