Merits of Export Processing Zones and Sweatshop | Essay

Running Head : Merits of export processing zones and sweatshop
MERIT OF EXPORT PROCESSING ZONE AND SWEATSHOP
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1Merits of exort processing zones and sweatshop
Export Processing Zone
The term free trade zone is the category of the distinctive economic zone. It is designated
as the geographical zone where the products are stored, landed, manufactured and reexported
under particular regulations of customs and in general, they are not subjected to the duties of
customs. Free trade zones are establish around international airports, seaports and national
frontiers zones with numerous geographical benefits for trading. The products which are
imported are subject to the control of custom at the time of importation through the process of
manufacturing at the time of export or payment for consumption at home. One of the standard
tools for industrial policy is the export processing zones. It is revealed from 59 pieces of research
that are conducted regarding the merit of the export processing zone that particular industrials
policy pays advanced wages and does not increase the wage gap of the gender (Moberg 2015).
The International Labor organization defines the particular policy industrial sectors with
exceptional incentives for attracting the foreign investors where the materials which are imported
undertake some grade of processing prior to exportation. The export processing zone is a
particular category of free trade zone which is set in emerging nations by the government to
advance commercial and industrial exportation. The export processing zones flourished after
World War II and have emerged differently as per the policies of each country. The massive
explosion of the policy indicates the significance of this tool for the growth of industrial policy
and for export development. There is evidence which reveals that the instrument of industrial
policy has an impact on wages and employment in considering the effect of the industrial policy
on labor conditions. Three factors are to be taken into consideration that is working hours, liberty
of association, health conditions of labor (Neveling 2015). The export processing zone attempts
to attain upgrading the industrial sector, increase manufacturing exports and creates employment

2Merits of exort processing zones and sweatshop
in the process of manufacturing. There is an increased application of the policy as the country are
moved from the policy of import substitution to the policies of export growth (Gunawardana
2016). The major reason for propagation of usage of tool of industrial policy is due to success of
applied countries in four practice that is firstly it gives importance to the growth of export,
secondly the rising importance on the growth of FDI, thirdly, the transference of labor
production from emerged countries to the emerging countries, fourthly, the developing the
international labor division and networks of the global output.
Merits of the export processing zone
The merit of the free trade zone is that it aids in the reduction of the issue of
unemployment and in addition to that assist to advance earnings of foreign exchange. Thus the
advantage of offering free trade zone is that it motivates competition that results in the
enhancement of efficiency of the nation in order to be at par with other competing nations. The
debates concerning the merits of the export processing zone touch several issues that encompass
social concerns like protection of the environment, labor rights to macro-economic matters
concerning the outcome of employment, government revenue, earnings of trade and foreign
exchange (Saha 2017). Many developing countries attempt to build economies by incorporating
an international global chain. This implies moving out from the economy which is import related
to an economy based on export. The countries adopt the policy to address the following which
involves an expansion of the industrial base, the attraction of foreign investment to develop jobs,
establish a backward link between domestic economy and zones., introduce technology. The
principle of export processing zones has derived from the zones of free trade that is created in
major ports like Gibraltar, Hong Kong and Singapore for the nineteenth century. Some of the
zones of free trade permit importation and exportation that is free from the formalities of custom

3Merits of exort processing zones and sweatshop
so that it makes the re-exportation of goods quicker. The policy applied by the emerging
countries since the 1930s to motivate foreign investment. The developing countries since the
1930s have viewed the industrial policy as the method for stimulating the economy by driving
investment from the emerging world. The merit of creating export processing zone rests on the
following grounds which involves the production of employment, the growth of foreign
exchange by increased exports, application of foreign investment to host countries, and also
producing backward links between export processing zones and domestic economy. The research
reveals that countries which has surplus cheap labor can apply this policy to enhance foreign
investment and employment. Under good management and propitious circumstances, the policy
of export processing zones is formulated to attain the two fundamental goals which comprise the
growth of employment and foreign investment. For instance, in Mauritius, the policy boasted
about 71 percent of the gross export of the nation in the year 1994 and employed over 16.6
percent of workers. The policy is sensitive to the environment of the national economy. They
will conduct better if the country follows good macroeconomic and accurate policies of the
exchange rate. Wages in the zones of export processing are either equal or higher in comparison
to the average pays outside the zones. The health laws, safety at the workplace, lax labor in many
areas have raised the issue concerning the welfares of the workforce. The nationality, size, and
corporate policy relating to the firm, the condition of the labor market, the category of
production in industry and the regulation of the country plays a significant role in creating right
concerning workers, wage rate, working environment in the zone of export processing. If the
country intends to maintain the policy of export processing zone the following guiding principles
help to increase the likelihood of success. Firstly sound fiscal policies and investment legislation
contribute global environment favorable for the success of the policy. Secondly, it is

4Merits of exort processing zones and sweatshop
recommended to create moderate taxation and structure on the tariff. It helps to guarantee that
the policy enables both importation and exportation which is free of trade tax and tariffs. Thirdly,
the provision of external infrastructure to zones has optimistic spillovers for the national and
local economies by enabling communication and transportation. The constraint on the labor
market enhances the labor cost and adjustment on a slow market. In this regard, the labor laws
which are friendly to business are beneficial. Nevertheless, this necessity is not complemented
by the exploitation of workers' safety and rights concerning laborers in some zones. Most of the
developing nations have lax legislation and its execution. The earnings of foreign exchange are a
chief benefit that is expected from the export processing zone. Nevertheless, it is argued that the
policy contributes earnings on foreign exchange that permits low income to relax constraints on
foreign exchange concerning the necessity of import for the rest of the economy and contributes
the government with the funds on development. The impact on the export processing zone
reveals a substantial increase in gross export and the earnings become phenomenal.The creation
of job opportunities is regarded as a fundamental goal and significant contribution of the export
processing zone to the economy. This objective is based on the following assumptions. Firstly
the country has a high rate of underemployment or unemployment. Secondly, it associates
creating employment by improving the issue of unemployment. Governments deject unionization
which is designated as liberty of association and assembly is illegitimate in the main zone of
export processing. Although the policy of unionization, as declared by the International Labor
Organization to be basic laborers right under the legislation of international labor it does not
have requisite possibilities to resolve the grievances of labor against the employers of zones. The
government could strengthen safety and labor regulations and insist on the compliance of the
firm with them. The constraints on the labor market enhance the cost of labor and adjustment of

5Merits of exort processing zones and sweatshop
the slow market. The firm monitoring and regulatory activities will improve the productivity of
the workforce.
Sweatshop workers and human rights
The sweatshop workers are designated as a disapproving term in working place that is the
socially unacceptable condition of work. The work may be dangerous, difficult challenged
climatically or poorly paid. The labor who are working in the sweatshop has long working hours
with low wage irrespective of laws that mandate a minimum wage or overtime pay (Connor and
Phelan 2015). There is also a possibility for the violation of legislation concerning child laws.
Australia has regulations that are world-leading to monitor the supply chain and to eradicate the
exploitation of workers which leads to the infringement of rights guaranteed to the labor in the
garment industry. The exploitation of human rights and labor that occurred in Australian relating
to the abuses of human rights and incapability to regulate the practices on business. The
corporation that is western-based has accused repeatedly of cumulative profit margin through
permitting workers in the developing countries to place at risk positions to preserve the low cost
of production (Baumann-Pauly and Nolan 2016). The issues faced by the workers of being
forced to work in dangerous condition of work is not a current phenomenon. Possibly the
factories with extremely poor conditions of labor are designated as a sweatshop. The business
resulting in cost and time pressures being drags down the supply chain resulting in the workers in
sweatshops have gross violations of their labor rights. It is necessary to determine the standards
of human rights and whether the country of Australia is the satisfying obligation of the human
right to combating foreign labor and domestic abuses. Australia is currently violating the
requirements of human rights to the adequate safety of employees at work in supply chains

6Merits of exort processing zones and sweatshop
(Nolan and Bott 2018). The contrast in the standard of labor between developed and developing
countries resulting in developed countries calling for apparent differences in domestic rights of
labor to be addressed through the agreements which are binding multinational through the World
Trade Organization. The attempts to connect the global labor rights and international trade
depend upon states capable of arriving at a consensus regarding the significance of specific labor
rights. The moves to establish the fundamental labor rights under World Trade Organization
obligations have failed to function. The International Labor Organization is a paramount
worldwide institute indicted with guarantying the maintenance of a legal framework that enables
safeguarding of labor rights. The roles of international labor organizations involve conducting a
discussion with employer and employee groups, governments, drafting treaties and management
of ratification (Boersma 2017). The International labor organization has been engaged
traditionally at the macro level by motivating the nations to create a legal framework in which
the rights of labor can be esteemed, recently the international labor organization engages directly
with ensuring the standards of labor are respected in the worldwide supply chain through
involvement at the micro-level. The movement of legislation focuses on promoting the
fundamental rights of labor at the micro margin rather than concentrating on compliance by
states with treaties at the macro margin that has prospective to deteriorate the role played by the
international labor organization. The western corporation is charged with ignoring labor rights
and human rights abuse in the supply chain. The worldwide human rights need to approve in
domestic legislation to allow the citizens for claiming rights. International labor organizations
protect the workers' right to health and safety as labor rights. The human rights at working place
traditionally not received protection within the matrix of human rights. The united nation charter
and commission on human rights was created to provide treaty and declaration on human rights.

7Merits of exort processing zones and sweatshop
The process is concluded in the international covenant on civil and political rights, the universal
declaration of human rights and the international covenant on economic, social and cultural
rights. The three tools are collectively termed as an international bill of rights. For instance, in
the company of Adidas and Nike in Australia, they are surviving in dangerous poverty and face
physical assault and prosecution for the activity of trade unions. Nike and Adidas have done a lot
to resolve the issue of human rights, workers and consumers. The factory of Nikoomas Gemilang
which is located in West Java produces sports shoes for both Adidas and Nike, half a dozen
workers report of finger loss ever year by cutting machinery. The female employees in the same
industry are subjected to humiliation regularly. It is said by both Adidas and Nike that they
monitor the practices of labor regularly in factories and break off transactions with the
contractors who violate the company standards. The retailer factory namely Kmart located in
Australia is charged with the abuse of Bangladeshi workers who claimed that they are subjected
to physical exploitation and intimidation during employment in sweatshop.workers are being
tortured and threatened with sexual abuse that is occurring in sweatshop resulting in gross
violation of human rights.
The merit of the free trade zone is that it upsurge national exportation, the free trade zone
is established by the government to invite international investors through exploiting their relative
benefit. The free trade zone makes importation and exportation easier as they are located near
airports and seaports. The merits of sweatshop are that it provides benefit to the employees and
encourage the economic growth of host nations. It also made the clothing and electronics
inexpensive for western consumers and in addition to that, it provides regular hours and higher
pay to workers.

8Merits of exort processing zones and sweatshop
References
Moberg, L., 2015. The political economy of special economic zones. Journal of institutional
economics, 11(1), pp.167-190.
Neveling, J.P.W., 2015. Free trade zones, export processing zones, special economic zones, and
global imperial formations 200 BCE to 2015 CE. The Palgrave Encyclopedia of imperialism and
anti-imperialism, p.1007.
Gunawardana, S.J., 2016. ‘To finish, we must finish’: Everyday practices of depletion in Sri
Lankan export-processing zones. Globalizations, 13(6), pp.861-875.
Saha, N., Rahman, M.S., Ahmed, M.B., Zhou, J.L., Ngo, H.H. and Guo, W., 2017. Industrial
metal pollution in water and probabilistic assessment of human health risk. Journal of
environmental management, 185, pp.70-78.
Connor, T. and Phelan, L., 2015. Antenarrative and transnational labor rights activism: Making
sense of complexity and ambiguity in the interaction between global social movements and
global corporations. Globalizations, 12(2), pp.149-163.
Baumann-Pauly, D. and Nolan, J., 2016. Business and human rights: From principles to
practice. Routledge.
Nolan, J. and Bott, G., 2018. Global supply chains and human rights: spotlight on forced labor
and modern slavery practices. Australian Journal of Human Rights, 24(1), pp.44-69.

9Merits of exort processing zones and sweatshop
Boersma, M., 2017. Do no harm? Procurement of medical goods by Australian companies and
government. Procurement of Medical Goods by Australian Companies and Government.