1
The International Expansion of Wal Mart and Its Effect on Women in Signatory Nations to
Free Trade Agreements
RACHEL A. CONRADT-ADAMS
Z112436
[email protected]
DECEMBER 26, 2006
SEMINAR PAPER FOR PROFESSOR ELVIA ARRIOLA
WOMEN, LAW AND THE GLOBAL ECONOMY
FALL, 2006
Submitted in Fulfillment of the NIU College of Law Graduation Writing
Requirement
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The International Expansion of Wal Mart and Its Effect on Women in Signatory Nations to
Free Trade Agreements
TABLE OF CONTENTS
I.
II.
III.
IV.
V.
INTRODUCTION ..............................................................................................1
A. Background .........................................................................................2
Background and History on N.A.F.T.A. and C.A.F.T.A................................. 3
A. The North American Free Trade Agreement and Labor .....................3
1. The North American Accord on Labor Cooperation and Enforcing
Employment Laws ...............................................................3
a. Internationally Recognized Rights Under the N.A.A.L.C. 4
b. Administrative Enforcement Under the N.A.A.L.C. . . . .5
c. Schurtman’s Study of Enforcing Employment Rights Under the
N.A.A.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
d. Arriola’s Study of Pregnancy and Gender Discrimination Under
the N.A.A.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. The Central American Free Trade Agreement’s Implementation and Labor
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1. Minimum Wage Laws in C.A.F.T.A. Member Nations ...........10
2. .Average Income in C.A.F.T.A. Nations ..................................10
WAL MART’S HISTORY AND N.A.F.T.A.’S IMPACT . . . . . . . . . . . . . . . . . . . . . . .11
A. Wal Mart and the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1. Wal Mart and Sex Discrimination Accusations in the United States . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Wal Mart and American Labor Law Enforcement . . . . . . . . . . 13
B. Wal Mart’s Expansion in Mexico Since N.A.F.T.A. . . . . . . . . . . . . . 14
1. Wal Mart and Mexico’s Wages Since N.A.F.T.A.. . . . . . . . . . .15
WAL MART’S OPERATIONS IN CENTRAL AND SOUTH AMERICA BEFORE AND
AFTER THE CENTRAL AMERICAN FREE TRADE AGREEMENT . . . . . . 16
A. Wal Mart’s Presence Prior to C.A.F.T.A. . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. Wal Mart and Its Suppliers at Guatemalan Plantations . . . . . . .16
2. Wal Mart and Suppliers in Nicaraguan Lawsuits . . . . . . . . . . . 18
a. Wal Mart’s Arguably Positive Impact on Central American Women.
. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 20
b Maquiladora Workers Make More Than Most of The Population In
Many Countries . . . . . . . . . . . . . . . . . . . . . . . . 21
c. The Deception of the “Average” Wage . . . . . . . . . . . . . . .22
B. Wal Mart and C.A.F.T.A.’s Ratification and Implementation . . . . .23
1. Direct Increase in Central American Employment . . . . . . . . . . 23
2. Wal Mart and a Guatemalan Business Award . . . . . . . . . . . . . . . 24
PERSUADING WAL MART AND OTHER MULTINATIONAL CORPORATIONS TO
INCREASE WAGES AND BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3
VI.
A. Examining the Possibility of Altering the Trade Agreements . . . . . . 25
1. Challenges to Improving Working Conditions Notwithstanding
N.A.F.T.A. or C.A.F.T.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
B. Arguments Against the Necessity of Amending the N.A.F.T.A. and
C.A.F.T.A. Treaties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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I. INTRODUCTION
This paper examines the effect of Wal Mart’s business practices on the status of women
in member nations to the North American and Central American Free Trade Agreements. While
Wal Mart has certainly provided the U.S. economy and consumers with benefits over the last two
decades, its treatment of workers, particularly women, internationally, has sparked considerable
controversy. Wal Mart is not just the largest company in the United States, but the world.1 Wal
Mart has more than 2400 stores in 15 countries outside the U.S.2
In order to understand Wal Mart Corporation’s actions in Latin America, one must
explore the economic and historical labor backgrounds of each nation that has ratified either the
North American Free Trade Agreement or Central American Free Trade Agreement. Part II
examines the background and history on the North American Free Trade Agreement and the
Central American Free Trade Agreement. It discusses the North American Accord on Labor
Cooperation. It examines the frustrations workers have in seeking recourse under the
N.A.A.L.C. Part II lists the countries that are parties to the Central American Free Trade
Agreement, each nation’s minimum wage laws as compared with a country’s average wages.
Part III examines Wal Mart’s expansion into Mexico since passage of the North
American Free Trade Agreement in 1993. It also discusses the arguable economic impact of
N.A.F.T.A. in Mexico. Part III also explores Wal Mart Corporation’s effect on the Mexican
economy and retail business.
Part IV examines Wal Mart’s role in Central American member nations prior to passage
of the Central American Free Trade Agreement. It explores working conditions in Wal Mart’s
1
Anthony Bianco et. al., Is Wal Mart Too Powerful, BUS. WK., Oct. 6, 2003 (Magazine), available at
http://www.businessweek.com/magazine/content/03_40/b3852001m2001.htm
2
Antonia Juhasz, What Wal Mart Wants from the WTO (Dec. 2005),
http://www.alternet.org/module/printversion/29464.
5
suppliers on Guatemalan plantations and Nicaraguan apparel factories. It also discusses a
lawsuit Wal Mart is defending for allegedly failing to insure its suppliers’ compliance with
minimal labor standards.
Part IV examines how the recent ratification of the Central American
Free Trade Agreement has likely resulted in Wal Mart directly opening numerous stores in each
nation that has ratified C.A.F.T.A.
Part V examines potential solutions to the problems Wal Mart is accused of facilitating,
including low wages and labor law violations in positions where large numbers of women work.
It explores whether one can explain the employment problems through failure to amend the
treaties, the natural economic cycle, or lack of consumer action.
Part VI explains the conclusion that natural economic laws explain Wal Mart’s decisions.
It also explains how improved working conditions at an apparel factory in Sri Lanka explain how
American consumers should pressure Wal Mart to provide better working conditions for women.
A. Background
In the thirteen years since N.A.F.T.A. became effective in 1993, Wal Mart has become
Mexico’s largest employer as well as America’s.3 Wal Mart has 1.8 million employees
worldwide, 1.3 of whom work in the United States and one hundred thousand of whom work in
Mexico.4 In addition to its direct employees, Wal Mart indirectly provides employment through
garment and agricultural suppliers worldwide.5 Banana plantations in Central America receive
huge business from Wal Mart, and have raised their production quotas significantly in recent
3
Elizabeth Cohn, Wal Mart: A College Curriculum, (Dec. 2005), http://walmartwatch.com/docs/walmartcurriculum.pdf, at 4 [hereinafter Cohn] (describing Wal Mart’s impact on America in introduction, generally).
4
Tim Werner, Wal-Mart Invades and Mexico Gladly Surrenders, N. Y. TIMES (Dec. 6, 2003), at A 1.
5
http://www.laborrights.org (click on “projects” on left side hyperlink; then follow to “What Do Wal Mart’s Low
Prices Mean for Women Globally hyperlink; then return to Wal Mart Projects page, click on “Download Complaint”
hyperlink).
6
years.
6
In California, a lawsuit alleges that Wal Mart has failed to enforce compliance with
labor rights in its Nicaraguan suppliers’ garment factories.7 Women comprise a majority of
workers at such garment factories.
8
II. BACKGROUND AND HISTORY ON N.A.F.T.A AND C.A.F.T.A.
A. The North American Free Trade Agreement and Labor
The North American Free Trade Agreement abolished most tariffs on products traded
between Canada, Mexico, and the United States. N.A.F.T.A. received the U.S. Government’s
approval in 1993 and became effective in 1994.9 When the three countries finished negotiating,
they also implemented an accompanying labor agreement.10 The labor side agreement, the North
American Accord on Labor Cooperation, hereinafter “N.A.A.L.C.,” was the first international
trade agreement with labor provisions.11
1. The North American Accord on Labor Cooperation and Enforcing Employment Laws
However, critics of the N.A.A.L.C. claim that it has failed not only to provide adequate
enforcement provisions for labor laws, but also fails even in theory to specifically address
several pressing concerns of the feminist movement. 12 N.A.A.L.C. only requires that each of the
member nations, Mexico, Canada and the United States, enforce its own laws.13 Scholar Nicole
Grimm notes that the N.A.A.L.C. was the first international labor agreement of its kind and
6
Labor Rights Wal Mart Projects, supra note 5.
Doe et al. v. Wal Mart, Corp., No. CV 05-7307 NM (MANx) (Super. Ct. Cal., Los Angeles County Ct. Cent. Dist.
Filed Sept., 2005), available at http://www.laborrights.org [hereinafter Doe] (Click on Projects hyperlink on left
side, then scroll down and Click on Wal Mart; then on Right Side, click on Download Complaint).
8
Nancy Cleeland et al. Scouring the Globe to Give Shoppers an $8.63 Polo Shirt, L.A. TIMES, Nov. 25., 2003 §
(Business).
9
Nicole Grimm, The North American Agreement on Labor Cooperation and Its Effects on Working Women in
Mexican Maquiladoras, 48 AM. U. L. REV. 179, (Oct. 1998) [hereinafter Grimm] (Describing Background and
History on North American Free Trade Agreement).
10
Id. at 180.
11
Grimm, supra note 9, at 180.
12
Grimm, supra note 9, at 184, 196.
13
Grimm, supra note 9, at 179, 196.
7
7
drafted in only six months, a very short time period.
14
The N.A.A.L.C. received approval
without lengthy debates to ensure adequate provisions.15 The accord also fails to specifically
mandate any protections for workers seeking parental leave or facing sexual harassment. 16
Those concerns, inter alia, predominantly affect large numbers of women. Grimm attributes the
failure to address these and other feminist issues partially because of the time in which
lawmakers drafted it, and partially because of a patriarchal culture in Mexico that discourages
women from seeking government office.17
a. Internationally Recognized Rights Under the N.A.A.L.C.
Among N.A.A.L.C.’s substantive provisions, it provides for eleven internationally
recognized workers’ rights between the three nations.18 Those rights include freedom of
association, the right to bargain collectively, the right to strike, some minimal employment
standards, the right to be free from forced labor, prohibitions against child labor, minimum wage,
no employment discrimination, equal pay for women, preventing occupational hazards, and
workers compensation.19 However, it only provides that each respective nation enforce its own
laws, and fails to directly bind multinational corporations.20 National Administrative Offices in
each of the three nations, hereinafter N.A.O.s, have the right to examine whether each nation in
which multinational corporations conduct business consistently enforces its labor laws.21
14
Grimm, supra note 9, at 180.
Grimm, supra note 9, at 180.
16
Grimm, supra note 9, at 196.
17
Grimm, supra note 9, at. 180-182.
18
Grimm, supra note 9, at 196.
19
Grimm, supra note 9, at 192, 196.
20
Grimm, supra note 9, at 196.
21
Monica Schurtman, Los ‘Jonkeados’ and the N.A.A.L.C.: The Autotrim/Customtrim Case and Its Implications for
Submissions Under the N.A.F.T.A. Labor Side Agreement, 22 ARIZ. J. INT’L & COMP. L. 291, at 317-321 (2005)
[hereinafter Schurtman] (discussing problems with cumbersome procedure involving labor complaints).
15
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b. Administrative Enforcement under the N.A.A.L.C.
The N.A.A.L.C also requires each signatory nation to establish its own National
Administrative Office to investigate alleged violations of any enforceable labor rights. 22 Such
infractions may have been committed in any given member nation over which the N.A.O. has
jurisdiction for reason of business transactions.23 Filing a petition through an individual member
nation’s N.A.O. constitutes the first step in reporting a violation of a labor right.24 However,
such labor provisions only protect workers when their governments consistently fail to enforce
their own labor laws in question, and allow no direct right of action against employers.25
The N.A.O. then conducts a public hearing and may consult with another nation’s
N.A.O.26 If the investigation shows a violation occurred; the N.A.O. will impose or recommend
corrective action on the offending government, but not any sanctions for a private business.27 If
the N.A.O. finds a member nation is consistently failing to enforce one or all of the following
three N.A.A.L.C. labor rights; freedom of association, the right to collective bargaining, and the
right to strike, it may impose a “ministerial consultation” as the highest sanction available.28 An
N.A.O. might recommend an evaluation committee of experts to remedy patterns of a nation
failing to enforce several other rights, additionally but that “penalty” constitutes the highest level
of correction available.29 Those other rights with a maximum medium level penalty of an
22
Grimm, supra, note 9, at 189; see also, Schurtman, supra note 21, at 291, 298 (discussing the administrative
process to file complaints under N.A.F.T.A.).
23
Schurtman, supra note 21, at 298.
24
Schurtman, supra note 21, at 309-337.
25
Schurtman, supra note 21, at 209, 301.
26
Schurtman, supra note 21, at 301.
27
Schurtman, supra note 21, at 301.
28
Schurtman, supra note 21, at 301, 329.
29
Schurtman, supra note 21, at 301.
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Evaluation Committee of Experts include, among other things, violations of the prohibitions on
employment discrimination and equal pay.30
The N.A.O. may refer findings of health and safety, child labor, or minimal employment
standard violations to a Council of Ministers, or an arbitration panel may impose sanctions.31
However, though theoretically an arbitration panel has the power to increase tariffs on the
offending nation, the N.A.O. almost never imposes either arbitration panels or tariff sanctions.32
For failing to protect women from discrimination, a nation can only receive the most minor
“penalties” of ministerial consultations or an Evaluation Committee of Experts to determine
better methods of enforcement.33
Therefore, in a N.A.F.T.A. signatory nation, if Wal Mart or any private multinational
corporation were hypothetically assumed to have violated laws prohibiting sexual harassment or
requiring maternity leave, it would not face any international sanctions from any N.A.O. under
N.A.F.T.A.34 Only the government failing to enforce any given labor right against Wal Mart
would face penalties.35 Furthermore, the worst penalty an offending national government would
face involves a ministerial consultation or E.C.E. conference on how better to enforce laws, not
fines or tariff penalties.36 Therefore, under the provisions of the N.A.A.L.C., Wal Mart faces no
direct sanctions for violating women’s labor rights.37 Improving enforcement would accomplish
30
Grimm, supra note 9, at 192-197.
Id.
32
Grimm, supra note 9, at 192-197.
33
Grimm, supra note 9, at 192-197; see also Schurtman, supra note 21, at 301, 329.
34
Grimm, supra note 9, at 192-197.
35
Id.
36
Grimm, supra, note 9, at 192-197.
37
Id.
31
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little save for engaging the government in ministerial talks on how it might better enforce its
own laws.38
c. Schurtman’s Study of Enforcing Employment Rights Under the N.A.A.L.C.
As a study of workers from Autotrim and Customtrim in Mexico shows, even workers
who establish violations of the N.A.A.L.C.’s most valued worker rights may spend years fighting
through the various levels of administrative agencies with little or no satisfaction.39 Due to
dissatisfaction with unsafe materials at work and perceived inaction by a Mexican governmental
union, employees of Autotrim and Customtrim attempted in 1996 to improve working
conditions.40 The workers tried to improve those working conditions through establishing a
platform independently of the governmental unions.41 Six months later, Customtrim fired 28 of
the individuals trying to secure better and safer working conditions.42 As the workers educated
themselves about their rights and found no recourse with Mexican administrative agencies, or
their so-called “union,” they finally filed a complaint with the U.S. N.A.O. in 1998.43
Although the N.A.O. found numerous labor violations to have occurred at Autotrim and
Customtrim, it took four years for the U.S. Government to even take minimal action.44 After the
aggrieved workers lobbied Congress, four years later the N.A.O. and the U.S. Department of
Labor Secretary Elaine Chao issued a declaration.45 She announced that the U.S. and Mexican
governments were forming an intergovernmental working group to study the labor problems,
38
Grimm, supra note 9, at 192-197.
Schurtman, supra note 21, at 309-334.
40
Id.
41
Schurtman, supra note 21, at 309-334.
42
Schurtman, supra note 21, at 309.
43
Schurtman, supra note 21, at 309-316.
44
Id.
45
Schurtman, supra note 21, at 309-337.
39
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which occurred at Autotrim and Customtrim.
46
That announcement further infuriated
workers, who had fought for years hoping the Mexican government would face sanctions for
failing to enforce its own labor laws.47 The first adverse employment action taken against those
workers occurred in 1997, and they complained to the N.A.O. by 1998.48 Yet the U.S.
Government, closely following N.A.A.L.C. administrative procedure, implemented no remedial
solution until 2002, five years after the violation occurred.49 Even then, it refused to issue any
formal sanctions.50 Hypothetically, if Wal Mart employees in Mexico sought sanctions against
the Mexican Government for consistently failing to enforce Wal Mart’s compliance with sex
discrimination laws under N.A.F.T.A., such employees would have an extremely difficult time
with the bureaucratic process.51
d. Arriola’s Study of Pregnancy and Gender Discrimination Under the N.A.A.L.C.
Law Professor and Attorney Elvia Arriola has investigated maquiladoras’ operations
since N.A.F.T.A.’s implementation in Mexico.52 Her study discussed Human Rights Watch’s
interviews with women working for multinational corporations such as General Electric, Zenith,
Honeywell, and Hallmark Cards.53 Those women reported having to regularly submit to
pregnancy testing as a condition of employment, and facing termination if they tested positive.54
As noted in part II, supra, the N.A.A.L.C. fails to specifically address any prohibitions on
discrimination against workers who seek parental leave or protection from sexual harassment,
46
Id.
Schurtman, supra note 21, at 332, 337.
48
Schurtman, supra note 21, at 309-316.
49
Id, at 304-309, 332.
50
Schurtman, supra note 21, at 304-309, 332.
51
Id.
52
Elvia Arriola, Voices from Barbed Wires, 49 DEPAUL UNIV. L. REV. 729, 786. (2000) [hereinafter Arriola]
(discussing research on working conditions into multinational factories on the Mexican border).
53
Id.
54
Arriola, supra note 52, at 786.
47
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two labor provisions affecting large numbers of women.
55
Arguably, such pregnancy
discrimination and implicit inquiries into female workers’ sex lives constitutes both sexual
harassment and violations of would-be parental leave requirements under N.A.F.T.A. if it
required effective labor discrimination law enforcement.56 Consequently, Wal Mart or any other
corporation like it, probably has the ability under the N.A.F.T.A labor provisions to avoid
enforcing policies against sexual harassment or mandating adequate family leave.57
B. The Central American Free Trade Agreement’s Implementation and Labor Provisions
In 2005, the U.S. Government agreed to participate in another free trade zone, known as
the Central American Free Trade Agreement. The agreement would expand the U.S.’s free trade
zone to include Guatemala, Honduras, El Salvador, Costa Rica, Nicaragua, and the Dominican
Republic.58 C.A.F.T.A. would also reduce tariffs, among other restrictions on international
trade.59 Interestingly, a 2005 news release from the White House boasting of President Bush’s
“achievement” in passing C.A.F.T.A., only listed as benefits what the treaty would do for
American textile and agricultural industries.60 Like N.A.F.T.A., C.A.F.T.A.’s labor requirements
provide that each nation enforce its respective labor laws with similar enforcement
mechanisms.61
However, critics of C.A.F.T.A. note that C.A.F.T.A. contains no specific prohibition of
any gender discrimination at all, and therefore provides even weaker protections for women than
55
Grimm, supra note 9, at 192-197.
Grimm, supra note 9, at 192-197.
57
Grimm, supra note 9, at 192-197.
58
Marisa Anne Pagnattaro, Leveling the Playing Field: Labor Provisions in C.A.F.T.A., 29 FORDHAM INT’L L.J.
386 (2006) [hereinafter Pagnattaro] (discussing C.A.F.T.A.’s labor provisions, substantive jurisdiction, and benefits
to signatory nations).
59
C.A.F.T.A. Will Create Jobs and Level the Playing Field for American Workers,
http://www.whitehouse.gov/news/releases/2005/07/print/20050715-1.html.
60
Id.
61
Pagnattaro, supra note 58, at 422.
56
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those labor provisions under N.A.F.T.A.
62
Furthermore, Wal Mart would face no direct
sanctions under the labor provisions of C.A.F.T.A. for failing to enforce laws prohibiting gender
discrimination in any form.63
1. Minimum Wage Laws in C.A.F.T.A Member Nations
Compared to U.S. wages, the Central American C.A.F.T.A. member nation require much
lower minimum wages than the law requires of American employers.64 An AFL-CIO study
shows that Guatemala’s minimum wage comes $4.96 a day in U.S. Dollars; El Salvador’s, $5.24
a day; Honduras, $4.88 a day; Costa Rica, $523 a month; Nicaragua’s, $55.74 a month.65
Minimum wages in the Dominican Republic depend on one’s occupation, but can fall as low as
$119 dollars a month.66 By contrast, American workers have a minimum wage of more than $5
dollars an hour.67 However, C.A.F.T.A., as noted supra in part II B, does not allow a private
right of action against employers for violations.68
2. Average Income in C.A.F.T.A. nations
The average Latin American makes significantly less in wages than the average
American, but citizens manage to survive and support families on the lower wages. The World
Bank’s Custom Report of average gross national per capita income shows an overall increase in
average income over the last year in each C.A.F.T.A. member nation.69 In 2006, the average
62
Pagnattaro, supra note 58, at 417, 418.
Pagnattaro, supra note 58, at 417, 418.
64
Don McIntosh, C.A.F.T.A. Fight Boils Down to Benefit From Free Trade, (May, 2005),
http://www.nwlaborpress.org/2005/5-20-05C.A.F.T.A..html
65
Id.
66
See McIntosh, supra note 64.
67
Senate Rejects Minimum Wage Hike, (Oct. 2005),
http://www.cbsnews.com/stories/2005/10/20/politics/main957660.shtml.
68
Pagnattaro, supra note 58, at 417, 418.
69
World Bank Report Doing Business, http://www.doingbusiness.org/CustomQuery/ViewCustomReport.aspx;
http://www.doingbusiness.org/ExploreEconomies/EconomyCharacteristics.aspx, (Last visited Dec. 22, 2006),
[hereinafter World Bank] (discussing the average income in most world countries between 2005 and 2006).
63
14
person in El Salvador made $2,450 dollars per year, an increase of an average hundred dollars
since 2005.70 The average person in the Dominican Republic made $2,370, an increase of almost
$300 dollars since 2005.71 In 2006, the average Guatemalan made $2,400 dollars, an increase of
nearly $300 dollars since 2005.72 In 2006, the average Honduran made $1,190 dollars, an
income increase of $60 dollars since 2005.73 The average Nicaraguan made $910 dollars in
2000, but only $790 in 2005.74
In sharp contrast, the average American made more than $43,000 dollars in 2006 and
more than $40,000 dollars in 2005.75 Consequently, a Latin American considers a significantly
lower wage acceptable.76 Therefore, Wal Mart could probably persuade potential employees to
work for its retail outlets offering them significantly less money than the average American Wal
Mart employee. If Wal Mart pays what the market will bear in Central America, it is paying its
newly hired employees many of whom likely include women significantly less than the $17,000
dollars they would make at a U.S. Wal Mart store.77
III. WAL MART’S HISTORY AND N.A.F.T.A’S IMPACT
A. Wal Mart and the United States
Wal Mart has been operating in the United States since it opened its first store in 1962 in
Rogers, Arkansas.78 Between 1962 and 2006, it grew to become the United States’ largest
employer, and up through the mid 1980s, produced its products exclusively in America.79 Wal
70
World Bank, supra note 69.
World Bank, supra note 69.
72
World Bank, supra note 69.
73
World Bank, supra note 69.
74
World Bank, supra note 69.
75
World Bank, supra note 69.
76
World Bank, supra note 69.
77
Cohn, supra note 3, at 15.
78
http://en.wikipedia.org/wiki/Wal_Mart; http://www.walmartfacts.com
79
Cohn, supra note 3, at 7, 21.
71
15
Mart currently employs more Americans than any other company in the United States, 1.3
million in 3600 stores within the 50 states.80
The way Wal Mart conducts business at its stores exclusively within the United States
provides information as to how it operates notwithstanding international factors like culture or
laws. One can look its history and practices in the United States to see how it operates in the
absence of trade restrictions or foreign cultural factors influencing its decisions. Wal Mart’s
American practices therefore provide information on how its unique corporate culture influences
its decisions to pay wages or treat women absent foreign governmental or cultural mandates.
1. Wal Mart and Sex Discrimination Accusations in the United States
Wal Mart is currently defending itself against the largest class action suit in U.S.
History.81 The class includes approximately 1.5 million women both previously and currently
employed at the store.82
Inter alia, the lawsuit alleges that Wal Mart’s corporate culture includes gender
stereotyping about the appropriate role of women.83 Approximately 80 percent of the time, Wal
Mart neglects to post openings for company promotions, and bosses often tap potential
candidates “on the shoulder.”84 The plaintiffs alleged more often than not, management
extended those invitations to apply for promotions exclusively to male candidates.85 Currently
women at Wal Mart comprise only 33 percent managers yet roughly 65 percent of hourly
employees.86 The lawsuit alleges company-wide policies also have a disparate impact in
80
Cohn, supra note 3, at 7.
Cohn, supra note 3, at 16.
82
Dukes et al. v. Wal Mart Corp., 222 F.R.D. 137, 141. (N.D. Cal. 2004) [hereinafter Dukes] (discussing whether to
dismiss the largest class action suit in U.S. history and various evidence).
83
Id, at 150.
84
Id, at 148.
85
Id, at 147-152.
86
Id, at 148.
81
16
violation of Title VII against women, since advancements require candidates to move across
the country.87 Women often find complying with the obligation to move more difficult to
reconcile with family obligations.88
2. Wal Mart and American Labor Law Enforcement
The lawsuit alleges Wal Mart’s uniform corporate culture across America places subtle
pressure on managers to continue using gender stereotypes about appropriate roles to maintain
the status quo in management.89 Furthermore, Plaintiff’s statistical experts found that throughout
American Wal Mart stores, earnings paid to women ranged between 5 and 15 percent less than
total earnings paid to similarly situated men in each year of the class period.90 Furthermore,
opponents of Wal Mart argue it has a worse record on gender discrimination than a similar store
chain, Target, which has 50 percent female management.91
Wal Mart has also faced repeated allegations of violating American labor laws paying
substandard wages.92 Wal Mart Corporation pays its average full time employee $17,000 per
year.93 Such wages fall below the average for American retailers.94 By contrast, Costco paid
American retail employees an average hourly wage of $15.97.95 Wal Mart has faced allegations
of violating federal and state labor laws by forcing employees to work “off the clock” without
pay, failing to pay overtime, and preventing workers from taking lunch breaks.96
87
Id, at 148.
Id, at 148.
89
Id, at 150-152.
90
Id, at 156.
91
Cohn, supra note 3, at 16.
92
Cohn, supra note 3, at 16.
93
Cohn, supra note 3, at 16.
94
Cohn, supra note 3, at 16.
95
Cohn, supra note 3, at 12.
96
George Miller, Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart, at 5.
http://edworkforce.house.gov/democrats/WALMARTREPORT.pdf (discussing legal challenges Wal Mart is facinng
and criticizing its business practices to the U.S. Congress).
88
17
B. Wal Mart’s Expansion in Mexico Since N.A.F.T.A.
The North American Free Trade Agreement has undoubtedly contributed to Wal Mart’s
expansion into Mexico over the last 15 years.97 Wal Mart did not open a single store outside the
United States until 1991.98 Since 1993 when N.A.F.T.A. was enacted, Wal Mart has become the
largest employer in Mexico as well as the U.S.99 It has more than 700 stores and sells 6 billion
dollars worth of food a year.100 Furthermore, U.S. imports from Mexico increased 229 percent
between 1993 and 2001, and U.S. exports to Mexico increased 144 percent.101 Sixty percent of
those exports arrived at factories in Mexico.102 Wal Mart now controls 30 percent of
Supermarket sales in Mexico, and does 11 billion dollars worth of business in Mexico.103 Wal
Mart now employees more than 100 thousand Mexican citizens on its payroll.104 Wal Mart now
does more business in Mexico than it does in any country worldwide, except the United States.105
Wal Mart’s recent and explosive expansion into Mexico since 1991 provides strong
circumstantial evidence N.A.F.T.A. has caused its expansion there since its passage in 1993.106
University of Massachusetts Economics Professor Christopher Tilly has done extensive
personal investigation on Wal Mart’s practices in Mexico City, and stated in an interview online
that its “safe to say” a majority of the Wal Mart’s Mexico retail employees are women.107
Detailed information on gender disparity in wages could not be found by investigating Wal Mart
97
Juhaz, supra note 2.
Juhaz, supra note 2.
99
Werner, supra note 4.
100
Werner, supra note 4.
101
Werner, supra note 4.
102
Werner, supra note 4.
103
Werner, supra note 4.
104
Werner, supra note 4.
105
Werner, supra note 4.
106
Cohn, supra note 3, at 16.
107
Online Interview with Christopher Tilly, Ph.D. Economics Professor, University of Massachusetts at Lowell, on
internet, (Nov. 20, 2006).
98
18
or its critic’s web pages. However, if Wal Mart’s Mexican retail stores have similar practices
as those in the United States, the women in Mexican Wal Mart stores probably make less than
men.108 For example, in the United States Wal Mart managers must move an average of three
times during their careers to obtain promotions.109 In both Mexico and the United States,
common knowledge demonstrates that women’s familial obligations more likely keep them
constrained to living in specific geographical areas. As Ms. Grimm mentioned in her analysis,
Mexican culture values a domestic role for women.110 Wal Mart also overtly tries to maintain a
uniform corporate culture in all of its stores. 111 Likewise, in Mexico more women than men
may fail to comply with requirements for promotions, causing them to earn less. However,
statistical evidence of wages could not be found. Furthermore, Wal Mart may have provided a
benefit of new jobs for Mexican women, considering the large number of Mexican cities in
which it has now opened stores.112
1. Wal Mart and Mexico’s Wages Since N.A.F.T.A.
Since Wal Mart has expanded into Mexico, average real wages in Mexican
manufacturing are lower today than they were before N.A.F.T.A. and the lowest wages have
declined by 20 percent, to an average of four dollars a day.113 However, many different factors
can influence Mexico’s average real wage: the country’s politics, its enforcement of labor laws,
agricultural production, and the wages corporations other than Wal Mart pay. So one cannot
conclude that Wal Mart by itself has caused, or even significantly contributed to, a lowering of
Mexican wages.
108
Dukes, supra note 82, at 150-152.
Dukes, supra note 82, at 150-152.
110
Grimm, supra note 9, at 184.
111
Werner, supra note 4.
112
Werner, supra note 4.
113
Juhaz, supra note 2.
109
19
IV. WAL MART’S OPERATIONS IN CENTRAL AND SOUTH AMERICA BEFORE THE
CENTRAL AMERICAN FREE TRADE AGREEMENT
As noted in part I, supra, the Latin American signatory nations to C.A.F.T.A. require
considerably lower wages than in the United States. The United States and a majority of the
C.A.F.T.A. nations in Latin America already operate according to the C.A.F.T.A. treaty. 114 But
common knowledge shows that Wal Mart conducted business in Latin America long before that,
particularly with subcontractors.115
A. Wal Mart’s Presence Prior To C.A.F.T.A.
1. Wal Mart and its Suppliers at Guatemalan Plantation Plants
C.A.F.T.A. went into effect between the United States and Guatemala during the summer
of 2006.116 But Wal Mart’s indirect employment in Guatemala began long before that.117 An
advocacy group for Latin American women, STITCH Online, has criticized Wal Mart for its
practices with Guatemalan Banana plantations.118 It noted a speech by Maria Carmen Molina, a
SITRABI Banana Union leader from Guatemala.119 Molina stated Wal Mart purchases a large
number of bananas from her plantation site.120 The vast majority of women on Molina’s
plantation bag bananas.121 When Wal Mart arranged a contract with Molina’s plantation, it
insisted on large increases in production for the same price, resulting in the women having to
114
http://www.commerce.gov/opa/press/Secretary_Gutierrez/2006_Releases/June/30_Guatemala_stmnt.htm (last
visited Dec. 16, 2006) [hereinafter Commerce] (announcing that U.S. and Guatemalan governments had officially
begun trade tariff reductions after C.A.F.T.A’s passage with other information).
115
What Do Wal Mart’s Low Prices Mean for Women Globally, http://www.laborrights.org [hereinafter Women]
(click on “projects” on left side hyperlink; then follow to “What Do Wal Mart’s Low Prices Mean for Women
Globally pdf hyperlink).
116
Women, supra note 115.
117
Women, supra note 115.
118
Women, supra note 115.
119
Women, supra note 115.
120
Women, supra note 115.
121
Women, supra note 115.
20
work much harder without bonuses.
122
Wal Mart’s demand for increased production required
that plantation workers not only clean, weigh and package the bananas, but also bag and price
them for the same rate of pay.123 The banana company refused to pay women more for
completing these extra steps, given the restraints Wal Mart placed on its finances.124 These
women had to complete Wal Mart’s extra steps, and many of them failed to reach their goals,
despite working harder than ever, and therefore lost their jobs.125 Additionally, because many of
these women no longer received their bonuses, many of them failed to make a living wage.126
Molina reported many more women experienced work-related injuries because they had to
produce at a rate that exceeded their physical capacities.127
However, as noted supra, Guatemala’s requires a minimum wage of $4.86 a day.128
Women on banana plantations such as Ms. Molina’s make an average of between $4 and $7
dollars a day.129 The U.S. Department of Labor’s reports on Guatemala noted that as recently as
the mid 1990s, 53 percent of Guatemala’s population lived below the international poverty
standard of $1 dollar a day.130 While a wage of roughly $5 dollars a day on a Guatemalan
plantation plant may sound horrendous to an American worker, such wages Wal Mart’s suppliers
pay fall above the average for Guatemalan standards.131 However, it costs about $170 dollars a
month to supply food for a family.132 Based on that data, Wal Mart’s wages likely fail to supply
122
Women, supra note 115.
Women, supra note 115.
124
Women, supra note 115.
125
Women, supra note 115.
126
Women, supra note 115.
127
Women, supra note 115.
128
See McIntosh, supra note 64.
129
Women Workers in the Banana Industry, http://www.stitchonline.org/index.asp (scroll down and click on Women
Workers in the Banana Industry link).
130
Guatemala, http://www.dol.gov/ILAB/media/reports/oiea/wagestudy/FS-Guatemala.htm (U.S. Department of
Labor’s research on Guatemala’s economy).
131
Guatemala, supra note 130.
132
Guatemala, supra note 130.
123
21
a woman as the primary household earner with enough to support a family.
133
However, it is
unlikely that Wal Mart’s business with the aforementioned banana plantation has increased
Guatemalan poverty. Evidence shows only that Wal Mart has paid what the Guatemalan market
bears.134
2. Wal Mart and Suppliers in Nicaragua: Lawsuits
International Labor Rights Fund attorneys last year joined with a California law firm,
representing hundreds of workers at Wal Mart suppliers throughout the world, in a class action
lawsuit.135 The lawsuit included Plaintiffs in Nicaragua, a C.A.F.T.A. member nation.136 One
plaintiff, referred to as pseudonym “Jane Doe IX” claims her employer required her to work
more than 70 hours per week at King Yong in Nicaragua, a Wal Mart supplier.137 Ms. “Doe”
said her employer required the extra hours for one of Wal Marts major shirt projects.138 She
stated she received no overtime pay and claimed she worked for unpaid time.139 The lawsuit
complaint stated the supplier locked its factory doors with electric wires surrounding the Wal
Mart supplier factory.140 The lawsuit complaint implied the supplier’s managers locked its gates
to prevent workers from attempting to leave before they’d worked their full 17 or so hours.141
Nicaragua law mandates overtime pay for more than 48 hours worked in a week, yet the
plaintiffs claimed Wal Mart refused to pay their bosses enough for overtime.142 The Nicaraguan
class representatives said they frequently saw Wal Mart quality control personnel visiting the
133
Guatemala, supra note 130.
Guatemala, supra note 130; see also Women, supra note 115.
135
Doe, supra note 7, at 27-33.
136
Doe, supra note 7, at 27-33.
137
Doe, supra note 7, at 27-33.
138
Doe, supra note 7, at 27-33.
139
Doe, supra note 7, at 27-33.
140
Doe, supra note 7, at 27-33.
141
Doe, supra note 7, at 27-33.
142
Doe, supra note 7, at 27-33.
134
22
factory and inspecting the orders.
143
The class representatives stated Wal Mart’s supplier
either reprimanded or fired employees who complained about abusive working conditions.144
Surveys by the International Labor Rights Fund of Wal Mart supplier employees show those
employees made an average of 23 cents an hour producing Wal Mart products.145 Women
comprise 80 percent of women in such factories.146
Nicaragua mandates that its employers pay a minimum wage in manufacturing of $55.74
a month.147 Computing the hourly rate of pay needed to comply with Nicaragua’s regular
maximum work week, mathematically Wal Mart would need to pay its suppliers enough for the
workers to receive $1.15 an hour.148 Though no exact information exists on the exact rate Wal
Mart pays its suppliers directly, to support a living wage Wal Mart would need to pay its
suppliers enough to increase fivefold what the suppliers pay their workers right now, 23 cents an
hour.149 That figure, of course, assumes the information provided in the lawsuit complaint
proves accurate.150 Given the numerous reports of Wal Mart’s insistence to its suppliers that
they provide greater numbers of products for the same prices, Wal Mart probably fails to pay its
suppliers enough money to financially support their employees.151
143
Doe, supra note 7, at 27-33.
Doe, supra note 7, at 27-33.
145
Sarah Anderson, Wal Mart’s Pay Gap, http://www.laborrights.org [hereinafter Anderson] (click on Projects on
left side of screen, then scroll down and click on Wal Mart, then click on Wal Mart’s Pay Gap pdf link).
146
Ellen Israel Rosen. The Wal-Mart Effect: The World Trade Organization and the Race to the Bottom, 8 CHAP.
L. REV. 261. (2005) [hereinafter Rosen] (starts by discussing the fact that 80 percent of women working in Latin
American factories are women); see also Leslie Salzinger, Genders in Production: Making Women in Mexico’s
Global Factories, at 9-35 (University of California Press 2003).
147
McIntosh, supra note 64.
148
McIntosh, supra note 64; see also Anderson, supra note 145; see also Doe, supra note 7, at 27-33.
149
McIntosh, supra note 64; see also Anderson, supra note 145; see also Doe, supra note 7, at 27-33.
150
McIntosh, supra note 64; see also Anderson, supra note 145; see also Doe, supra note 7, at 27-33.
151
Charles Fishman, The Wal Mart You Don’t Know, 77 Fast Comp., (Dec. 2003), at 68; see also McIntosh, supra
note 64; see also Anderson, supra note 145; see also Doe, supra note 7, at 27-33.
144
23
a. Wal Mart’s Arguably Positive Impact on Central American Women.
While American workers who make an average of more than $40 thousand dollars per
capita income may find wages at Central American plantations and factories offensively low, it
appears at least some Central American workers may benefit from Wal Mart’s presence. While
Wal Mart and other multinational corporations have undoubtedly expanded into other countries
with less expensive labor forces, studies show that a low wage may be in the “eye of the
beholder.”152 Multiple economic studies such as those conducted by Moran, Aitken, Harrison,
and Lipsey document that, even after controlling for other factors, multinational firms “pay
higher wages than domestic firms” in Latin American countries.153 More often than not,
however, contractors actually pay the wages in these factories, while multinational corporations
request orders from them.154
Powell and Skarbek’s research shows that in countries where multinational corporations’
factories, including Wal Mart’s suppliers, exist, people who work in the corporations’ factories
receive above average wages.155 In multinational corporations’ factories, the average
Nicaraguan makes 76 cents an hour while working close to 70 hours per week; the average
Honduran worker makes $1.31 per hour working at close to 70 hours per week; the average
worker for 70 hours a week makes $1.38 per hour in El Salvador; and the highest multinational
supplier wages in Central America are in Costa Rica where the average worker is paid the
equivalent of $2.38 in U.S. dollars working close to 70 hours per week.156 Consequently, a
152
Benjamin Powell, David Skarbek. Sweatshops and Third World Living Standards: Are the Jobs Worth the
Sweat? Independent Institute Working Paper, No. 53, (Sept. 2004),
http://www.independent.org/publications/working_papers/article.asp?id=1369, [hereinafter Powell] (click on
Download PDF file).
153
Powell, supra note 152, at 3.
154
Powell, supra note 152, at 4.
155
Powell, supra note 152, at 5-14.
156
Powell, supra note 152, at 5.
24
majority of women who work for Wal Mart suppliers in Central American countries may
make more than the average person.
However, evidence of a gender disparity in wages for Central American signatory nations
in which Wal Mart has opened stores cannot be found. One can only speculate as to whether
Wal Mart’s uniform corporate culture causes Wal Mart to pay women and men equally in
Central America.157 Furthermore, C.A.F.T.A. allows no private right of action against Wal Mart
to enforce any equal pay provisions in such countries.158
b. Maquiladora Workers Make More than Most of the Population in Many Countries
One could argue that Central American economies cannot afford to enforce or pass laws
requiring wages as high as the required $5.15 an hour in America.159 Comparatively speaking,
suppliers’ apparel jobs may benefit their primarily female employees by paying them more than
the majority of the poor population.160 In Costa Rica, the World Bank notes that 94.5 percent of
the workforce lives below $2 dollars a day; in El Salvador, nearly 60 percent of the population;
in Honduras, almost half the population; in Nicaragua, more than 80 percent.161
Therefore, using the “average wages” cited in part a, supra, a majority of apparel workers
for multinational firms make more than the average person in their countries, including those
who serve Wal Mart.162 Such women may fare better economically because of, rather than in
spite of, the fact that they work for suppliers of Wal Mart.163
157
Dukes, supra note 82, at 150-152.
Pagnattaro, supra note 58, at 386, 417, 418.
159
Fair Labor Standards Act, http://www.dol.gov/compliance/laws/compflsa.htmPublicL.109-279/8-17-06
(discussing minimum wage U.S laws).
160
Powell, supra note 152, at 3-5; see also, Rosen, supra note 146.
161
Powell, supra, note 152, at 6-8.
162
Powell, supra note 152, at 1-8; see also, Doe, supra note 7, at 27-33; see also, Anderson, supra note 145.
163
Powell, supra note 152, at 1-8; see also, Doe, supra note 7, at 27-33; see also, Anderson, supra note 145.
158
25
c. The Deception of the “Average” Wage
However, as labor leader Andy Stern notes in his book, “A Country That Works”
describing an average wage can deceive people into thinking a significant portion of the
population makes at or above the “average wage.”164 In reality, a couple of millionaires’ salaries
can grossly distort what appears to be the “mean” income. 165 Andy Stern noted an economist’s
analysis of three nurses sitting in a break room during their shifts.166 The first nurse earns $80
thousand dollars per year and the other two nurses each earn $50 thousand per year, so the
average amounts to $50 thousand.167 However, when the nurse leaves to answer a patient call,
and a C.E.O. patient enters the room with three nurses, the average wage becomes more than $21
million.168 No one got a raise, but one distortedly high salary causes it to appear that each nurse
is wealthy. 169
Similarly, in Latin America, if one or two wealthy managers’ wages are factored into
much more poorly paid Latin American’s workers’ salaries, it could falsely cause multinational
corporations’ suppliers’ wages, including Wal Mart’s suppliers’, to appear significantly higher
than in actuality.170 If so, perhaps the apparel factories and agricultural plantations where Wal
Mart indirectly employs women workers are not making more than the average person in their
countries.171 Exceptionally high but rare managerial wages at Wal Mart suppliers may
distortedly raise that “average” wage.172
164
Andy Stern, A Country That Works, 136-137 (Simon & Schuster, Inc. 2005) [hereinafter Stern] (discussing
fallacies related to using the average wage).
165
Stern, supra note 164.
166
Stern, supra note 164.
167
Stern, supra note 164.
168
Stern, supra note 164.
169
Stern, supra note 164.
170
Stern, supra note 164.
171
Stern, supra note 164.
172
Stern, supra note 164.
26
B. Wal Mart and CA.F.T.A.’s Ratification and Implementation
The full impact of Wal Mart’s expansion in Central America resulting from C.A.F.T.A.
has yet to be seen since it only began opening retail stores in some C.A.F.T.A. signatory nations
in 2005.173 As of this time, it would be premature to argue conclusively whether Wal Mart’s
future expansion will raise or lower women’s living standards since C.A.F.T.A. was only
implemented in the U.S. in 2006.174
1. A Direct Increase in Central American Employment
Wal Mart unquestionably has opened new retail business in Central American member
nations to C.A.F.T.A. since the treaty received Congress’ official approval during the summer of
2005.175 In examining Wal Mart’s wages paid prior to and after C.A.F.T.A’s passage, little
evidence exists that Wal Mart pays people less than comparable area employers. 176
Wal Mart’s website openly boasts of opening new retail outlets in 2005 to a majority of
C.A.F.T.A. signatory nations, save for the Dominican Republic.177 Wal Mart has opened 130
new stores in Costa Rica since September, 2005; in El Salvador, 59; in Guatemala, 119; in
Honduras, 37; in Nicaragua, 35.178 Wal Mart now directly employs nearly 7 thousand people
directly in Costa Rica; more than 1,100 in Nicaragua; more than 1500 in Honduras; almost 8,000
in Guatemala; and almost 3,600 in El Salvador.179 Little information on the gender distribution
of Wal Mart’s employees in the member nations exists.
173
International Data Sheet, http://www.walmartfacts.com/articles/4427.aspx [hereinafter International] (discussing
when Wal Mart has opened new international stores).
174
Commerce, supra note 114.
175
International, supra note 173; see also Jessica Brady, Labor’s Love Not Lost, CONG. DAILY, (Sept. 15, 2006).
176
Powell, supra note 152, at 1-8; see also Doe, supra note 7, at 27-33; see also Anderson, supra note 145.
177
International, supra note 173.
178
http://www.walmartfacts.com/featuredtopi/?id=cs9 (Wal Mart’s website, last visited Nov. 20, 2006) [hereinafter
Wal Mart International] (included data on El Salvador’s operations; Costa Rica operations; Nicaragua operations;
Honduras operations; and Guatemala operations) .
179
Id.
27
Award winning economics Professor Tilly has studied Wal Mart’s direct hiring
practices in Mexican stores.180 Tilly noted women comprise a clear majority of Wal Mart’s
Mexican retail clerks and pharmacists.181 If Wal Mart has followed its previous hiring patterns
from the United States and Mexico, women will also comprise a majority of those hired since
2005 in Honduras, Guatemala, Nicaragua, Costa Rica, and El Salvador.182 While critics may
detest the apparent low wages at Wal Mart, if the corporation has created more positions of
employment for Central American women, its presence there may at least partially benefit
women.
2. Wal Mart and a Guatemalan Business Award
Wal Mart’s website boasts of an award a store affiliate, “La Fragua” received in
Guatemala last October, 2005.183 Hewitt and AmericaEconomia rewarded La Fragua for scoring
in employee surveys as one of the 25 Best Employers in Latin America.184 Notwithstanding its
receipt of an award, Wal Mart’s website also states that it only began conducting business in
Guatemala last September, 2005.185 The award therefore could have resulted from business
conducted prior to the time Wal Mart took over operations of La Fragua and may not reflect
current employee satisfaction with Wal Mart.186
180
Tilly, supra note 107.
Id.
182
Tilly, supra note 107; see also Dukes, supra note 82, at 148.
183
Hewitt and AmericaEconomia Announce Hewitt’s 25 Best Employers in Latin America,
http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/Newsroom/Pressreleasedetail.aspx?cid=2283,
[hereinafter Hewitt] (last visited Nov. 20, 2006); see also Wal Mart International, supra note 178.
184
Hewitt, supra note 183, see also Wal Mart International, supra note 178.
185
Wal Mart International, supra note 178.
186
Hewitt, supra note 183.
181
28
V. PERSUADING WAL MART AND OTHER MULTINATIONAL CORPORATIONS TO
INCREASE WAGES AND BENEFITS
A. Examining the Possibility of Altering the Trade Agreements
One could argue that lawmakers in the member nations to the N.A.F.T.A. and C.A.F.T.A
trade agreements should amend the treaties to ensure better treatment of workers. Arguably, the
assurance of concrete governmental sanctions for violations of gender discrimination and
minimum wage laws could reduce the number of labor complaints.187 For example, Wal Mart
may start to pressure its apparel suppliers to comply with Nicaragua’s wage laws.188 N.A.F.T.A.
and C.A.F.T.A. governments theoretically can impose sanctions only against governments for a
pattern of failure to enforce their own labor laws, not against Wal Mart or other corporations
directly.189
Furthermore, the N.A.A.L.C. only requires nominal fines of offending nations, which
National Administrative Offices very rarely, if ever, enforce.190 If an N.A.O. did ever levy such
fines, they would total .007 percent of the total trade in goods during the most recent 191
Furthermore, C.A.F.T.A. has the same virtually unenforceable labor provisions for Wal Mart in
Central American signatory nations.192 C.A.F.T.A. further even fails to specifically prohibit
gender discrimination against women.193
Given the further bureaucratic difficulty the treaties require of women workers
demanding their governments enforce laws against Wal Mart and other corporations like it,
187
188
189
190
191
192
193
Grimm, supra note 9, at 192.
Doe, supra note 7, at 27-33; see also, Anderson, supra note 145.
Schurtman, supra note 21, at 304.
Id.
Id.
Pagnattaro, supra note 58, at 386, 417-418.
Id.
29
amending the treaties’ labor provisions could provide a solution.
194
If Wal Mart, or other
multinational corporations like it, directly faced huge fines that N.A.F.T.A. or C.A.F.T.A.
required and enforced, fewer allegations of violating minimum wage or maximum working hour
laws could surface.195
1. Challenges to Improving Working Conditions Notwithstanding Amending N.A.F.T.A.
or C.A.F.T.A.
One could still criticize the approach of merely amending N.A.F.T.A. or C.A.F.T.A. to
create better labor law enforcement conditions against Wal Mart. Put simply, if workers don’t
fight to enforce their rights, such rights will cease to exist. In the United States, effective
governmental mechanisms to enforce the Fair Labor Standards Act or compliance with union
laws exist.196 An aggrieved employee can complain to an administrative agency such as the
Department of Labor or the National Relations Board.197 Such agencies will then require
governmental officers to investigate alleged violations.198 Governmental agencies will then file
suit on behalf of aggrieved employees or issue large fines against private employers who commit
violations.199
Yet even with effective enforcement mechanisms in the United States, only employees
educated about their rights know how to effectively protest violations of labor and gender
discrimination laws. Wal Mart has faced sanctions for labor law violations in the United
States.200 However the United States Wal Mart employees possessed sufficient knowledge to
realize such laws existed. Only with the assistance of employee knowledge could the
194
Schurtman, supra note 21, at 304-311.
Pagnattaro, supra note 58, at 417-418; see also, Schurtman, supra note 21, at 304-311.
196
Robert Covington, Kurt Decker, Employment Law in a Nutshell, 279-283, 393-421, (West Pub. Co. 2nd Ed.
2002) (1995).
197
Id, at 280, 415.
198
Covington et. al, supra at 196.
199
Covington et. al., supra at 196.
200
Miller, supra note 96, at 5.
195
30
government enforce those laws, regardless of the fine print written on labor laws or
international treaties. As the tireless work of organizations like the Comite Fronterizo de
Obreras in Reynosa, Mexico suggests, many workers in Mexico and Latin American countries
may fail to realize their rights under labor law. The C.F.O. only persuades Mexican employees
of multinational corporations by visiting with hundreds of workers each month, explaining
Mexican labor laws to them. Without such educational efforts, the multinational corporations in
Mexico would have significantly more opportunities to violate laws of which employees lacked
knowledge. Lack of worker education remains a problem even if the N.A.F.T.A. and C.A.F.T.A.
signatory governments had workable enforcement mechanisms in place.
B. Arguments Against the Necessity of Amending the N.A.F.T.A. and C.A.F.T.A. treaties
Wal Mart’s defenders could cite the arguments of someone like New York Times
Columnist Thomas Friedman.201 Friedman criticized American trade unions that boycotted the
World Trade Organization’s Fair in Seattle in 1999.202 The unions protested low wages in “third
world” countries.203 Some of those poorer countries could have included places such as Mexico,
or one of the signatory nations to the Central American Free Trade Agreement. Friedman
criticized American labor groups as using “low wages” as a pretext for their true concern:
complaints about multinational corporations moving their business out of the U.S.204 Friedman
argued that while wages in such countries might pale in comparison with American standards,
multinational corporations had not at all “worsened” conditions in such countries.205 In fact,
wages in such countries remained the same or better as a result of multinational corporations’
201
Thomas Friedman, The Lexus and the Olive Tree, 363-364, (Anchor Books 2000) (1999).
Id, at 363, 364.
203
Friedman, supra note 201.
204
Friedman, supra note 201.
205
Friedman, supra note 201.
202
31
presence.
206
As Powell and Skarbek’s research indicates, one corporation which effectively
increased wages, albeit very slightly, includes Wal Mart.207
A fiscal conservative could argue that once trade increases as a result of tariff reductions,
the economies and working conditions in Mexico and Latin America will eventually improve.
According to laissez faire economic theories, eventually, Wal Mart can’t find anyone, male or
female, in Nicaragua who will work at suppliers for 23 cents an hour after its economy improves
as a result of free trade. One might argue lowered tariffs will lead to increased purchasing of
Central American products, which will increase profits for the suppliers to the U.S. and their
direct employees. Eventually, the suppliers or corporations such as Wal Mart will have to start
paying workers, of whom women comprise a significant number, more to retain a workforce at
all. Even if Wal Mart does pay its workers less than other multinational corporations, and even
if it pays women less than men, it could eventually have to increase women’s wages
significantly.
Even critics of Wal Mart must concede that the corporation pays American employees
considerably more than the wages paid to suppliers’ employees in Central America. American
Wal Mart employees, a majority of whom are women, make an average of close to 9 dollars an
hour.208 Wal Mart arguably pays what the market will bear, and in America Wal Mart cannot
conduct business at all without offering higher wages than those in Latin American countries.
One could argue that an improvement in Latin American economies will inevitably lead to an
increase in the wages paid to a majority of Wal Mart’s direct or suppliers’ female employees.
Some objective research does indicate that globalization eventually leads to an overall
206
Friedman, supra note 201; see also Powell, supra note 152, at 1-8 (citing World Bank Development indicators).
Powell, supra note 152, at 1-11 (citing World Bank Development Indicators).
208
Cohn, supra note 3, at 8, 15; see also Dukes, supra note 82, at 141, 150-152.
207
32
international decrease in poverty. As a 2002 World Bank study indicates, since 1980
worldwide, an era of indisputably increased globalization, the number of people living on less
than the equivalent of one U.S. dollar per day has fallen by 139 Million worldwide.209 Likewise,
eventually, Wal Mart’s role in globalization could eventually lead to a cumulative wage increase
in Mexico and Central America.
Someone might also suggest that since Wal Mart has now directly opened and hired
employees in signatory nations to C.A.F.T.A. nations can more easily enforce their labor laws
against the corporation. Obvious problems exist for any government or plaintiff trying to argue
that Wal Mart, as a third party contractor purchaser, bears moral or legal responsibility for
employees of a distant supplier it only hires indirectly to produce quotas of products. But since
Wal Mart now directly employs workers in those countries, arguably such countries can require
it to comply with their laws through direct action of their own governments.210 The countries
may no longer require any assistance enforcing their labor laws from any international
administrative agency such as a National Administrative Office created from N.A.F.T.A. or
C.A.F.T.A. Consequently, any C.A.F.T.A. or N.A.F.T.A. signatory nation with laws prohibiting
sex discrimination could penalize Wal Mart for those practices, if proven.
VI. CONCLUSION
Though Wal Mart pays minimal wages that may fail to suffice as a living wage, its direct
entry into Mexico and Central American countries could contribute in a small way to decreasing
poverty in future years.211 However, the prospect of enhancing a country’s economy sometime
209
World Bank: Global Economic Prospects, 30-100, (2002), available at
http://humanglobalization.org/facts/pdf/Globalization%20-%20instrument%20or%20obstacle.pdf
210
International, supra at note 173.
211
URL: Doe, supra note 7, at 27-33, see also Anderson, supra note 145, see also Friedman, supra note 201, at
363-364.
33
in the future does not justify Wal Mart’s allowance of abusive labor conditions at its third
party suppliers who employ mostly women. As the Doe lawsuit alleges, future economic growth
prospects does not justify Wal Mart’s demands on suppliers that result in 17 hour work days for
women, or keeping female employees behind barbed wire fences to prevent them from leaving
work.212 Regardless of what a nation or treaty law requires, Wal Mart should cease engaging in
such labor practices, which adversely affect large numbers of women.
The prospect of international tariff reduction agreements has allowed Wal Mart to
directly and indirectly employ more women in Mexico and Latin America.213 Furthermore,
women comprise the vast majority of employees in Wal Mart in the United States and Mexico.214
If the Central American Free Trade agreement countries are following the retail pattern hirings in
the U.S. and Mexico, mostly women now benefit from new Wal Mart retail jobs in Central
America.215
If enough socially conscious American consumers boycott Wal Mart’s products in the
United States, Wal Mart very likely might pressure its third party suppliers in Mexico and
Central America to improve working conditions. Thomas Friedman in his book The Lexus and
the Olive Tree discusses a Sri Lankan apparel factory for Victoria’s Secret.216 He stated that the
employer required reasonable 8-hour workdays and provided an immaculate and safe
environment.217 While the company paid low wages, he said he would otherwise allow his
daughters to work there.218 When he asked the manager whether it would provide a competitive
advantage to spend less money in creating a safe workplace, the manager responded that
212
Doe, supra note 7, at 27-33.
Werner, supra note 4, see also, International, supra note 173.
214
Dukes, supra note 82, at 148; Tilly, supra note 107.
215
International, supra note 173, see also Dukes, supra note 82, at 148, see also, Tilly, supra note 107.
216
Friedman, supra note 201, 177-178.
217
Id.
218
Id.
213
34
Victoria’s Secret would not do business with his company if he allowed such conditions.
219
Victoria’s Secret became more socially conscious because American students refused to
purchase products made under hazardous working conditions.220 The refusal of enough socially
conscious consumers in America to shop at Wal Mart will likely cause the corporation to start
paying its workers higher wages. Consumer boycotts could also force Wal Mart to enforce
policies discouraging gender discrimination or unfair wages to female employees in Mexico and
Central America.
219
220
Id.
Id.
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Conradt-Adams-The Int'l Expansion of WalMart