By MARGOT PATTERSON

The label “Made in USA” has drawn greater scrutiny since three lawsuits were filed charging retailers with the abuse and exploitation of garment workers in the Northern Mariana Islands, a U.S. commonwealth in the south Pacific.

According to U.S. government reports and information contained in lawsuits, garment workers from China, the Philippines, Bangladesh, Thailand and elsewhere pay $2,000 to $7,000 per worker to obtain jobs in the Mariana Islands that frequently have them working 12 hours a day, seven days a week for $3.05 an hour, often without overtime pay. The largely female work force is usually housed in prison-like barracks, six to eight people to a room. Inward-facing barbed wire surrounds the barracks. In many cases workers are prohibited from leaving the compound.

The United States acquired the Northern Mariana Islands, a chain of 14 islands near Japan, after World War II. The islands assumed commonwealth status in 1975, when they negotiated exemption from U.S. minimum wage and immigration laws. A $1 billion garment industry was built during the 1980s with its center in Saipan, the largest island. Dozens of Asian-owned apparel factories opened in Saipan, eager to take advantage of favorable tariff rights with the United States. U.S. retailers are able to avoid $200 million a year in duty and to sell goods produced in the Marianas under the “Made in USA” label.

During the past five years, contractors in the garment industry in Saipan have been cited for more than 1,000 violations by the U.S. Occupational Safety and Health Administration. Dangerous and unsanitary working conditions cited include fire exits blocked or chained shut, extreme heat with poor ventilation, exposed wiring, filthy and inoperable toilets, air choked with dust and fibers, and vermin-infested living conditions. While workers pay $100 a month for food, it’s been reported they often go hungry or are fed poorly prepared, unhygienic food and are given little access to running water or drinking water.

Three related lawsuits have been filed against U.S. retailers and apparel firms that seek to hold them accountable for mistreatment of workers in foreign-owned factories operating on U.S. soil. Brought by a coalition of human rights and labor organizations -- Global Exchange, Sweatshop Watch, the Asian Law Caucus and the Union of Needletrades, Industrial and Textile Employees -- the two federal class-action suits and a companion suit in California state court seek $1 billion in damages on behalf of garment workers. Among defendants are such well-known companies as Tommy Hilfiger, Calvin Klein, J.C. Penney, The Gap, Wal-Mart, May Department Stores, Nordstrom and Sears. Filed in 1999, the lawsuits contend the companies engage in unfair business practices and false advertising in violation of the California business code. The suits also charge companies with violations of the minimum wage law and “racketeering conspiracy” to produce clothing using indentured labor on U.S. territory. The latter is said to be the first legal attempt to hold U.S. retailers accountable for subcontractors’ mistreatment of workers under the federal Racketeer Influenced and Corrupt Organizations Act.

All together, the lawsuits represent what may well be the boldest and most sweeping effort to date to make U.S. retailers responsible for sweatshop conditions in companies they buy from. But many U.S. retailers and apparel firms dispute the allegations and maintain they only do business with firms on Saipan that comply with applicable U.S. wage and labor laws. While the courts have yet to rule on the charges, many of the defendants named in the lawsuits have settled without admitting liability in order to avoid costly legal fees and adverse publicity.

“We believe that we didn’t have a liability issue, but in the essence of in-depth use of management time and legal costs we just felt it was expeditious to settle,” explained Anita Britt, senior vice president, finance and investor relations, at Jones Apparel Group.

Levi Strauss, a company later added to the lawsuit, is one of the retailers that has not settled, though the company no longer does business in Saipan. “We’re confident that the contractors we were using in Saipan at the time we were manufacturing there were in compliance with our code of conduct,” said Linda Butler, spokesperson for Levi Strauss & Co.

None of the factories on the island have settled, and Richard Pierce, executive director of the Saipan Garment Manufacturers Association, said he doubts any will. The Saipan Garment Manufacturers Association is not named in the lawsuit, but the association includes some Saipan factories that are.

“They’re not guilty of what they’re charged of doing,” Pierce said. “Out of the 17,000 workers employed here, of course there are some problems that come up once in a while but certainly not to the extent that the attorneys would like people to believe.” The suits, he said, are “a form of extortion.”

Critics of the Saipan garment industry say one of the worst aspects of employment are the “shadow contracts” workers sign before coming to the island and in which they waive basic rights. Workers, who are not told the contracts are unenforceable in U.S. courts, believe they must comply with restrictions on religious and political activities. In addition to prohibitions against forming unions or attending church services, women are told they cannot date or marry.

According to information in the lawsuits and in other reports, most of the workers are young, lured by tales of the good life they will have “in the U.S.A.” Many come expecting they will live on the mainland, where they will be housed in comfortable, air-conditioned quarters and be paid the U.S. minimum wage rather than the $3.05 minimum wage that prevails on Saipan. Instead, they find themselves living in involuntary servitude, forced to work 60- to 70-hour-work weeks and to meet unrealistic production standards that force them to work overtime without compensation.

About 40,000 foreign workers are said to be working in indentured servitude in the Marianas. Of these, an estimated 15,000 workers are employed in the garment industry.

High-ranking officials in the federal government have testified to deplorable conditions in the Saipan garment industry. In a statement made to the U.S. Senate Committee on Energy and Natural Resources in 1998, then-Interior Secretary Bruce Babbitt spoke of the relationship established between the U.S. Congress and the Mariana Islands in 1976 that was intended to provide a transitional economic stimulus but which has produced an experiment “gone horribly awry. It has created a plantation economy, dependent upon the massive importation on a continuing basis of low-paid, vulnerable, short-term indentured workers.” Babbit called the situation in the Northern Mariana Islands a “disgrace.”

Most of the garment workers in Saipan come from China. A report by the U.S. Department of the Interior’s Office of Insular Affairs written in 1999 said Chinese workers live in fear that if they displease their largely Chinese employers, they will be fired and deported and their families harassed by local entities of the People’s Republic of China. Control over Chinese workers is augmented by agents of provincial Chinese labor ministries who are stationed in Saipan.

Testifying before the Senate Committee on Energy and Natural Resources, Eric Gregoire, a former human rights advocate for the diocese of Chalan Kanoa in Saipan, said, “Chinese agents stationed on Saipan extend communist totalitarian practices to citizens of the People’s Republic of China. The church has documented their attempts to limit religious freedom, coerce women into having abortions and intimidate workers into dropping complaints.”

Gregoire told the Senate committee, “There are now thousands of unemployed workers who were brought into the commonwealth for the sole purpose of recruitment fraud. The conditions in which these people are made to live are some of the harshest anywhere in the world.”

Those involved say media attention to the lawsuits against U.S retailers have led to some improvements in conditions for garment workers in Saipan. Nikki Bas, director of Sweatshop Watch, a coalition working to eliminate sweatshops in the garment industry and one of the plaintiffs in the case, said, “We definitely think that public attention has helped improve conditions there.”

So far, settlements have been reached with 19 of the U.S. retailers named in the suit. The settlements provide for companies to make a one-time payment to an $8.5 million settlement fund that will provide back wages to the 25,000 workers named in one of the class-action suits and will set up an independent monitoring body to evaluate conditions inside the factories. The lawsuits seek to make U.S. retailers responsible for conditions in factories they buy from but do not themselves own or operate. The settlement agreement is awaiting court approval and does not entail an admission of wrongdoing by defendants.

“The companies that have settled have agreed they will not do business on the island with any contractor that has not agreed to the conditions put into the settlement. The theory behind the settlements is that they will force the factories to clean up,” said Albert Meyerhoff, an attorney with Milberg Weiss Bershad Hynes and Lerach, one of the firms bringing the lawsuits. An expert in class-action, the firm won public attention when it negotiated a billion dollar settlement with Swiss banks to reimburse Holocaust victims.

Several U.S. retailers have not settled, and Meyerhoff said they are blocking the settlements that have been reached. Those companies that have not settled are The Gap Inc.; Target Stores; J.C. Penney Company Inc; Talbot’s, Lane Bryant Inc. (The Limited); Levi Strauss & Co.; and Abercrombie & Fitch. These companies have filed a motion to dismiss the lawsuits on the grounds that the suits are legally deficient and do not establish the firms’ responsibility.

A key issue in the litigation and the settlement agreement is the steep recruitment fees guestworkers pay to work in Saipan and which force them to continue working to pay off the debt they’ve incurred to obtain their jobs. Under terms of the settlements, guest workers can only be charged for justifiable administrative fees such as passport handling.

The Gap is one of the largest U.S. buyers of clothing made in Saipan and many see The Gap as the leading player among the defendants. Jack Dougherty, spokesman for The Gap, said, “We haven’t settled because we believe the allegations against us are false and we would like to defend ourselves before a court of law.”

The Gap has its own internal monitoring system, which was the focus of a flattering April 24 article in The New York Times that looked at the efforts the company has made in El Salvador to improve working conditions and the obstacles it’s encountered.

Leila Salazar, corporate accountability officer for Global Exchange, a plaintiff in the lawsuits, said she believes The Gap and the other companies that have not settled are stalling partly out of a reluctance to comply with the requirement that an independent monitoring agency be established.

Pierce said factories on Saipan are constantly being inspected not only by the Department of Labor but by retailers’ own monitors and by third-person monitors that the association itself hires to ensure that factories in the association meet a code of conduct the association established in 1997. Pierce accused lawyers at Milberg Weiss of mounting a concerted public relations campaign to demonize the island out of self-interest. “The attorneys want to cash in on this. They want to make large sums of money off situations that don’t exist.”

Pierce some unions have joined in the lawsuit, “probably to eliminate the competition.”

In Congress, Sen. Edward Kennedy, D-Mass., and Rep. George Miller, D-Calif., have introduced legislation that would end the Northern Mariana Islands’ exemption from U.S. immigration laws and the U.S. minimum wage law.

Margot Patterson is NCR’s senior writer. Her e-mail address is mpatterson@natcath.org

National Catholic Reporter, September 7, 2001

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