Exploited Labor: News & Updates

One week ago, 33 Democrat representatives urged the U.S. Trade Representative and State Department to eliminate investor-state dispute settlement provisions from current and future trade deals in Honduras and the rest of South-and Central America. In a open letter they state that the investor-state dispute settlements (ISDS) is a "problematic corporate handout" system, which violates affected countries sovereignty.

For US companies the ISDS mechanism is a tool that is supposed to secure investments in Central-and South America by allowing corporations to sue nations for compensation if they abruptly change their policies towards corporate involvement and investment. The ISDS mechanism is closely related to the "Dominican Republic-Central American Free Trade Agreement" (CAFTA-DR). The Free Trade Agreement allows companies to acquire land in these countries and establish autonomous zones in which constitutional labor and environmental requirements are suspended.

In the specific case the congresspeople brought forward the U.S. investment company, Honduras Prospera Inc. claims of, close to $11 Billion in compensations from Honduras, after the Honduran congress repealed the law allowing the autonomous zones. If the compensation claim goes through, the small country would have to pay more than a third of its GDP to a greedy US corporation securing profits through agreements between the strongest and one of the smallest economies in the Americas, while draining Honduran tax payers for its losses.

The claim comes after the Honduran congress repealed the autonomous zones as unconstitutional and made an effort to expel them from their land. Throughout the Americas, the agreement led to a total of $27.8 Billion in ISDS settlement orders, most of which were against Argentina, Venezuela, Peru, Mexico, and Ecuador. If the $10 Billion settlement demand against Honduras would go through, this would blow every other claim out of the water and would open the doors for more companies suing for massive amounts of compensation.

In their paper, the lawmakers wrote that, "the broken ISDS has time and time again worked in favor of big business interests while infringing on the rights and sovereignty of our trading partners and their people." 

We as IRTF are hopeful that the lawmakers' fight against the Dominican Republic-Central American Free Trade Agreement is successful, as it takes away Cental-and South American countries sovereignty and opens the door for human rights abuses, exploitive labor and environmental destruction, though this is unlikely.

But no matter what the outcome will be, we as IRTF will keep on fighting corporate greed and unjust business making in Central America.  

Read the full letter here: https://www.warren.senate.gov/imo/media/doc/2023.05.02%20Letter%20to%20T...           

In November 2021, the Corporate Accountability Lab (CAL), in coalition with the Fair World Project (FWP), filed a lawsuit against the Hershey candy company as well as the certification label Rainforest Alliance. The consumer protection case suit was filed in the DC Superior Court, after CAL found cases of (forced) child labor, exploitive labor and wage theft at a number of Rainforest Alliance certified cocoa farms in West-African producing for Hershey. In the suit CAL and FWP accuse Rainforest Alliance and Hershey of false and deceptive marketing on some of their chocolate products. They bring forward the fact that labels like the Rainforest Alliance let consumers believe that the labeled merchandise is produced free from child labor, wage theft and environmental destruction. On many of the farms this is not true, and the lack of a living wage paid to the workers leads to a circle in which families have to rely on their children to work to keep themselves fed.

These working conditions have deep roots in corporate greed, a phenomenon that overweighs any ethics. The lower the price for the base product is, the more profit can be generated. In case of Hershey and the Rainforest Alliance. this greed shows its worst. In an effort to appeal to today's more aware consumers, companies cooperate with labels to distract from inhumane production conditions. This way labels and networks like Rainforest Alliance not only trick the consumers but also fail the workers who should be protected by them. 

Now, after almost 1.5 years, a key point was reached in the case on March 23, 2023. After dragging out the case, the defendants now filed a motion to dismiss it, arguing that Hershey as well as Rainforest Alliance already acknowledged the problems in their production chain. In a statement Hershey acknowledged "the existence of child labor and high deforestation rates" in the farming of cocoa beans, and stated that it is not guilty of false advertising since it "publicly acknowledged these challenges" and  that its claims are strictly "aspirational in nature." It gets even more absurd with Rainforest Alliance's excuse for child labor under its label. It stated that it never claimed that the label meant that certified farms are free from human rights and environmental abuse. Rainforest Alliance made clear that the seal "represents [Rainforest Alliance's] vision of sustainability as a journey of continuous improvement." It is clear though that this is not what consumers think the Rainforest Alliance label means.

In the end, false labels like Rainforest Alliance's do far more harm than good. A label means very little if human rights standards are still disregarded and farmers are under paid or don't even know about the certification. To actually end human rights and environmental abuses in farming and production, labeling organizations would not only need to pay fair wages but also create community based monitoring systems and long-term contracts with small, individual farms. Rainforest Alliance does none of this. 

In the end, the lawsuit's main goal is it to shine a light on this misbehavior and  to hold companies accountable for their actions and lies.  

The following article by the long time fair trade activist Kim Lamberty gives insight into the challenges Fair Trade businesses and producers face in a world run on profits and competition. In her years as an organizer and as the founder of the coffee non-profit "Just Haiti," Kim was confronted with a number of difficulties, one of which is pricing. As a fair trade business, Just Haiti requires paying  producers a living wage which can support them and their families. This ambition is hard to retain on a commodity market that keeps the price for a pound of coffee down at $1.90. For Just Haiti and other fair trade businesses that pay high enough to sustain small farms, it means they have to operate as a non-profit with volunteer labor outside of production. In addition to the low prices, rising inflation puts heavy pressure on producers and fair trade businesses.

While one might think that a rise in commodity prices would help farmers to sell their products at higher profits and lift them out of their fatal financial position, that is only partly true. Since most of the farmers living under the poverty line spend most their earnings on food and other utilities for their families, the higher commodity prices come back around and pull even more people into poverty. This exploitation of working families and the ongoing impoverishment becomes especially disgusting when taking into account the fact that quarterly profits in the U.S. non-financial sector have skyrocketed. Within the last two years, profits went up by more than 80%, adding up to a profit of $2 trillion in the 3rd quarter of 2022. To make such a rise in profits possible, corporations increase their prices under the veil of commodity prices, in many cases even surpassing the increase in production and commodity costs.

This kind of behavior by international corporations make it evident that there is more to the struggle for fair business trading than most people expect. If change is to come, production and prices of these goods have to be rethought. The first step is holding corporations accountable for the treatment of their workers as well as cutting dividends for investors as well as salaries and bonuses for CEO's. But it's not all on the businesses. For years, consumer pressure has kept prices low, keeping producers in poverty and actively depressing wages. It is apparent that these systematic problems require a systematic solution. 

To change this inequality, all of us can take measures. We need to organize and educate ourselves as well as our communities on ways to support those who struggle and oppose corporate greed. We can invest and buy from companies paying fair wages. We can make sure not to buy from companies with exploitive off-shore contractors, and we can support non-profits like the Quixote Center, which invest in small partner businesses in Haiti. The Quixote Center additionally works to invest national aid dollars into small community-based businesses to keep profits within these communities and out of the hands of exploitive corporations.  

As conscious people, we all must stand up against corporate crimes against workers, communities and the planet!

On behalf of IRTF’s Rapid Response Network (RRN) members, we wrote six letters this month to heads of state and other high-level officials in Colombia, Guatemala, and Honduras, urging their swift action in response to human rights abuses occurring in their countries.  We join with civil society groups in Latin America to: (1) protect people living under threat, (2) demand investigations into human rights crimes, (3) bring human rights criminals to justice.

IRTF’s Rapid Response Network (RRN) volunteers write six letters in response to urgent human rights cases each month. We send copies of these letters to US ambassadors, embassy human rights officers, the Inter-American Commission on Human Rights, regional representatives of the UN High Commissioner for Human Rights, and desk officers at the US State Department. To read the letters, see https://www.irtfcleveland.org/content/rrn , or ask us to mail you hard copies.