South-Western - Management  
An Ugly Side of Free Trade: Sweatshops in Jordan
Topic Global Management
Key Words Free trade, National Labor Committee, global business
News Story

The United States gave Jordan a free trade agreement in 2001. Since then, apparel manufacturing in Jordan is booming, and exports to America have increased by twenty times over the last five years. However, this increase in productivity has come with problems. Some foreign workers in factories that produce garments for U.S. retailers like Target, Wal-Mart and Kohls are complaining of dismal conditions and human rights violations in the factories.

Jordanian contractors in need of laborers have been enticing workers to come from other countries like Bangladesh. Workers pay a fee of $1,000 to $3,000 for the privilege of working in Jordan, and then when they arrive in the country, their passports are confiscated and they are forced into working under reprehensible conditions, often seeing little or none of the pay that was promised to them.

The National Labor Committee, an advocacy group based in New York found substandard conditions in more than 25 of Jordan's 100 garment factories. Interviews with former and current workers support their findings. Workers tell of working 90 to 120 hours a week, of not being paid overtime guaranteed them by Jordanian law, and of living in dismal conditions, sometimes sleeping on factory floors or 10 to 20 in a small dorm room.

Wal-Mart confirmed that they had discovered serious problems with Jordanian factories as well. Beth Keck, a Wal-Mart spokesperson said that it is a continual challenge to try to improve working condition in overseas factories. Charles Kernaghan, of the National Labor Committees, who investigated the factories, admitted he was shocked by the egregious treatment he saw there. He said American companies are often slow to uncover problems because workers are coached to lie or are afraid to speak out. Some factories also send out work to substandard subcontractors without notifying American retailers. Yanal Beahsha, Jordan's trade representative to Washington said that the Jordanian government inspects factories and tries to enforce labor laws. The company also recently increased the minimum wage for citizens and guest workers.

American retailers, meanwhile, say that their policy is to work with factories to improve their conditions rather than automatically withdrawing their business. Wal-Mart gives factories a year to fix serious problems, re-inspecting them every 120 days. Doing business with the factory might be the only leverage available to try to improve the working conditions.

Questions
1.

Define free trade.

2.

NAFTA is a free trade agreement between Canada, the United States, and Mexico. What does NAFTA allow for?

3.

Retailers like Wal-Mart, Kohls, and Target say that their only negotiating tool with the Jordanian factories that exhibit human rights violations and terrible working conditions is to keep working with them and to try to get them to improve working conditions. What are your opinions about this approach?

4.

Is the free trade agreement with Jordan ultimately helpful or harmful for human rights? Be prepared to discuss your opinions in class.

Source “An Ugly Side of Free Trade: Sweatshops in Jordan,” The New York Times, , May 3, 2006, p. NA.
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