FOR IMMEDIATE RELEASE: October 4, 2004
Contact: Cara Santos Pianesi, 202-939-2211, csantos@CarnegieEndowment.org

A unique and successful international policy experiment in Cambodia creates a model for how trade agreements can address working conditions and labor rights and improve governance of increasingly global production systems. It marks the first time that credible information about labor conditions at individual workplaces is widely accessible at the local and international levels, and in the public and private sectors. Sandra Polaski, senior associate at the Carnegie Endowment, describes the case in a new Carnegie Paper, Cambodia Blazes a New Path to Economic Growth and Job Creation, which can be accessed at www.CarnegieEndowment.org/trade.

Five years ago, a textile trade agreement between the United States and Cambodia established quota limits on the small Asian country’s apparel exports. In a unique step, the two countries agreed that if Cambodia’s factories achieved substantial compliance with national labor laws and internationally agreed basic labor rights, the new quotas would be increased. Successful implementation required reliable information about practices and conditions in the factories—typically a major weakness for developing countries. The governments turned to the UN’s International Labor Organization (ILO), which had never monitored the private sector or engaged in on-the-ground workplace inspection.

Two seemingly small decisions were key to the success of this unprecedented model for global corporate regulation and self-regulation: the Cambodian government required factories to participate in the monitoring in order to benefit from increased quota allotments, and the ILO provided full transparency of monitoring results. International apparel firms now knew the range of conditions in supplier factories and could select partner firms accordingly. Factory owners had two strong incentives to improve treatment of workers: increased market access through the quota bonus system and increased orders from reputation-conscious buyers. In the paper, Polaski describes specific outcomes from the experiment, including boosted exports, new job creation, and better working conditions (especially in payment of wages)—all achieved at a fairly modest cost. Polaski reviews the elements of this successful model that could be replicated in future trade agreements, after the apparel quota system ends on January 1, 2005.

Sandra Polaski, senior associate, directs the Trade, Equity, and Development Project at the Carnegie Endowment. She served as the U.S. Secretary of State’s special representative for international labor affairs from 1999 to 2002, playing a leading role in U.S. policy on international labor issues.
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