We are in an era of uncertainty over whose rules will govern global economic integration. With the growing market share of Chinese firms and the power of the Chinese state it is unclear if Western firms will continue to dominate transnational governance. Exploring these dynamics through a study of contract rules in the global cotton trade, this article conceptualizes commodity chain governance as a contested process of institution-building. To this end, the global commodity chain/global value chain (GCC/GVC) framework must be revised to better account for the broader institutional context of commodity chain governance, institutional variation across space, and strategic action in the construction of legitimate governance arrangements. I provide a more dynamic model of GCC governance that stresses how strategic action, existing institutions, and dominant discourses intersect as firms and states compete for institutional power within a commodity chain. This advances our understandings of how commodity chain governance emerges and changes over time.
Edward Wong, Jonathan Ansfield, and Sharon LaFraniere , "China Paints Google Issue as Not Political ," New York Times, January 20, 2010.
2.
Jennifer Bair , "Global Capitalism and Commodity Chains: Looking Back, Going Forward," Competition and Change9, no. 2 (2005): 153-80.
3.
Martin Hess, "‘Spatial’ Relationships? Towards a Reconceptualization of Embeddedness," Progress in Human Geography28, no. 2 (2004): 165-86.; Martin Hess and Henry Wai-chung Yeung, "Whither Production Networks in Economic Geography?"Environment and Planning A38 (2006): 1205-27.
4.
Peter Gibbon and Stefano Ponte, Trading Down: Africa, Value Chains, and the Global Economy ( Philadelphia: Temple, 2005).
5.
Hess and Yeung, "Whither Production Networks in Economic Geography?"
6.
Terrence K. Hopkins and Immanuel Wallerstein, "Patterns of Development of the Modern World-System," Review1, no. 2 (1977): 11-145.
7.
Gary Gereffi, "The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers Shape Overseas Production Networks," in Commodity Chains and Global Capitalism, ed. Gary Gereffi and Miguel Korzeniewicz ( Westport, CT: Praeger, 1994), 95-122.
8.
John Humphrey and Hubert Schmitz, "How Does Insertion in Global Value Chains Affect Upgrading in Industrial Clusters?" Regional Studies36, no. 9 ( 2002): 1017-27.
9.
Jennifer Bair, "Global Commodity Chains: Genealogy and Review," in Frontiers of Commodity Chain Research, ed. Jennifer Bair (Stanford, CA: Stanford University Press, 2009), 1-34.
10.
Gary Gereffi , John Humphrey, and Timothy Sturgeon, "The Governance of Global Value Chains," Review of International Political Economy12, no. 1 ( 2005): 78-104; Timothy Sturgeon, "Modular Production Networks. A New American Model of Industrial Organization,"Industrial and Corporate Change11, no. 3 (2002): 451-96; Timothy Sturgeon, "From Commodity Chains to Value Chains: Interdisciplinary Theory Building in an Age of Globalization," in Frontiers of Commodity Chain Research, ed. Jennifer Bair (Stanford, CA: Stanford University Press, 2009), 110-35.
11.
Gereffi et al. ("The Governance of Global Value Chains") refer to these as governance structures, which suggests that this new typology is meant to replace Gereffi’s ("The Organization of Buyer-Driven Global Commodity Chains") earlier producer-versus buyer-driven distinction. Here I follow Gibbon and Ponte (Trading Down) who suggest that Gereffi et al. are actually referring to "forms of coordination" such as standards and contracts that are embedded within broader governance structures (see also Sturgeon, "From Commodity Chains to Value Chains").
12.
Benjamin Cashore , Graeme Auld, and Deanna Newsom, Governing through Markets: Forest Certification and the Emergence of Non-State Authority (New Haven, CT : Yale University Press, 2004), 220.
13.
Ibid., 220, original emphasis.
14.
John Bowman, Capitalist Collective Action (New York: Cambridge University Press, 1989); Harland Prechel, "Steel and the State: Industry Politics and Business Policy Formation, 1940-1989,"American Sociological Review55, no. 5 (1990): 648-68; see also Cashore et al., Governing through Markets.
15.
Giovanni Arrighi and Beverly Silver, "Capitalism and World (Dis)Order," Review of International Studies27 ( 2001): 257-79.
16.
Gary G. Hamilton and Gary Gereffi, "Global Commodity Chains, Market Makers, and the Rise of Demand-Responsive Economies," in Frontiers of Commodity Chain Research, ed. Jennifer Bair (Stanford, CA: Stanford University Press, 2009 ), 136-62.
17.
Richard P. Appelbaum, "Big Suppliers in Greater China: A Growing Counterweight to the Power of Giant Retailers," in China and the Transformation of Global Capitalism, ed. Ho-fung Hung, ( Baltimore, MD: The Johns Hopkins University Press, 2009), 66.
18.
Ho-fung Hung, "Introduction: The Three Transformations of Global Capitalism," in China and the Transformation of Global Capitalism, ed. Ho-fung Hung (Baltimore, MD: The Johns Hopkins University Press, 2009), 17.
19.
Bair, "Global Commodity Chains"; Peter Gibbon, Jennifer Bair, and Stefano Ponte, "Governing Global Value Chains: An Introduction," Economy and Society37, no.3 (2008): 315-38; Philip Raikes, Michael Friis Jenson, and Stefano Ponte, "Global Commodity Chain Analysis and the French Filière Approach: Comparison and Critique," Economy and Society29, no. 3 (2000): 390-417.
20.
Bair, "Global Commodity Chains "; Hess and Yeung, "Whither Production Networks in Economic Geography?"
21.
Gereffi et al., "The Governance of Global Value Chains," 99, emphasis added.
22.
Laszlo Czaban and Jeffrey Henderson, "Globalization, Institutional Legacies and Industrial Transformation in Eastern Europe," Economy and Society27, no. 4 (1998): 585-613; Peter Dicken and Anders Malmberg, "Firms in Territories: A Relational Perspective,"Economic Geography77, no. 4 ( 2001): 345-63; Gibbon and Ponte, Trading Down.
23.
J. Rogers Hollingsworth and Robert Boyer.Contemporary Capitalism: The Embedded-ness of Institutions (Cambridge : Cambridge University Press, 1997 ); Peter Hall and David Soskice, eds., Varieties of Capitalism (Oxford: Oxford University Press , 2001); Richard D. Whitley, "Business Systems and Global Commodity Chains: Competing or Complementary Forms of Economic Organization?"Competition and Change1, no. 4 (1996): 411-25; Richard D. Whitley, Divergent Capitalisms: The Social Structuring and Change of Business Systems ( New York: Oxford University Press, 1999).
24.
Hess, "‘Spatial’ Relationships?"
25.
Gary Gereffi , "International Trade and Industrial Upgrading in the Apparel Commodity Chain,"Journal of International Economics48, no. 1 (1999): 37-70.
26.
Gibbon et al., "The Governance of Global Value Chains."
27.
Fred Block, "Rethinking Capitalism," in Readings in Economic Sociology , ed. N. W. Biggard ( Oxford, UK: Blackwell, 2002), 224.
28.
Paul DiMaggio , "Interest and Agency in Institutional Theory ," in Institutional Patterns and Organizations: Culture and Environment, ed. L. G. Zucker ( Cambridge, MA: Ballinger, 1988), 3-22; Paul DiMaggio and Walter Powell, "Introduction," in The New Institutionalism in Organizational Theory, ed. W. Powell and P. DiMaggio (Chicago: University of Chicago Press, 1991), 3-45.
29.
See also Bob Jessop , State Theory: Putting the Capitalist State in Its Place (Cambridge, UK: Polity , 1990).
30.
Marie-Laure Djelic and Sigrid Quack, "Theoretical Building Blocks for a Research Agenda Linking Globalization and Institutions," in Globalization and Institutions: Redefining the Rules of the Economic Game, ed. M. Djelic and S. Quack (Cheltenham, UK: Edward Elgar, 2003), 18.
31.
Boaventura de SousaSantos, Toward a New Common Sense: Law, Science and Politics in the Paradigmatic Transition (London: Routledge, 1995).
32.
Neil Fligstein , "Markets as Politics: A Political-Cultural Approach to Market Institutions," American Sociological Review61, no. 4 (1996): 659.
33.
Dirk Lehmkuhl , "Structuring Dispute Resolution in Transnational Trade: Competition and Coevolution of Public and Private Institutions," in Globalization and Institutions: Redefining the Rules of the Economic Game, ed. M. Djelic and S. Quack (Cheltenham, UK: Edward Elgar, 2003), 278-301. See also, A. ClaireCutler, Private Power and Global Authority: Transnational Merchant Law in the Global Political Economy (Cambridge: Cambridge University Press, 2003); Yves Dezalay and Bryant Garth, "Merchants of Law as Moral Entrepreneurs: Constructing International Justice from the Competition for Transnational Business Disputes,"Law & Society Review29, no. 1 (1995): 27-64; Yves Dezalay and Bryant G. Garth, Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order (Chicago: University of Chicago Press, 1996); Walter Mattli, "Private Justice in a Global Economy: From Litigation to Arbitration,"International Organization55, no. 4 (2001): 919-47.
34.
Peter Gibbon , "Upgrading Primary Production: A Global Commodity Chain Approach," World Development29, no. 2 (2001): 345-63. In later work, Gibbon and Ponte (Trading Down) argue that the cotton trade is not driven by any set of lead actors. I believe that they are mistaken in this assessment. This is perhaps because they rely heavily on secondary sources for data on the cotton trade. Many secondary sources suggest that the merchant node is highly competitive. However, interview data, as well as analysis of news reports of mergers and acquisitions among merchant firms, suggests that the degree of consolidation among merchants is considerably underestimated in most accounts. Here see Koray Caliskan, "Making a Global Commodity: The Production of Markets and Cotton in Egypt, Turkey and the United States," PhD diss., Department of Politics, New York University .
35.
John M.Talbot, Grounds for Agreement: The Political Economy of the Coffee Commodity Chain (Rowman & Littlefield: New York, 2004).
36.
Talbot, Grounds for Agreement; John M. Talbot, "The Comparative Advantages of Tropical Commodity Chain Analysis," in Frontiers of Commodity Chain Research, ed. Jennifer Bair ( Stanford, CA: Stanford University Press, 2009), 93-109.
37.
Talbot, Grounds for Agreement .
38.
CFA refers to la Communauté financière d’Afrique, or the Financial Community of Africa. The CFA zone includes Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Cote d’Ivoire, Mali, Niger, Senegal, Togo, and Guinea-Bissau.
39.
International Cotton Advisory Committee, Documents of the ICAC (CD-ROM), vol. 15 ( Washington, DC: International Cotton Advisory Committee , 2008).
40.
Ibid.
41.
Caliskan, "Making a Global Commodity."
42.
Pakistan privatized cotton marketing in the late 1980s; India followed suit in the early 1990s. In East Africa, Tanzania, Uganda, and Zimbabwe began liberalizing market and trade regimes for cotton in the early 1990s. In West Africa, Bénin and Cote d’Ivoire introduced some liberalization measures in the late 1990s and early 2000s. Other West African countries, such as Mali, Chad, and Burkina Faso, were supposed to privatize their SOEs as part of structural adjustment programs in the late 1990s and early 2000s, but they have not done so, or have only partially carried out reforms. SOEs continue to play an important role in cotton marketing in other countries as well, such as Uzbekistan and China, as Chinatex has only been partially privatized. See John Baffes, "Policy Reform Experience in Cotton Markets," in Commodity Market Reforms: Lessons of Two Decades, ed. Takamasa Akiyama, John Baffes, Donald Larsen, and Panos Varangis (Washington, DC: The International Bank for Reconstruction and Development/The World Bank, 2001), 165-90; John Baffes, "The ‘Cotton Problem’ in West and Central Africa: The Case for Domestic Reforms," Cato Institute Economic Development Bulletin 11 (July 10, 2007), http://www.cato.org/pub_display .php?pub_id=9302 (accessed April 1, 2009).
43.
Private authority over contract rules was not new to this period. Private actors constructed authority to set contract rules, settle disputes through private arbitration, and enforce arbitral decisions as early as the medieval period. See Cutler, Private Power and Global Authority.
44.
B.M. Cremades and S.L. Plehn, "The New Lex Mercatoria and the Harmonization of the Laws of International Commercial Transactions," Boston University International Law Journal2 ( 1983): 317-48; J.P. Robé, "Multinational Enterprises: The Constitution of a Pluralistic Legal Order," in Global Law without a State, ed. G. Teubner (Brookfield, VT: Dartmouth, 1997), 45-77.
45.
Cremades and Plehn, "The New Lex Mercatoria and the Harmonization of the Laws of International Commercial Transactions"; Cutler, Private Power and Global Authority.
46.
Cutler, Private Power and Global Authority, 157.
47.
Ibid.
48.
John Braithwaite and Peter Drahos, Global Business Regulation ( Cambridge: Cambridge University Press, 2000).
49.
George S. Busch, An American Harvest: The Story of Weil Brothers-Cotton (Englewood Cliffs, NJ: Prentice-Hall, 1982).
50.
Industry players suggest that the CCA, like other "private" business associations in China, is actually better characterized as a "quasi-public" association with limited autonomy from the state. While technically private, in practice, the state continued to exercise significant control over the CCA and thus over the negotiation of contract rules. See Jonathan Unger, "‘Bridges’: Private Business, the Chinese Government and the Rise of New Associations," The China Quarterly 147 (1996): 795-819.
51.
Dezalay and Garth, "Merchants of Law as Moral Entrepreneurs."
52.
Ibid., 52; see also S.L. Sempasa, "Obstacles to International Commercial Arbitration in African Countries," The International and Comparative Law Quarterly41, no. 2 (1992): 387-413.
53.
Santos, Toward a New Legal Common Sense.
54.
China Cotton Association, "Cotton Purchase Contract: Applicable to Non-Chinese Made Cotton Trade" (2006 ).
55.
Liverpool Cotton Association Limited, Annual Report and Accounts2003 (Liverpool, UK: The Liverpool Cotton Association, 2003), http://www.ica-ltd.org (accessed June 18, 2007).
56.
International Cotton Association Limited, Annual Report and Accounts2005 (Liverpool, UK: The International Cotton Association, 2005), http://www.ica-ltd.org (accessed June 18, 2007).
57.
International Cotton Association Limited, Annual Report and Accounts2005; International Cotton Association Limited, Annual Report and Accounts2006 (Liverpool, UK: The International Cotton Association, 2006), http://www.ica-ltd.org (accessed June 18, 2007).
58.
International Cotton Association Limited, Bylaws and Rules of the International Cotton Association Limited ( Liverpool, UK: The International Cotton Association , 2009), rule 226, http://www.ica-ltd.org (accessed April 1, 2009); see by contrast European Cotton Confederation, European Cotton Rules , http://www.afcot.org (accessed April 13, 2009).
59.
International Cotton Association Limited, Bylaws and Rules of the International Cotton Association Limited.
60.
The continental European cotton associations are: the Association Française Cotonnière (AFCOT, France), the Belgium Cotton Association (Belgium), the Bremen Cotton Exchange (Germany), the Centro Algodonero Nacional (Spain), the Gdynia Cotton Association (Poland), and the Associazione Tessile Italiana (Italy).
61.
Zbigniew Roskwitalski , "Standardization of Trade Rules," paper presented at the 65th Plenary Meeting of the International Cotton Advisory Committee, Goiania, Brazil (11-15 September 2006), http://www.icac.org (accessed June 18, 2007).
62.
Rajaram Jaipuria , "Improvement of Cotton Trading Practices: Prospects and Problems," Express Textile, January 13, 2005.
63.
G. Gurumurthy , "LCA Arbitration Rules Bug Cotton Importers ," Business Line, June 3, 2001.
64.
Liverpool Cotton Association Limited, Annual Report and Accounts2003.
65.
International Cotton Association Limited, Annual Report and Accounts2004 (Liverpool, UK: The International Cotton Association, 2004), http://www.ica-ltd.org (accessed June 18, 2007).
66.
Ibid.
67.
Liverpool Cotton Association Limited, Annual Report and Accounts2003.
68.
This reflected broader neoliberal discourses about trade that differentiate between the impartiality of a "universal free trade model" and the "unfairness" of alternative trade practices, such as protectionism.
69.
International Cotton Association Limited, Annual Report and Accounts2005; International Cotton Association Limited, Annual Report and Accounts 2006.
70.
International Cotton Association Limited, Annual Report and Accounts2006; International Cotton Association Limited, ICA Members Newsletter16 (2007), http://www.ica-ltd.org (accessed June 18, 2007); International Cotton Association Limited, Membership Directory 2009, Incorporating Annual Review2008 (Liverpool, UK: International Cotton Association Limited, 2009), http://www.ica-ltd.org (accessed December 15, 2009).
71.
International Cotton Association Limited, "The International Cotton Association Limited,"http://www.ica-ltd.org (accessed June 18, 2007).
72.
Ibid.
73.
International Cotton Association Limited, ICA Members Newsletter.
74.
Jan B. Wellmann, "Standardised Trading Rules: Incorporating ICA Rules in the Rules of the Bremen Cotton Exchange," paper presented at the 64th Plenary Meeting of the International Cotton Advisory Committee, Liverpool, England (September 27, 2005), http://www.icac.org (accessed June 18, 2007).
75.
International Cotton Association Limited, Annual Report and Accounts2005.
76.
Geocoton was previously the state-owned CFDT, la Compagnie Française pour le Développement des Textiles, or the French Textile Development Company. After former French colonies in West Africa received their independence, the CFDT secured export monopolies through joint ventures with these new governments and their cotton SOEs. The West African SOEs thus bargained on behalf of cotton producers, but they were compelled to sell most if not all of their cotton to CFDT. The CFDT was partially privatized in 2001 and became known as Développement des Agro-Industries du Sud, or DAGRIS. In 2008, Geocoton gained majority share and the firm took this name. See Thomas J. Bassett, Thomas J., The Peasant Cotton Revolution in West Africa: Cote d’Ivoire 1880-1995 (Cambridge: Cambridge University Press, 2001); James R. Bingen, "Cotton, Democracy, and Development in Mali," The Journal of Modern African Studies 36, no. 2 (1998): 265-85.
77.
The privatization of the West African SOEs under structural adjustment programs meant the loss of CFDT/Geocoton’s export monopolies in these countries. Without its export monopolies, CFDT/Geocoton had to compete with an increasingly consolidated group of transnational merchants that wanted to access this newly open market.
78.
Cotton International, " AFCOT Expanding Reach in Europe, Africa," Cotton International: World Report3, no. 9 (September 2005): 24.
79.
There are a number of trade associations operating in the cotton sector in India, which participate in transnational forums such as the ICA to differing degrees. The Cotton Association of India, previously the East Indian Cotton Association, is attempting to position itself as representative of the national industry, but appears to be dominated by more trans-nationally focused actors and particularly merchants who handle large enough volumes to warrant membership in the ICA and are capable of participation in transnational forums.
80.
International Cotton Advisory Committee, Documents of the ICAC (CD-ROM).
81.
In India, yields have increased from 302 kg per hectare in 2002/2003 to 520kg per hectare in 2006/2007-a 72 percent increase over four seasons. See Armelle Gruere, "2007/08 World Cotton Outlook," paper presented to the 9th International Cotton Conference, Gdansk, Poland, 6-7 September 2007, http://www.icac.org (accessed April 4, 2008).
82.
Gruere, "2007/08 World Cotton Outlook."
83.
Tommy Horton , "Understanding China: U.S. Industry Group Believes Trip Accomplished Goals," Cotton Farming (August 2008): 12-14.
