The ETI insists that all its members, ranging from Primark and Tesco to Marks & Spencer, sign up to a list of basic principles, which include freedom of association and a ban on recruiting child labour.
Levi's, which had been a member of the ETI since 1999, refused to sign, insisting that the concept of a living wage is not properly defined. It is the first company to be suspended by the ETI.
A Levi's spokesman said: "Our company code of conduct is completely actionable and we don't want to include something we can't really deliver. We support further work on defining what is a living wage, but at the moment we don't want to include something aspirational in our code."
The spokesman said that there needed to be further discussion among academics, unions, the Government and industry to define the basis of a living wage in a way that could be implemented by companies.
Some sources suggested that Levi's was afraid of potential legal action in the United States if it signed up to the charter, because of the woolly definition of a living wage.
The row with Levi's comes as the ETI, set up in 1988 by a group of companies, charitable agencies and unions to help to promote good working practice, is facing pressure from some members to help to promote their ethical standards more widely. Some want it to toughen its standards and introduce a ranking system to help consumers to identify retailers and suppliers that source their goods in more ethical ways.
Others point out that without the ETI there would not be even proper debate on the concept of a living wage and other labour standards, and the body plays an important role.
A spokeswoman for the ETI said that the body had a "rigorous annual reporting process" and that progress was scrutinised by its board, which includes unions and campaigning organisations as well as corporate members. She said that the ETI was looking at ways to drive improvement among members and was concerned that they did not become complacent. The stand against Levi's showed that it was prepared to take disciplinary action against those who did not adhere to core principles.
Disciplinary action by the ETI is usually contained internally, leading to criticism that its members are not put under sufficient pressure to improve.
A spokesman for Labour behind the Label, a pressure group, said: "It's a crying shame that Levi's won't commit to paying their workers a living wage, but those that do accept the principle treat it as an aspirational target, anyway. Not one major high street company can claim that the workers making its clothes are paid a living wage, or even that it takes the target seriously in practice. In fact, they undermine it by demanding lower and lower prices from suppliers."
The pressure group said that of 37 companies questioned in its recent labour standards survey, 16 accepted the principle of a living wage, yet only four could show any evidence of putting it into practice.
The ETI admitted that it would be "naive" of a company to suggest that there were no problems in its supply chain either because it is a member of the ETI or has an ethical strategy in place.
The spokeswoman said: "What is important for us is that they demonstrate a commitment and don't walk away from those problems."
- 116 Human Rights