THE WHITE HOUSE

Office of the Press Secretary

                           PRESS BRIEFING
                                 BY 
              GENE SPERLING, NATIONAL ECONOMIC ADVISOR               

The Briefing Room

2:05 P.M. EDT

MS. GLYNN: Hi, everyone. First, we have Gene Sperling, the National Economic Advisor, to talk to you about the Sweatshop Initiative. Mike will be out shortly after that, and he'll have a briefing on the President and Mrs. Clinton's taxes.

MR. SPERLING: I just wanted to be able to be here to take a few questions if anybody needed to before I have to go up to the Hill. We are actually going to give out -- we're right now making copies of the actual agreement so that you can actually have it explicitly.

The main thing I think is important in understanding the context of this is that last year, last summer, this was something where, after Secretary Reich really brought this to national attention, and particularly with Kathie Lee Gifford's help, there was an effort at first to have a legislative solution, which I think would have had the very parties you saw here today in kind of a pitched battle against each other.

Our idea last August and August 2nd was that before we got into what would have been a confrontational posture, was it possible to bring together a very diverse group -- industry, the garment unions, the human rights groups, religious groups, and whether they could work something out that would come to be a code to end sweatshops.

I think what came out of this is a very historic first step. I think it is rightly -- it is a breakthrough agreement. It is historic, it is unique, but I think it's right to think of this as the challenge going forward. The agreement in itself does not end sweatshops, it is the actions that will take place from here.

But it is striking to know what was agreed to. First of all, there was a pretty strong workplace code of conduct that was voluntarily agreed to, which is very significant in many ways. Probably nothing is more important than the agreement that there will be no child labor, and that reads that , "No person shall be employed at an age younger than 15, or 14 where the law of the country of manufacturer allows, or younger than the age for completing compulsory education in the country of manufacturer where age is higher than 15."

There are currently 240 million children under 15 who work in the world in some industry, half of them work full time. As many as 80 million work in very exploitative and hazardous situations. A large chunk of them, or a significant chunk is in the garment industry. And this -- to the degree that this locks in a code of conduct where everybody signs or agrees that they will not allow a contractor to have child labor, it is extremely significant.

It is worth reading through, the agreement as we will give out, in terms of its agreement on harassment, on nondiscrimination, on health and safety, on the freedom of association and collective bargaining -- which is especially important since there are many countries where those rights are not protected -- that the employer shall pay, and I want to read this, "Employer shall pay employees as a floor at least the minimum wage required by local law or the prevailing industry age, whichever is higher; and shall provide legally mandated benefits."

On the hours of work, even in the United States, there is no legal limit on the mandatory work week. There is a 40-hour work week, and if you are required to work over the 40-hour work week you are required to get time-and-a-half, but there is not a limit on what the mandatory work week is. So this is an agreement that not just in the United States, but that in every country across the world that these companies are dealing with, they will not have a mandatory work week that goes beyond 48 hours plus 12 hours of mandatory overtime. So a 60-hour limit in a mandatory work week with at least one day off in every seven day period. That is a pretty historic agreement.

If it was just this code of conduct, that would be significant. But I think one could then raise the question, how do we know. And that is why I think the next two components are so important. The second is on the principles of monitoring, that the companies signed on not only to internal monitoring, but to a very explicit principles of external and independent monitoring.

And under the obligations of an independent external monitors -- and I will read -- "that the independent external monitors be given independent access to and conduct independent audit of employee records; be given independent access to all production records and practices and wage hour, payroll and other employee records and practices of company factories and contractors and suppliers." And then finally that this same group is forming an association that will hold accountable the independent external monitors and the company that are part of this agreement.

So you have a very significant work place code of conduct. You have independent external monitors. And you have an association that will ensure that these independent external monitors are accountable and that the companies are kept in good standing. I think these three parts lead to something that will be very significant in giving the public confidence that when they're buying a product from one of the companies that is part of this agreement, that that would not be a product that was made with child labor or in a sweatshop. This is -- this group will report back in six months with an explicit understanding that they will come forward with the means for the association. I stress that this association will have representatives -- be governed by a board whose members would be nominated by not only companies, but labor unions, consumer, human rights and religious groups.

So I think that -- the way that I look at this is that what is historic about this is that you're creating an ongoing structure and a framework for dealing with a really worldwide, monumental issue, and that you are bringing together groups that are usually in adversarial positions and having them work together and put in place this code of conduct. It is truly significant, and we will work as hard as we can to make sure that the code of conduct is held to, that more companies come on board, and that the association is the type that gives confidence to the public that the products are not being made in sweatshops or child labor.

Q Gene, I assume that you all have thought this all the way through in that sweatshop conditions and child labor are deplorable. But there are situations in some cultures where their income is a significant portion of the family's income, what there is. And that eliminating this is going to have an economic impact on families in some areas. Have you all thought about what happens to those people and how you replace that income within those families?

MR. SPERLING: Well, I think far greater is the problem of young children who have not even reached adolescence or maturity, who lose their abilities to function, suffer enormous abuse, I think that you're not taking away the ability of children, younger people, 15, 16, 17, and 18. But again, 240 million children are in child labor, 80 million full-time in exploitative conditions. I think this -- I think that the people here felt that this would be a positive step forward in creating a significant loophole in that area and would not serve this clause.

Q Gene, about Indonesia, Jeffrey Dowger (phonetic), who runs a group called Press For Change, says that this is primarily a public relations effort. If you were serious about cracking down on Nike contractors in Indonesia you would begin reviewing the trade preferences under GSP and then Indonesia would get serious about this. Is the administration planning again on renewing the trade preferences for Indonesia?

MR. SPERLING: Well, first of all, let me get to the first point. As I have said before, earlier this week, you can always argue about whether the glass is half empty or half full, but there was no glass here at all before this was done. And the notion that people like the National Consumers League, the Lawyers Committee for Human Rights, the Robert F. Kennedy Memorial Center for Human Rights, the Interface Center on Corporate Responsibility, that they would all work and sign their names and their reputations to something that they did not think is a step forward just doesn't make sense.

Clearly, nobody who signed onto this thing thought it was perfect. Every single part of the people here compromised in some way. But the reason they signed on was because they realized they were making historic, significant progress.

Now, there are realities that are out there that are very complicated in terms of economic development in third world -- or developing countries. Some people might feel that even making the minimum wage -- or even the prevailing wage -- because of how that sounds to us in terms of being, perhaps, 30, 40, 50 cents an hour in some places, is not what we would like or maybe not enough for a liveable wage in some countries.

But it is -- a sweatshop is by definition a place where people work less than the minimum wage, when they have no regard for the hours and the mandatory hours or the health and safety. And when you move to a situation where you're eliminating child labor and making sure that everybody is at least paid what they are owed by law, you are making a significant step forward. You may not be solving all the world's problems, but you're making a significant step forward. And for those people and those workers to get at least what they are owed can sometimes mean 20, 30, 40 percent more in their paycheck.

So I think this is serious. I am -- I'm not prepared at this point to answer on the GSP for Indonesia.

Q A question, are you going to -- is this a make or break week for the budget talks? And are you going to reach an agreement this week?

MR. SPERLING: I think that as Chairman Kasich said yesterday, I think there is a sense of good will and good faith in the room, and probably far better than we had in '95 and '96. And I think there is an explicit understanding of all of us that we -- all of us are going to have to give a little, but give in a way that still protects our values. And so I think that there's an atmosphere and an attitude that is very positive. I think that it is very possible to get an agreement. And I, as Frank Raines said, would be cautiously optimistic.

I don't want to -- I understand that Chairman Domenici said it was a make-it-or-break-it week, because he's trying -- he's been a very, very constructive force in this process, and he's been trying to make all sides move forward expeditiously, and I think it's right for him to keep that pressure up. But whether it is exactly this week or next week, I think his main point is that we need to move quickly, that we have an opportunity right now over the next couple of weeks to have at least a chance, or a significant chance, of getting an early deal, and that would be a pretty significant thing, and I think we should do everything we can to make sure we don't waste that opportunity.

Q What has to happen before the President invites the leadership up here?

MR. SPERLING: Well, I think all sides have to have a comfort level that we're at a position where something constructive can happen, and I don't want to say more than that at this time.

Q But you're not there yet?

MR. SPERLING: We're not there at this moment, but that doesn't meant that I don't think that we are on a path to getting there. I actually think things have gone pretty well.

Q Gene, Wal-Mart is the company that markets Kathie Lee Gifford's line of clothing. They're a retailing giant, and they're also from the President's home state. How big of a disappointment is it that they weren't here today, and are you making any efforts to get them involved in this program?

MR. SPERLING: I think our overall reaction was last August that when we were able to get companies like Nike and Liz Claiborne and Philip Van Heusen to embark on this novel path, that that was a very strong showing from the industry. We clearly hope that now that this breakthrough agreement has taken place, that will give impetus for more and more companies to come on board, and it's our hope that there will be a certain amount of pressure for those who don't.

But our feeling is that this was a very good representation and that we have now had some momentum and there's going to be some cautiousness in this from some of the companies, certainly.

As we've said, this is a pretty unique thing for companies to get together with unions and human rights group and make this kind of a pact. But I don't think on August 2nd, when we had, this many people thought we would be at this point -- and we are, and that's pretty significant. So I'm going to remain optimistic that our momentum will continue.

Q On the budget, do you think it's possible that when OMB re-estimates the deficit this summer that you could see a deficit for this year that's under $100 billion; and does that give you some hope that you've got some extra wiggle room with the Republicans?

MR. SPERLING: I personally think we should probably, you know, wait at least another month before knowing. This next month is the critical month. The CBO number that you saw, the $91.7 billion is not a projection, it's an extrapolation just taken what the numbers are. So I think that there are a number of people, a number of Wall Street analysts who, based on the stronger growth we've had this year are speculating that the deficit could be far lower. But I think we'll have to wait and see.

I will take this moment to say that the deficit has been lower four years in a row than we've projected. And if this were the case, this would be the fifth year in a row that the OMB projections on the deficit proved to be too conservative. And I think that's very significant as we go forward in deciding on the economic projections to use in the budget.

Q Gene, how's the funding divvied up amongst the -- the funding divvied up to bankroll the independent external monitors, and what incentive do the independent monitors have if, for example, the industry people want to take away their share if they don't think things are going right?

MR. SPERLING: Well, I think that that was why we -- that's why from the administration's perspective when we stepped up our involvement in the last week, what was so important to us was the creation of this independent -- of this association that would have a board represented by labor and human rights groups and consumers as well as industry. In other words, we understood that if it was simply a case of a company hiring an independent external monitor, there would continue to be doubts as to whether that independent -- that external monitor was truly independent.

But in this case, you now have an association that holds the independent external monitors accountable, has to make sure that they have followed the right procedures and are still in good standing. So I think that provides an extra layer of protection to the public. You not only have an independent external monitor, you have an association represented by unions and human rights groups overseeing essentially independent monitors.

Q Where is the money coming from -- for the monitors?

MR. SPERLING: Well, the companies will -- the companies will, I imagine, be primarily picking up that cost. But I have to say that the -- probably the best answer is that that is -- that will be among the issues that will be discussed over the next six months as they create the association.

MR. MCCURRY: Last question.

Q Is an adjustment to Consumer Price Index being considered in the budget discussions? Is that still a live option? We haven't heard about it for a while.

MR. SPERLING: Well, our feeling is that -- as you know, I don't have much new to say. It's been the opinion of this administration, and I think most experts, that the Consumer Price Index does somewhat overstate the cost of living, the question has always been by how much and what is the best way to do that. We want to ensure that in any context, whatever context it's done, it's done on the basis of technical accuracy. We're not ruling out what context it will be dealt with, just that when it is dealt with, it will be dealt with in terms of where there is broad-based agreement on technical accuracy.

Thank you.

THE PRESS: Thank you.

END 2:20 P.M. EDT