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July, 31 2004 |  Download PDF |  Share

King Yong, Nicaragua: A Major Test Case for the Central American Free Trade Agreement

 Made in Nicaragua  Athletic Works label

 

Introduction

King Yong, a large Taiwanese-owned maquila factory in Nicaragua producing clothing for export to Wal-Mart and Kohl's continues to defy a Nicaraguan government order to immediately reinstate scores of workers illegally fired for exercising their constitutional right to Freedom of Association.

On March 22, 2004, the workers at King Yong organized a legal union. Three days later, the firings began. To date, over 400 workers have been fired, including seven of the newly elected union leaders.

A Ministry of Labor investigation of the firings concluded: "It is also clear that the persecution by the employer [King Yong] against all the members of the union Board was an attempt to deny these workers their right to full trade union freedom as established under Article #82 of Nicaragua's Constitution." Repeatedly, the Minister of Labor has ordered King Yong to immediately reinstate the fired workers: "The employer is to maintain the workers in their same posts, with identical wages, and to pay all back wages incurred during their illegal dismissal."

King Yong's response has been to defy the Minister of Labor. In a face-to-face meeting on May 17, the legal representative of King Yong simply told the Labor Minister, "We will not accept this union."

The Ministry of Labor also cited King Yong for excessive mandatory overtime hours and failure to pay the legal overtime wage. King Yong management responded that "The late hours registered do not mean that the sewers were working, but rather it is common for the workers to just hang around the factory to socialize and talk to each other."

The Ministry of Labor has also cited King Yong for numerous health and safety violations, including excessive noise levels, inadequate lighting, failure to conduct health and safety training, failure to keep a record of chemicals used at the factory, and failure to notify the government of industrial accidents and illnesses.

So, here you have a case where the workers have done everything correctly, organizing their union, presenting all the required documentation, and swiftly gaining legal recognition from the government.

Here you also have the Ministry of Labor doing the right things, attempting to uphold and implement Nicaragua's Constitution and Labor Code, all to no avail.

The King Yong workers informed us that they have now exhausted every avenue available to them in Nicaragua in the struggle to win their legal rights. They have tried to negotiate in good faith with the King Yong Company. They have fully cooperated with the Ministry of Labor. The workers have met with members of the National Assembly and with local religious, human, and labor rights organizations. Yet none of this has worked.

What makes it more difficult for the workers is that the vast majority of production in the factory at the time of the mass firings was for Wal-Mart and Kohl's, two corporations with notoriously poor track records for monitoring and implementing their Codes of Conduct. What is more, Wal-Mart and Kohl's have evidenced an ideological aversion to Freedom of Association, so the workers cannot expect any help from this avenue.

As if this is not bad enough, it turns out that under the Central American Free Trade Agreement (CAFTA), Nicaragua has been granted special trade privileges which will allow abusive companies like King Yong to send as many as 427 million garments to the U.S. duty free, despite the fact that the fabric will be sourced in China, outside of the CAFTA countries. On top of the 640 million square yards of fabric lost to textile mills in Central America and the U.S., over the next decade, the duties lost on these garments could cost the American people over $227 million.

As one of the poorest countries in Latin America, Nicaragua needs such trade preferences, but only if the benefits reach the workers and do not flow only into the pockets of abusive companies like King Yong and their U.S. buyers, Wal-Mart and Kohl's.

CAFTA, as negotiated by the Bush Administration, will fail the people of Central America and the U.S. unless it is renegotiated to include enforceable worker rights standards which are at least every bit as strong as legal protections currently afforded corporate trademarks and products. As it stands now, CAFTA protects the product but not the human being. This is morally and ethically wrong.

In the King Yong case, we can see how governments in the developing world are less and less able to defend their own laws and the basic rights of their people in the face of unfair trade agreements that disproportionately protect corporate products and not the human beings who make them.

 

King Yong workers at the factory gate

 

In March and April 2004, when the illegal mass firings began, Wal-Mart accounted for approximately 80 percent of factory production. The workers believe that Wal-Mart's order was for one million Athletic Works label shirts, which were sewn on eight lines. The rest of production, in two lines, was the Tek Gear label for Kohl's.

In June and July some production shifted to Liz and Me (long sleeve women's t-shirts for Catherine's Plus Sizes), Gloria Vanderbilt (women's blouses with lace, sold at Kohl's, Mervyn's and other stores), and Girls Connection (loose-fitting shirts for girls sold at Wal-Mart).

Athletic Works (Wal-Mart)

Made in Nicaragua
100% cotton
RN 52469 

 

 

TEK GEAR (Kohl's)

60% cotton
40% polyester
RN 73277

 

 

Executive Summary

Repression and abuse at the Taiwanese-owned King Yong maquila factory in Nicaragua producing for Wal-Mart and Kohl's

  • King Yong crushes freedom of association through illegal mass firings;
  • Defies Nicaraguan Minister of Labor's order to immediately reinstate the fired workers;
  • Ministry of Labor cites King Yong for excessive mandatory overtime and failure to pay the legal overtime wage;
  • Under special CAFTA trade preferences, abusive companies like King Yong in Nicaragua can export 427 million garments to the U.S. duty free, despite the fact that the fabric can be sourced in China;
  • Mandatory overtime: 12-to-15-hour shifts, from 7:00 a.m. to 7:00 p.m. or 10:00 p.m. six days a week. Workers are at the factory 65 to 79 hours a week;
  • Base wage of 29 to 34 cents an hour meets less than half of even the government's own estimate of what is required to meet basic subsistence level needs;
  • Workers routinely cheated on overtime pay legally due them;
  • Workers have to sew one Wal-Mart 'Athletic Works' shirt every 15 minutes for which they are paid just nine cents. Workers are given just 14.2 minutes to sew 'Tek Gear' shorts for Kohl's while being paid eight cents;
  • Supervisors routinely shout at the workers and hurl the garments in the workers' faces;
  • Workers need permission to use the bathroom, and visits are limited and strictly monitored. The bathrooms are filthy, lacking toilet paper and often even water;
  • The drinking water is not potable;
  • Workers faint from excessive factory heat, describing conditions as "taking a bath in their sweat";
  • Ministry of Labor cites King Yong for extreme noise levels, inadequate lighting, failure to provide occupational health and safety trainings, failure to provide a list of chemicals used at the plant, and failure to notify the government of industrial accidents or illnesses;
  • Wal-Mart's and Kohl's Codes of Conduct are unknown to the workers and completely meaningless;
  • The workers at King Yong organized a legal union on March 22, 2004. Three days later, the firings began. To date, upwards of 400 workers have been illegally fired, including seven of the ten newly elected union leaders;
  • CAFTA, as signed by President Bush, will never help workers in Central America or in the U.S. until the free trade agreement is renegotiated to include enforceable worker rights standards which are at least as strong as legal protections currently afforded corporate trademarks and products.

 

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