Introduction of a Garment Trading Adjudicator – stopping unfair trading practices in UK fashion industry

Posted on 16-03-23 by Hilary Marsh Number of votes: 19 | Number of comments: 15

This submission is made on behalf of Transform Trade and provides proposal to the 'Better Jobs and Better Work' commission, addressing questions 3, 6, and 7.

The introduction of a Garment Trading Adjudicator to regulate the UK's largest fashion businesses' purchasing practices is integral to ensuring British consumers' confidence that retailers benefiting from the UK market are not subjecting their international and domestic partners to unethical practices in clothing supply chains.

What is the issue?

Many large UK fashion brands buy clothing in a way that places inappropriate, unexpected, and excessive risks and costs onto supplier factories in the UK and worldwide. This impacts factories' viability, but also undermines fair competition in the UK market for smaller brands. Clothing manufacturing has largely been driven out of the UK in part because of the prevalence of abusive purchasing practices.

These unfair purchasing practices include cancellation of orders, price reduction, refusal to pay for goods dispatched/in production and delaying payment of invoices. A recent survey found factories reported that large brands including Aldi, Asda, Gap, H&M, Lidl, LPP, Next, and Zara all subjected some of their Bangladeshi factory suppliers to the four types of unfair purchasing practices cited above.

This way of buying causes job losses, poverty wages, excessive overtime, and unsafe working conditions for the people, majority of whom are women and from Asian and ethnic minority backgrounds, who make our clothes. Manufacturers purposefully recruit "flexible workers" so that they can adjust production plans at short notice to the volatile trading practices of the clothing retailers.

What can be done?

The introduction of a Garment Trading Adjudicator (or 'Fashion Watchdog') to regulate the purchasing practices of the largest fashion brands selling in the UK market would enable:

  • consumers to have confidence that retailers had adhered to fair business practices
  • fair market & competition for smaller fashion brands (who sometimes pay upfront)
  • factories being able to plan and invest
  • decent working conditions to be offered by manufacturers both in UK and overseas
  • environmental improvements

The establishment of a similar regulator, the Groceries Code Adjudicator, to oversee food retailers' practices towards food suppliers, has successfully reduced the prevalence of unfair practices that breach the statutory Groceries Supply Code of Practice. In 2014, 79% of suppliers in groceries reported experiencing a breach of the statutory fair purchasing code, this reduced to 29% of suppliers in 2021, with food retailers continuing to operate successfully and competitively. As a result, some of the large food retailers pay their food suppliers between 1-3 months earlier than their clothing suppliers.

How will it work?

The Garment Trading Adjudicator would ensure large clothing retailers/brands abide by a Statutory Code, initially replicating elements in the Groceries Supply Code of Practice and would need to include Principle of Fair Dealing so suppliers can operate with certainty.

(https://www.gov.uk/government/publications/groceries-supply-code-of-practice/groceries-supply-code-of-practice)

Current activities?

17 Labour MPs are listed as supporters on the Transform Trade Fashion Watchdog – MP Supporter Page with additional interest expressed by shadow MPs. (https://www.transform-trade.org/fashion-watchdog)

The culture of the garment sector is driven by practices of the largest retailers in the Global North, regulation of these businesses will change the power imbalance of the trade. The UK is a major consumer market and London has iconic fashion status across the world, but this image is tainted by abusive practices. By establishing a sister adjudicator to the supermarket watchdog the UK can stand tall as a world leader for fair business practices within clothing sector.

Referring to: Better jobs and better work

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