1.

The Issue
Moving Children Out of Factories and into Schools
RUGMARK is a voluntary labeling program founded in
India which tries to ensure that a product is made without
the use of child labor. The program focuses on the hand-
knotted carpet industry which holds a significant portion
of the export market in India. The issues at stake here are
the rights of children and the sovereignty of nations to
decide their own policies regarding labor standards in
their countries. Low labor costs are often the main
advantage developing countries have in the global
economy, and children's rights are often ignored in the
heat of the competition to be the cheapest supplier of
goods to the world market. There remains a question as to
whether the demand side of the global marketplace (in
this case the United States)has the right to choose not to
buy products which were produced using unacceptable
means. Should this right to choose be thought of as
protectionism or altruism? The Rugmark Foundation
works to balance the needs of India as a developing
country with the values Western consumer markets are
beginning to push onto third world country exporters.
They do this by using the proceeds from their labeling
scheme to create schools for the children who are taken
out of the factories.
2. Description
Rugmark and Child Labor
WHO IS RUGMARK?
Rugmark was founded by a well known Indian activist
named Kailash Satyarthi in September 1994 in
cooperation with the German non-governmental
organization "Bread for the World". The Rugmark
Foundation intended to combat child labor in the
notorious hand-knotted carpet industry in India and was
finally established after a number of years of campaigning
on the issue of child rights violations in India in
collaboration with religious groups, trade unions and
human rights organizations. All of this work culminated
in a UN resolution to move toward labeling schemes that
would ensure that child labor had not been used in the
manufacturing of a given product. After the publication of
the resolution, the objectives and criteria of the
organization were formulated by the Indo-German Export
Promotion group (IGEP).
After establishment of the first office in 1994, a second
office was opened in Germany. In 1995 the ILRF
managed to assist in the opening of an office in the US.
Now Rugmark operates in Nepal and Pakistan as well.
Since the founding of RUGMARK, other similar
programmes have been developed by the various
governments and by the carpet industry itself. The main
question for all of them relates to their level of
commitment and their ability to oversee and guarantee
child labor free carpets.
RUGS 101

Although carpets are generally referred to as being

woven, they are in fact knotted. Indian carpets which are
very large can take a long time to complete. One loom
may only produce 2-3 carpets per year.
The quality of the rugs is determined by the number of
knots per square inch. From what I understand 400 per
inch would be of the highest quality, while under 200
would indicate a less valuable rug. Two other factors
determined by the labor input are the intricacy of the
design and the evenness of the rows of knots. Typically,
between 3-6 boys set side by side knotting carpets for
even more than 14 hours a day. Of course other non-
labor related determinants would be the quality of the
wool and the dyes used for coloring it.
Some sources explain that the carpet industry is male
dominated and that very few girls or women are involved
in the process, but other sources have pictures of little
girls squatting before the looms and yet other sources
report how the carpet industry is used as the entry
point for trafficking young girls in the sex trade. (See
NEPALSEX Case)
Nepali girls are also imported into India for knotting
carpets based on Nepali patterns which are supposed to
be much simpler and these carpets are counted as lower
quality carpets.
Child Labor in the Global Economy

The main reason families send their children to work is

poverty. Unfortunately, a system in which children are
sent to work at a very young age and deprived of basic
education will only maintain and even exacerbate the
cycle of poverty that is pushing these children to work in
the first place. The literature on child labor in India
provides numerous examples of this cycle of poverty.
There are children who are born into a state of bondage
and sometimes the parents do not even know the details of
the original transaction. According to many of the cases,
it seems that even minimum education would prevent the
poor from taken advantage of so often.
HOW MANY CHILDREN ARE WORKING?
There are millions of children working all over the world.
The ILO estimates that there are as many as 250
million children toiling in a wide range of work
settings. 50% of these children can be found in Asia,
however, the largest percentage of working children
are in Africa (around one in three) while 15-20% of
the children work in Latin America. The main
economic sectors where child labor can be found are:
 Agriculture
 Services (domestics, restaurants, street vendors)
 Prostitution
 Small-scale manufacturing
Only 5% of child labor goes toward export oriented
industries such as manufacturing and mining. Asia has the
highest percentage of children who work in export
industries. Of the export industries,the following list
includes those industries with the highest percentage of
child labor worldwide:
 Garments
 Carpets
 Shoes
 Small-scale Mining
 Gem Polishing
 Food Processing
 Leather Tanning
 Furniture
There is no doubt that the problem is a serious one. Some
of the products made by the hands of children are sold at
the most exclusive stores in the West. The most well
known products are the hand-knotted carpets, soccer
balls and T-shirts found in our malls.
WHY USE CHILDREN?
Most of the countries where child labor is found do in fact
have minimum age laws and primary education laws, but
these laws have not been enforced. A related problem is
that sometimes it is the actual law enforcement officials
who benefit from the labor of children. In general poverty
is usually cited as the main reason for the problem of
child labor. Although, no one could dispute that poverty is
a factor, it is very important to understand that depending
on the country, there are some other social factors that
contribute to the problem perhaps just as much as poverty
does. Examples cited in the Department of Labor Report
include:
1. Economic self interest of the factory owners who profit
from the use of such low wage workers whom they can
exploit without any legal repercussions.
Why Use Child Labor? Because children are:
 less demanding
 more obedient
 less likely to resist or object
 easily taken advantage of
  require lower pay
 not protected by the law or its representatives
2. Public indifference or lack of political will due to the
fact that child labor is treated as a non-issue by
politicians, the media and other figures or institutions who
decide which issues are placed on the table for national
discussion.
3. Inadequate resources to support established public
policy measures regarding primary education laws and
policies that promote export industries regardless of their
child labor practices.
4. Local governmental labor inspectors lack enough
authority, expertise, accountability and experience to do a
good job.
5. Corruption at all levels of government can be
widespread, and in many cases, there are governmental
officials who personally benefit from child labor.
6. Some cultures of the majority or dominant groups in
society do not see anything wrong with child labor which
utilizes children of lower castes and classes.
From the point of the child or the family who sends their
child to work the direct cause is poverty or at least the
culture of poverty and the lack of any alternatives. The
truth is that the amount of money children can make is
usually very small. A large portion of children do not get
paid at all or are paid so little that the difference it makes
in their families income is negligible. It is even more
tragic when children are forced to work to pay off parents'
debts, or when they are kidnapped and forced to work
under all manner of horrendous conditions.
The question arises and is a currently a heated debate as
to whether to completely abolish child labor or simply
regulate it? Both sides of the debate have strong
arguments, but are not directly related to international
trade. Some people worry that if child labor is abolished
all at once, the children will be in an even worse situation.
Others worry that if it is only regulated the problem will
remain. Considering the fact that the current laws are not
upheld or enforced, this argument has some merit.
LABOUR CONDITIONS
In too many cases, children are taken from their families
and forced to work hundreds of miles from home where
there is no regulation of their working conditions.
Children can be as young as five years old. Sometimes
they may be beaten or not have access to nearly enough
food or even water. They work in places lacking even
basic hygiene, and breaks are few and far in between. The
health risks these children face are many depending on
the kind of work they perform, but it is safe to say that
many of these laboring children are forced to quit
working at a relatively young age and so the cycle begins
again when they send their own children to work.
CONSEQUENCES of CHILD LABOR:
The social cost for the poor countries is the real tragedy
because without providing their children with education,
more children will inevitably be drawn into these types of
working situations. Child labor without education
depletes these countries from the potential of their future
leaders and skilled laborers.
Child Labor in the Carpet Industry in India
There are 300,000
children working in the
carpet industry in India
which recently brought
in $815 million annually.
This is an increase from
20 years ago when the
industry only brought in
41 million with the labor
of 20,000 children.{4}
{4} The increase in the
numbers of child laborers
may be a perfect example of how the global economy
system is creating the "race to the bottom". The main
problem faced by the RUGMARK program in eliminating
child labor from the workplace is to do so without causing
a significant loss in India's carpet market share, but also to
create a viable alternative to work that would benefit all
involved.
It is also no accident that 80% of the working children in
India are the children of the "Dalits" who are oppressed
low caste or minority tribal people.(harvey where children
work)
Increasingly, the issue of children's rights are being
discussed in many fora, from local governments in the
third world to international conferences such as the 1997
conference on Child Labor which was held in Oslo. One
of the reasons that the carpet industry was targeted by
RUGMARK is because it is such a large export market
for India. It is also known for being a large employer of
child laborers and bonded laborers.
In India there is an area known as the "Carpet Belt".
It is based in Uttar Pradesh, one of the poorest states
in India. It is also the most populous. Carpet weaving
itself is known to be a traditional industry in Jaipur,
Agra, Kashmir and Mirzapur and Bhadoi district
region of the Varnasi district in Uttar Pradesh which
is basically a strip of land running accross the
Northern part of India.
US Attitude toward Social Labeling and RUGMARK
In 1992 the Child Labor Deterrence Act was introduced in
the United States Congress. This act, although still not
passed, was a serious cause for concern in India's export
industries and there were allegations that this was a
protectionist piece of legislation specifically aimed to
destroy foreign competition. *But because carpets are an
exported good with a significant share of all foreign
currency earning exports, there is room for foreign
markets and their consumers to have a say in the types of
products they are willing to purchase. Most importantly,
there is an opening here for international pressure to have
an impact on another country's domestic policies
regarding child labor.
In 1997 Congress passed a law that should provide a tool
with which the US could be more effective in combating
child labor. This was "an amendment to the Tariff Act of
1930 that will now prohibit the US Customs Service from
allowing the importation of any product that is made by
forced or indentured child labor."* This is a step forward
but it does not prohibit the importation of goods made by
child labor even when it is illegal in the exporting
country. The problem with the "protectionist" objection is
that the U.S. does not produce hand-knotted carpets as a
major industry. There are no big business concern for this
specific industry.
Current U.S. policy sees labeling schemes as a restriction
on international trade. The U.S. Customs service has not
yet implemented the new 1997 law. This law should be
enforced as soon as possible. However, the nature of the
agreements the U.S. is signed onto, such as the GATT and
could see the new law as a form of social sanctions which
would then be classified as "A Technical Barrier to
Trade." According to Pharis Harvey, the ratified Uruguay
Round of the GATT makes it difficult for countries to ban
goods made by child labor. A study by the congressional
research Service actually concluded that it would be
"GATT-illegal" for the US to ban goods for this reason.
(Harvey/Where Children Work). According to Harvey,
Indian economists who teach in the West say that child
labor is necessary. For the US to campaign against it is a
vain attempt to impose one set of cultural standards on
another. These economists say that the main impact of
pressure of this sort will be to "force children out of
productive jobs and into prostitution and dangerous
life on the streets."(Harvey,ibid) We should be thinking
about ending child labor not as a by product of alleviating
poverty but as a way out of it.(Harvey, ibid) Despite the
apparent conflicts between the WTO and import ban laws
and even labeling schemes, Rugmark and the ILO would
welcome an actual court case on the issue. This is because
they think the issue of child labor would finally be
brought to the level of debate it deserves.
In the long run, this debate on children and their labor rights are
related to the issue of global labor standards and the rights of
sovereign states to legislate their own codes of conduct. The big
question is how appropriate is it for international trade to
regulate social issues in sovereign states.