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Ellen Israel Rosen (2005), "The Wal-Mart Effect: The World Trade Organization and The Race to the Bottom", Chapman Law Review v. 8 (Spring) p. 261-282

22 January 2005

by Michèle Rioux

This article discusses how the World Trade Organization’s (WTO) new quota elimination policy negatively affects workers worldwide. Until January 2005, all textile and apparel trade was governed by a system of quotas in an effort to give developing countries access to major U.S. and European markets. The author argues that the new no-quota rule by the WTO will result in retailers, including Wal-Mart , moving to countries that can produce the largest volume of apparel at the lowest cost: namely, China and India . The author then looks at how Wal-Mart’s business practice of using its power to pressure their suppliers to drive down prices is leading to harsh working conditions for American as well as Chinese workers, particularly women workers. The author concludes that Wal-Mart’s style of competition, that involves driving down retail prices regardless of the human costs is leading to a "race to the bottom" in the garment industry.

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