Final Report

Senate Ad Hoc Committee on Trademark Licensing and Monitoring

Presented to the Senate Executive Committee

Wednesday, March 21 2001

Table of Contents

On May 24, 2000, Senate President James Earl wrote to the members of the University Senate that during the 2000-2001 academic year: the Senate Executive Committee will serve as the Senate's  oversight committee concerned with our membership in the Worker Rights  Consortium. To assist the Executive Committee with that task, I am  creating a subcommittee to review the issue during the coming year. This  committee will make its reports and recommendations to the Executive  Committee; these will be forwarded to the Senate for debate; and the  Senate's recommendation will be forwarded to the President.

The original charge to the "Senate WRC Review Committee" was  To bring clarity to the many issues surrounding the University's membership in the WRC.  The committee will listen to the many voices in this complex public debate, including students, faculty, administration, trustees, alumni, licensees, donors, and others. . . . The committee will provide regular interim reports.

A short explanation accompanied this charge: The University's decision to join the WRC and Phil Knight's public response created a very heated debate. Many people are obviously very angry. But different people are angry about different things. Some are angry about radical student activism, some about the University's system of governance; some about politics in a state agency, some about our bad business practices; some focus on a missing phone call, others on the faults of the still-unformed WRC; for some it's an issue of courtesy and loyalty, for others it's all about labor unions; some are angry about our relations with donors and alumni, others about the corporatization of the University; for some it's an issue of global economics and human rights, and for others it is really all about collegiate sports--and there are still many other issues. These issues are so entangled that it has been difficult even to frame a logical debate; and that is why I have asked the committee first of all "to bring clarity to the issues."

In sum, then, the original charge was "to bring clarity to the issues," and "to frame a logical debate" for the Senate.
The committee submitted an interim report on September 18, 2000.1 This is our final report. The report is divided into three sections. First, we review our mission and activities. Second, we offer a recommendation, which has the unanimous support of the committee, that the University embark on research and instructional activities designed to illuminate the host of human rights issues raised by the issues we have considered. In the third section, we offer collective and individual reflections on the WRC controversy.
 

I. Mission and Activities


On September 18 the Senate Executive Committee approved a motion "to reconstitute the Senate WRC Review Committee according to its own recommendation:  to expand the committee to include a broader representation of students and faculty; to change its name to the Senate Ad Hoc Committee on Trademark Licensing and Monitoring; and to enlarge its charge to include reviewing the University's membership in all monitoring agencies, including the WRC and the FLA. The new committee continued the work of the previous committee, and set out in September to accomplish three objectives: First, the committee offered to be the chief forum for discussions of the issues raised by the University's membership in the WRC. Second, the committee worked to provide the Senate Executive with a report on these issues before its March 21, 2001 meeting. Third, the committee promised to structure a discussion or debate on these issues for the April 11, 2001 Senate Meeting.

Toward these ends, the committee met regularly, consulted with noted experts in the field, interviewed governing board members of both the FLA and the WRC, sponsored forums and other public events, engaged industry representatives and university counsel, and considered the opinions of friends and supporters of the University.  Our mission and deliberations were dramatically affected by decisions made by the administration in October 2000 and by the State Board of Higher Education in February 2001.  On October 9, 2000 Melinda Grier, the University of Oregon's General Counsel, wrote an opinion letter to President Frohnmayer, in which she raised a number of legal questions about the WRC. She advised President Frohnmayer to not pay the dues invoice from the WRC. On October 25, 2000, President Frohnmayer announced that he would not make the financial contribution necessary for affiliation with the WRC.  In February the committee, in a state of confusion, requested a clarification of UO membership status in the WRC and the FLA.  Duncan McDonald informed the committee that the UO had "signaled its intention of joining both organizations but was not paying dues to either group at this time.î  In search of clarity, the committee asked President Frohnmayer to request an updated legal evaluation of both the WRC and FLA from Ms. Grier. She suggested that this opinion should wait until more was known about the development of the WRC and FLA.

During this period, the committee researched and discussed three issues:

  1. The desirability of an enforceable licensing code of conduct.
  2. The state of the monitoring discipline and the advantages and disadvantages of university affiliation with the Fair Labor Association and the Worker Rights Consortium.
  3. The research and instruction the University should promote to better understand human rights in a global economy, the issues surrounding the ìliving wageî concept, and other related issues.
Then, on February 16, 2001 the State Board of Higher Education passed a motion:

Consistent with OUS's commitment to the free flow of commerce and efficient business practices, OUS institutions shall not adopt limits on eligibility to enter business agreements or otherwise conduct business unless based on the ability to perform, evidence of illegal activities or other criteria required or allowed by statute or Board rule. OUS institutions shall report compliance with this policy no later than December 31, 2001.

The State Board of Higher Education has statutory authority over the seven universities in the Oregon system (See Higher Education Chapters ORS 351,352,354). General Counsel Grier concluded, after discussions with OUS counsel, that Board's motion prevents the University of Oregon from enforcing its Licensing Code of Conduct and from becoming full members of either the Worker Rights Consortium or the Fair Labor Association. On March 7, 2001 University President Dave Frohnmayer announced that he would follow the opinion of General Counsel.
In the wake of these decisions, the committee decided that its original mandate was no longer relevant, that it should report on its activities, set forth one recommendation, and provide the Senate Executive Committee with insights from its members.

    Recommendation on Human Rights Initiative

Members of the committee differed on many points, but are unanimous in recommending that the University should initiate research and instruction on the host of human rights issues raised by the WRC controversy. In our discussions with industry representatives, monitoring experts, and labor rights activists, we were told that there is a great need for sustained research on such human rights issues as the living wage, working conditions, and the right to form labor unions. Consistent with the research mission of the University of Oregon, the committee calls for the serious study of these and other related issues. Toward this end, we would encourage University of Oregon research centers (e.g., Center for the Study of Women in Society, the Humanities Center) Endowed Chairs (The Wilberta and Carlton Savage Chair of International relations and Peace, the Morse Chair), and disciplinary departments that address human rights and labor issues to collaborate on a research and educational program that illuminates the meaning of human rights in a global economy.

The Senate should petition the administration to form a programmatic approach to the research of and instruction in human rights, particularly as they relate to condition of workers in developing countries. The funding for this proposal might come, in part, from licensing fees. Accordingly, we envision the creation of

III. Collective and Individual Reflections

Judgment One: Jim O'Fallon


It is unfortunate that this issue was first framed in an adversarial context. By adopting a code of conduct to be inserted as a term in our agreements with our licensees, without first consulting with those licensees, we deprived ourselves of vital information about the activities that we seek to affect, and opened the university to charges of uninformed moral arrogance. In fact, some of our licensees (most notably Nike) are well ahead of us in terms of commitment to addressing the conditions of employment in apparel factories, and none of them appear to be indifferent to the problem. To be sure, there are differences of opinion about the appropriate content of codes of conduct, most significantly the requirement of a ìliving wageî. There are reasons to be concerned about the economic consequences of different code formulations for the people whose welfare is the object of the code, and little reason for anyone to be confident that they have the one right answer to these problems.

Under these circumstances, the university would be best served by pursuing cooperative and constructive engagement with our licensees. That could include affiliation with monitoring organizations, if that is not precluded by OUS regulations. Many of the most active licensees have embraced both internal and external monitoring as a vital element of their corporate responsibility programs. In this context, I am inclined to agree with Matt Dyste and Lynn Kahle regarding membership in the Fair Labor Association.

The WRC has the potential for contributing to an effective monitoring regime, but it carries the burden of an adversarial relationship to industry that goes far beyond what is necessary to maintain independence. It is also tainted by an opaque but close relationship to rhetorical campaigns designed to inflict harm on some licensees, particularly Nike. Both of those factors militate against affiliating with the WRC.

The recently adopted OUS policy appears to be grounded in the belief that the university's business practices should not be the occasion for the university becoming a political football, or a prize to be won by contending sides in a political controversy. The board can and has adopted policies regarding practices such as affirmative action and prevailing wage requirements. That provides insulation for the university, where academic freedom should be the prevailing value, and it provides political accountability at an appropriate level for what is, after all, a public institution. It may be possible to refine the policy in a way that facilitates efforts to cooperate with licensees on human rights issues, but the basic policy is sound and should be sustained.
 

Judgment Two: Matt Dyste and Lynn Kahle


The Oregon University System has adopted a business practices policy that has been interpreted to mean the University of Oregon cannot adopt a Licensee Code of Conduct that goes beyond requiring Trademark Licensees follow the laws of the countries in which they do business in. The business practices policy's interpretation further precludes the University from join organizations, such as the Workers Rights Consortium (WRC) and the Fair Labor Association (FLA), to monitor the behavior of licensees in meeting the demands of a Code of Conduct. Should the policy change or the interpretation be revised? The following is our observation of what the University should do and why we believe it to be so.

The University of Oregon's licensing program functions on a cooperative basis with our licensees and retailers. In many cases our licensees have been involved with the University of Oregon for many years. There is a level of trust and sense of accomplishment between the University and its licenses that our activities promote and support the University, our alumni, friends, and fans.

For the 2000-2001 contract year the University of Oregon adopted an aspirational Licensee Code of Conduct to guide licensees' principles of acceptable working conditions. Both the FLA and WRC exist to help universities manage that piece of their licensing business so that the production of products recognizes the basic human rights of workers who produce licensed products. Both the FLA and WRC exist to improve conditions for workers who toil in what have come to be referred to as sweatshops. The FLA and WRC share a common mission but have very different approaches to fulfilling that mission.

Both organizations will have relationships with companies that produce licensed products but in very difference manners. Pharis Harvy, of the International Labor Rights Fund and member of the FLA's Board of Director, spoke about the two organizations stating, ìMy own perception is that the FLA and WRC are compatible organizations Ö that are mutually supportive and helpful.î Mr. Harvy further stated the two organizations can work extremely well together, however, if a university only had the resources for being committed to one organization it should choose the FLA because the WRC's reports on labor issues ìcome out in a somewhat random way,î and the FLA has a more systematic approach to monitoring.

University of Oregon Assistant Economics Professor Bruce Blonigen spoke of the differences in the two organizations saying, ì2I make these distinctions because I think the two organizations the University has joined in response to these issues, the Worker's Rights Consortium and the Fair Labor Association, split across these two viewpoints. The WRC believes that it is counterproductive to even engage in a conversation with the multinational firms, whereas the FLA is intended to combine efforts of all interested parties to come up with constructive long-term solutions to encourage the positive aspects we often see from multinational firm presence in less developed countries. The FLA also enjoys an immense advantage in having the U.S. government as part of its association. The Department of Labor recently made available a 300 page document that details labor and wage conditions and norms for the apparel industry across 36 countries, to help the FLA's efforts. The State Department recently gave the FLA almost a $1 million dollars to support independent monitoring of apparel plants in less developed countries, and so it was the FLA last week that announced it had begun monitoring of apparel plants with an independent auditing firm, not the WRC. In the end, the University should be using it resources and energy to find long-term solutions to effect positive change in the countries that support its licensees. I think the evidence strongly suggests that this is best accomplished through constructive engagement with the licensees, rather than treating them as adversaries.î

With both organizations committed to improving standards for workers and enforcing Codes of Conduct my focus becomes how will they carry out their mission. Given the common mission of these organizations the University of Oregon should efficiently manage its resources and join with only one of these organizations. I have examined mission of both the FLA and WRC, the monitoring principles and industry involvement expected by both groups below.

From my study of the issues, the testimony of experts the Licensing Code of Conduct committee heard from, and a review of the information below I conclude the University of Oregon should join with the Fair Labor Association.

WRC's MISSION
3The Worker Rights Consortium (WRC) has been developed by the United Students Against Sweatshops (USAS) in consultation with workers and human rights groups. It consists of a system to verify and inspect conditions in factories producing apparel for colleges and universities. Members of USAS believe that the WRC will force information regarding industry practices out into the light of day and pressure firms to improve conditions in factories producing their goods.

FLA's MISSION

4The mission of the FLA is to improve working conditions in factories in the United States and abroad. To this end, the FLA Charter Agreement establishes an industry wide Code of Conduct and monitoring system. The agreement lays the foundation for an independent monitoring system. The FLA accredits independent monitors to inspect factories that manufacture products for its participating companies and for licensees of its affiliated universities, determines whether these companies are in compliance with the Association's standards, and issue public reports that will give consumers the information they need to make informed purchasing decisions.
 

WRC INDUSTRY INVOLVEMENT:

The WRC was founded on the principle of being an ìalternative to company controlled monitoringî.5 Implicit in this is the notion that industry self monitoring is insufficient to ensure the well being of workers in factories. As a result, industry does not have a voice in the decision making or verification process that the WRC employs.

The Consortium does acknowledge that some amount of consultation with apparel producing companies is necessary in terms of factory disclosure, access, and other items. These consultations, however, are wholly separate from involvement.

The Consortium does not view its position on industry involvement as antagonistic but rather as independent, a necessary relationship to prevent conflict of interest and ensure objectivity.

FLA INDUSTRY INVOLVEMENT:

6The Board of Directors of the Association shall consist of six industry representatives, six Labor/NGO representatives and one university representative. The initial industry Board Members shall be selected by the industry members of the AIP, and the initial Labor/NGO Board Members shall be selected by the Labor/NGO members of the AIP. Thereafter, new industry Board Members shall be selected by a majority of the then serving industry Board Members in consultation with the companies then participating in the Association's monitoring process. New Labor/NGO Board Members shall be selected by a majority of the then serving Labor/NGO Board Members. The initial university Board Member and any successor thereto shall be chosen by the University Advisory Council.

Each Board Member shall be committed to the goals of the Association in eliminating sweatshop practices. Persons employed or retained by, or agents of, accredited monitors or entities whose applications for accreditation are pending shall not be eligible to serve on the Board. Officers and directors of Participating Companies, College or University Affiliates and Labor/NGO organizations may serve as Members of the Board. No more than one Board Member may be from any individual company, college or university or Labor/NGO organization. The Board shall adopt appropriate screening and recusal policies in order to address any potential conflict of interest issues.

WRC MONITORING
7Instead of attempting to create a comprehensive monitoring regime in order to certify companies, the WRC will use limited but carefully targeted investigatory resources to verify compliance with the code of conduct. Companies may develop their own internal monitoring mechanisms in order to ensure that their factories do not violate code provisions. Independent investigations, conducted on a spot check basis, are nevertheless important because they put teeth into the licensing agreement and accountability in the relationships between licensees.

8WRC is developing a network of local non governmental organizations (NGOs) in regions where licensed goods are produced. This network will allow the WRC to inform workers of their rights under applicable Codes of Conduct, and will allow workers to report conditions securely and confidentially to the WRC itself. In turn, the WRC network will be able to verify factory conditions with workers in interviews outside the factory. The WRC will perform spot investigations in areas with a history of violations, but its main mechanism will be verifying factory conditions with workers themselves.

FLA MONITORING9
Companies affiliated with the FLA implement an internal company monitoring program consistent with the FLA Principles of Monitoring covering at least one half of all their applicable facilities during the first year of their participation, and covering all of its facilities during the second year. In addition, the company commits to use independent external monitors accredited by the FLA to conduct periodic inspections of at least 30% of the company's applicable facilities during its initial 2-3 year participation period. All internal and external monitors provide their reports to the FLA which will, in turn, prepare a public report in accordance with the FLA Charter.

Judgment Three: Chad Sullivan

I. My recommendation concerning the OUS policy:

The ostensible purpose of this committee has been to ensure that the name and reputation of the University of Oregon, let alone its money, are not in anyway attached to sweatshops. The new OUS business practices policy, as currently interpreted, effectively renders this goal impossible and unimportant. Without a licensing code of conduct and University affiliation with some kind of independent information gathering, monitoring, and/or complaint verification organization it can never be known for certain whether the University is contributing to the exploitation of workers. The OUS policy is a bad one that was made without adequate public debate, without sufficient concern for human rights and does, despite its stated intention, engage in political partiality. I sincerely submit that this policy should be repealed, or sufficiently modified, to allow for codes and monitoring. In the meantime this policy can and should be interpreted as not only allowing a role for monitoring organizations, but necessitating them.

II. Reasons for the Recommendation:

This policy was made without adequate public input and debate, and it ultimately conflicts with the findings of this committee, (see section IV below). In particular I find it curious that the State Board did not contact our committee, or committees at other schools such as OSU, who have been studying these issues for some time. Given the recent political confrontations regarding these issues, the Board's process seems odd, to say the least. At the very least, the OUS Board could grant a hearing of concerned parties.

Furthermore, after a brief survey of the relevant Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR), (specifically ORS chapters 279, 351, OAR 571.040, and 581.040), I have concluded that this policy is not based explicitly on state law.

I have located language that discusses ìlimits on eligibility to enter business agreementsî, but I have been unable to find any language that specifically precludes limits on eligibility based on human rights violations or licensing codes of conduct. I have also been unable to locate the phrase ìcommitment to free flow of commerce and efficient business practicesî.

Furthermore, I have found legal language which supports the principles behind codes of conduct. For example,

The Legislative Assembly finds that: Ö(2) For its economic well-being, Oregon
needs ... alert and informed consumersÖ(4)Öcitizens who understand the interdependence of human beings and our shared dependence on the resources provided by our natural environmentÖ(6)Ö[and] individual Oregonians need... to internalize and exemplify humane values. (ORS 351.001)

Perhaps more importantly, the relevant ORS and OAR chapters, and the OUS policy itself, provide considerable room for the State Board to maneuver. Consider, for instance, ORS 279.007, ì(2) A public contracting agency may evaluate every aspect of competition in its effort to purchase products or servicesî. The new OUS policy also allows limits on eligibility because of ìcriteria required or allowed by statute or Board ruleî.

Given these observations the State Board could, and should do a number of things, including: add a clause to the policy that allows for limits on competitive eligibility that are based on humane working conditions, adopt a state-wide licensing code of conduct and allow universities to affiliate with monitoring organizations, or repeal this policy. Having a state-wide code of conduct is actually preferable to each university having its own because, as we were informed by a number of experts, a current problem in monitoring is the overwhelming plethora of individual codes.

My confusion about this policy is further heightened by my understanding that President Frohnmayer had at least one lawyer examine the legality of membership in the Worker Rights' Consortium before joining, and that no objection was made at that time.

My investigation has not been comprehensive; further exploration of this policy is needed by qualified legal professionals. However, the current interpretation is based on one person's legal opinion and I believe it to be non exhaustive and not explicitly based on state law. The faculty of the Senate should do everything in its collective and individual power to convince the State Board to reconsider this policy.

III. Until the OUS policy is changed, the Senate should do everything possible to work under this policy including:

(One of the criteria by which OUS allows limits on eligibility is by ìevidence of illegal activityî. Several noteworthy individuals, including Scott Nova, Executive Director of the WRC, and Pharis Harvey, governing board member of the FLA, have offered different interpretations of this policy. These alternate interpretations point out that most of the provisions of the licensing code of conduct refer to illegal activities and that evidence of illegal activities is impossible to determine without some kind of independent information gathering, monitoring, or worker complaint verification system. Thus universities can and must engage in, or support monitoring organizations in order to follow the wishes of the Board.) (There are many more issues related to this topic that have yet to be properly considered, including the ones mentioned above. Moreover, as information reaches the university some system of reception and remediation will need to be undertaken. If the policy is changed, a committee will be required to reevaluate affiliation with monitoring organizations, and other unfinished business of this committee. That committee should resemble the make-up the structure of this committee with students and faculty as members.)

IV. Once the policy is changed we should:

(Although no vote was taken, and I cannot formally speak for the entire committee, my unofficial tally, from private conversation and contextualized comments, indicates that what follows is the committee's majority position.)

By the end of the committee's extensive investigation into the issues surrounding the ìWRC controversyî it had become apparent that having a strong and enforceable licensing code of conduct, and being affiliated with all organizations capable of providing evidence of compliance with that code are essential if the University wishes to ethically license its trademark.

A licensing code of conduct is necessary to outline the standards by which the university expects its contractors to adhere to and because not all of the provisions are written or enforced in every producing country. Some of the provisions include protection from harassment or abuse, discrimination, child labor, forced over time and guarantees of health and safety, freedom of association, overtime compensation, etc.

The current UO licensing code of conduct (http://comm.uoregon.edu/licensing/coc.html) contains a few unenforceable provisions which need substantial revision. To that end, one suggestion was that the UO temporarily adopt two codes, one aspirational and one actual, with the intention of taking the steps necessary to eventually have one code. An aspirational code is a good statement of principle but insufficient on its own.

One of these steps, and one that is in line with the research principles of the university, would be to support or join any and all available efforts to determine an enforceable living wage. One such effort, made up of universities, has recently begun. The UO was sent an invitation to the first meeting of this Living Wage Association, which was held in February, but no UO representatives were sent.

Independent factory monitoring is necessary because industry self monitoring has been historically insufficient to adequately assess the conditions of producing factories. This point is agreed upon by many apparel manufactures, including Nike, which is a founding member of the Fair Labor Association.

More specifically, the university should seek affiliation with both the Fair Labor Association and the Worker Rights Consortium. A number of individuals interviewed by the committee, including the esteemed Pharis Harvey, director of the International Labor Rights Fund (ILRF) and sometimes Nike consultant, concurred with our decision that the WRC and the FLA serve different but mutually reinforcing purposes in factory inspection.

The Worker Rights' Consortium has been greatly misconstrued by everyone from economics professors to University administrators. I encourage you to read the appended analysis of the WRC prepared by myself and Prof. Lynn Kahle in which many of the common concerns are addressed. I would also point to the recent situation at Kukdong for an example of how the WRC is willing and does work with corporations ó cordially, but at a necessary distance.

The dues necessary for membership in both organizations would be only two percent of the UO's annual profit from trademark licensing. Further superfluous expenses, such as travel costs for UO representatives to Governing Board meetings, would still not exceed five percent of licensing profits, according to the estimate of total costs of both organizations made by Matt Dyste.

V. Personal observations:

A) If the stealthy process by which the OUS policy was enacted is not political, the content of the policy certainly is. I contend the Board's understanding of ìimpartialityî, as do I UO Deputy Director Maureen Shine's understanding of ìneutralityî, as cited in the Chronicle of Higher Education. When a university enters the economic arena, it must assume the ethical responsibilities of any other consumer. It is not neutral or impartial to be engaged in business activities without also inquiring into and requiring certain human rights standards. Moreover, OUS's stated commitment to the ìfree flow of commerceî and ìefficient business practicesî sounds more like the World Trade Organization then a board of higher education.
I would also like to note that the Oregon University System is the only such system in the country that has adopted such a policy. More than 200 universities have affiliated with either or both the FLA and the WRC, both of which require university licensing codes of conduct. The University of California System offers perhaps the most stark contrast, as all UC schools are WRC members.

B) Regarding Nike, I applaud its recent efforts to improve conditions in factories as evidenced in its willingness to join the Fair Labor Association, its voluntary code of conduct (although not as strong as it should be), and the creation of a Corporate Responsibility Department. Amanda Tucker, who works in that department, wooed the committee with a polished PowerPoint presentation, and led us (myself included) to believe that Nike is leading the industry in efforts to improve factory conditions.

But before the ìhappy ending musicî begins let us remember and consider a few things. First, ìleading the industryî is a relative term and according to Pharis Harvey, Nike has been ìslow, slower then Reebok or Adidasî to take action.

Second, regardless of the current actions and rhetoric of Nike, and other corporations, let us not forget that they went to these countries, in the first place, to exploit human beings (also called ìcheap laborî). This is a horrific, historical fact that is never mentioned in these discussions.
Moreover, it should not be assumed that now that Nike is finally doing something (after decades) that they can handle everything by themselves. Amanda Tucker acknowledged that hers is just one small department in a big corporation. Corporations are historically motivated towards human rights only when pressured from the outside. It is not self-aggrandizement (because I wasn't involved then) to point out that the student movement is responsible for most of the reforms, including the factory location disclosure essential for monitoring, that we see today.

Finally, lets talk numbers. Nike made an estimated $569 million in profits last year, they spent $800 million on advertising, and Phil Knight made $4-6 million dollars. Nike could DOUBLE the income of all its workers in Indonesia and it would only cost them 2% of its entire advertising budget, or $16 million! Phil Knight was prepared to give the UO $30 million dollars. Nike workers in Tangerang, Indonesia, make approximately $1.25 a day, substantially below what it requires to live on. Raising the wage by a dollar a day, is all these workers are asking for. They are not asking for the 4,000% raise necessary to equal comparable American salaries. Wages can be raised without upsetting economies and living wages are possible, if desired. These numbers come from a presentation last week which many of you received flyers about (see www.nikewages.org).

C) I am concerned by recent use of the phrase ìcultural imperialismî in the rhetoric of corporate executives, university administrators, law professors, and others. This is used to critique licensing codes of conduct which require companies to follow basic human rights standards that may not be covered in all countries where apparel is produced. But this not cultural imperialism; most of these standards are internationally recognized and accepted by many countries, including Mexico. (The problem is usually one of enforcement.) Moreover, as Pharis Harvey pointed out to us, requiring human rights standards in U.S.-owned factories is no more imperialistic then sourcing the factories there in the first place.

D) Lastly, I want to share the with you, (if, as I do not expect, you have even read this far), the great disillusionment and sadness I feel regarding the way this issue has developed in the last year. As a young student activist concerned with human rights, I am nauseated by the way our administration has acted in bad faith towards the Worker Rights Consortium, and done everything but explicitly lie to the campus community. For every negative WRC progress report issued by UO administration since this summer, I have three or more counter reports from United Students Against Sweatshop Members who were also at Governing Board meetings. They report a Duncan McDonald who seemed interested only in derailing the WRC from its goals and making it difficult for meetings to be productive.

While the WRC has bent over backward to accommodate the wishes of UO administration, (who's demands have been made without the consent of any pseudo democratic campus body), the UO has been endlessly creative in criticizing the organization. (Contrast this with the uncriticized FLA, joined by royal decree, which has its share of problems, including the infamous indemnification problem.)

The lesson I am learning here is that human rights are not as important as money. In fact this has been the substance of the only logical reason (besides ìMelinda says soî) posited for not joining the WRC ? that membership could hurt the university financially. This is something that has only been openly articulated by administrators recently, and is accurate. (The other arguments are red herrings).

Yes, there are risks involved when one becomes involved in the apparel industry -- just ask the workers in Indonesia, or Mexico. Immature CEOs and wealthy alumni with unhealthy duck fetishes may be unable to allow their university to privilege human rights over profit.

Yet, the University is walking a fine line and setting a dangerous precedent by succumbing to the desires of private contributors. Abstractly, once the decision is made to sacrifice principle to perceived reality, a downward spiral is enacted that makes compromise increasingly easier. This is the case when the bottom line begins to be the determinant of policy. Moreover, if the University is unwilling to take the risk necessary to stand up to corporate greed, then it should reconsider being involved with the apparel industry at all. We only make $300,000 on licensing anyway, with 50% going to the athletic department and the other 50% to Duncan McDonald's office.

But its not just the administration that has been profoundly disturbing. The apathy of the faculty has seriously frightened me. Please tell me why a tenured professor does not have the wherewithal to speak up about things that are blatantly wrong? Even members of this committee have been incredibly defeatist and passive. This issue does not directly affect you. You can continue to hide in your office or your study or the library or the classroom, doing what you love. But it will only be a matter of time when what you do is obsolete for the demands of tomorrow's economy or, before, (if it hasn't already happened), your job is so controlled and competitive that what you value and love about education is gone.

You can discount me as another student idealist going through ritualized rebellion, perhaps even with ìuninformed moral arroganceî, whatever that is. Ill be gone soon anyway, and this whole terrible conflict will be over. But realize that in the process you are stereotyping me and denying some stark realities. Students do not have all the answers even if they sometimes think they do. But they have been the people, historically, to bring these issues to the table and they deserve support and respect for that. It is now the responsibility of you rational, experienced, and wise people to take the next step(s).

At one of the public forums our committee held in February, UO Law professor Ibrahim Gassama said, ìwe do not have the choice of doing nothingî. I assert that the State Board of Higher Education's recent policy decision, as currently interpreted, institutionalizes such a choice. I recommend that the University Senate listen more closely to the words of Prof. Gassama, and contest both this policy and its prevailing interpretation.

Judgment Four: Margaret Hallock

Statement submitted by Margaret Hallock, member, Senate Ad Hoc Committee on Trademark Licensing, Professor, Labor Education and Research Center

The Senate committee spent a good deal of time and energy studying and discussing how best to protect the trademark of the University of Oregon. It is a legitimate and necessary function of the university to ensure that goods that bear the University of Oregon logo are not produced under inhumane conditions. I believe that we should continue our efforts, even under the new OUS policy, with student faculty activity directed towards implementation of a code of conduct for contractors and licensees.

There is compelling need for international attention to human and worker rights. The transformation of the global economy has outpaced the ability of national regulatory mechanisms on labor conditions, and the nature of globalization alters the balance of power between nation states and corporations. Essentially, nations often compete for foreign investment by promoting downward pressure on wages, preventing formation of authentic worker organizations, and lax enforcement of labor laws. This type of development may attract low end investments in export zones but will not have long-term positive effects on development of physical and human capital that sustains growth and development. Such development is neither efficient nor equitable.

Abuse of labor in sweatshops in the U.S. and abroad is now well documented. Much of the problem is related to the fact that production of goods occurs through a complicated network of sub-contractors who manufacture goods for large name brand designers and retailers. Over the past two decades, many of these large multinational firms have themselves publicly recognized the problem of unacceptable labor conditions in factories and have established voluntary codes of conduct and independent monitoring schemes. Many believe that improvement can come only when the problem is thus ìownedî and addressed by the corporations who commission the product of these factories.

Our committee found impressive progress in voluntary codes of conduct such as those instituted by the Fair Labor Association (FLA), as well as progress in the science and practice of monitoring. There is also increased awareness that the problem of sweatshops cannot be solved by monitoring alone, that workers need to be empowered to improve working conditions through grievance procedures and authentic worker organizations and unions, as suggested by the Workers Rights Consortium (WRC). These are complementary and potentially effective approaches, as suggested to us by numerous experts and participants in both organizations.

The OUS policy is not well understood and deserves careful study regarding the ability of institutions to conduct business to protect the trademark on human and worker rights grounds. We should ask the OUS Board to reconsider this policy and open it for public debate. The UO could provide educational testimony in this process. In the future it may be possible for the UO to belong to the FLA and the WRC, which I endorse.

In the meantime, the policy suggests that OUS institutions can require that contractors and licensees operate legally, i.e., licensees and contractors should abide by relevant labor laws. I suggest that the UO faculty senate and student body continue to study the UO code of conduct and attempt to create a code and oversight process which asks licensees to demonstrate or certify that they are following the laws of the United States and the countries in which goods are produced for the collegiate market. The certification required routinely in many public contracting procedures might be used as a model.

Our study confirmed that many developing countries have commendable laws governing labor conditions, but such laws are often not enforced. Corporations themselves justifiably call for better enforcement of laws to reduce the costs and burdens of the voluntary codes and monitoring that substitute for lax law enforcement. A code of conduct which requires legal working conditions might help expose and correct working conditions that violate wage and hour laws, health and safety laws, child labor laws, and other legal requirements regarding work.

Thus, I suggest that we use the consensus of the committee to conduct inquiries into abuses of human rights and worker rights, determine the relevance of international labor laws, and to create a unique UO code of conduct which emphasizes compliance with domestic and international labor law.

Appendix One:

On the FLA and WRC

Chad Sullivan and Lynn Kahle

1) Nature, Integrity, and Effectiveness of Monitoring Planned

The primary concern of the Worker Rights Consortium (WRC) is ensuring that workers who make licensed university apparel are treated ethically, in accordance with its code of conduct. The WRC was developed by the United Students Against Sweatshops (USAS), through consultation with workers and human rights groups around the world. The WRC functions around the idea that universities, once informed of code of conduct violations committed by their licensees, can use that information to pressure licensees to improve conditions in their factories.

The WRC maintains that it is ìconsistent with the mission of universities and colleges to establish a system of licensee verification that maximizes accountability and respect for human rightsî.10 Under the WRC program, it is the responsibility of the licensees to comply with the code of conduct through full public disclosure of factory locations and conditions. The WRC works to ensure this compliance and reports its findings to universities.

Acknowledging the vast scope of the apparel industry, the WRC does not attempt to certify companies or factories. It would be impossible for a university to know for certain that all factories are complying with its code, especially since one-time investigations allow the possibility of cover-ups. ìHence, certifying ëcompliance' of an entire corporation or factory is ultimately impossible and only extends the probability that the name of the university will be lent to companies that are ... profiting off of abusive working conditionsî.11

Instead the WRC works to publicly illuminate conditions in factories and respond to the needs of workers making licensed products for institutions of higher education. The WRC accomplishes these goals in three ways: a) information forcing, b) verification, and c) proactive investigations.

Information Forcing - Companies are forced to publicly disclose the location of factories making university apparel. It is the aspiration of the WRC to also require information about working hours, wages, health and safety conditions, etc., including objective measures of those conditions. The WRC will attempt to make this information available to worker allied groups in producing regions. The WRC considers misreporting of information a serious transgression.

Verification System - Operating independently of the garment industry, the WRC will receive and verify worker complaints regarding alleged abuses or violations of the WRC Code of Conduct. This system works like a fire alarm for the safety of workers.

Proactive Investigations - The WRC will coordinate proactive investigations in conjunction with local, non governmental organizations, and human rights groups experienced in regions where workers rights are severely violated or where a licensee has a history of repeated violations. These investigations will be as unannounced as possible so that factory management does not have the opportunity to hide code violations before the investigation. (The WRC does acknowledge that some elements of the investigation, such as the examination of records, require contacting the factory management prior to arrival).

Through the verification system and the proactive investigations the WRC will evaluate licensees' compliance with universities' codes of conduct. The WRC intends its program to be ìstraightforward, practicable, consistent with the mission and role of universities, and likely to change the actual behavior of licensees and their subcontractors. Most importantly, [the WRC] believe[s] that coupled with strong codes of conduct, this enforcement process will be most likely to benefit workersî.12

After verifying or discovering code violations at a factory the WRC is committed to pressuring the licensee to improve those conditions rather than to shut factories down. The latter action would work against the goals of the WRC, encouraging workers to not report abuses. Indeed the WRC emphasizes the responsibility of the licensee to use its leverage over subcontracting companies to correct conditions, rather than abandon or stop production at those factories. In short, the Consortium will act as a watchdog on the specific factory and licensee, repeatedly investigating and evaluating to ensure improvement.

It is the firm commitment of the WRC that all verification and investigation, as well as the resources used in those processes be independent of licensees and instead managed by those whose ìclear mission is to be responsive to the concerns of workersî.13

The ultimate goal of the WRC is to provide licensees with an incentive to improve working conditions in their factories by creating an arena where licensees can compete not for the cheapest labor but for the highest level of labor standards.

A further goal of the WRC is to promote research relevant to the issue of improving working conditions. The Consortium emphasizes the role universities could play in this matter, as centers of inquiry and research, and recognizes the many remaining questions involved in this process including: setting living wages, methods of investigating workplaces, etc.

The Consortium also operates under the belief that the most important agents in ensuring worker safety are workers themselves. To this end, the WRC aims to educate workers, by way of allied NGOs, about their rights, specifically in terms of collegiate codes of conducts. From this process of education and verification of worker complaints, the WRC hopes to empower workers to defend themselves.

INTEGRITY

Although some licensees, such as Nike, have publicly questioned the WRC's integrity, the WRC proclaims that it is committed to ìmaintain absolute integrity and truthfulness throughout the investigation processî. 14 The WRC realizes the difficult task set before it, acknowledges the need for flexibility, and is open to change. Especially regarding verification procedures, the Consortium states a commitment to ìdevelop and revises its programs in consultation with workers, human rights groups, and other interests, including apparel producing companiesî.15 Already, in its short existence, the WRC has proven itself to be responsive to constituents' concerns, evidenced in structural changes made during the first governing board meeting, at the request of the university constituency.

2) EXTENT AND DESIRABILITY OF INVOLVEMENT OF INDUSTRY, WORKERS, GOVERNMENT AND NON GOVERNMENTAL ORGANIZATIONS

INDUSTRY INVOLVEMENT:

The WRC was founded on the principle of being an ìalternative to company controlled monitoringî.16 Implicit in this is the notion that industry self monitoring is insufficient to ensure the well-being of workers in factories. As a result, industry does not have a voice in the decision making or verification processes which the WRC employs.

The Consortium does recognize that there is a need to work closely with industry in order to bring about change and will eagerly engage licensees whenever there is an opportunity for cooperation. This has already been shown in the Kukdong case, where the WRC has made every effort, (including letters, emails and phone calls), to cooperate with Nike and Reebok. In another example, the WRC consulted with the Collegiate Licensing Company (CLC) and the Licensing Resource Group (LRG), both of which are apparel industry groups, in the development of its format for disclosure of factory addresses. In addition, at its first meeting, the WRC governing board passed a resolution recommending the Executive Director hold ten consultative meetings with interested parties in the apparel industry.

The Consortium does not view its position on industry involvement as antagonistic but rather as independent, a necessary relationship to prevent conflict of interest and ensure objectivity.

WORKER INVOLVEMENT

Involvement of workers is at the heart of the WRC's purpose. Indeed it conceives of itself as providing a voice for workers, responding to their complaints when recorded. More than that the WRC wishes to encourage workers and worker allied groups to advocate on their own behalf. To that end, the organization aims to be as responsive and supportive of workers as possible. The WRC also realizes the sensitive nature of workplace investigations and the possible danger to the safety of the workers if factory management suspects them of reporting code violations. Therefore the WRC will work with worker allied groups, (NGOs, unions, and other organizations which have knowledge of factory conditions and established relationships with workers), to maximize worker safety, primarily by interviewing workers off site when necessary.

GOVERNMENT

Government plays little or no role in the WRC, except as necessary in accordance with national and international laws. The Consortium does attempt to consult with relevant government agencies where appropriate.

NON GOVERNMENTAL ORGANIZATIONS

The WRC places much importance on the involvement of NGOs, as evidenced by the inclusion of many leaders of NGOs in the Advisory Council. The WRC has, from the beginning, enlisted the support of NGOs, especially ones with human rights and labor focuses, to craft principles and strategies for ensuring workplace safety. The WRC has a network working group currently involved in building contacts with NGOs in various countries that can act as a resources and allies to the organization. Throughout the processes of verification and investigation the Consortium will work closely with local NGOs that are familiar with workers and factory conditions. Moreover, the WRC intends to make information it gathers available to those groups to assist them in their work.
 

3) ABILITY OF THE ORGANIZATION TO CARRY OUT ITS GOALS

The WRC is still in early developmental stages. Thus far, the organization has shown promise and rapid development. There are currently 71 affiliated schools and Scott Nova became the WRC's Executive Director in December. In the last two months, the WRC has expanded its staff from one to three people and is in the process of hiring two additional staff people, which should increase efficiency and productivity.
The Consortium is getting closer to fulfilling its programmatic goals; it currently has three working groups -- one to compile and standardize disclosed factory location information, one to form networks with non governmental organizations (NGOs) around the world, and another to establish pilot projects in producing regions. These pilot projects should begin within the next few months.

A lot has been made about the budgetary resources of the WRC and the organization's assumed inability to fulfill its goals because of insufficient funding. Most of these arguments, however, fail to acknowledge the difference between the WRC's verification model and other types of monitoring. The primary methodology employed by the WRC to ensure humane working conditions, as outlined above, is requiring full public disclosure, responsive investigations, and limited proactive investigations. WRC investigations will be carried for the most part by accredited NGOs rather than hired monitors. Investigations will also be carefully targeted and conducted on a limited basis; far less then the number monitored by the FLA. This methodology makes it possible for the organization to function with less resources than a full-fledged monitoring organization. Rather than the expensive process of certification, the WRC channels its resources towards exposing code violations and relies on the good intentions of universities and licensees to exert their influence to correct these conditions. The WRC has expressed confidence in its ability to operate with a first year budget of approximately $500,000 and to raise additional funds, as necessary, from foundation grants.
Nevertheless, there is still some concern that the current operating budget of $150,000 a year will prove to be insufficient to find and certify NGOs with all of the skills and resources necessary for objective and fair investigations.

Moreover, in spite of zero government funding and hostility from the apparel industry, the WRC has come together faster than the FLA did. The FLA had a three-year head start on the WRC: the Apparel Industry Partnership came together in August of 1996, while the WRC was not formally announced until October 19, 1999. The WRC took only about a year to hold a founding conference, assemble a Governing Board, become an incorporated organization, begin the application process for non-profit tax status, write bylaws, and hire an Executive Director. In addition to the founding document, the WRC has guidelines for partner NGOs in apparel producing regions and a searchable and detailed factory disclosure format. The quick pace of this process is indicative of the Consortium's drive and ability to fulfill goals.
 

4) HOW THE INFORMATION GATHERED FROM MONITORING WILL BE USED

The WRC will publicize the results of its investigation, sending data and suggested courses of action to licensees, worker allied NGOs, and affiliated universities. For the latter, the WRC will furnish university code specific information, where appropriate. It is the sole discretion of the university how the information gathered by the WRC will be used. The WRC does expect companies cited for violations to improve the conditions at their factories and assumes universities affiliated with the WRC have the same expectations. The WRC does not require specific penalties; however it does plan to establish a system of guidelines for such penalties and will make such recommendations in the event of code violations.

The WRC makes a special note that termination of a licensing agreement should be considered the ultimate penalty for repeated code violations. The WRC does not advocate this penalty as an immediate step but one that ìuniversities should be willing to takeî.17 The rationale behind this statement is that the threat and possible actuality of contract termination will motivate the industry to improve.

5) Transparency of organization's actions and financing

On the issue of open meetings and transparency, the WRC has partial, but not total openness. WRC seems to be drifting toward greater openness. Governing Board meetings are open to members and observers from any of the three constituencies. The Board does reserve the right to go into private executive session but has never taken that action to date. Observers have been allowed to attend meetings. Officials of WRC have answered reporter questions responsively, but the press is not currently allowed to attend board meetings, No reporters have attended the Board meetings, but The board does post concise meeting minutes on the WRC web site; the notes from the July meeting can be accessed there. (The decision about whether to post expansive minutes, concise minutes, or nothing on the web stimulated intense and extended discussion at the July Board meeting, resulting in the ìconcise minutesî decision). The atmosphere of the WRC decisions and meetings still seems somewhat restrictive to someone used to operating in the context of Oregon open meetings law.

In many ways the WRC is more committed to transparency than any other monitoring organization. The level of public information disclosure required of licensees is high and investigations will be fully reported.

The WRC's budget for its first full year of operations will be ìon the order of $500,000 ? sufficient to fund a core paid staff of 5-6, overhead, and ... international program work, including a significant number of investigationsî.18 These funds come, presently, from university dues and the following independent philanthropic foundations: the Stern Family Fund, the General Service Foundation, the Arca Foundation, the Phoenix Fund, and the New World Foundation. The WRC's affiliate universities will pay fees in the 2001 fiscal year of roughly $170,000 (a figure that may be larger, depending on the number of new affiliates this year). University dues are calculated as 1% of their gross licensing revenue or $1000 from each member school, whichever is greater ó the UO dues are about $3000 per year. Dues, regardless of gross licensing revenue, are capped at $50,000 for any one affiliated school. The UO is one of a few universities who has not yet paid dues for this fiscal year.

The Executive Director of the WRC is ìconfident that the potential exists in the foundation world ? and from other funding sources ? to achieve major increases in the organization's budget over time, providing the resources necessary to support an expanding operationî.19

It is important to note that the Worker Rights Consortium is in the process of making the transition from social movement to institution. This entails ironing out the remaining wrinkles of idealism leftover from the young student activists who started the organization. As the group becomes more of a law governed bureaucracy, and students shift from having total control of the WRC to one third, financial disclosure and greater openness will be unavoidable. The current trend is toward greater transparency and, ultimately, it is unlikely that the issue of transparency will inhibit universities from participating in the WRC. Moreover, with one third of the decision making power, universities can work to change any policies they disagree with.

6) Clout of universities within organization

The decision making Board of Directors consists of five representatives from each of the following constituencies: USAS (United Students Against Sweatshops), the University Caucus, and representatives from the Advisory Council. The offices of chair, secretary, and treasurer rotate among the three constituencies each year. Currently the chairman is from the Advisory Council, the secretary is from USAS, and the treasurer is a university representative. The next two years are scheduled already, with the university representative being secretary next year, and then chair the following year. Additionally, universities have potentially more influence than one third considering all five USAS representatives will be from universities themselves. Only universities (71 affiliates as of 1/22) will pay dues, and those dues will subsidize Board of Directors meeting participation for USAS and Advisory Board representatives. It may appear as though universities are paying the bulk of the bill for a third of the voice yet they pay the same amount to the FLA for much less of a role.

7) KIND OF INFORMATION PROVIDED ABOUT LICENSEE

When the WRC investigates the labor practices at a factory producing University of Oregon apparel, it will inform the university of any violations of its Code of Conduct. While it is unlikely that all factories investigated by the WRC will make UO apparel, the WRC is the only organization to exclusively investigate factories that make university apparel. (In contrast to the FLA, which attempts to monitor the entire apparel industry). Also, as evidenced by the recent spotlight on Kukdong International in Mexico, many university apparel producing factories manufacture for several universities. Therefore, it is likely that many factories investigated by the WRC will be connected to the University of Oregon.

8) Relation between organization's Code of Conduct and UO's Code of Conduct

In general the UO Code of Conduct matches the WRC Code of Conduct almost exactly. When the UO Code was developed, the two codes were placed side by side, and time and again issues of conflict were resolved by adopting the WRC language, which in general is more protective of workers than the FLA Code of Conduct. All three Codes are dynamic and changing as organizational operations become more sophisticated. In a few instances the UO Code omits WRC provisions, such as the requirement that licensees at least comply with Title 29 CFR of the US Federal Code of Regulation, enforced by OSHA. The WRC does not require that affiliated schools adopt its code of conduct, but the WRC code will be the basis of investigations. Reports to the UO will be tailored to the UO code's relevant provisions, where appropriate. The WRC does require women's' rights and living wage provisions, which the UO code does contain.

Appendix Two:

O'Fallon Response to Lingua Franca Article

Dear Fellow Committee Members:

Chad has asked for my response to the Lingua Franca article. By and large, it seems to do a good job of describing the situation, though I question the accuracy of the claim that a large number of schools switched from the FLA to the WRC. As I followed the situation, it appeared mainly to be schools that had not been affiliated before joining WRC, or schools that were FLA affiliates adding WRC affiliation. That said, I'm not sure what difference it makes.

What I found most interesting was the discussion of the economics of the situation. I will state my prejudice up front: any economic prediction that is not strongly grounded in empirical work is very problematic. There is a body of economic thinking, associated with Joan Robinson of LSE, that has focused on the problem of the ìsecond bestî ó what happens to economic prediction when the conditions under which ideal theory operates (e.g., no transaction costs, perfect information, etc.) are not satisfied, which is always the case in the real world. The answer, in part, is that the predictive usefulness of the classical model is seriously compromised.

A good example is the question of the minimum wage. As the article notes, business predicted significant job loss with the imposition of the minimum wage, a consequence that did not appear to follow. The interesting question is why not, given that there is a lot of empirical evidence for the simple assumption that demand falls with increasing price. At least some of the possible explanations may include the fact that the minimum wage (in the United States) operates at the margin of the economy, affecting a relatively small portion of the workforce. The original imposition of the minimum wage in this country (nationally) was the Fair Labor Standards Act, which took effect at the end of the depression, but when the economy was moving into broad expansion in response to the War, which also shrank the labor pool. I obviously don't have the answer to the question, but I would suggest that the answer probably is dependent on a lot of variables that are different in different places at different times. The fact that non market based wage increases don't have the predicted effect in one place at one time, gives us no information about what effect they will have in a different place at a different time.

The kind of argument that Pollin advances is worthless. It has the appearance of facticity (it uses numbers) but it is pure speculation. What we would need to know in order to verify the claim that ìnone but the workers would noticeî the wage increase would relate the workers wages to the overall cost of bringing the product to market. The best surrogate that we have for that is the overall profitability of the firm. For nike in 1999, that was about 6.4% of revenue. That must be placed in the context of firms vying for capital investment where profitability is significant.

I do not believe that we live in the best of all possible worlds, nor do I believe that unregulated markets provide the best answers to all economic questions, nor do I deny that the conditions under which people work and live in much of the developing world (and many parts of the developed world) are very harsh. I do question the usefulness of the monitoring strategy upon which we have embarked, and I am certain that we have no credible information upon which to base our assumption that it will have a salutary effect.

Here is a chain of inferences that strikes me as just as plausible as those that drive the WRC position, focused as it is on the very small part of the industry that is engaged in production of licensed apparel. Those factories that have 10 or 15 % of their product line in licensed goods decide that the increased costs of compliance with the codes, which cannot easily be limited to the time spent working on licensed goods, are not worth it. Perhaps they lose contracts with others, not subject to WRC scrutiny, who are unwilling to pay the premium and can get their work done elsewhere for less. Gradually, the licensed work is concentrated in a relatively few factories, quota permitting, where the workers are treated relatively well (making those jobs quite attractive, which ironically probably undermines the ability of unions to organize the workers ó witness the fate of organized labor in the U.S.).

The FLA strategy is subject to the same kind of possibilities. If it is successful, it will pull in a larger part of the industry, but the small industry enrollment so far is not promising. There is a significant risk here for Nike and other FLA members: they are relying on their marketing strength to allow them to impose costs on themselves that their competitors are not carrying (not just the wages, but the improved working environment with regard to materials used, ventilation, safety, etc.) and still compete successfully. That risk is made greater when they are subject to attacks that undermine their ability to carry the costs of improved working circumstances. Another irony here, perhaps ó the WRC/USAS strategy of publicizing problems with visible companies is fundamentally at odds with its reliance on the strength of those companies to leverage the industry in the right direction. If a nike goes under (it certainly could happen) has WRC succeeded?

Here is an idea. Rather than join either the WRC or the FLA, why doesn't the UO enter into agreements with its licensees to engage in cooperative efforts designed to address the problems of working conditions in the apparel industry? Just a thought.

JMO

Appendix Three:

Answers to Questions about the WRC

Chad Sullivan to Scott Nova (Executive Director, WRC)

  1. How is the leadership of the WRC determined? We understand that the University Caucus will approve bylaws stipulating the procedures used to select representatives. How do or will the USAS and the Advisory Committee select it members?
The three constituent bodies of the WRC; the University Caucus, the Advisory Council and United Students Against Sweatshops are considered informal associations that are autonomous and can rule themselves. Just as the University Caucus rules are set by the university caucus members, the same is true for the other WRC associations.

-The Advisory Council decisions have been made in discussion via conference calls.

-USAS process has been to have Board member candidates fill out applications to explain themselves and then be selected by vote of USAS membership. (USAS voting qualification is determined by schools that decide to affiliate with USAS and their principles of unity) Votes are collected by USAS staff.

2) What unique service will the WRC provide to the University of Oregon that will not be made available to the general public, especially in terms of the expenditure made by the university?

Through its affiliation, the University of Oregon derives the following benefits:

-Reports on factory conditions that, where appropriate, speak to the issue of compliance with the University's specific Code of Conduct.

-The ability to work in concert with other WRC affiliates to correct problems at contract factories.

-Access not just to reports on WRC investigations, which will be public, but to in depth consultation with WRC staff and investigators.

-The ability to consult on issues of interest with the labor rights experts on the WRC advisory council.

-Participation in an organization that is in a position to earn the trust of all elements of the university community.

One further point in this connection:

The WRC is not a fee-for-service business providing a product to a set of customers in exchange for payment. It is a cooperative effort by colleges and universities to work toward a common goal ? improved conditions for workers in the collegiate apparel industry. It is true, as noted above, that affiliate schools will benefit from certain services not available to nonaffiliated schools or the general public. However, I would urge the committee to measure the WRC's value primarily in terms of its potential to play a constructive role in the effort to improve working conditions in the industry. I believe that the WRC has enormous potential in this regard and can best serve the U of O by working with the U of O and other schools to advance our common agenda of decent treatment for all workers who produce collegiate apparel.

3) What has or did the WRC add to the situation at Kukdong that licensees were not already doing on their own? The WRC, and the universities who communicated their concerns about the situation to Nike and Reebok, have played a crucial role in convincing the licensees to take the necessary steps to correct the immediate problem at Kukdong ? i.e. the inability of the workers to return to their jobs in the aftermath of the work stoppage. I would be happy to discuss with the committee in detail why I believe the WRC's role has been so important in this case and the specific ways in which the WRC's intervention has added to the process of remediation.

4) Is the investigation at Kukdong indicative of the kind of investigations the WRC will have in the future?

The Kukdong investigation is indicative of one type of investigation the WRC will conduct ? investigations in direct response to worker complaints. In terms of the form of the investigation, the use of a delegation of the board is not typical, though we will use this mechanism in some cases. What is typical is the direct involvement in the investigative work of a representative of a respected local NGO; the emphasis on detailed interviews with workers outside the plant, in their communities; the timely response; and the concrete recommendations for remediation.

5) Regarding the WRC's Preliminary Report from Kukdong, who created the recommendations for university action; were they formulated by WRC staff, the WRC Governing Board, or who?

The recommendations for action by the licensees and by the universities were formulated by the members of the delegation, which included the Chair of the WRC Governing Board and myself as WRC Executive Director. The idea that universities should urge licensees to take remedial action where violations are uncovered is, of course, a core principle of the organization.

6) Since the WRC is involved in monitoring only factories that license university apparel, what role does it play, or what justification does it have for investigating a factory like Kukdong where there is currently no licensee production?

The WRC's purpose is to promote just and humane working conditions at factories producing collegiate licensed merchandise. Nike acknowledged, from the outset of the dispute, that Kukdong is such a factory and had reported Kukdong's status as a source of collegiate apparel as part of the factory disclosure process. Given the seasonal nature of apparel production, there will often be periods, even at major producers like Kukdong, when there is no active contract. Absent an announcement from a licensee that it is ending its relationship with a contractor, such seasonal variations cannot be assumed to represent an end to a contractor's role as a source of collegiate products. Given the Kukdong's ongoing role in collegiate production (including the production of collegiate apparel in recent months under allegedly substandard conditions), Kukdong is an entirely appropriate subject for investigation, notwithstanding the seasonal lull.

In this regard, it is worth noting Nike's statement of January 16: ìNike has been a major customer of Kukdong Mexico, a Korean owned and operated factory with about 800 workers, whose primary output is sweatshirts. Because of the seasonal nature of that product, Nike currently has no orders placed at KukdongÖ Nike's intent at this time is to remain a Kukdong customerÖî

7) Is the WRC a monitoring organization? (Is the WRC comfortable with the term monitoring in regards to its model of factory investigation?) There are some members of the Governing Board who consider the term monitoring to be problematic. Given the evolving nature of the debate about working conditions in the apparel industry, such semantic disputes are to be expected. Monitoring is not the first term I would use to describe our role, but I have used it in some cases and the WRC as an organization has no official objection to the term.

8) Is the WRC code of conduct a fixed document, specifically in regards to the living wage provision? Will universities be allowed to affiliate with the WRC if the living wage provision is absent from the university's code of conduct except in an aspirational sense?

College and University affiliates are not expected to adopt the WRC model code exactly. Rather it is a model code that the WRC uses as a measure for working conditions when doing investigations. There are some code provisions that the WRC considers key including: women's rights, the right to organize, disclosure from licensees of factory locations, and the living wage.
Universities can affiliate as long as they support the payment of a living wage in principle, or aspirationally, if that terminology is preferred. As an organization the WRC supports investigating a living wage further and exploring methods of implementation when sufficient living wage research has been done.

9) Have the ten consultations with licensees, passed as a resolution by the WRC governing board, taken place yet? If not, who is coordinating that and is there a timeline on the meetings? If so, have any apparel companies indicated a willingness to work with the WRC and to be monitored by the WRC's code of conduct?

We are planning the consultations and I will direct this process personally as Executive Director. The timeline is as soon as possible, which is to say that this is a top organizational priority. The WRC recognizes that working with licensees is necessary if we are to bring about positive change ? as evidenced by our efforts to work with licensees in the context of our efforts at Kukdong. As the U of O is well aware, significant tensions with Nike predate my arrival as Executive Director and I expect that it will take some time to develop a good working relationship with this particular licensee ? though I am hopeful that it can be done. I anticipate less difficulty working with other licensees. Reebok, for example, approached the WRC directly during the Kukdong fact-finding mission and asked to compare notes on the situation at the factory. We have had substantial ongoing contact with Reebok in the context of the Kukdong dispute.

10) Does the WRC perceive itself to be in an adversarial relationship to licensees? To what extent will the WRC involve itself with industry?

We do not view ourselves to be in an adversarial relationship with licensees. We are an enforcement organization dedicated to ensuring that collegiate Codes of Conduct are upheld and that conditions improve for workers in the collegiate apparel industry. We need to work with the licensees to achieve these goals. There will be occasions, as with any enforcement process, where there are disagreements and tensions between the WRC and specific licensees. This is unavoidable. However, we do not view the relationship as inherently adversarial.

11) What is the relationship between the WRC and the FLA? Are the two organizations complimentary or adversarial?

We do not consider the FLA an adversary and welcome opportunities for constructive cooperation ? as exemplified, for example, by our cooperative work with the International Labor Rights Fund, a key FLA board member, on the Kukdong investigation.

12) What position, if any, does the WRC have on the phase out of the Multifibre Arrangement (MFA) and the World Trade Organization? We have no organizational position on these issues.

13) What risk of liability would the University of Oregon have from lawsuits or legal actions occurring in other countries? I have discussed liability issues with the U of O's General Counsel and have arranged for her to confer with the WRC's attorneys. If the committee wishes, I can consult with our attorneys about the specific question of potential liability in foreign courts and offer an amplification of our previous communications on liability questions. However, as I noted to the U of O General Counsel, the university should not rely on the WRC or our attorneys as the basis for reaching conclusions on legal questions.

Appendix Four:

Dyste Perspective on Code of Conduct Questions

1. Wages and Benefits: UO's Code: Wages and Benefits: Trademark licensees recognize that wages are essential to meeting employees' basic needs. Trademark licensees shall pay employees, as a floor, wages and benefits that comply with all applicable laws and regulations, and that provide for essential needs and establish a dignified living wage for workers and their families. A living wage is a "take home" or "net" wage, earned during a country's legal maximum work week, but not more than 48 hours.  A living wage provides for the basic needs (housing, energy, nutrition, clothing, health care, education, potable water, childcare, transportation and savings) of an average family unit of employees in the garment manufacturing employment sector of the country divided by the average number of adult wage earners in the family unit of employees in the garment manufacturing employment sector of the country.

While the code indicates the concept of a Living Wage is aspirational, it is written into the code, along with language that attempts to define what a Living Wage is.  These is not much consensus on what defines a basic need and what it may take to satisfy such a basic need so I believe this section to be unenforceable. To have enforceable wage provisions the code should speak to the wage laws that the respective countries of manufacturer have legislated.

2. Working Hours and Overtime Compensation: UO's Code: Working Hours: Hourly and/or quota based wage employees shall not be required to work more than the lesser of (a) 48 hours per week or (b) the limits on regular hours allowed by the law of the country of manufacture, and be entitled to at least one day off in every seven day period, as well as holidays and vacations (as legally recognized in the country of manufacture). Overtime Compensation: All overtime hours must be worked voluntarily by employees. In addition to their compensation for regular hours of work, hourly and/or quota based wage employees shall be compensated for overtime hours at such a premium rate as is legally required in the country of manufacture or, in those countries where such laws do not exist, at a rate at least one and one half their regular hourly compensation rate.

Codes I have reviewed place a limit on total hours worked on the lower of the maximum hours established in the country of manufacture or 60 hours per week.  Wages paid for overtime work are based on prevailing wage laws within the country of manufacture.

3. Health and Safety: UO's Code:  Trademark licensees shall provide a safe and healthy working environment to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of Licensee facilities. In the case of work related injury, factories will provide just compensation. In addition, trademark licensees must comply with the following provisions: UO's code requires that licensees provide just compensation in the case of work related injuries.

Our code does not define how "just compensation" is determined.  Without an enforceable, definable, and insurable standard this clause should not be in our code as an attachment to the licensing contract.

4. Freedom of Association and Collective Bargaining: UO's Code: Freedom of Association and Collective Bargaining: Trademark licensees shall recognize and respect the right of employees to freedom of association and collective bargaining. No employee shall be subject to harassment, intimidation or retaliation in their efforts to freely associate or bargain collectively.  Trademark licensees shall not cooperate with governmental agencies and other organizations that use the power of the State to prevent workers from organizing a union of their choice. Trademark licensees shall allow union organizers free access to employees. Trademark licensees shall recognize the union of the employees' choice.

Our code requires licensees not to cooperate with governmental agencies seeking to enforce laws of their respective countries.  With the non-cooperation with local governmental agencies statement included in the code it appears that UO is mandating what could amount to obstruction of justice under laws of the country where products are manufactured. Further, what constitutes free access to employees by union organizers?


1 The report, titled ìFraming And Clarifying The Issues: Interim Report Of The Senate WRC Review Committee,î can be found on line: (http://darkwing.uoregon.edu/~uosenate/dirsen001/dirWRC/WRC91800.html)

2 As quoted from Comments to the Ad Hoc Committee on Trademark Licensing
Bruce A. Blonigen

3 As quoted on the WRC web site, (www.workersrights.org), in ìExecutive Summaryî

4 As quoted on the FLA web site, (www.fairlabor.org), in ìobjectives of the Fair Labor Associationî.

5 As quoted on the WRC web site, in ìKey Principlesî in ìOrganization Documentsî.

6 As quoted on the FLA web site, in ìGovernance of the Associationî.

7 As quoted in ìWRC answers (rough final)î Lynn Kahle, Chad Sullivan

8 As quoted on the WRC web site, in ìCompanion Documentî

9 As quoted on the FLA web site in ìAbout the FLA-Monitoringî.

10 WRC Executive Summary, ìPrinciplesî, (www.workersrights.org)

11 Key Principles, 4, (www.workersrights.org)

12 Key Principles, preamble, (www.workersrights.org)

13 Key Principles, 5, (www.workersrights.org)

14 Key Principles, B.3.b., (www.workersrights.org)

15 Key Principles, 6, (www.workersrights.org)

16 as quoted on the WRC web site, (www.workersrights.org), in ìKey Principlesî in ìOrganization Documentsî.

17 WRC Key Principles C.2. (www.workersrights.org)

18 personal correspondence, Scott Nova-Chad Sullivan email, February 15th

19 Ibid.



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