The anti-sweatshop movement, long a thorn in the side of such corporations as Gap and Nike, got a big boost last week when 26 major retail apparel companies settled a lawsuit and agreed to establish an ambitious system to monitor working conditions in U.S. manufacturing plants located overseas.

The settlement, agreed to by San Francisco’s Gap Inc. and Burlingame’s Gymboree Inc., established a $20 million fund to pay back wages to workers on the island of Saipan in the western Pacific, and to create a system to prevent labor abuses there.

But the groups that brought the lawsuit, including San Francisco’s Global Exchange, the Asian Law Caucus and Oakland’s Sweatshop Watch, say they have a long way to go.

“While we have some significant victories like the Saipan one, companies at the same time are moving in the opposite direction, continuing to gravitate toward countries with as few safeguards for workers’ rights as possible,” said Medea Benjamin, founding director of San Francisco-based Global Exchange, one of the lead groups in the Saipan lawsuit.

In fact, most industry watchers expect Saipan to be abandoned altogether by apparel firms in 2005, when new World Trade Organization rules force the United States to abolish its system of apparel import quotas. Retailers are expected to switch their manufacturing outsourcing from Saipan and other relatively high-cost locales to China, where wages are rock-bottom, labor abuses are ignored and the All-China Federation of Trade Unions (ACFTU) is a compliant tool of the government.

“Saipan is just the tip of the iceberg,” said Katie Quan, director of the Henning Center for International Labor Relations at UC Berkeley, which has worked extensively in China.

Quan said the challenge for activists and corporations alike is to develop relations with the Chinese regime, which sees anti-sweatshop concerns as unwelcome foreign meddling with its internal affairs.

“There has to be a process of constructive engagement, and relations have to be built with the unions in China,” she said.

A small, but important, first step occurred late last year, when U.S. activists and Reebok Inc. forced one of the company’s suppliers, Kong Tai Shoes in Longgang, Guangdong province, to allow workers to elect an independent union. The union is the only one in China not under the thumb of the All-China Federation of Trade Unions.

In fact, many companies like Reebok, Gap and Levi Strauss & Co. of San Francisco have made concerted efforts in recent years to implement anti- sweatshop codes of conduct for their supply chains. This process has been spearheaded by Business for Social Responsibility, a corporate group in San Francisco that conducts training programs around the world for executives and factory floor managers in ethical labor practices.

In the past few years, at least 250 U.S. companies, mostly in the apparel, footwear and toy industries, have created codes of conduct for their suppliers.

“Companies are starting to work more closely with their suppliers, developing management systems to make sure that factories take more ownership of the codes (of conduct) and that the changes are sustainable,” said Debbie O’Brien, director of the group’s business and human rights program.

She praised the Saipan settlement as “a very promising possibility” because it designated the International Labor Organization, a U.N. agency, to carry out the monitoring program. The ILO’s unique structure emphasizes cooperation between the private sector, unions and government, so it enjoys the trust of corporations, she said.

Another initiative is the Fair Labor Association, a consortium of major apparel and footwear firms and nonprofit groups whose worldwide monitoring system will become fully operational in January.

UC Berkeley, UCSF, UC Davis, UC Santa Cruz and Santa Clara University are among the 173 colleges nationwide that have signed on to the Fair Labor Association to help ensure that the caps, T-shirts and other merchandise bearing their logos be made without exploitation.

But reform will continue to be a slow, arduous process, activists agree. With the apparel and footwear industries creating an ever-expanding production chain, along with a vast, complex web of contractors and subcontractors all over the world, labor abuses have become more, not less, common.

“There’s no single magic bullet for any of this,” said Garrett Brown, coordinator of the Maquiladora Health and Safety Support Network, a coalition of occupational safety professionals that trains workers in Mexico, Indonesia and China and is based in Berkeley.

He said that action must be taken on many fronts—including emphasizing labor rights in international trade treaties, strengthening the ILO and domestic laws, and enforcing corporate codes of conduct.

“You’re pushing a glacier uphill, because all the force of economics and politics has been headed downhill on us for the past 20 years. So we have to push on all fronts, slowly, bit by bit, to make a difference.”