International Trade and Globalisation
Draft of a page to send to Ethical Fashion Forum, in case they will change their current one. Comment welcome. They sounded a bit softer in the line they took in about 2014, as though their party line might change, so I wrote this.
You can use Bing or Google to do a site search Ethical Fashion Forum's pages for the use of any words like "welfare state", "national insurance", "social insurance" or whatever words you use for the subject and find no reference at all, so the chance of them changing their view of globalisation remains low. There are handy links to those very search results on this page - http://veganline.com/ethical-fashion-forum.htm
While they and their backers refuse to mention anything about a welfare state on their web site, there's not much point in talking to them and offering suggestions, but this was written anyway. It doesn't try to parody their style by writing "things are very difficult - Nana, 17, Bangladesh textile worker", or "The East India Company are doing wonderfully- photographed work, buying from happy with artisans in Bengal - or plan to do so in future because they haven't started yet (case study number 4 for your essay)". Oh alright then, I've added it to the bottom of this page in a box if you're interested.
International Trade is influenced by the price of goods in different countries.
That depends on ingenious mechanisation, and the cost of labour. An area or a country with rising levels of skill and investment in machines, but a low cost of living will tend to export goods.
Trade is controlled by tariffs that divide the world into trade blocs described here. If they co-operate, it is sometimes through a trade association called the World Trade Organisation.
Trade is influenced by exchange rates, when they are manipulated upwards to control inflation, or downwards to increase exports. To make a currency more valuable, governments pay extra to creditors for government debt. Investments flow-in. The value of the currency rises. To make a currency less valuable, governments and the private sector move money out of a country into overseas investments or bank accounts.
Exchange rates are a big part of what's done my monetary policy:
low wage economies are caused by the lack of a welfare state
Trade is influenced by the ingenuity and investment of workshops making goods, but it is also influenced by the cost of living and peoples' availability to work on low wages. Some countries have a better developed welfare state, paid from taxes or national insurance on workers. Others are run by elites which choose not to have a welfare state, making the output of those countries cheaper. One complication is that new industrial towns which spring-up tend to have a higher fertility rate - more people over time - in countries with no welfare state. The lack of girl's secondary schools, the lack of health advice, and the lack of pensions for people who have no children to support them are all factors which cause people to have large families. When families grow fast, there is a lot of unemployment and wages remain very low.
The poverty of overpopulated countries spreads to other countries, as cheap goods under-cut the price of goods woven and stitched in Europe. Governments in poor countries are also scared to introduce a welfare state for fear of loosing export markets to other poor countries that don't have a welfare state. A buyer of something like clothing can easily move orders from Sri Lanka to Ethiopia for example if one country is cheaper than another.
Tariffs again: the multi fibre agreement
Textile products are some of the most labour intensive to make and easily shipped.
The multi fibre agreement was written specifically to control rapid changes in the textile trade. It ran from 1974 until 2005. There may have been a hope that in these 31 years, the cost of production in developing countries would rise because of national insurance and welfare state costs, the costs of inspecting safe factories that do not fall down, and the cost of a developed government.
No consensus: globalisation doesn't work very well to promote development
Agreement on trade is hard to find: different groups from different backgrounds have a different idea of what is "ethical" or in their interests. It is rare to find a group of people in one room who take acknowledge all the issues at the same time.
- One rule of thumb is that free trade and floating currencies achieve a good deal for everyone, with other points like different levels of welfare state or remaining currency manipulation best ignored. The hope is that these are either unimportant or will come-right in the end: a developing country might introduce better welfare systems after it develops. South Korea, for example, has even become an aid donor to poorer countries after being a very poor country within living memory. Those who talk about world trade tend to be on the right of politics and less interested in welfare systems, so they tend to take this view regardless or complication. It's common to quote Adam Smith's phrase "comparative advantage", which was a very general idea from a different age about a different subject, but the phrase is still used. The same people tend to be very interested in reducing inflation by controlling their local labour market, and favour raising the value of their local currencies so that imports are cheaper.
- One rule of thumb is that a few detailed tariffs for specific reasons will achieve a good deal for everyone, despite the reduction in world trade. The European Union imposes a 15% tariff on goods from outside an ever-widening free trade zone. Conditions for entry include some level of democracy and human rights. Some countries in need of development like Bangladesh are also included in the trade zone for no particular reason and many more have followed recently. Detailed rules are written. Ethiopia has 0% tariff access to the EU market for leather goods for example, because someone at some point decided that leather goods would help Ethiopia. Protection of the North American free trade zone can be complex too, with different tariff rates for different classes of goods.
- Conditional tariffs were once proposed in the early 70s by the World Trade Organisation. At that time the jargon word was a "social clause" and the condition of a lower tariff was signing-up to standards of the International Labour Organisation (not introducing a welfare state as suggested here). People who ran third world countries, and who do very well out of poverty, were very much against the scheme and it went no further. That's a pity because, in theory, a very general and widely understood scheme can give the government of one country confidence to intoduce a change that gets them a lower tariff, and not be under-cut in export markets by another country that doesn't.
Ethical Fashion Forum
Ethical Fashion Forum is based in the UK which is still a major market for fashion products, and a small producer of the more automated or niche-market products. Like the rest of Europe, the UK also has high unemployment. Common ethical claims would be that something is made in a democratic welfare state that needs a fashion industry to remain that way.The original rubbish page is still online unfortunately
Ethical Fashion Forum members are based all over the world. Common ethical claims made of products are that they boost employment for a particular group in an employment scheme, or that they produce a local design that earns more of the value of the product to people on lower incomes in that country, rather than a large trading conglomerate.
As a forum, we can provide no absolute answers but hope to allow groups of members with particular ethical claims to state them as clearly as possible and to refer to facts where possible.
This blog is by a vegan shoe company called Veganline.com that sells vegan shoes boots & belts PlanB4fashion.blogspot.co.uk can be read on one long page about ethics fashion and trade
Oh this is the style of taxpayer-backed promotion of fashion companies via teacher training notes. It doesn't mention that
- Monsoon's ethical claims are contradicted by the Ethical Trading Initiative that refused to sign,
- Monsoon has admitted paying below the minimum wage in India
- Monsoon has been exposed as paying below the minimum wage in the UK
- Monsoon's ex-UK suppliers state that "the ruthlessness has always been there" alongside news that it is paying their invoices late and with a 10% reduction on the agreed price
- Monsoon's backers at Ethical Fashion Forum used a charitable grant to hold a "summit" calling for companies like Monsoon not to have to pay tax.