Lifting of import quotas a blow to garment factories

Bay Area apparel industry tattered by overseas competition -- immigrant workers try to start over after layoffs

Vanessa Hua, Chronicle Staff Writer

Jenny Kwong sewed up a lacy green gown as Cantonese music blasted in the background one recent evening.

Falling business had forced the San Francisco factory owner back behind the sewing machine. What her workers produced covered the rent on the factory. To turn a profit, she herself needed to sew, Kwong said with a sharp laugh.

Kwong is caught in the relentless decline of the Bay Area garment industry. For years, local factories have closed and jobs melted away as production shifted to cheaper places around the world. Today, the Bay Area is home to an estimated 3,500 garment workers, down from a peak of 30,000 in 1990.

In the latest blow to the local industry, a global system of quotas expired on Jan. 1 that had restricted the international flow of garments made in China, India and 146 other nations belonging to the World Trade Organization.

The lifting of import quotas could accelerate the loss of local jobs, say factory owners and community activists. Within the next couple of years, the Bay Area could lose more than half of its remaining garment jobs, which many Chinese immigrant women have long depended on for their livelihood.

Those women -- middle-aged or older, poorly educated and unable to speak English -- often don't know about retraining programs for workers who lose their jobs to increased imports, and have few opportunities even with that help.

"This is the death knell," said Katie Quan, chair of Center for Labor Research and Education at UC Berkeley and a former garment union leader. "The elimination of quotas makes it extremely attractive to move everything off- shore."

Ironically, many local garment workers may lose their jobs to cheaper factories in China -- the homeland that they left to find a better life in the Bay Area. That economic powerhouse sets the standard for cheap, efficient and full-package production.

As the last barriers to imports fall, Kwong's business is in jeopardy. The 60-year-old woman studied fashion design in Hong Kong, where she ran her own bridal store before immigrating to the Bay Area. Here, she worked in a garment factory and on an electric assembly line and ran a dry-cleaning business before starting her own factory nearly two decades ago.

Now, more than half of her sewing machines are idle after she cut the payroll from about 20 to just eight workers. She said she feared the loss of the quotas: "We can't be cheaper than other countries."

The Bay Area garment industry has roots dating back to the Gold Rush, when immigrant Levi Strauss founded the company that made the world's first jeans and later became a major source of San Francisco's manufacturing jobs.

A decade ago, the North American Free Trade Agreement set off the steep decline of the nation's garment industry as clothing labels outsourced production to Mexico and other countries with cheaper labor. In 2002, Levi's shuttered six U.S. manufacturing plants, including its historic Valencia Street operation in San Francisco. The two remaining plants in San Antonio closed a year ago. Last year, the state Department of Industrial Relations listed 204 garment factories in San Francisco; in 1998, it listed 406.

In 2004, sewing machine operators in the San Francisco metropolitan area earned on average of only $357 per week, according to state Employment Development Department. Bay Area garment workers, many of them Chinese immigrants, must deal with long hours, piece-rate pay schedules and poor working conditions, labor activists say.

On top of offshore competition, San Francisco's increase of the minimum wage to $8.62, high rents and other operating expenses have led to many plant closures, factory owners say. Many of the remaining factories are small, employing 20 to 40 workers, who come in only when there are orders.

Workers in the city sew clothes and evening gowns for local designers such as Jessica McClintock, who say they keep their production local for greater control and fast turnaround; the U.S. military, whose clothes must be American-made; and other niche manufacturers.

Housed in rundown buildings, the factories are in the South of Market district, the Mission, Potrero Hill and other industrial areas in San Francisco.

The building at 972 Mission St. houses the Consulate of Jordan along with a handful of garment factories and a Web design firm.

Upstairs, under florescent lights, rows of middle-aged women in a factory hunched over sewing machines recently. Some wore homemade face masks, protection against the fabric particles. Their activity filled the air with a low hum.

"I can't speak English, so it will be hard to look for work," worker Lily Ng, 48, said in Cantonese as she sewed a trendy pink top.

In another factory on the same block, just one worker sewed, and another folded pants. Plastic bags stuffed with cloth scraps, crumpled paper and threads littered the floor amid empty sewing machines.

Every so often, a company buying sewing machines on the cheap to sell overseas calls her, said factory manager Cindy Huang. She has declined the offers, but she predicted that her factory could close within months.

No work is coming in, Huang said. She wore fuzzy blue slippers and fleece, bundled up in the cold, drafty factory.

"It's depressing, to work on something for so many years and watch it fall apart," Huang said in Mandarin. "It's good for China but bad for the people here."

The federal Trade Adjustment Assistance program, established in 1962, provides training and benefits to workers who are laid off because of increased imports from a foreign country. Congress has appropriated $220 million annually for this program.

Nationwide, factories making textiles, apparel and other fabric products were among the two hardest-hit industries in fiscal year 2004, according to the Department of Labor.

In 2003, the state informed 12,989 laid-off workers that they were eligible for these federal training and unemployment benefits -- more than five times the number in 1998.

Typically, only 20 percent of those eligible apply, said state Employment Development spokesman Kevin Callori.

"It may not be right for everyone," he said. "It depends on each person's situation and whether they feel the program will work for them."

In the 12-month period ending in June, graduates of the federal training and benefits program earned about 72 percent of their previous wages, and 62 percent found jobs within three months, according to the Department of Labor.

Critics say that applying for these benefits is complicated, involving approvals from state and federal agencies, and difficult for non-English speakers to navigate.

For example, the letter informing workers that they are eligible for the benefits is in English, although it lists help lines in other languages.

Some garment factories change their name before they close or may cut their checks through another company, creating paperwork confusion, community activists say. Other factories may not inform government agencies of all eligible workers. Some unemployed only learn about the federal benefits months later through word of mouth, the activists say.

In addition, the training programs offer few choices for limited-English speakers: cooking, janitorial work or in-home care, for example.

Because the benefits are tied to signing up and attending vocational programs, some immigrants may sit uncomprehending through classes conducted in English, said Gordon Mar, executive director of the Chinese Progressive Association, community organizers in San Francisco.

Afterward, workers often cannot find jobs related to their vocational training or can find only part-time jobs, he said.

Since fall, the association has fanned out to more than 70 garment factories in San Francisco, handing out flyers about its seminars on what workers can do if they lose their jobs.

Peng Mei-Ying immigrated here two decades ago. Unable to speak English, she had few job options and two children to raise. She became a garment worker, sewing eight hours a day for minimum wage. Her back ached all the time, and the detail work exhausted her.

The gowns she made were expensive and sexy -- not her style, said the short, solid woman. In her free time, she went for walks or stayed at home. "You need money to have hobbies," Peng, 48, said in Cantonese through a translator.

In March, Leeda Sewing Manufacturing, the San Francisco factory where she sewed bridal and evening gowns, folded.

Along with her husband, a retired restaurant worker, Peng lives in the Sunset District with her son, a cab driver, and her daughter, a college student. Peng, who receives about $610 per month in unemployment, said her relatives help with expenses.

In November, Peng began an 18-month program to learn English and professional care-giving provided by Self-Help for the Elderly. With only a middle school education, Peng has been out of the classroom for decades. She's forgotten how to write a lot of Chinese characters and never learned English.

"It feels like you can't learn anything," Peng said. "You think about what you don't know. It's so hard."

On a recent afternoon, association staffer Alex Tom helped a group of anxious garment workers fill out forms. The women, from the shuttered Kamei Garment Co., wrote in blocky, childlike letters.

The women asked for advice on what training programs to sign up for and how to prepare for interviews with state employment officials.

Take your time to decide, Peng advised her fellow former garment workers. They can't force you to choose.

Peng is enrolled in a new training program geared toward garment workers. Offered by City College at its campus in Chinatown, the program teaches English and care-giving, light housekeeping, and meal preparation.

In class, a dozen middle-aged Chinese women sat with notebooks on their desks, pink plastic lunch-bags at their feet, murmuring words such as "area code," "California," and "Happy Holidays."

"You need English not just to make a living. You need English to enjoy yourself, to travel and see the United States," said teacher Milton Owyang. "In one year's time, you'll have no limitations because you'll know how to ask where to go."

Student Huang Hui-Ming sat in the front row. At 59, Huang is reinventing herself again. In 1990, the math teacher immigrated from southern China with her husband. She wanted to tutor, but did not know enough English. She became a garment worker.

"There's no more garment industry. I have to do something to live," Huang said in Cantonese. "Everyone wants to know how far they can take their skills."

Poor Nations Put Premium on WTO's Survival

By Paul Blustein

Washington Post Staff Writer

GENEVA -- This time, there were no raised-fist salutes from trade ministers parading before TV cameras and remarkably little bombast about the tyranny of the wealthy. Instead, last week's global trade meeting ended with a series of mutually congratulatory news conferences, following agreement on a framework for advancing the World Trade Organization's Doha Round of negotiations.

The contrast could hardly have been starker with the WTO meeting last September in Cancun, Mexico, which broke down amid recriminations between rich and poor nations. And although explanations for last week's outcome are myriad, one factor probably accounts for the accord better than any other: the fear that a second consecutive failure would permanently cripple the WTO.

In the end, for all the fierceness of their differences over issues such as farm subsidies and tariffs on manufactured goods, the representatives of the WTO's 147 member countries stepped to the brink and saw that the abyss into which they might plunge was deeper and scarier than the leap they had taken in Cancun. Many fretted that the Doha Round, and conceivably the trade body itself, might not be able to withstand another Cancun-style blow.

Those concerns were particularly strong among developing countries, including some of the same Latin American, African and Asian nations that had celebrated their defiant stance at Cancun as a triumph over the arrogance of the United States and the European Union. Despite complaints that Washington and Brussels use their clout to tilt the terms of global trade in their own favor, developing countries are keenly aware that the WTO system protects the interests of poor lands, especially small ones, much better than if world trade were governed by regional blocs or by the equivalent of the law of the jungle.

The organization's director-general, Supachai Panitchpakdi, "made so many declarations that if this [Geneva meeting] fails, it's the end of everything in the WTO, and those messages are heard very loudly," said Celine Charveriat, head of the Geneva office of the aid agency Oxfam International, who was working closely with many of the poor-country delegations. "Right or wrong, those arguments were very important."

The WTO and its predecessor institution, the General Agreement on Tariffs and Trade, were designed to secure at least basic rights for poor and weak nations. WTO rules are arrived at by consensus, rather than votes weighted by economic power as at the International Monetary Fund and World Bank. Small members can -- and sometimes do -- file complaints against mighty powers for breaking the rules, and win judgments forcing bigger countries to change their offending conduct. One of the organization's fundamental principles is that member nations are not allowed to discriminate against the firms or products of other members (an important exception being for national security reasons, the justification the United States cites for its embargo of Cuba).

So although Charveriat, along with other advocates for the poor, was critical of the Geneva pact as providing too little to the developing world, she acknowledged that Third World governments had potent reasons for wanting to keep the WTO alive and well.

Partly that is because, with decisions requiring consensus, a single country may be able to obtain concessions by holding out against a broad deal. Moreover, worldwide negotiations offer the only opportunity for obtaining large-scale reductions in the billions of dollars in subsidies that the United States, European Union and other rich countries give their farmers. Farm subsidies often lead to gluts of supply and depressed world prices for crops, impoverishing farmers in developing countries, so reducing or eliminating them is a key goal of nations such as Brazil and South Africa in the Doha Round.

"Even if developing countries think the WTO needs radical reform," Charveriat said, "they know they have greater leverage in the WTO than in bilateral agreements," such as the proposed free-trade deal between the United States and Central American nations or the E.U.'s pending arrangement with South America. "They also know that subsidies are never on the table in bilateral agreements," because neither Washington nor the European Union, the two biggest subsidizers, will agree to slash their payments to farmers unless the other is doing so at the same time.

The desire to shore up the WTO was not the only reason for agreement in Geneva. One significant factor was the signal sent earlier this year by both the United States and the E.U. that they were prepared to be more forthcoming if other countries were willing to deal as well.

The E.U. offered some major concessions in advance, in particular a signal that if the Doha Round is completed it will phase out all its export subsidies for farm goods. Export subsidies are the most widely reviled type of aid to agriculture because they go directly for crops that are shipped into other countries' markets. The E.U. also gave up demands to expand WTO rules into new areas such as international investment, a proposal that developing countries viewed as pushing the organization too far.

For his part, U.S. Trade Representative Robert B. Zoellick sent a letter to all WTO members in January and visited numerous foreign capitals to convey the message that despite the political pressures of the U.S. election campaign, Washington genuinely wanted to try this year to restart the Doha Round, which was launched in November 2001 with an original deadline of Dec. 31, 2004. (That deadline is now well out of reach, trade officials agree.) At the same time, Zoellick was openly warning that if the Doha Round remained moribund, the United States would devote its trade energies to smaller pacts -- with Australia, Morocco, Thailand, Colombia and other nations interested in dealing bilaterally.

"What came after Cancun was the crude reality of statements by the United States, saying to countries, 'If you don't want to deal in the WTO, we will deal elsewhere,' " said Arancha Gonzalez, the spokeswoman for E.U. Trade Commissioner Pascal Lamy.

Zoellick and his aides were not shy during the gatherings last week about driving home the point that the WTO's future was on the line. "In a lot of the meetings, we said -- and others did, too -- 'If this thing falls apart, who knows when it will get started again? Who knows after two failures in a row?' " said a senior U.S. official. " 'Who knows whether this organization will be able to continue as a place where you can negotiate agreements?' "

That is not to say that participants were willing to sacrifice key interests for the sake of a deal. "It could have gone down," Zoellick said in a brief interview. "In fact, [Friday] I thought it might."

But Pedro de Camargo Neto, Brazil's former chief agricultural trade official, said with some exasperation, "Everyone felt we needed an agreement" because of the perception that the WTO would go over a cliff otherwise.

"They created the cliff -- it's a nonexisting cliff, in my opinion," said Camargo, who was here pressing his own country's delegation for a more ambitious agreement. "But it was a big factor."

So at his news conference, Zoellick, who after Cancun had blasted Brazil as one of the "can't do and won't do" countries, heaped praise on his Brazilian counterpart, Celso Amorim, for the "constructive" role he had played in Geneva.

Asked how he would now characterize Brazil and its allies, Zoellick replied, "I guess we 'did do.' So it's 'can done.' "

World trade gets new lease on life

Negotiators reached a series of compromises Sunday that could benefit African farmers.

By Abraham McLaughlin | Staff writer of The Christian Science Monitor

JOHANNESBURG, SOUTH AFRICA – Keep the bicycle moving - or it will fall over and crash.

That was the basic rationale behind a successful late-night negotiating session between members of the 147-nation World Trade Organization in Geneva this weekend that resulted in keeping complicated global trade talks rolling forward - and maybe even shifting into a higher gear.

It's the second time in the past year that the "bicycle" of talks - as trade observers call it - nearly stalled and tipped. The first was in Cancún, Mexico, in September, when developing countries stalked out of talks because of what they saw as intransigence on the part of rich traders like the US and Euorpe.

The new agreement is a promise by rich and poor nations to consider politically tough concessions - like lowering trade barriers and reducing subsidies to farmers - in the future. It means the 60-year tradition of global trade talks won't fall apart - good news for globalization's backers.

If the talks had imploded, observers warn, the world risked being plunged back into a time like the 1930s, when the American and global recessions were prolonged by an absence of international cooperation on trade. It also means serious trade talks will resume early next year, after the US election. And, in the meantime, it means Democratic presidential nominee John Kerry lost a foreign-policy issue with which to criticize President Bush.

"It's a real shot in the arm," says Peter Draper of the South African Institute for International Affairs here. It allows the WTO to put the current round of talks "into a state of suspension for six months" while the US has its election and the EU shuffles its trade staff. And, he says, "When things get back under way next year there will be a fairly solid framework from which to start."

Or, as EU trade commissioner Pascal Lamy put it: "I said in Cancún the WTO was in intensive care. Today not only is it out of hospital, it is up and running."

For all its tentative wording, the new trade deal does augur for dramatic movement in the future.

One major concession would mostly affect the European Union - home of massive subsidies to farmers: If the current round of talks is completed, the agreement reads, all subsidy payments to farmers for exported products will be eliminated "by a credible end date." Observers say this date could be around the year 2020.

Another potential concession, although vaguely worded, commits the US to aim for "ambitious" and "expeditious" cuts in subsidies to cotton farmers. Currently the US give some $3.9 billion in assistance to about 25,000 cotton farmers. The WTO recently ruled that this aid is illegal - though the US has been reluctant to change, because cotton farmers have big political clout.

African nations, particularly the four big West African cotton producers - Benin, Senegal, Burkina Faso, and Mali - agreed to back off on their demand for separate negotiations on cotton. In return they'll get extra assistance from institutions like the World Bank. "They were basically bought off," says Mr. Draper.

Another breakthrough: Poor nations agreed to move toward cutting - or at least capping - tariffs on agricultural and industrial goods. This is the main reason the US and EU are negotiating with poor countries, as it will provide millions of new customers for their exporters.

But some observers see the whole trade-talks milieu as having gotten so complicated that it obscures - and perhaps sabotages - real progress. Trade expert Michael Finger at Trinity University in San Antonio, Texas, has studied the topic for decades. He says he recently spent an entire day wading through a section of a recent agreement - and was no clearer on what it meant.

That, he says, hints that much of the impetus for the talks, at least for the US, is political, not economic. Mr. Finger figures US Trade Representative Robert Zoellick's marching orders were to just keep the talks alive.

"The moment the thing falls apart, that's a political negative," he says. Someone like Senator Kerry "can make a point in a political stump speech against an administration" that has let the world-trade regime collapse." But the price for the US of keeping the talks alive wasn't high, he says. The administration "hasn't lost any constituency" - like cotton farmers - "on this because none of it is legally binding."

Indeed one of the more telling phrases in the new document is this: "[A]dditional negotiations are required to reach agreement."

So the bicycle rolls on.

Trade pact draws focus on labor laws

Workers' rights get new attention

By Marion Lloyd, Globe Correspondent

SAN SALVADOR -- In a routine that varied little for seven years, Miriam Jurez, a 42-year-old single mother, rose at dawn and endured 12-hour days bent over a sewing machine at Doall Industries, where she and hundreds of other maquila, or factory, workers earned $142 a month pumping out clothing for Liz Claiborne and other famous US brands.

The longer she worked, the angrier she became.

''More than anything, we wanted them to enforce the law and to respect us," said Jurez, a former leftist guerrilla who lost her husband during the country's 12-year civil war. Her eyes flashed as she told how her bosses denied workers their rights, including medical care, overtime, and paid vacations. She also described verbal abuse by employers and said pregnant workers were often denied permission to see a doctor.

Last year, Jurez began talking to other workers about forming a union. But instead of improving conditions at the factory, she and several dozen other union organizers lost their jobs in May. Doall officials defended the firings, citing a slump in work orders at the Korean-owned factory, which is one of roughly 240 foreign-owned assembly plants operating in El Salvador's 15 free zones.

Jurez is one of hundreds of maquila workers who say their rights have been violated by employers who flout El Salvador's labor laws with impunity, complaints that are echoed by workers in countries throughout the region. Human rights groups have long bemoaned the failure of Central American governments to enforce their own labor laws, an issue that could delay implementation of the planned US-Central American Free Trade Agreement, or CAFTA.

A Liz Claiborne executive said the New York-based company had a local representative in El Salvador who monitored labor conditions at the factory, a practice the company follows in all countries where it contracts out clothing production.

''In many cases, we make good progress," said Roberta Karp, senior vice president for Liz Claiborne corporate affairs and the company's senior counsel. ''But in other cases, the progress is not enough." She noted that the company intervened in a factory dispute at another Doall plant in El Salvador in 1999, persuading the company to rehire several dozen fired workers.

That plant closed earlier this year, citing a slump in contracts. But Karp said company officials would have to investigate the recent firings at the Santa Tecla plant to see whether they were due to union issues or cost-cutting measures.

''It's got to be clear. It would be inappropriate for us to manage their business," she said.

Marlene Lpez, a labor lawyer who took Jurez's case to court, is convinced her client was fired for standing up for her rights in a country where power has traditionally been held by a tiny ruling elite. ''In El Salvador, the fact that companies violate the law by firing union workers isn't even news. Everyone knows it," said Lpez, who represents hundreds of maquila workers each year in cases alleging violations by their employers.

The problem of unenforced labor laws in Central America is receiving close attention in Washington, where CAFTA is becoming a campaign issue.

President Bush strongly supports the agreement, saying it will create thousands of new jobs for American workers and protect the textile industry from competition from China when global textile quotas are eliminated starting Jan. 1.

CAFTA, which would immediately eliminate tariffs among the United States and five Central American countries, was due to be in place by January. But it's not clear whether Bush will push for a potentially contentious vote in Congress before the November elections.

Critics of the agreement, including Senator John F. Kerry, say it does not do enough to protect workers' rights and would force US companies to compete with rivals in countries where labor laws are routinely ignored.

Alex Hong, a factory manager at Doall, denied his company discriminated against unions, two of which he said operate at the plant. ''We always act within the law," he said in a telephone interview, adding that all the fired workers received severance packages.

But Edwin Flores, the leader of one of the unions, said together they represent only 65 of the plant's 600 workers. He noted that as recently as January, the company was refusing workers' access to government health care.

Karp, the Liz Claiborne executive, said her company was alerted to the problem and persuaded management to start paying its health care dues.

''The companies do everything they can to keep unions small, and the Labor Ministry does what it can to help them," said Gilberto Garca, a leading Salvadoran labor activist who was invited to speak before the US Congress in March on labor abuses in his country.

Garca also contributed to a December report on abuses in El Salvador's maquilas by New York-based Human Rights Watch. The report, titled ''Deliberate Indifference," argued that ''because labor laws are weak and government enforcement is often begrudging or nonexistent, employers who flout the law have little worry that they will suffer significant consequences."

Government officials say the report, as well as another recent study by the British organization Oxfam, is biased and does not take into account recent improvements in labor conditions in the country.

''All they want is to cause damage to a sector that is creating a huge number of jobs," said Jorge Nieto, the country's labor minister. He said the government had worked closely with the International Labor Organization to modernize the country's labor codes and that ''our laws are as good as the most developed country."

Nieto cited a recent law making it a jailable offense for employers to withhold social security and health care payments by employees. Another prohibits employers from forcing prospective workers to take pregnancy tests.

Other officials argued that CAFTA would improve labor conditions by putting El Salvador and other Central American countries under a microscope.

''For us, it's not only about access to markets, but about consolidating the reforms we've implemented so far," said Miguel Lacayo, the country's Harvard-educated minister of economy. He said he hoped El Salvador would be able to move away from unskilled maquila-based jobs to skilled industries under CAFTA.

But labor activists argue that there is little to guarantee that the agreement won't perpetuate widespread abuses.

Lpez, the labor lawyer, took 500 cases to court last year and has filed another 100 cases so far this year on behalf of female maquila workers. Many of the cases involved women who lost their jobs after Carolina Apparel International, a subsidiary of North Carolina-based Rives Apparel International, closed its Salvadoran plant in December. The company, which produced clothing for famous US labels, left without paying several weeks' salary and severance packages to its 350 workers, she said.

The lawsuits are now in limbo, since there is no company representative left in the country to confront the charges. Attempts to get comment from the company were unsuccessful. Telephones at its head offices in High Point, N.C., have been disconnected.

Labor activists say that in some ways Salvadoran workers are worse off today than before the war. In his speech to members of congress, Garca cited figures showing that 2 percent of the country's 2.5 million workers are unionized, compared with 10 percent during the war.

''Before, labor leaders were fired, jailed, kidnapped, or killed. It was one of the causes of the civil war," said Joselito Acosta, a union leader who has spent two years fighting efforts by Pennsylvania Power and Light Global to annul a collective bargaining agreement at the company's Salvadoran subsidiary, DelSur.

The company finally backed down in February after Acosta and other labor leaders took their campaign to Washington and met with Representative James P. McGovern, Democrat of Massachusetts, and other members of Congress.

''Today, they don't kill you," Acosta said. ''They just fire you, because they know there will be 15 more people waiting to take your place."

Small coffee brewers try to redefine fair trade

By Tim Rogers | Contributor to The Christian Science Monitor

GRANADA, NICARAGUA – Fueled by a popular taste for lattes and cappuccinos and a growing consumer-awareness campaign, the fair-trade coffee movement has tens of thousands of Americans asking for a scoop of social justice with their morning coffee.

Fair-trade coffee - beans purchased from small farmers outside the US at well above the slumping market price - is hot in the java world: The amount of fair-trade coffee sold in the US nearly doubled last year.

But as the movement has expanded in recent years to include such brands as Starbucks, Green Mountain, Procter & Gamble, and Dunkin' Donuts, dissension is percolating among some smaller roasters. They claim that the large firms, which buy only a small percentage of fair-trade beans, are turning it into a marketing ploy rather than an effort to help farmers.

Now a move is underfoot to create a new model where smaller brewers purchasing 100 percent fair-trade coffee hope to distinguish themselves as the real deal among fair traders. The rift demonstrates how some small companies feel cheated by larger corporations for infringing on their market niche, even when all parties involved insist they are working toward the same goal.

Others say the mainstreaming of the movement has helped the cause.

"If a corporate giant roasts a million pounds of fair-trade coffee in one year, they are still doing far more than some of the smaller 100-percent roasters will in their entire history," stresses Paul Rice, CEO of TransFair USA, the group that audits the US fair-trade industry.

The fair-trade model seeks to ensure livable wages as well as environmental and cultural sustainability for small farmers in Latin America, Africa, and Asia by establishing a base purchase price of $1.26 per pound - about $.75 more than the current market price. Since TransFair formed in 1998, fair-trade coffee sales in the US have grown exponentially, totaling 19 million pounds last year, according to Mr. Rice.

Several smaller 100-percent fair-trade coffee roasters in the US have broken from the establishment in recent months, claiming they can do more to raise consumer awareness by going it alone.

On Friday, Larry's Beans of North Carolina split from TransFair, the company that holds the US trademark for the term, "Fair Trade Certified." At least three other smaller roasters - Just Coffee, Dean's Beans, and Cafe Campesino - have followed suit. All the details of their new association have yet to be worked out.

"Without people outside the increasingly corporate-friendly TransFair system pushing for the original vision of a better model, [the movement] will be watered down into nothingness," says Matt Earley, cofounder of Just Coffee in Madison, Wis.

Under the current system, chains like Starbucks can call themselves fair-trade friendly by purchasing just 1 to 2 percent of their coffee from certified growers.

Starbucks, which brews fair-trade coffee once a month as its "coffee of the day" in the company's 7,834 worldwide shops, and has bags of it for sale on its shelves, acknowledges that fair-trade beans are only a small percentage of its total purchase, but explains that there are other ways to ensure farmers are treated justly.

Sue Mecklenburg, vice president of business practices for Starbucks, says the company purchases all its beans - fair-trade certified or not - at an average price of $1.20 per pound. She says that last year the company bought 2.1 million pounds of fair-trade certified coffee, double the amount from the previous year, and sold 28 million cups of fair-trade coffee as its cup of the day in 2003.

"Starbucks doesn't purchase 100 percent of its coffee as fair-trade certified, but 100 percent of the coffee we buy is under conditions that are fair to farmers," she says, noting that fair-trade certified coffee is still a relatively small market, representing 670,000 smallholder family farmers, out of an estimated 25 million coffee farmers around the world.

Another sticking point inside the movement are the requirements for being certified. Germany's Fair Labeling Organization (FLO), which certifies all fair-trade coffee in the world, charges farmers $2,431 to certify plus an annual base of $607 for recertification and $.02 per 2.2 pounds of coffee sold under the fair-trade label.

Stuck in the middle of the controversy is the rural Nicaraguan coffee cooperative of El Porvenir, located on a 2,000-acre swath of land in the volcanic highlands. This village of 255 people produces a modest 45,000 pounds of organic coffee beans in a good year and has been trying for three years to get certified as fair trade by FLO.

Mike Woodard of the Nicaraguan ecumenical organization Jubilee House Community, says he helped the village fill out a certification questionnaire in 2001, but never received a response. FLO did not answer questions about why they have not visited the community, but spokesman Simen Sandberg says that seldom do they certify producers who harvest less than 44,000 pounds per year - almost the exact amount El Porvenir harvested last year.

Rice downplays criticisms that the movement sold out by inviting the multinational's on board. He says his mission is to get as many roasters and retailers involved as possible.

But some are still wary of the bigger brewers. Robert Everts, co-executive director of Massachusetts' Equal Exchange, the largest 100-percent retailer of fair-trade coffee in the US, applauds efforts to bring in larger firms, but says he stands with the defectors. He says that "the verdict is still out" whether the fair-trade establishment can support both the big and small roasters under the same tent.