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13 Dec 2021

Judy Gearhart, Senior Researcher, Accountability Research Center at American University

(Dis)Incentivizing Democracy; the Role of Global Corporations in Cambodia

CNRP protesters raise flags

Last week, the U.S. Summit for Democracy came with new cross-government investments and substantial recognition of trade unions’ role in strengthening democracy, but there was too little discussion of how U.S. corporations abroad may incentivize or, if unchecked, disincentivize democracy. The U.S. has a proud history of leveraging trade benefits and access to our markets to advance human rights policies globally, including the right to freedom of expression and other civil and political rights that are essential to democratic governance. Yet the U.S. lags in its efforts to regulate the impact of U.S. corporations abroad and the uptake of laws requiring global companies to conduct human rights and environmental due diligence (mHREDD) on abuses in their supply chains. U.S. leadership has been episodic, but largely missing in this space.

One country not among the Summit participants is Cambodia – where the U.S. successfully leveraged trade incentives and multi-national corporation (MNC) engagement to advance greater protections for workers’ rights in the 1990s. Cambodia’s crumbling democracy and increased restrictions on freedom of expression and worker organizing rights have significantly undermined those gains in recent years.

Apparel exports have been the main vehicle for Cambodia’s integration into the global economy, growing from nearly zero in 1994 to more than US$9 billion in 2018 and contributing 74% of the country’s export income. Many Western investors and politicians hoped liberal economic policies and Western business influence would help foster democracy and open civic spaces; initially it seemed to work. In 1998 the Clinton Administration negotiated the US-Cambodia Textile Agreement which included a novel system of quota incentives: the more Cambodia improved labor regulations, the more quotas they gained for duty free access to the U.S. This agreement helped establish the International Labour Organization’s flagship factory monitoring program, Better Factories Cambodia, and later Cambodia’s Arbitration Council, which has handled industry grievances and earned widespread trust among unions and employers alike. Even after the trade incentives ceased, progress continued for a time.

Although they can earn more than in non-export sectors, working and living conditions for Cambodian apparel workers have been incredibly difficult, with extreme exhaustion, malnutrition, overbearing debt, and gender-based violence all too common. Urban apparel workers have organized massive protests to successfully challenge government decisions on the minimum wage. Yet since July 2013, civic space has been shrinking steadily and democratic processes disregarded in a way that intertwines labor rights and democracy. Following allegations of electoral fraud in 2013 there were massive protests and in January 2014, the police cracked down on garment worker strikes for a higher minimum wage, killing four. With each stolen election, both civic space and workers’ rights have been further restricted. In 2018, having dissolved the opposition party, Prime Minister Hun Sen’s Cambodian People’s Party (CPP) claimed all 125 of the seats in Parliament. The government then pressed forward with criminal charges against six independent union leaders for their alleged role five years prior during the 2013 protests against electoral fraud. These political charges have hung over these leaders creating stress, intimidation, and a drain on the time and resources they need to advocate for workers.

During a Labor Link podcast interview, Tola Moen, the director of the Center for Alliance of Labor and Human Rights (CENTRAL), emphasized the connection, noting: “We believe that the democratic shrinking space is the main root cause to undermine the labor rights and human rights.”

Global apparel brands have in the past made known their concerns for closing civic space in Cambodia. Companies with the Fair Labor Association backed letters to defend Tola when he was facing criminal charges in early 2018 and later for the six union leaders. The charges against Tola were dropped, but not for the union leaders. This kind of episodic engagement, punctuated by long gaps of quiet business as usual, does not equate to a sustained policy of condemning the government’s ongoing efforts to undermine workers’ organizing rights and broader freedom of expression in the country. This silence, accompanied by continued purchasing, is how companies disincentivize democracy.

Prime Minister Hun Sen may argue such restrictions are needed to remain competitive and attract the global brands. To counter these arguments, apparel brands should take steps to identify and condemn the ways in which shrinking democratic space is undermining their interest in continuing to buy from Cambodia. Despite Hun Sen’s increased allegiance to China, it’s still the U.S., Canada, and Europe that buy 77% of Cambodia’s apparel and textile exports. So, there is every reason to make a concerted effort to incentivize reforms.

The recent 10th annual UN Forum on Business and Human Rights featured the work of Mary Lawlor, the UN Rapporteur on Human Rights Defenders, and the need for business to consider the impact closing civic space has for workers in their supply chains. Businesses seeking to mitigate the risk of human rights violations in their supply chains need to consider the political context and take steps to condemn both direct and indirect actions that undermine workers’ rights. The growing number of mHREDD laws in Europe create avenues requiring businesses to raise concerns about civic freedoms affecting workers’ rights in their supply chains. It’s time for the U.S. to join these efforts by regulating U.S. companies’ impact abroad and providing guidance on how they can incentivize rather than disincentivize democracy.

By Judy Gearhart, Senior Researcher, Accountability Research Center at American University