TAIWAN: Businesses Said to Run Sweatshops In Central America

TAIPEI, Taiwan -- This island nation has long been famed for its transformation from a developing country to an industrial colossus. But a recent labor dispute at a Taiwanese-owned textile factory in impoverished Nicaragua has cast a spotlight on what U.S. activists say is Taiwan's least admired export: labor rights abuses.

In recent years, Taiwan has set up scores of garment factories in Central America to produce goods for the U.S. market. Management practices at these factories often seem like they're taken from the pages of a Dickens novel, activists say.

"Taiwanese manufacturers have one of the worst reputations in the world regarding the treatment of workers. They can be quite vicious," said Charles Kernaghan, executive director of the National Labor Committee, based in New York.

Kernaghan and others say the abuses include obligatory overtime, physical violence, union busting and pregnancy tests as a condition for employment.

To be sure, Taiwanese firms are following in the footsteps of many U.S.- owned maquiladoras, which also take advantage of low wages, tax breaks and lax government enforcement of labor and environmental laws. But U.S. factories tend to be less abusive because they are under constant scrutiny by nongovernmental organizations and liberal politicians at home. In Taiwan, there is little public awareness of the problem.

"There are civil society groups that are attempting to impose an enforcement mechanism," said Teresa Casertano, field representative for Central America for the AFL-CIO Solidarity Center in Washington, D.C. "But the Taiwanese government is not sensitive to that."

Taiwan's Ministry of Foreign Affairs is steadfast in its support of its overseas investors and rejects the implication that Taiwanese businesspeople have a poor labor rights record. Instead, ministry officials say the nation's policy to win diplomatic support abroad has only benefits.

"(Our companies) bring much-needed jobs and economic development to these countries," said spokeswoman Katherine Chang.

In recent months, the U.S. anti-sweatshop movement has made the Nien Hsing Textile Co., the world's largest manufacturer of blue jeans, a cause celebre. The Taipei company has enjoyed spiraling profits from its denim operations in Central America, which supply the huge retail demand in the United States for cheaply produced clothes.

But a decision by Nien Hsing executives last year to fire and sue union leaders at its Chentex plant in Managua who had demanded better pay and working conditions attracted the attention of the National Labor Committee. The NLC is renowned for exposing sweatshop conditions in the Honduran factory that produced clothes for the label of television personality Kathie Lee Gifford.

Chentex workers alleged that beyond union busting, the company paid subsistence wages of $60 a month, or 20 cents for every $30 pair of jeans delivered to such major retailers as J.C. Penney, Target, Sears, Kmart and Wal- Mart as well as the U.S. armed forces, which sold Chentex-made jeans in stores on military bases nationwide.

A conflict began after workers asked for an 8-cent hourly wage raise and complained about poor ventilation, limited bathroom breaks and physical abuse when they didn't meet production quotas. Management then fired four union leaders and 700 others affiliated with the union.

Afterward, protests erupted in the United States at college campuses, and action was demanded in Congress, where Rep. Sherrod Brown, D-Ohio, wrote a letter to then-President Bill Clinton signed by 68 Democrats asking him to order the U.S. Embassy in Managua to investigate and "not be part of the sweatshop economy."

The pressure tactics worked. Nien Hsing lost orders from its U.S. buyers, and the U.S. government sent a strong warning to Nicaragua to enforce labor laws that Chentex had violated or lose preferential trade benefits.

In May, Nien Hsing received a final humiliation: Nicaragua's highest court demanded the immediate reinstatement of the fired employees. It was the first time a Central American maquiladora had been ordered to reinstate fired union workers.

Most important, the campaign against Chentex marked the first time that a Taiwanese firm had been held accountable for its actions abroad, says Chen Hsin-hsing, assistant professor in labor studies at the Shih Hsin University in Taipei.

"We hope it shows our industrialists that there is a minimum standard of how you treat workers," said Chen. "It is a lesson they need to learn."

Terry Collingsworth, executive director of the International Labor Rights Fund in Washington, D.C., says Taiwanese management needs to learn another lesson. "They bring over a paternalistic attitude and tend not to speak Spanish," he said. "It's a real cultural barrier in which they don't know each other."

Chen also hopes the Chentex case will send a clear message to the Taiwanese
government.

In its desperate campaign to regain admission to the United Nations and resist mainland China's attempts to strip the island of international recognition, successive governments have offered impoverished nations such as Nicaragua millions of dollars in aid and substantial business investments in return for diplomatic recognition.

The seven Central American nations are a rare stronghold of support for Taiwan and are among only 29 around the world that maintain diplomatic ties with Taiwan.

Since 1992, Taiwan has given the region more than $180 million in aid, including $14 million to build Nicaragua's presidential palace and its foreign ministry.

"Development, aid, investment. It's the Holy Trinity of Taiwan diplomacy," said George Nee of the Asia Pacific Labor Update, a labor rights watchdog group in Taiwan. "After encouraging these businesses to go overseas and subsidizing them to do so, the(Taiwanese) government is hardly going to turn around and slap them on the hand for exploiting labor laws."

That view is shared by Nien Hsing vice chairman John Chen, who says his company remains one of the largest investors in Central America -- employing more than 13,000 people in Nicaragua alone. He dismissed U.S. labor activists who criticize Taiwanese as puppets of those who want to protect U.S. business interests.

"They spread vicious lies and rumors about Taiwan's offshore manufacturers in an attempt to protect American-made goods," he said. "That is their motivation." But some Taiwanese politicians disagree.

Independent legislator Shih Ming-teh, a senior member on the parliamentary committee for foreign affairs, is organizing a hearing next month to rally support for legislation that would hold companies more accountable for labor abuses committed locally and abroad. He says Taiwan will pay dearly for ignoring a call-to-arms from Western critics who perceive the globalized economy as unfettered exploitation of developing countries.

"In the long run, this will shame Taiwan's international image and will cause a lot of trouble," he said. "This is not an issue that will go away. It's time to take action or pay the price."

• 116 Human Rights
• 204 Manufacturing