Speech by Minister Lilianne Ploumen at the EU Garment Initiative meeting

Speech by the Minister for Foreign Trade and Development Cooperation, Lilianne Ploumen, at the EU Garment Initiative meeting, Brussels, 25 April 2016.

This speech is only available in English. Check against delivery.

Thank you, Marjeta [Jager, Deputy Director-General, DG DEVCO].

Ladies and gentlemen,

Yesterday marked the third anniversary of the horrors of Rana Plaza. Over eleven hundred people died in an accident that was entirely man-made.

Rana Plaza once again brought home fundamental truths about how markets function. Or rather, about how they malfunction without proper boundaries.

A ‘free’ market in which companies postpone adequate safety measures because they cost money is not a free market. It’s Russian roulette.

A ‘free’ market that allows exploitation of workers is not a free market. It’s a slave market.

A ‘free’ market in which nobody takes responsibility for the environment is not a free market. It’s a dumping ground.

Let me be clear: I strongly believe in the potential of markets. Globalisation can help create millions of better jobs. It can help eradicate extreme poverty within a generation – in fact, we can only achieve the global goal of eradicating poverty by 2030 if we stimulate trade and investment.

But globalisation cannot fulfil its potential unless certain conditions are met. Most importantly, ‘trickle-down’ is dead.  ‘Leaving no one behind’ requires that we end inequality. And ensuring that markets serve societies instead of the other way around requires that we tame them.

We, the people in this room today, can do our share. We’ll start with the garment industry. But I want to be able to look back on this conference as the start of something even bigger. After all, what works for clothes can also work for other sectors. Provided we join forces.

We can tame markets by agreeing on standards for wages, working conditions and the environment.

We can set an example by upholding those standards ourselves.

And we can spread those new standards by holding each other to account.

Every part of the global value chain – every company, every government and every consumer – shares responsibility.

Governments have two clear responsibilities: facilitate and regulate. That’s also my order of preference – and I’ll come back to that.

Three years after Rana Plaza we have made tangible progress. Linking sustainability with trade works: look at the GSP+ trade arrangement between the EU and Pakistan. And in Bangladesh, the EU made clear that tax-free exports to its market could not be taken for granted, convincing Bangladesh to improve its garment factories.  Programmes have also been set up by the EU and the member states to support governments with labour and environmental inspections and social dialogues. And the ILO Better Work programme in the garment industry is up and running.

But we’re certainly not there yet, and there’s no room for complacency.

The EU and its member states can do much more. For a start they can step up their facilitating role. Let’s bring all parties together. Next month, the Netherlands and Germany will be organising an ‘Asian Living Wage Conference’ together with Pakistan, which is hosting it. The event will bring together governments, employers, workers and international fashion brands. They will discuss concrete steps to ensure a living wage in each country.

The thinking behind this approach is very simple: we can’t improve the value chain if we look at only one link at a time. A single company won’t initiate a social dialogue – it doesn’t have the convening power. A single government won’t raise the minimum wage if it only results in production being shifted to neighbouring countries – the main result would be unemployment. So concerted action is key.

Convening all the relevant players is necessary, but it’s not enough. All those players must also change their behaviour. And they must do so in the full knowledge that, at least initially, sustainability and responsible enterprise will cost money. Because the time of shifting the burden to others, as if responsible behaviour were a game of ‘hot potato’, is over. Costs and benefits must be shared equally, throughout the value chain. If a living wage can only be earned by working extremely long hours, that means producers and brands are evading their responsibility. If inspection agencies turn a blind eye to signals of pollution and safety hazards, that means governments are not doing their job. Responsible sourcing and financing will be the topic of another conference, one that Germany and the Netherlands are planning together with Bangladesh.

I often hear calls for regulation: rules on due diligence, for example. Regulation can work, and governments shouldn’t be afraid to use it – but I believe we should only do this when necessary. If we want true ownership in every part of the value chain, let’s not draft new laws too soon. In the Netherlands and Germany, there is plenty of evidence showing that voluntary social dialogue is a promising way forward. I believe in the power of voluntary multi-stakeholder cooperation, and to this end I aim for voluntary agreements. So after parties discuss the problem and what to do about it, they commit themselves to collective action. The power of such agreements lies in the fact that everyone feels responsible. They share risks and hold each other accountable.

This year, I want to see ten voluntary agreements setting norms for corporate social responsibility in various industries in my country. The first one, which is about to be signed, concerns the textile industry.

Let me explain how it works in practice. The Dutch Agreement on Sustainable Garments and Textiles aims to include at least 35 brands that together form 30 per cent of the Dutch market for clothes. That should increase to 80 per cent by 2020. Companies that join are obliged to carry out due diligence in accordance with international standards. A steering group that represents all stakeholders is in charge of monitoring these commitments. By June, I expect to have the 35 companies needed to set the agreement in motion. But if we don’t, then my only option will be to introduce legislation that requires all brands to carry out due diligence. Take it or leave it: My aim is to facilitate, but I’m not afraid to regulate.

National initiatives should form the building blocks of an EU-wide approach.  A bottom-up method offers the best chance of ensuring that consumers and companies are involved and committed. So I call on European fashion and retail companies to sign up to both national initiatives and the EU Garment Initiative.

Ladies and gentlemen,

To me the Garment Initiative is proof that Policy Coherence for Trade and Development is working, and is the only way forward. To make all global value chains more sustainable. To ensure that markets function properly. And to harness the power of globalisation to create a decent life for all.

Thank you.