Friday, September 7, 2007

Sanction busting and ethical threads

Since last year shoes exported to Europe from China have carried an extra surcharge of 16.5 percent of their value to compensate for below-cost imports. Cheaper shoes are thought to be pushing down prices and taking market share that damages European shoe makers. Reported in the European Union's Official Journal, the Commission some Chinese shoe makers are being accused of avoiding the extra charges by re-routing their goods through Macau or by completing the final assembly of goods in that country. Macau is a peninsula and two islands about 60 kilometers (35 miles) west of Hong Kong. It was formerly a Portuguese enclave that returned to Chinese rule in 1999. However unlike, Hong Kong, Macau is governed by different laws. The Macau shoes are then sold without the surcharge to Europe and for less than the prices of Chinese shoes that led to the introduction of the extra charges. The availability of cheaper footwear has also sparked a bitter dispute between European producers and retailers, who benefited from selling more shoes at bargain prices. The Chinese meantime accuse the EU of protectionism and intend to file a legal challenge with the EU courts. A recent study from Australia entitled Ethical Threads was conducted by The Brotherhood of St Laurence and found approximately 50 % of clothes sold in Australia were manufactured overseas. Evidence suggest consumers remain unconcerned about the conditions under which garments are manufactured. Further it was reported the Australian garment industry was slow to embrace mandatory and voluntary mechanisms to protect workers in international and local supply chains. The small and medium businesses surveyed did not see corporate social responsibility and ethical supply as being their responsibility. The Ethical Threads report found many Australian outworkers (i.e. 40% of total employment in the textile, clothing and footwear sector in Australia) were underpaid. Condition for out workers had worsened in the past five years, as a shortage of work increased competition. Despite a regulatory framework and strong legislation to protect outworkers, their isolation meant they felt disempowered. The report also urged companies using overseas manufacturers to ensure that foreign workers had appropriate pay and conditions.

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