 that Third Labor Association issued its recent report, and Apple made a new round of commitments to clean up its Labor Rights Act. So here's one. Apple supplier Foxconn will improve working conditions. Someone tell me what is wrong with this headline? Are colleagues anyone? Is it a report of the news or an interesting prediction of future events? Okay, here's a slightly better headline. Foxconn promises improvements after labor audit. That is accurate, at least. And now my favorite, Apple Foxconn promises we'll see. Why are we here having this discussion and what is the central question before us? We're having this discussion because Apple is facing an intense public relations crisis, posing a serious threat to what is probably right now the single most valuable corporate brand in the world. That crisis exists because of the courageous work of organizations like SACOM and China Labor Watch and a small number of other groups who have brought vital information to light through years of work about what's actually happening in these factories and because of some good journalism that has led to intense public scrutiny of Apple's labor practices and intense criticism of those practices. That has now led Apple to make some commitments to improve labor conditions. And the central question before us is will that crisis, will those commitments actually lead to meaningful improvements in the wages, the working conditions in the lives of workers in China and throughout the world who make Apple products? I'm going to cite a number of reasons, six reasons to be pessimistic about whether that will take place, actually take place. And then two reasons to be a little bit more hopeful. First, the model, the first reason is that the model of labor rights reform that Apple has embraced, the model of auditing by outside auditing firms, codes of conduct, commitments by the supplier to take certain steps, followed by additional audits has been around for a long time, pioneered by major apparel brands like Nike and Adidas and Gap in the mid-1990s. There's a track record now of over 15 years of codes of conduct auditing, monitoring by corporations themselves and in conjunction with industry-funded groups like the Fair Labor Association. And that model is a proven failure. 15 years after the apparel industry embraced the same model, we see in many countries lower real wages for apparel workers than when the process started, virtually zero improvement in terms of respect for the right to organize and bargain collectively. Ask Nike, ask Adidas to point to a single factory among the more than a thousand in their global supply chain where there is a collective bargaining agreement that involves wages and benefits significantly above legal minimums and listen to the silence that you will receive in response. The problem of excessive overtime, which is a huge issue in Apple's supply chain, continues to plague workers in factories in the apparel industry around the world. The issue in China specifically of the obvious enormous obstacles to meaningful independent unionism. The Fair Labor Association has been monitoring factories in China for more than a decade. There are hundreds of factories, apparel factories under the rubric in China of the Fair Labor Association monitoring program. Each one of those factories has the exact same problem in terms of the right to organize and bargain as Foxconn's factories. Independent unions and strikes are against the law, and so you cannot have an independent union. As Debbie explained, there is some space within the law for democratic elections within the structure of the Communist Party-controlled union at the factory level that could, with the right pressures, lead to some meaningful collective action by workers. And the FLA has recommended that Foxconn undertake that step. In fact, the FLA has expressed great optimism that Foxconn will do so. And yet the Fair Labor Association cannot point, among the hundreds of factories it has been monitoring in China for a decade, where it has made the same recommendation over and over and over again, cannot point to a single factory where there has been a democratic election of worker representatives about management interference that has led to meaningful collective bargaining in those facilities. So we have a model that has proven to be a failure, a model that has been much more about corporations protecting their reputations by seeking to treat the appearance of an earnest effort to address labor rights issues. Because clearly, it can't be swept under the rug. Apple has learned this lesson. They can't deny that there are labor rights violations at Foxconn and other suppliers. So they must convince people that they are taking those issues seriously, making an earnest effort to address them. This model has been much more about protecting corporate reputations than it has been about protecting the rights of workers. So we need to be skeptical for this reason. We also need to be skeptical because Apple has a track record. This is not the first time that Apple has promised to improve conditions. It is not the first time that Apple has specifically, for example, promised to eliminate excessive overtime. At Foxconn, here's what Apple said in 2006 after the first media exposés about abusive conditions at Foxconn. Apple said, referring to Foxconn, employees work longer hours than permitted by our code of conduct, which limits normal work weeks to 60 hours and requires at least one day off each week. Foxconn has enacted a policy change to enforce the weekly overtime limit set by our code of conduct. The policy change has been communicated to supervisors and employees, and a management system has been implemented to track compliance. Supervisors must now receive approval from upper-level management for any deviation from overtime limits. Problem solved in 2006. Yet, Apple's chosen auditor, the Fair Labor Association, has now revealed what Debbie's organization, Chang's organization, others have been reporting each year in between 2006 and 2012, which is nothing improved in terms of forced and excessive overtime in the supply chain. Apple also promised in 2006 to bring in aggressive, independent auditors to solve these problems. They said, we have engaged with services of baritain, an internationally recognized leader in workplace standards dedicated to ensuring that people around the world work under safe, fair and legal conditions. We are committed to ensuring compliance with our code of conduct and will complete audits of all final assembly suppliers in 2006. In cases where a supplier's efforts in this area do not meet our expectations, their contracts will be terminated. Apple cannot point to a single example of terminating contracts for a failure to comply with its own code standards or minimum domestic legal standards. That auditing process led to no apparent improvements in wages and working conditions, and yet again now Apple has promised that a process of auditing, a process of proposing discipline on suppliers, is going to lead to substantial change. It's always important to understand in looking and evaluating these kinds of promises and looking at this model of corporate codes of conduct and monitoring to understand that there are actually two different realities that we're dealing with. There is the reality of what actually happens in global supply chains and why those things happen. The fundamental driver of excessive overtime and poverty wages and abusive working conditions in Apple's factories locally is not the factories, it's Apple. It is Apple's notorious efforts to put intense pressure on suppliers to produce at the lowest possible cost, to deliver at the fastest possible pace while operating in countries where labor law is not enforced. If you push the lowest possible cost and the fastest possible delivery in countries where labor standards are not enforced, you will get severe labor rights abuses as a strategy for meeting those demands. That's what's driving the problem and the solution to the problem. Whether it's the electronics industry, the toy industry, the peril, what have you, the solution requires that the brand at the top of the supply chain raise its prices to suppliers and provide more reasonable demands on delivery and accept a lesser degree of what companies like to call labor flexibility. There is no way to solve these problems without significant sacrifices by the brand itself. Yet that issue is largely absent from the discussion. Then there is the fantasy world of corporate social responsibility in which the brand at the top of the supply chain is engaged in a genuine heartfelt effort to improve working conditions trying to deal with the weaknesses and malfeasance of its local supplier who just can't learn. This is a fantasy world in which Tim Cook operates. He says, we care about every worker in our worldwide supply chain. Any issue with working conditions is caused for concern. Any suggestion that we don't care is painfully false and offensive. He says, no one is doing more to improve working conditions in China than Apple. He says, we take the conditions of workers very seriously. I worked in factories. I worked at a paper mill. We understand working conditions at a very granular level. Now here is quoted in the New York Times, a former Apple executive talking about what happens in the real world. We've known about labor abuses in these factories for four years and they're still going on. Why? Because the system works for us. Suppliers would change everything tomorrow of Apple's hope when they didn't have another choice. If half of iPhones were malfunctioning, do you think Apple would let it go on for four years? We operate in a context in which Apple has the resources and the power to correct these problems. They could have done so in 2006 or 2007 or 2008 or 2009 or 2010. The fact that it hasn't happened is reflective of the unwillingness of Apple to really make these changes. A third reason to be skeptical is gaps in the actual recommendations of the Fair Labor Association and the commitments of Apple. For example, on the issue of forced overtime and excessive overtime, Apple has promised to fix the problem in 15 months. Let's bear in mind what we're talking about here. These are violations of Chinese law which limits overtime to 36 hours a month. We're talking about hundreds of thousands of workers producing Apple products for Foxconn and other Chinese suppliers. So Apple and Foxconn and other suppliers are violating the law hundreds of thousands of times on a daily basis. And having done so now, admittedly, for a period of years, millions of violations of the law, Apple and Foxconn with the FLAs approval now saying, give us 15 more months and we'll stop breaking the law. Now, why do they need 15 months? Well, there's two possible explanations. One is they don't intend to actually stop breaking the law and just want to kick the hand down the road to a point where hopefully it will be less scrutiny. The more charitable interpretation would be that they do intend to reduce overtime. But that, of course, doing so requires some significant changes in the number of workers and the work structure. In order to stop violating the law before those changes can be implemented, there would be consequences in terms of production levels and delivery times. In other words, Apple would have to accept somewhat slower production and later delivery for a period of time while that transition is made. So something has to give. Either Apple and Foxconn keep breaking the law for a year and a half or Apple has to make some small sacrifices in terms of delivery expectations. Guess what gives? What gives is the law and the rights of workers. So Apple says in 15 months we'll stop breaking the law. I'd like to say in 15 months I'll stop robbing banks. Another significant gap. Debbie mentioned no effort to address the issue of harsh and psychologically abusive treatment of workers by supervisors. No focus in the FLA's report on this fundamental question of Apple's behavior, not Foxconn but Apple. The price pressure, the unreasonable delivery deadlines, no discussion in the report of that critical fact. That does not go well going forward. The fourth reason is the lack of accountability for anyone who works for Apple or Foxconn at a managerial level for what is now admitted by Foxconn and Apple to have been revist violations of worker rights and law. Not a single person dismissed as an employee. Apple promises in 2006 we will fix these problems. We have assigned our corporate social responsibility staff to address these problems. Six years later their own auditor demonstrates that the company has failed abjectly to do so. And yet no shake up, no dismissals. Foxconn, Apple said in 2006 we will terminate suppliers that do not meet our standards. Six years later Apple's own auditor shows that Foxconn has failed to meet the standards every year for six years. What are the consequences of Foxconn? What is the penalty? The penalty is having to promise again to do better next time. The absence of accountability is not a positive sign. The failure of Apple to make any commitments related to price and delivery schedule is critical. And finally the track record of the FLA and its entire model of corporate monitoring over the course of the last 15 years in apparel, the last several years in the electronic sector is reason to be skeptical about whether these commitments will actually be met. What are the reasons for optimism? The crisis Apple faces is real. Its image has suffered significant damage because of this issue. And Apple knows it. And Apple ultimately is about as image driven a company as its possible to imagine. Notwithstanding the wonderful nature of the technology, the most valuable thing about Apple is the way that buying an Apple product makes customers feel about themselves. And if Apple loses that, they lose a very large portion of the value of their brand. And they know that they can't afford to lose that. And the fact that that dirt is real gives them a strong motive to act. Provided the pressure stays on. The second reason to be optimistic is Apple has a lot of money. And can't afford actually to fix these problems, could afford to transform its supply chain. To pay a living wage for a regular work week to every worker in its supply chain. To compel its suppliers to obey the law and to pay prices and seek delivery deadlines that are commensurate with actually producing under decent working conditions. Apple has the resources to solve the problem. So the fundamental question going forward, the real variable here, has nothing to do with what the Fair Labor Association does or doesn't do, or what Tim Cook does or doesn't say. The key variable is, will effective activism, independent research and media scrutiny stay at an elevated level in the months and years ahead? Will this intense exposure and public scrutiny remain? If it does, there is a decent chance that Apple will feel that it's in its interest to make these changes. And of course it has the resources to do so. Remember, if the company will move only as far as it concludes it is in its interest to move, there are no moral epiphanies in corporate work. These people aren't suddenly going to discover a personal profound commitment to the rights of workers. Apple will move if it concludes it to its interest to move. And if it concludes that a failure to do so will cause irreparable damage to its brand, it will ultimately move. So really it is up to us. It is up to researchers and activists, to unions and NGOs, to the media to keep shining this powerful light on Apple. And if they do, if we do, there is some real prospect for change. Thank you.