Placing So Much Hope on So Little: The World's First Fair Trade Zone

Members of the Women's International Sewing Cooperative. Photo: Sarah Junkin Woodard

With peak winds of 180 mph, Hurricane Mitch thundered onto the gulf coast of Honduras on October 29, 1998 and slowly moved south to Nicaragua, dropping an estimated 75 inches of rain in five days. Rivers swelled, engulfing farmland and villages. A mud slide more than a mile wide raged down the face of Nicaragua's Casitas Volcano, erasing all evidence of life, including several villages. Lake Managua overflowed its banks, flooding some of the poorest communities in Nicaragua. Over a half million people were left homeless. With a death toll of 11,000, Mitch remains the second deadliest Atlantic basin hurricane in history.

Founding of Nueva Vida

On November 6, CNN reported on early recovery efforts: "... Near Lake Managua, families whose homes were destroyed by floods are building a new town, called Nueva Vida or New Life, on a field near Ciudad Saninois (sic).... Using sticks of lumber, sheets of plastic and pieces of tin, they have begun to build makeshift houses."

Approximately 13,000 Lake Managua refugees were transported 20 miles to an encampment on 125 acres of muddy pasture belonging to an agricultural co-op organized by the Center for Development in Central America (CDCA). Headquartered a mile and a half from the encampment, CDCA members quickly responded, distributing first aid, water, and food.

The CDCA is a program of the Jubilee House Community (JHC), a nondenominational faith-based community originally from North Carolina. Members of JHC began working with impoverished communities outside Charlotte in 1979, setting up homeless shelters, soup kitchens, and one of the first shelters for battered women in the US run solely by the women themselves.

In 1992 JHC began focusing its energies on Ciudad Sandino, a settlement of roughly 200,000 former refugees from past Nicaraguan disasters. In 1994, at the invitation of FUNDECI, a development NGO based in Managua, JHC moved to Nicaragua and started working as the Center for Development in Central America. From 1994 to 1998 CDCA helped provide potable water to two of the poorer communities within Ciudad Sandino, and built several health centers, a school, and three solar-powered composting latrines. The CDCA was beginning work with agricultural cooperatives when Hurricane Mitch hit.

Once the essentials of first aid, food, and shelter were taken care of, the CDCA began working with the Nueva Vida camp, suggesting that each block elect a representative who would then gather with other representatives to determine what course(s) of action to take.

This particular approach to community development has been the guiding principle of both Jubilee House Community and CDCA. "Working with poor and homeless communities is about empowerment," says Mike Woodard, one of JHC's founding members. "The difference is, instead of empowering the individual, we focus on the community. If you find a job for one person, you help them and their family. But, 30 people organizing a cooperative venture will end up helping 30 people, their families, and the community as a whole."

Five areas of focus were identified by the community representatives for immediate attention: housing, health care, education, sanitation and employment. These tasks were then taken back to five respective blocks (now commissions) for brainstorming. The housing commission dealt with the Nicaraguan Red Cross to get the community's prefab houses out of customs and built (the latter proved much easier than the former). The health commission began building a health center; the education commission began setting up elementary schools and day care centers; those responsible for sanitation worked with outside experts to design and install a sewage system. The employment commission was given the task of generating ideas for long-term employment options for the community -- undeniably, the most daunting of the five tasks.

Finding Jobs

In Give It Your All, a 65 page report on the Fair Trade Zone, Becca Mohally Renk writes: "In Nicaragua, the government has been incapable of coming up with a workable plan to create quality employment -- the current administration's "alternative" is the low-paid, highly unstable jobs offered in the country's free trade zones. Likewise, there are relatively few NGOs working specifically on sustainable economic development." Despite the potential long-term payoff, the need for initial capital and the requisite long-term organizational commitment often causes NGOs to shy way from these projects.

The union of Nueva Vida refugees and CDCA was a felicitous one in this regard. CDCA members live and work in the community they serve and raise money in North America (when necessary) to provide low-interest loans to that community.

In 1999, CDCA's Mike Woodard was at an organics conference in Illinois and happened to meet the production manager of Maggie's Organics, a Michigan-based clothing distributor. At the time of their meeting, Maggie's Organics was searching for an off-shore manufacturer to make its organic T-shirts. In a year and a half, Maggie's had lost five US contractors to bankruptcy, thanks to NAFTA. Mike was trying to find work for Nicaraguan refugees. The idea of a sewing cooperative was born. Maggie's Organics offered to contract with the Nueva Vida community if they could build a factory and produce quality clothing using organic cloth.

When the idea of a sewing cooperative was proposed to the Nueva Vida employment commission, it was accepted. Initially, thirty women were selected (six from each commission/block). Half had to be experienced garment workers so they could train the others. Many dropped out and the selection process was repeated.

Not only did these women, (most of them mothers) commit to working half a day for up to two years with no pay, some of them working the second half of the day as street vendors in Managua, but many did so against the wishes of family and friends.

They were ridiculed by some for placing so much hope on so little. Of the first 100 women who joined the cooperative, only 11 members remain.

Cooperative Groundbreaking

In February 2001, after two years of sweat-equity, including laying a foundation and building a factory, the women officially incorporated as Cooperativa Maquiladora Mujeres de Nueva Vida Internacional (the Women's International Sewing Cooperative of Nueva Vida).

In May of 2001 their first shipment of sewing machines arrived (purchased with a loan from CDCA), and by August the cooperative was trained and able to produce its first order: 50 plain white T-shirts for Maggie's Organics.

By August of the following year the collective was filling an order of 26,000 T-shirts for Maggie's and beginning production on a sophisticated organic camisole that, despite predictions of failure from others in the garment industry, easily passed the high quality control standards at Maggie's.

Production aside, the collective was also learning the disciplines of business and cooperativism while holding weekly co-op meetings. The organization of the sewing cooperative is based on the Mondragon cooperatives of northern Spain.

In 50 years, Mondragon has grown from one worker-owned stove factory to a network of 150 cooperatives world-wide. Overly simplified: the Mondragon system is about worker-entrepreneurship. Workers are equally and collectively invested in the collective. Management decisions are made democratically (one owner, one vote). The maximum salary ratio is three to one. Thirty percent of each worker/owner's salary is re-invested for cooperative improvements or expansion.

If you consider the above construct and try to imagine it being applied by 50 or so hurricane refugees suffering from post traumatic stress, often living on one meal a day, caring for their families, and coming from lives of poverty, you can imagine the frustrations the women of Nueva Vida and the CDCA organizers encountered. Rest assured, there was turbulence.

The worker-owners of Nueva Vida testified in Give it Your All about challenges they've faced. Power outages caused late delivery and loss of clients. There was some mistrust of anglos. There were personal battles, professional disputes, and debates over the role of seniority. Yet each problem was an opportunity for discussion; each issue worthy of debate. The Mondragon model anticipates that there will be problems and sets up structures to deal with them democratically.

Creating the Fair Trade Zone

In October of 2003, the cooperative received a grant for two purposes: to purchase a large order of cloth, and to begin the process of becoming a free trade zone. With this move, the cooperative could reap the benefits of tax exemption and expedited shipping, putting it on equal status with free trade sweatshops. A year later the cooperative received its free trade notification and began operating as the "Fair Trade Zone," a deliberate pun on the absence of fairness in free trade. In 2004, the Fair Trade Zone made a profit for the first time.

Between 2004 and 2005, production doubled. Their clients include Maggie's Organics, North Country Fair Trade, the Nicaraguan Solidarity Campaign, and the Presbyterian Church.

The cooperative currently includes 90 full-time employee-owners who work at twice the wage of sweatshop labor. Benefits include (among others): health insurance; three months of paid maternity leave; one month of vacation per year; free business and management training, and an equal share of profits at the end of the year.

Two of the co-op members who were most shy in the beginning have become administrators. One of them now travels around the world to colloquia and sweat-free gatherings, spreading the word about the Fair Trade Zone. Several have started taking secondary and higher education courses. One is on track to become an accountant.

As of April 2007, the Fair Trade Zone and JHC-CDCA are developing a cotton spinning plant to insure a constant supply of organic cotton. Thirty-five heads of household (mostly women) are earning sweat-equity building the factory. The plant is expected to be operational in four years.

Other projects include financing the plant's planned conversion to solar power and replacing some well-worn sewing machines. The JHC-CDCA continues to run a health clinic in Nueva Vida and has developed a building materials cooperative, a ceramic water filter cooperative, a security cooperative, and an agricultural cooperative of 2000 farmer-owners.

Not unlike Mondragon, the Fair Trade Zone has become well-known as a successful cooperative model. CNN has covered the -venture. Universities, particularly Bucknell in Pennsylvania, have developed study programs at Nueva Vida and the Fair Trade Zone. In 2006 PBS broached the subject of a documentary.

Mother Jones wanted the group to suggest someone from their ranks for a special column on rebels. The cooperative declined Mother Jones' offer, saying that as a cooperative they couldn't think of picking out one person to represent them.

Resources on the Fair Trade Zone not listed in the printed edition.

Fair Trade Zone website

Jubiliee House Community and the Center for Development in Central America

Maggie’s Organics

Give It Your All: The Fair Trade Zone: becoming the world's first worker-owned free trade zone, Becca Mohally Renk, 65pp, .pdf file: www.fairtradezone.jhc-cdca.org/pdfdocs/Give_It_Your_All_Complete.zip. Detailed history of the Nueva Vida community and the birth, growth and continued success of their worker-owned women's sewing collective. A primer on forming a successful, self-sustaining, self-governing collective, literally, from nothing. Fair Trade Zone, Km. 11 Carretera Nueva a León, 1.6 km. Abajo, Ciudad Sandino, Managua, NICARAGUA, 011-505-269-7073, fairtradezone@jhc-cdca.org, www.fairtradezone.jhc-cdca.org.

Ants That Moved Mountains, directed by Jody Milano, a 15 minute documentary on how the Fair Trade Zone and the Nueva Vida Women's Sewing Cooperative in Nicaragua formed after hurricane Mitch in 1998.