It’s really easy to be disheartened when talking about improving labor and environmental standards in developing countries. At one hand we have a disapproving international free trade arrangement that – implicitly – depresses the growth of international standards that benefit anything else than a lower world market price. On the other, there is a pitiful deficiency of a strong international framework for the promotion of production norms that protects the workers and the environment from the hazards of unleashed free market capitalism. For all the good intensions of fair trade, it is not going to solve this dilemma. Clearly, following this logic – there should be no hope for stopping the proverbial “race to the bottom”. But, is it really a correct postulation that the tradeoff between global standards and export competitiveness will continually favor the latter? Not quite, according to Tewari and Pillai’s encouraging account of environmental policy in India’s leather industry. By a clever implemented course of action by the Indian state, in which it effectively banned the production of the chemicals that threatened to jeopardize leather trade with Germany, collective industry action and the supply chain corrected itself and began to use substitutes for harmful substances. In the end, the environment, Indian producers and German consumers all won in this plus-sum game that came about. What can we learn from this case study? Well, there is a point of using stick and carrots by Western countries to bring about change. The joint strategy of sanctions and thoughtful capacity-building by the German government was a clever way of changing the rules of the game for a durable solution in a race to the top that did not harm India’s export competitiveness.
It’s really easy to be disheartened when talking about improving labor and environmental standards in developing countries. At one hand we have a disapproving international free trade arrangement that – implicitly – depresses the growth of international standards that benefit anything else than a lower world market price. On the other, there is a pitiful deficiency of a strong international framework for the promotion of production norms that protects the workers and the environment from the hazards of unleashed free market capitalism. For all the good intensions of fair trade, it is not going to solve this dilemma. Clearly, following this logic – there should be no hope for stopping the proverbial “race to the bottom”. But, is it really a correct postulation that the tradeoff between global standards and export competitiveness will continually favor the latter? Not quite, according to Tewari and Pillai’s encouraging account of environmental policy in India’s leather industry. By a clever implemented course of action by the Indian state, in which it effectively banned the production of the chemicals that threatened to jeopardize leather trade with Germany, collective industry action and the supply chain corrected itself and began to use substitutes for harmful substances. In the end, the environment, Indian producers and German consumers all won in this plus-sum game that came about. What can we learn from this case study? Well, there is a point of using stick and carrots by Western countries to bring about change. The joint strategy of sanctions and thoughtful capacity-building by the German government was a clever way of changing the rules of the game for a durable solution in a race to the top that did not harm India’s export competitiveness.
Labor and Environmental Standards 