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Reinventing global trade: the MFA Forum

Simon Zadek
15 April 2007

Global trade policy and practice is being reinvented from the ground up. Far away from the depressing bickering between nation-state representatives over the carcass of the Doha trade round, labour and civil-society organisations and public agencies are collaborating with business in delivering more responsible trade.

There are hundreds of such initiatives across many economic activities and issues, such as corruption linked to extractive industry activities (Extractive Industry Transparency Initiative / Eiti) and social and environmental criteria for project investment (Equator Principles). Common between them is that they seek to leverage the competencies, legitimacies and resources of diverse partners in building practical links between the competitiveness of businesses, sectors and countries and improved social and environmental performance and outcomes. Whist certainly not a substitute for much-needed adjustments to today's trade regime, these collaborative initiatives provide ways to overcome their weaknesses, and perhaps even to experiment in very different regimes as potential vehicles of progress.

Simon Zadek is chief executive of AccountAbility. His books include The Civil Corporation: The New Economy of Corporate Citizenship (Earthscan, 2001). He is currently completing his next book, The New Competitiveness

AccountAbility also serves as the convenor and secretariat of the MFA Forum. For more information, see www.mfa-forum.net and www.accountability21.net, including downloadable publications about the MFA Forum and responsible competitiveness

In Toronto on 16-18 April 2007, dozens of organisations are converging under the umbrella of one such initiative, the MFA Forum, which will hold its third international convention to review its progress in advancing responsible competitiveness in the textiles and apparel sector.

The MFA Forum was created in late 2004 in anticipation of the phasing out of the Multi-Fibre Arrangement (MFA) in January 2005. In a sector providing livelihoods for 100 million people in fifty developing countries, the ending of the MFA has unleashed massive changes in the competitive landscape of the sector, driven largely by the rapid expansion of low-cost, high-quality production in China and India. The consequence of the end of the MFA is not a one-shot affair. Competitive pressures continue to rise, fuelled by the need to concentrate and shorten supply chains in response to consumer demand for low prices and rapid style changes.

Businesses and entire national business sectors that cannot rise to the challenge through investment and improved business and broader economic practices will simply not make it. The stakes are huge; at risk are the livelihoods of tens of millions of workers and their families and communities, many of them concentrated in vulnerable economies such as Bangladesh, Lesotho and much of central America. But the challenge is not to maintain a fading status quo that existed only because of the now-abandoned trade quota system. Rather, it is to prevent a "race to the bottom" across this competitive landscape.

The MFA Forum was established by a founding coalition that included the International Textile, Garment and Leather Workers' Federation (ITGLWF); the Maquila Solidarity Network and Oxfam; Gap, Nike and Levi Strauss; the International Labour Organisation and the World Bank; as well as other standards-focused standards initiatives including the Ethical Trading Initiative and the Fair Labor Association. Its aim is to support an orderly and responsible restructuring of the sector in ways that secure its continued competitiveness in vulnerable societies, where necessary to help mitigate any negative impacts on workers and economies, and to make responsible business practices a key dimension of the sector's competitiveness through its impacts on productivity and product acceptability to consumers.

Also by Simon Zadek in openDemocracy:

" From the magic mountain: the World Economic Forum "
(29 January 2004)

" openDavos: Simon Zadek's blog "
(February 2005)

" Reinventing accountability for the 21st century "
(12 September 2005)

" China's route to business responsibility " (30 November 2005)

"Accountability: the other climate change" (31 October 2006)

"The World Economic Forum: changing the world from within"
(22 January 2007)

Plus: Simon Zadek wrote a blog on openDemocracy from the World Economic Forum at Davos in 2004, 2005, 2006, and 2007

The MFA Forum in practice

The MFA Forum's approach has been to use the strength of its participants in building three drivers of the sector's "responsible competitiveness":

▪ adherence to agreed social and environmental standards

▪ linkages to increased actual deal-making, buying goods and services

▪ enabling support (e.g. from international development agencies in management training, national public-oversight capacities, investments in productivity and trade-enabling infrastructure).

The forum's model has been simple, at least on paper. Working together, its participants can more effectively shape the context and practice of real-time production and trade. A collaborative framework was agreed that set out responsibilities of each constituency, and established an approach focused on building coalitions in producing countries between similarly diverse players to reach agreements on how to protect jobs, improve labour standards and enhance the competitiveness of local producers.

Since then, the MFA Forum has assisted in building initiatives in Bangladesh and Lesotho, and is now active in a second generation of initiatives in Morocco, Romania and a regional initiative in central America. Bangladesh is home to 1.8 million textile workers. In June 2005, the MFA Forum and United Nations Development Programme (UNDP) in Bangladesh co-hosted a conference in Dhaka called "Forum on the Future: an Internationally Competitive Textile and Garment Industry". This attracted hundreds of participants, including government, manufacturers and trade associations, civil society and labour organisations as well as international development agencies.

In September 2005, the MFA Forum convened a buyers' group to fulfil commitments made at the conference. These buyers together accounted for almost 80% of Bangladesh's exports of apparel and textiles, opening an extraordinary opportunity to encourage the investment and broader changes needed to secure the sector's long-term viability for Bangladesh. A working group made up of all local stakeholders is now taking forward plans to promote compliance with international labour standards and enhance the competitiveness of the industry.

In Lesotho, the forum has also helped in bringing together the key players that can ensure the viability of an industry providing a major portion of the landlocked southern African country's formal employment and export earnings. From August 2005, the MFA Forum working group produced benchmark reports and held follow-up meetings; these culminated in a high-profile event in May 2006 - Destination Lesotho: On the Road to Responsible Competitiveness - which involved Bono and other international advocates, and focused on new opportunities for the sector. The Lesotho working group is also building its advocacy capacity and its ability to serve new markets.

A new compact

All involved must continue to hope - even at this late stage - that something can be retrieved from the Doha trade round. But there is no time to wait for a miracle. The MFA Forum is an example of how trade policy and practice is being reinvented by those with a real stake. But reshaping global trade from the ground up is not simple, nor is its success guaranteed. "Voluntary alliances of the willing" are limited by those who will not play ball (the economist's infamous "free riders"), and by the often-difficult process of tens if not hundreds of organisations actually getting things done.

There are numerous ways in which such initiatives can flounder and fail. At the same time, these initiatives benefit from the very focused energy that comes through a recognition by the partners of the interdependence of their interests, and the huge potential in working together. An effective mutual accountability between the players, a compact of sorts, is the key to realising this potential.

Some view these initiatives as a symptom of the problem, unlikely to address root causes, or even a misguided distraction. Others, including myself, see them as powerful and much-needed innovations in how to govern and guide business and economy, and ultimately as offering insights into how to reshape our approach to global governance.

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