Syllabus Globalization: Business, Legal and Public Policy Issues January Term, 2017 — January 3-6, 9-13, 17-18
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- Teaching Assistant
- Office Hours
- GLOBAL LABOR STANDARDS
- The Ready Made Garment (RMG) Industry in Bangladesh
- In the aftermath of Rana Plaza
- Sources Consulted Julfikar Ali Manik and Jim Yardley, “Building Collapse in Bangladesh Leaves Scores Dead” (news article in The New York Times, April 24, 2013) 2
- Disaster in Bangladesh – Rags in the ruins: A tragedy shows the need for a radical improvement of building standards (news article in The Economist, May 4, 2013) 4
- Kim Bhasin, “A Year After Deadly Collapse, Bangladesh’s Garment Industry Remains Broken” (news article in the Huffington Post, April 24, 2014) 7
- BGMEA at a Glance , Bangladesh Garment Manufacturers and Exporters Association (BGMEA) (online publication, undated) 9
- Bangladesh Reduced Number of Poor by 16 million in a Decade” (press release from The World Bank, June 20, 2013) 12
- Achim Berg, Saskia Hedrich, and Sebastian Kempf, “Bangladesh’s ready-made garments landscape: The challenge of growth” (case study by Mckinsey Company, Inc., November 2011) 14
- Background Material Rehman Sobhan, “Bangladesh’s Disaster: Perspectives on the Political Economy” (blog post for Centre for Policy Dialogue, March 20, 2014)
- Tripti Lahiri and Christina Passariello, “Why Retailers Don’t Know Who Sews Their Clothing” (news article in The Wall Street Journal, July 24, 2013)
- Muhammad Yunus, “After the Savar tragedy, time for an international minimum wage” (opinion piece in The Guardian, May 12, 2013)
| Syllabus
Globalization: Business, Legal and Public Policy Issues January Term, 2017 — January 3-6, 9-13, 17-18 9am - 12:30pm Classroom: WCC 3016 Instructor: Lewis B. Kaden John Harvey Gregory Lecturer on World Organization Hauser 316 Office Tel: +1 617-495-3195 Email: lewis.kaden@gmail.com Teaching Assistant: Hannah Clark Tel: +1 202-580-5930 Email: hclark@jd17.law.harvard.edu Faculty Assistant: Sandra Mays Griswold 2 South Office Tel: +1 617-496-3358 Email: smays@law.harvard.edu
Globalization has increased the interconnection and integration of developed and developing countries as changes in technology, communications, trade and transportation bring them closer together. At the same time, cultural, economic and political differences also create tensions and challenges to governments, business organizations, trade associations and civic groups, families and individuals. This course examines six cases in which these interests around the globe grapple with the challenges and opportunities which accompany globalization. Office Hours: Tuesday and Thursday from 3-4pm or by appointment. Course Requirements: Each case is intended to occupy two days or 7.0 hours of class time, except for the last case, which occupies one day. Before each case discussion begins, and by 9 pm the previous night, each student should submit by e-mail a short paragraph answering one of the discussion questions to Mr. Kaden (lewis.kaden@gmail.com). Students are also encouraged to submit comments or reactions to issues in the cases or the reading materials or a question they would like addressed. These answers, comments and questions will help frame our discussion. At the beginning of the course, students will also be assigned to various teams to complete group assignments. These assignments can involve anything from writing brief memoranda or proposals on particular issues in the case to preparing presentations on interesting aspects of the material to share with the class. These group assignments are meant to foster interaction and collaboration among students in the class and to encourage deeper reflection on the issues addressed in class. The group assignments and brief submissions will be graded on a completion basis, and are not intended to be evaluated or returned to the student. At the end of the course, students will submit a short 6-8 page paper (approximately 2,000 words) that reflects thoughtful analysis about one of the six cases. The paper is a thought piece, drawing on the materials and class discussion and not requiring additional research. The primary requirement of the course is preparation for each class, thought and effort given to the issues and group assignments, active participation in the discussion and debate. Our emphasis is not so much a search for the “right” answers – usually there are conflicting views and opinions – but rather thoughtful engagement, analysis and expression of views on those conflicts and choices. The paper should be emailed to Mr. Kaden (lewis.kaden@gmail.com) by 6pm on Friday, Jan. 20, 2017. The Syllabus: For each case, there is a brief case statement, a number of questions to consider and background reading. The reading is required, except where designated as optional. For some of the materials, the assigned reading is an excerpt from a longer report, document or book. In each case, the syllabus includes a reference to the longer works for those interested in pursuing it further. Some of the readings are documents such as settlement agreements or legal complaints. If the entire document is included, it is because I think it is useful to see what it includes, although some sections are worthy of closer reading and for others that may not be necessary. Also, journalistic pieces can generally be read quickly, and learning to choose what to skim and what to read closely is an important part of training in the skills that are frequently part of being a business executive, public official or senior lawyer. Finally, I would appreciate if before the course begins, each student can send me a very brief statement of any experience, background or interest that influenced your decision to register for the course so that I learn a little more about you than the limited information that the Registrar provides. I expect there will be students from HLS, HBS and KSG. It is intended that the materials provide each of you enough background to participate actively in the discussions of each case, whether you have any experience in business, law, or public policy beyond your student experience so far. My hope is that your varied backgrounds and experience will make the class discussion and exchange of views more interesting than would be the case if the group was less diverse. Class Schedule: Jan. 3-4: Global Labor Standards Jan. 5-6: Trade Jan. 9-10: Corruption Jan 11-12: Financial Crisis Jan 13, 17: Cyber Security Jan. 18: Multijurisdictional Law Enforcement: Public-Private Regulatory Regimes
On April 24, 2013, an eight-story building comprised of retail stores and garment factories called Rana Plaza collapsed in Savar, an industrial suburb of Dhaka, killing 1,137 people and injuring more than 2,500. Most of the victims were factory workers who stitched garments for export to developed countries. Some of the survivors described the collapse as similar to an earthquake, starting with a loud cracking sound followed by the floor opening up beneath their feet as the beams broke in half. Investigations uncovered that cracks had appeared in Rana Plaza the day before its collapse and the shops on the lower floors had been evacuated. Because of frequent power cuts, heavy generators had been installed on the factory premises to keep the production line active at all times and caused major vibrations throughout the building while running. Authorities had approved only five of the eight floors that were actually built. Both the police and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), one of the largest trade associations in Bangladesh representing the garment industry, had told Sohel Rana, the building’s owner, that his building was unsafe, but Rana ignored them and the factories stayed open. Workers were told by factory managers that the building had been inspected once more and was now considered safe, and also received threats that they would be fired if they did not show up to work. Rana was arrested and initially charged with negligence. On June 1, 2015 the police in Bangladesh filed formal murder charges against Rana and 40 others, including his parents, several factory owners in the building, and at least a dozen government officials. Charges for building code violations were also submitted to a court in Dhaka against 18 people, 17 of whom were among those charged with murder, including Rana and his parents. Before the collapse, Rana Plaza had housed five different garment manufacturers: New Wave Bottoms on the second floor, Phantom Apparels on the third, Phantom Tac on the fourth, and Ether Tex and New Wave Style on the sixth and seventh floors. Because of widespread subcontracting, few retailers knew straightaway whether their products had been made at Rana Plaza or not. Primark was one of the few companies that promptly admitted that they had contracted with New Wave Bottoms, and made a unilateral commitment to compensate the victims and their families. Ether Tex claimed to have produced clothing for Walmart at their Rana Plaza facility, but Walmart denied the allegation. As branded garments and copies of contract orders were found in the rubble, some retailers went through their own records and realized they had to walk back some of their previous statements, including Benetton. The Ready Made Garment (RMG) Industry in Bangladesh Rana Plaza was not the first deadly factory accident to occur in the Bangladeshi ready-made garment (RMG) industry. An estimated 500 people had been killed in factory accidents over the past decade, including 73 workers in an earlier factory collapse in Savar in April 2005. 90 percent of the country’s buildings do not meet building codes, and weak infrastructure and poor electrical supply increase the risk of fires in factories. Bangladesh is a country of 160 million people with the greatest population density in the world. The garment industry accounts for 80% of Bangladesh exports and 18% of the country’s GDP. Its global competitiveness in this industry is considered to be ranked second only to China and has helped alleviate widespread poverty. But its comparative advantage is its ability to produce low cost garments at high capacity with good quality needlework. It is dependent on raw material imports, lacks sufficient skilled labor, and has had continuing political instability. Freedom House rates Bangladesh as a “partly free” country, and corruption is widespread—even in the garment industry, where many members of Parliament have personal investments in the garment business. Labor rights have historically not been well protected, and the US State Department considers “poor working conditions and labor rights” to be among the most pressing human rights issues in Bangladesh. Subcontracting practices and the lack of inspectors and regulatory oversight remain a serious problem. Larger manufacturers who have contracts with Western companies frequently subcontract work to smaller factories, both as a cost-cutting strategy for prime contractors, but also to ensure that orders are completed on time, which may be required if they take on more orders than they have capacity for in their own facilities. A common practice in the Bangladeshi garment industry is to deduct 5 percent of the price for each week that an order is delayed, which gives factory owners and managers an incentive to push their workers to maximum production and, in the case of Rana Plaza, at the cost of lives. Retailers also risk losing control of an increasingly complex supply chain. The use of agents who help facilitate deals between Western buyers and Bangladeshi suppliers further increases this complexity and reduces transparency. Agents also contribute to weaker relationships between buyers and suppliers by offering retailers flexibility and by negotiating short-term contracts. This may lead to downward pressure on labor standards as suppliers may delay investment in their facilities to improve working conditions due to the insecurity of short-term contracts. Multiple Parties Some argue that the national government needs stronger, more effective regulation of the garment industry and should raise the minimum wage, improve factory conditions, and enforce basic safety standards. But others point to the increasing costs that these regulations would incur, which would make Bangladeshi products less attractive on the global market. Many western consumers advocate living wages and decent hours for garment workers in Bangladesh while demanding cheap clothes in stores at home. Western retailers create jobs, pay taxes, and contribute to the common good in developing countries, but also wish to supply the growing demand from consumers in North American and European markets and the low costs of Bangladesh products create attractive margins. The Bangladeshi government Prime Minister Sheikh Hasina came to power after leading a coalition of 14 parties to victory in the election in 2008. The election was on the whole considered relatively fair and free by most international observers. However, her reelection on January 5, 2014 was more controversial. The main opposition party boycotted the election after they feared an unfair contest. Freedom House, an American NGO, rates Bangladesh as a “partly free” country. 2013 was one of the most violent in Bangladesh since the country gained its independence; about 500 people died in protests and political clashes. Hasina’s government has promised to improve labor standards in the country, but progress on inspections, conditions and benefits for workers has been slow. Bangladesh Garment Manufacturers & Exporters Association (BGMEA) BGMEA is one of the largest trade associations in the country representing the RMG sector. Since its inception, BGMEA has been dedicated to promote and facilitate the apparel industry through policy advocacy to the government and services to its members. Its membership base has grown rapidly over the years. BGMEA had less than 400 factories among its members in 1984 that altogether employed some 120,000 workers. Today it has about 4,500 member factories employing 4 million garment workers. Factory owners There are about 4,500 registered garment factories in Bangladesh. Some of the manufacturers are important players in the global market. Because the textile industry amounts to about 80 percent of Bangladesh’s total exports, the larger manufacturers dominate the BGMEA and have substantial influence in the Bangladesh business, civic, and political community. Some of the large factories meet building and safety standards and are frequently visited by major buyers for whom they are prime contractors. However, smaller, independently owned factories take on many subcontracts from the prime contractors. Sometimes these subcontractors in turn subcontract orders to other factories, which makes the supply chain even more complicated. Many of these small and independent factories have very low wages and poor working conditions. Garment workers and labor unions Bangladesh garment workers frequently work very long hours. A typical worker may stitch 120 pairs of trousers per hour, 10 hours a day, six days a week, and 50 weeks per year. That amounts to 360,000 pairs of trousers annually. And many workers do this for wages starting at $68 a month. Labor rights have historically not been well protected. The American State Department considers “poor working conditions and labor rights” to be among the most pressing human rights issues in Bangladesh. After Rana Plaza, the Bangladeshi government has made it easier to join and start labor unions. In 2013 alone, 96 new trade unions registered with the Department of Labor, bringing the total number up to 222. International Labor Organization (ILO) The ILO was founded in 1919 as a specialized agency within the United Nations. Its mission is to promote social justice and internationally recognized human and labor rights. The tools that it has at its disposal include conventions which produce recommendations for minimum standards of labor rights, including freedom of association, collective bargaining, and the right to organize. The ILO can also provide technical assistance and training to labor and employer organizations. As with many international organizations, one of the most frequent points of criticism directed at the ILO is that it lacks the power to enforce the standards it sets. Western consumers In 1997, the average woman in the United Kingdom bought 19 items of clothing a year. Ten years later, in 2007, the number had jumped to 34. The demand for cheap garments has grown significantly over the past decades. Bangladesh exports about $25 billion worth of garments every year, which is equivalent to almost a fifth of the country’s GDP. Most of the goods are bought by retailers in Europe and North America. Western retailers Of Bangladesh’s garment exports, about 60 percent go to the European Union, 25 percent to America and 5 percent to Canada. Among the major European retailers are HRM, Adidas, Benetton, Mango, Next, Zara, and Primark. American retailers buying Bangladeshi products include Gap, J.C. Penney, L.L Bean, Macy’s, Target and Walmart. Garment manufacturing in Bangladesh is important to the country and attractive to investors. Low labor costs and high quality products have generated the industry’s rapid growth.
The Rana Plaza tragedy put a harsh light on factory safety, weak enforcement of standards, little transparency for subcontracting practices and widespread competition with other countries eager to expand their garment industry. Bangladesh risks losing their competitive edge unless they act on these problems.1 Reform requires action from global buyers, local suppliers, governments and development organizations. The continuing challenge for Bangladesh is whether it can improve working conditions, strengthen business relationships, increase oversight and inspections, strengthen workers’ ability to advocate change and reform public policies in ways that upgrade the garment sector while maintaining its competitive position in the global market. A key question is whether common ground can be found where many of the parties can come together around solutions that they feel benefit them, or if change will have to come through unilateral action. Some measures have already been taken by the Bangladeshi government as well as by foreign governments, the international community, and Western retailers. There is evidence of improvements. But have the measures been sufficient? What could have been done differently? And what should each party do next to prevent another Rana Plaza from occurring in the future?
“Disaster in Bangladesh – Rags in the ruins: A tragedy shows the need for a radical improvement of building standards (news article in The Economist, May 4, 2013)4 “Another Beating” (news article in The Economist, January 11, 2014)5
“Bangladesh Reduced Number of Poor by 16 million in a Decade” (press release from The World Bank, June 20, 2013)12 Sanchita Banerjee Saxena and Véronique Salze-Lozac’h, “Competitiveness in the Garment and Textiles Industry: Creating a supportive environment – A Case Study of Bangladesh” (Occasional Paper No. 1, July 2010 from The Asia Foundation)13 Achim Berg, Saskia Hedrich, and Sebastian Kempf, “Bangladesh’s ready-made garments landscape: The challenge of growth” (case study by Mckinsey & Company, Inc., November 2011)14 Rosemary Westwood, “What does that $14 shirt really cost? From the archives: Bangladesh disaster raises tough questions about cheap clothes” (infographic and article from Maclean’s, May 1, 2013)15 Before Class 1 Please approach the background material and respond to one of the discussion questions that follow. Send a written response to one of the questions to Mr. Kaden (lewis.kaden@gmail.com) the day before Class 1 by 9:00 pm. Discussion Questions 1. To what extent is there a trade-off between raising wages and requiring companies to invest in improving factory safety? Between increasing domestic labor standards and maintaining competitiveness in the global market? How should victim compensation factor into this analysis? What do you think about Muhammad Yunus’s proposal for a global minimum wage? 2. How would you approach the issues associated with subcontracting? What can western retailers do in countries where the rule of law is weak and the incentive to fabricate building certificates and inspection reports is great? Do you think the NYU Center for Business and Human Rights proposal for “direct, strategic sourcing” (page 26) is a viable alternative? How effective do you think it will be? 3. What are the differences and similarities between the Alliance and the Accord? Are the differences material? Do either effectively or adequately address the situation in Bangladesh? What are some of their advantages and shortcomings? How can these shortcomings be addressed? 4. What kind of duties and responsibilities do foreign governments have towards developing countries such as Bangladesh? What role should they play in improving labor conditions within Bangladesh? What about international organizations such as the International Labour Organization (ILO)? Western retailers and consumers? 5. What kind of lessons can be drawn from the efficacy of the Fair Labour Association (FLA), a collaboration between academia, civil society, and the private sector? Refer to The Economist article, “When the jobs inspector calls”. How would you evaluate the “National Tripartite Plan of Action on Fire Safety in the RMG Sector”, an initiative launched as a cooperation between government, employers, and workers (“National Action Plan”), and Better Work Bangladesh, a program implemented as a partnership between the ILO and the International Finance Corporation (IFC)? What are their strengths and weaknesses? How would you measure success for each of these programs? 6. Refer to the Kasperkevic reading. Why hasn’t the 2013 Accord on Fire and Building Safety in Bangladesh been more effective, in spite of large companies signing on and its binding nature? Background Material Rehman Sobhan, “Bangladesh’s Disaster: Perspectives on the Political Economy” (blog post for Centre for Policy Dialogue, March 20, 2014) Jana Kasperkevic, “Rana Plaza collapse: workplace dangers persist three years later, reports find” (news article in The Guardian, May 31, 2016), https://www.theguardian.com/business/2016/may/31/rana-plaza-bangladesh-collapse-fashion-working-conditions. Tripti Lahiri and Christina Passariello, “Why Retailers Don’t Know Who Sews Their Clothing” (news article in The Wall Street Journal, July 24, 2013) Testimony of Scott Nova, Executive Director of the Worker Rights Consortium and a representative of the Accord, from hearing on “Prospects for Democratic Reconciliation and Improving Workers’ Rights in Bangladesh” (Senate Committee on Foreign Relations, February 11, 2014) Muhammad Yunus, “After the Savar tragedy, time for an international minimum wage” (opinion piece in The Guardian, May 12, 2013) Directory: syllabus syllabus -> Ap united States History Course Description syllabus -> Syllabus for cjsa 1312 Crime in America Hybrid Course Semester Hours Credit: 3 Course Dates/Times: In Class sessions syllabus -> Complex Systems Safety and Resiliency: Safety Culture, Systems Design & Integration Professor syllabus -> Tbd & by appointment Phone: 617-495-1462 Faculty Assistant syllabus -> Catalog description syllabus -> MA180 and ma418 statistics, Fall 2012 syllabus -> Engineering Design and Sustainability syllabus -> Principles and Algorithms of Computer Vision Download 440.88 Kb. Share with your friends:
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