1. Developing a sustainable apparel and footwear industry Responding to the economic crisis and beyond MFA Forum Mexico Committee, Mexico City, August 2009

2. The global economic downturn is devastating one of the single largest sources of employment in developing countries: -Approximately 11.5 million jobs worldwide have been lost in this sector to date, and losses are expected to increase by another 3 million over the coming year. In Mexico, about 68,000 jobs have been lost so far in the sector. -The loss of employment for women – the vast majority of workers in this industry – devastates families, setting back Millennium Development Goals. Progress on labour rights compliance is being rolled back as companies look to cut costs and reduce risk. The need to respond

3. The industry can choose one of two divergent paths: -Global supply chains which provide decent work and emphasize productivity and technical innovation; or -Global chains which continue to compete on low price, achieved by lowering labour and environmental standards. The need to respond (2)

4. The MFA Forum Promotes “responsible competitiveness”, including: Promoting trade policies that reward countries for their respect for labour and environmental standards, and advocating for national laws, regulations and enforcement that strengthen labour rights compliance and a sustainable industry; Building partnerships between brands, suppliers, governments, trade unions and NGOs to make labour and environmental performance a competitive advantage for suppliers and countries; and Addressing the negative impacts of industry restructuring and economic downturns, such as irresponsible factory closures.

5. The Sustainable Apparel and Footwear Initiative (SAFI) is organized around three pillars: 1.Support improved access to trade finance at preferential rates for suppliers that can demonstrate commitment to labour rights compliance and environmental sustainability; 2.Assist workers through increased access to social safety nets and training; and 3.Develop a more sustainable and responsible industry for the future. The Sustainable Apparel and Footwear Initiative (SAFI)

6. For suppliers that are hard hit by tight credit terms or lack of access to credit, SAFI is working with the International Finance Corporation to find ways to ease access to credit for responsible suppliers. SAFI is trying to introduce mechanisms that support improvements in labour rights compliance by providing better financing terms for ‘good’, ‘better’ and ‘best’ suppliers. The aim is to create real financial incentives for suppliers to respect worker rights and environmental standards. 1: Trade Finance

7. Identify programs, approaches, and partners that can lessen the negative impacts on workers in key countries. Ensure country-level engagement with government and other key stakeholders to ensure training, social security, and wage supports for workers. Promote the “Responsible Transition Guidelines” which spell out brand, supplier, government, trade union and NGO responsibilities in the event of closures and job losses. 2: Social Protection & Safety Nets

8. Develop a new model of competitiveness for the industry based on respect for labour and environmental standards. -Promote research and investment in the supply chains of the future; -Develop models that internalize and account for all costs rather than just competing on FOB price; -Research scenarios that help predict needs, issues and pathways towards ‘lean & green’ manufacturing and jobs; -Work on regulations, incentives and competitiveness through tripartite discussions (including regional and national level capacity building); and -Build local economies and markets by promoting a decent wage for local workers to build consumer demand. 3: Shaping the Future

9. Investing in skills, training and retraining (through the social protection and trade finance tracks) will improve productivity and quality for the future. Building incentives that reward factories for respecting labour rights and the environment (through the trade finance track) will support industry transformation and sustainable employment. Engagement with key organizations and governments on specific tracks will open doors to collaboration on other tracks. Three tracks, one initiative

10. Questions for Discussion What are your reactions to SAFI? What are the priorities for your organization to address the current economic crisis in Mexico? How can the MFA Forum work with you to support the development of responsible sourcing in Mexico?