Abstract
This chapter will focus on social labelling schemes implemented by non-governmental organizations (NGOs), which are one form of private regulatory initiatives for the promotion of labour standards in global supply chains. From a theoretical perspective, these schemes are based on information asymmetries in terms of social conditions in production, which exist between consumers and producers. They aim to minimize this information asymmetry, as equal levels of information enable consumers to decide in favour of products made under good conditions over those made under bad conditions. However, in practice there remains an information asymmetry, primarily between the producers and the labelling NGOs, but inevitably being passed on to the consumers. This results mainly from a deficient oversight capacity of the implementing NGOs to ensure that their standards are met. Therefore, the effectiveness of the labelling schemes is limited. This will be shown by means of three existing schemes, namely GoodWeave, Fairtrade, and the Forest Stewardship Council (FSC). Hence, it will be argued that transparency with regard to the NGOs’ actual oversight capacity is necessary to make labelling schemes more effective. This might be achieved through a regulatory approach addressing the information provided by the labels. Furthermore, the International Labour Organization (ILO) could play a significant role by supporting labelling NGOs with necessary resources to strengthen their oversight capacity.
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Notes
- 1.
See O’Rourke (2003), pp. 4–5.
- 2.
See Bartley (2007), pp. 297–298.
- 3.
Urminsky (2001), p. 38.
- 4.
Cf. Zadek et al. (1998), p. 16.
- 5.
See Freeman (1994), pp. 80–84.
- 6.
Cf. Chestnut (2013), p. 347.
- 7.
See Hicks (2012), pp. 165–166.
- 8.
Cf. Diller (1999), pp. 100–101.
- 9.
See e.g. Marx and Wouters (2016), p. 3.
- 10.
Marx and Wouters (2016), p. 6.
- 11.
See Nooruddin and Sokhey (2012), pp. 83–84.
- 12.
For this distinction see Zadek et al. (1998), pp. 24–27.
- 13.
The term ‘theory’ is used for the sake of delineation from ‘practice’, which is dealt with in the next section. To be precise, Akerlof has actually built a ‘model’ which is the basis for the more far-reaching neo-institutional theory of economics and the school of thought of New Institutional Economics.
- 14.
Jointly with Michael Spence and Joseph Stiglitz.
- 15.
For an (early) overview of the contributions see e.g. Löfgren et al. (2002), pp. 206–209.
- 16.
Cf. Akerlof (1970), pp. 492–499.
- 17.
Ibid., pp. 495–496.
- 18.
- 19.
See Akerlof (1970), p. 489.
- 20.
Cf. Löfgren et al. (2002), p. 197.
- 21.
Akerlof (1970), p. 490.
- 22.
Cf. Barkley Rosser (2003), p. 10.
- 23.
Akerlof (1970), p. 490.
- 24.
Since the argument of this chapter is of a conceptual nature, the following assessment is not an empirical study. It rather builds on other sources for relevant empirical information. The conceptual implications are the focus of interest though.
- 25.
See http://www.goodweave.net/index.php?cid=156. Accessed 5 Mar 2016.
- 26.
See GWI (2016b), p. 3.
- 27.
See GWI (2009).
- 28.
See http://www.goodweave.net/index.php?cid=156. Accessed 5 Mar 2016.
- 29.
GWI (2016b), p. 2.
- 30.
- 31.
GWI (2016b), p. 5.
- 32.
GWI (2016b), pp. 3–7 and also http://www.goodweave.net/about/child_labor_free_rugs. Accessed 5 Mar 2016.
- 33.
See Seidman (2012), p. 1035.
- 34.
See Ballet et al. (2014), p. 93.
- 35.
Cf. Seidman (2009).
- 36.
See http://www.goodweave.org/about/certification-division. Accessed 5 Mar 2016.
- 37.
See e.g. Seidman (2012), p. 1035.
- 38.
See GWI (2016a), p. 10.
- 39.
See Dumas (2013), p. 87.
- 40.
Ibid.
- 41.
There is a difference between the terms ‘Fair Trade’ and ‘Fairtrade’. While Fair Trade represents the broad movement ‘that seeks greater equity in international trade’, Fairtrade refers specifically to ‘the product certification system operated by Fairtrade International’. See Fair Trade Glossary (2011), p. 1.
- 42.
See http://www.fairtrade.net/about-fairtrade/history-of-fairtrade.html. Accessed 5 Mar 2016.
- 43.
See FI (2007), p. 3.
- 44.
See http://www.fairtrade.net/about-fairtrade/the-fairtrade-marks/fairtrade-mark.html. Accessed 5 March 2016.
- 45.
See FI (2007), p. 4.
- 46.
Ibid.
- 47.
Ibid.
- 48.
See FI (2007), p. 4.
- 49.
See FLO-CERT (2015), p. 8.
- 50.
Ibid., p. 4.
- 51.
See http://www.fairtrade.net/about-fairtrade/the-fairtrade-marks/using-the-fairtrade-mark.html. Accessed 5 Mar 2016.
- 52.
See FLO-CERT (2016), p. 7.
- 53.
See http://www.fairtrade.net/about-fairtrade/what-is-fairtrade.html. Accessed 5 Mar 2016.
- 54.
Cf. Raynolds (2014), p. 503.
- 55.
See FI (2015a), p. 8.
- 56.
Cf. Cramer et al. (2014), pp. 10–11.
- 57.
Cf. Dragusanu et al. (2014), p. 231.
- 58.
See FI (2015a), p. 17.
- 59.
Raynolds (2014), p. 503.
- 60.
- 61.
FI (2015b), p. 6.
- 62.
See Davenport and Low (2012), pp. 344–345.
- 63.
Cf. ibid., p. 332.
- 64.
FI (2015b), p. 10.
- 65.
FI (2015b), p. 10.
- 66.
Ibid., p. 16.
- 67.
Cramer et al. (2014), p. 5.
- 68.
See ibid., p. 6.
- 69.
Cramer et al. (2014), pp. 15–16.
- 70.
See FI (2015a), p. 24.
- 71.
See http://www.fairtrade.net/about-fairtrade/the-fairtrade-marks.html. Accessed 5 Mar 2016.
- 72.
See http://www.fairtrade.net/about-fairtrade/our-vision.html. Accessed 5 Mar 2016.
- 73.
See FSC (2015b), p. 2.
- 74.
Ibid., p. 6.
- 75.
See FSC (2015a), p. 1.
- 76.
Ibid.
- 77.
See FSC (2015b), p. 8.
- 78.
FSC (2015a), p. 2.
- 79.
See FSC (2015b), p. 7.
- 80.
Ibid., p. 6.
- 81.
See FSC (2015c), p. 2.
- 82.
See https://ic.fsc.org/en/certification. Accessed 5 Mar 2016.
- 83.
See http://fsc-watch.com. Accessed 5 Mar 2016.
- 84.
See Moog et al. (2015), pp. 474–475.
- 85.
Cf. Moog et al. (2015), p. 480.
- 86.
Cf. Chestnut (2013), p. 356.
- 87.
See Boström (2012), p. 11.
- 88.
See Moog et al. (2015), pp. 480–481.
- 89.
Cf. Chestnut (2013), p. 357.
- 90.
See FSC (2015d), pp. 10–44.
- 91.
Cf. Boström (2012), p. 11.
- 92.
Cramer et al. (2014), p. 124.
- 93.
See Ballet et al. (2014), p. 96.
- 94.
See Ballet et al. (2014), p. 97.
- 95.
See European Commission Recommendation 2013/179/EU on the use of common methods to measure and communicate the life cycle environmental performance of products and organizations, O.J. L 124/1-4 (2013).
- 96.
Again, the issue of available resources to labelling NGOs seems not to be sufficiently taken into account.
- 97.
See ILO (2016).
- 98.
Baccaro and Mele (2012), pp. 206–207 describe how the proposal of an ILO social label was considered, but failed within the ILO at the end of the 2000s.
- 99.
Cf. Baccaro and Mele (2012), p. 206.
- 100.
Cf. Bartley (2003), p. 450.
- 101.
Cf. Baccaro and Mele (2012), p. 206.
- 102.
- 103.
Specifically, inconsistent with Art. 2.1. TBT Agreement and Art. I:2 and II:4 GATT 1994 and not applied consistently with the chapeau of Art. XX GATT 1994.
- 104.
See WTO, United States — Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, Report of the Appellate Body, 20 Nov 2015, WT/DS381/AB/R.
- 105.
For a basic and comprehensive disquisition of the legal aspects under the WTO system in terms of state-sponsored social labelling schemes see Lopez-Hurtado (2002). Additional case law since then has to be considered though.
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Aghazadeh, N. (2018). Promoting Labour Standards in Global Supply Chains Through Consumers’ Choice: Is Social Labelling Effective?. In: Gött, H. (eds) Labour Standards in International Economic Law. Springer, Cham. https://doi.org/10.1007/978-3-319-69447-4_17
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