Oxford Development Studies, 13 Routledge Vol. 33, No. 2, June 2005 l\ ..o,.,™..c^ Global Standards and the Dynamics of Environmental Compliance in India's Leather Industry MEENU TEWARI* & POONAM PILLAI ABSTRACT Under what conditions can small suppliers and small-firm-dominated industries comply with stringent standards without compromising their trade competitiveness? This question is at the heart of a controversial debate about the emergence of environmental standards as a new variable in global trade and market access. There are few documented cases of success and the literature remains sceptical about the ability of small supplier firms to comply with stringent environmental regulations. This paper draws on the Indian leather industry's relatively effective compliance with two German bans on Azo dyes and PCPs to argue that the supposed trade-off between environmental compliance and export competitiveness is not inevitable. Critical to India's compliance with the PCP and Azo dye ban was not merely private governance mediated by lead firms and global buyers but also the institutionalization of compliance by the Indian state, which became deeply involved in diffusing the new standards. The paper examines how and why the state got involved in ways that generated—and sustained—a process of negotiated collective action and broad-based environmental compliance by a small-firm-dominated sector. 1. Introduction The rise of global standards has emerged as a controversial new theme in the recent literature on trade and the environment. This paper makes an empirical contribution to the discussion of global standards and export competitiveness by analysing how a labour- intensive developing-country industry (Indian leather goods) complied with a developed- country environmental standard that affected trade and market access (German regulations banning two commonly used leather chemicals, pentachlorophenol (PCPs) and Azo dyes, in the 1990s). *Meenu Tewari, University of North Carolina at Chapel Hill, CB 3140, Chapel Hill, NC 27599b, USA. Poonam Pillai, World Bank, Washington, DC, USA.. The authors would like to thank Judith Tendler, Anirudh Krishna, Gary Gereffi, Sanjaya Lall, Charles Sabel, Phil Berke, Nichola Lowe, Wendy Wolford, Felicia Mebane, Andrew Perrin, Bill Rohe, Ray Burby, Robert Keohane, Matthew Slaughter, Robert Connolly, members ofthe 2004 Duke Summer Institute on Globalization and Equity and two anonymous reviewers for valuable feedback on previous drafts of the paper. We gratefully acknowledge financial support from the India Programme, formerly housed at the Centre for International Development, Harvard University, and from the Department of Urban Studies and Planning at MIT. Jeffrey Goebel provided valuable research assistance. Tewari is grateful to the Institute of Economic Growth, Delhi University, for hosting her during the final round of fieldwork in the Spring of 2003. All errors of fact and interpretation are our responsibility. ISSN 1360-0818 print/lSSN 1469-9966 online/05/020245-24 © 2005 International Development Centre, Oxford DOI: 10.1080/13600810500137947