Position Paper - Trade and Social Rights

Tal Aviv and Ramallah - For a Middle East in peace, 23-24 May 2005

Introductory Remark

The Congress of the Socialist International in Sao Paulo adopted the document "Governance in a Global Society" as the basis for its work on global policy issues. The SI agreed, as proposed by its President, to specify and update its proposals on the issues of the reform of the United Nations, the reform of the International Financial Institutions and trade and social rights. High Level Working Groups and experts from SI member parties prepared these proposals. The SI is presenting them to the global public as its contributions to the debate taking place in the year 2005, especially in view of the United Nations Leaders Summit in September and the General Assembly. The SI will consider and evaluate the results of these events and further develop its positions and proposals for the global agenda.

 

A. Trade and labour standards: A dialogue of the deaf

The debate over linking trade and workers’ rights and labour standards has been for some years now a dialogue of the deaf, with advocates on either side giving minimal focus to any objectives for positive synergies between labour standards, development, trade and globalisation.

For some critical years now, each side views the other as if promoting positions, policies and arguments that, intentionally or not, will result in the further impoverishment of more poor people in more poor countries.

The opponents of labour standards fear, that these would undermine developing countries’ comparative advantage in low-wage goods and that the procedures for the enforcement of standards will be manipulated by the richer countries for protectionist purposes, resulting in more people in poor countries without jobs.

Advocates of labour standards argue that failure to include these in trade agreements increases inequality and leads to a race to the bottom for workers worldwide.

 

B. Our approach to the problem and the issues

We believe that both sides have many things right, therefore we should identify and accept the valid and constructive points of both and our intention should be to focus constructively on these.

It is true that globalisation and increased trade contribute significantly to growth and development and that the quality and decency of jobs created over time are in absolute terms better than those previously, in agriculture or the informal sector.

Equally, that the opening up of the markets in developing countries leads to increased income and social inequalities and to a disproportionate and irrational influence that multinational corporations have acquired in trade and labour agreements.

It is also true that multinationals, if left on their own, most of the time will focus on only one objective, their profitability, and will exploit to their sole economic benefit the available resources and opportunities within their operating environment, nature, economy and society. This often leads to a short term and opportunistic exploitation of whole societies and economies in countries or regions, to the destruction of the cohesion of the local communities and to the destabilisation of the local political institutions and civil mechanisms that are necessary to support and promote socio-political stability and the process of democratisation.

It is true that increased market access for developing-country exports will enable poor people to move to more productive and decent jobs.

It is true that the application of a minimum set of core labour standards can spread the benefits of globalization more broadly, discourage the worst abuses of workers, and increase public support for trade agreements.

It is true and it is a benefit that developing countries have a comparative advantage because of their low labour cost, but at the same time it is also true that business in developing countries should not be permitted to acquire any competitive advantage by abusing workers or by not adjusting to decent work practices and to core labour standards and agreements.

It is true that the socioeconomic conditions and attitudes in developing countries are also dynamically progressing with globalisation, the expansion of ideas and democracy, and that most socials standards that may have been ideal yesterday, will not be socially accepted tomorrow.

It is true that developing countries should be respected and left to select the ideal balance above the core International Labour Organisation (ILO) labour standards, in accordance to their prevailing socio-politico-economic conditions.

Our position is that we, the socialists of the international movement for freedom, social justice and solidarity, should firmly insist and examine further and thoroughly any potential for positive synergies between globalisation, development, trade and core labour standards.

Our position argues that the core labour standards (as defined by the ILO) can and should be applied globally and this can happen without affecting in any negative way any comparative advantage of any country, and that doing so would be good for trade and development.

Our position should be that the connection between globalisation, development, trade and labour standards, should be included and should become one of the issues for the discussion of the Doha Development Round and the next Ministerial Meeting within 2005.

 

C. Labour standards, globalisation, trade and development

Ensuring that labour standards, globalization and development are mutually reinforcing depends on four key distinctions:

- core versus cash standards;

- universal versus uniform standards;

- competitive versus comparative advantage;

- lack of capacity versus lack of political will.

Some labour standards, as for example, wages, health and safety regulations, days off, or pensions, must vary with the level of development and local living standards in each country. These "cash standards", if set too high, will increase the labour costs beyond what is justified by increases in productivity levels and can decrease employment and exports.

In contrast, core labour standards should be regarded as humanity’s minimum framework standards/rules, analogue to property protection rights and freedom of transactions in product markets, rules widely viewed as necessary for market economies to operate efficiently.

Only seven years ago in 1998, more than 170 ILO members identified four standards as "fundamental principles and rights at work" that all countries should promote, regardless of their level of development.

The international community has agreed that these four core labour standards:

i. freedom of association and the right to collective bargaining;

ii. the elimination of forced and compulsory labour;

iii. the abolition of child labour;

iv. non-discrimination in employment;

represent the minimum acceptable labour standards, for any one with a minimum understanding of and respect for human rights and for the principles of democracy and that they definitely strengthen the operation of the markets, since they protect workers’ rights to choose whether and under what conditions to work.

These core ILO labour standards stem from the basic democratic principles and minimum human rights that are and should be globally applied and recognised as the fundamental rights to which all workers in every country are entitled.

The global application of these standards does not mean forcing developing countries to adopt rich country standards, for they do not imply uniformity in the details of the protection or in the institutions that implement them. Even the same legally binding ILO conventions that define the core standards leave substantial room for national differences. The application of these principles has less to do with trade and development and more with democracy and social progress, with freedom and political will.

As a World Bank survey of more than 1,000 studies on the economic effects of unions concluded there is "little systematic difference in economic performance between countries that enforce [union rights / labour standards] and countries that do not." In addition, the study found that what unions achieve, depends on local institutional and legal arrangements and on the competitive environment in which they operate. In general, the study found that estimates of the economy-wide welfare losses from union wage demands are not critically important and that high union density reduces earnings inequality. The economic effects of freedom of association and bargaining rights are also contingent on the sector and the environment in which they are exercised. The labour-cost effects depend on the net result of potential increases in wages and productivity. In general, the evidence does not suggest that globalisation is leading generally to a race to the bottom, or that countries with lower labour standards attract more foreign direct investment or grow faster.

Of the four ILO core labour standards, three, that is, ending forced labour, child labour (as the ILO defines it) and discrimination, are broadly shared by the majority of the international community and have been given extended priority by the Millennium Development Goals. In this international agenda, the UN targets of achieving universal primary school enrolment cannot be achieved without addressing the issues of child labour. The ILO estimates that the total benefits of reducing child labour and of bringing children from work to school, if at the same time it is backed up by improving educational quality and providing some assistance for the lost family income, will be a lot higher than the costs, even by a factor of 7. Actually, quantifying the costs and tangible benefits is more difficult, but the World Bank has documented extensive benefits, for example from empowering women, including better health and well-being for women, children, and men; higher overall productivity and economic growth; and better governance. Another documented example of these effects has been demonstrated in a study undertaken by the Consumer Utility and Trust Company (CUTS), an NGO based in India, that strongly supported the case that it will cost anywhere between US$12 to 18 billion per annum in India alone to send all existing child workers to schools. It is unlikely that the developed countries would be willing to bear even a tiny fraction of this cost.

In most if not all developing countries, child labour and discrimination existed long before international trade or globalisation made any impact at all. In addition, most developing countries already have within their legal systems some form of labour legislation, designed with an objective to fulfil the perceived local and social needs of labour, rather than to fulfil the needs of the industry to become more competitive internationally, against foreign corporations either at home or abroad. In this respect, child labour or even some forms of discrimination form a very old integral part of the supply side of the economy that has shaped the social and religious terms, the status and the role of families and family members, as well as the role of religious institutions in the country’s educational model.

 

D. Capacity and political will: Too little of both?

Poverty, lack of resources and weak governmental capacity are not the only reasons why developing countries do not effectively enforce labour standards. For some, lack of political will to do so is the main reason, a fact that suggests the need for a multifaceted approach to promote compliance. Meaningful progress will be most likely in countries that can effectively demonstrate their will to improve the implementation of labour standards and if so, then these countries should be given international financial and technical assistance to do so.

ILO is the leading international organisation on these issues and, in addition to providing technical assistance to labour ministries and other agencies, unions, and employer groups, it has two other tools for improving working conditions. Firstly, it supervises compliance with global labour conventions and publicises violations of standards to shame countries into improving matters. Secondly, the ILO has an enforcement mechanism - albeit one that has not been extensively used until recently. More vigorous enforcement action by the ILO requires not sharper teeth, but political will on the part of its members. In addition to any official assistance, private-sector initiatives - including independent monitoring and verification of codes of conduct - can be an important complement to fill gaps while local capacity is being strengthened.

 

E. Recommendations

1. Utilise all our influence and political clout within the EU, the IMF, the WTO and the OECD and other fora, to support multilateral trade agreements.

2. Utilise all our influence and political clout to include the trade labour relation agenda in the discussion of the Doha Development Round and of the next Ministerial Meeting within 2005.

3. Utilise all our influence and political clout so that in any relative agreements, every promise given by the rich and all pre-agreement political rhetoric will be matched with a roadmap for minimum core labour standards.

4. Utilise all our influence and political clout in order to press governments in developing countries to enforce the existing laws, while continuing legal reforms. The most important problems with labour standards arise from inadequate enforcement of existing laws. In case there are discrepancies between these laws and international norms, then it should be made clear that governments could gain in credibility and in trade and development financial incentives, by passing labour reforms in key areas.

5. Invest in people and institutions. Institutional reform and strengthening of the labour inspectorate in developing countries are also important, even though this will take time. Important interim steps include creating mechanisms that allow workers to pursue complaints outside the normal government or corporate inspection process, such as alternative dispute resolution bodies and ombudsmen. The Socialist International could play an important role in this area.

6. Expand and support private-sector initiatives. In addition to any government related efforts, the private sector (with an emphasis on multinationals and international corporate governance requirements) should contribute to improving labour standards compliance, mainly through expanded monitoring of corporate codes of conduct in developing countries. The areas that should be strengthened are: resources for training and certifying independent auditors, mutual recognition among competing monitoring initiatives that meet minimum standards, and increased transparency with respect to monitoring results. The Socialist International could play an important role in this area.

7. Support the various non-governmental institutions (Rotation Agencies, consumer movements) in their communication-informative campaigns to denounce the working practices which are not according to the ILO standards, as described above.

8. Support the Consultative Group on WTO reform established by the WTO Director General, in the direction of a relatively modest, but feasible, package of reforms, focusing first and foremost on the preparation and management of Ministerial conferences, and other means to improve the efficiency and inclusiveness of WTO negotiations. Our objective should be to improve the WTO, so that it will remain the principal agency and forum for trade opening and the strengthening of trade rules, as we believe that the multilateral approach to cooperation on trade matters, based on the principles of transparency and non-discrimination, remains the most effective and legitimate means to manage the globalisation process and trade relations between countries.

9. Ensure in the middle term, the implementation of a '' new hierarchy of the international standards'' that will assure a fair equilibrium among the commercial, social, health and environmental standards in the context of the reform of the international UN institutions, the Bretton Woods and the WTO.

 

APPENDICES

A1. ILO Core Labour Standards

A2. The Millennium Development Goals

A3. The GATT trade rounds

A4. Ministerial Conferences of the World Trade Organisation & Doha Round

A1. ILO core labour standards

The term '"core" labour standards' has come to mean different things to different individuals and entities. One particular definition that has been at the centre of the discussion is that used by the ILO. This institution defines the 'core' standards as consisting of the following norms (described in greater detail in the corresponding ILO Conventions):

i. Convention 87 stipulates that workers have the right to establish and join the organisations of their own choosing. These organisations, in turn, have the right to draw their own constitutions and rules, to elect their representatives in full freedom, and to organise their administration and activities. Convention 98 is viewed as essential to making Convention 87 meaningful and is, therefore, frequently grouped with it. Convention 98 provides for protection against anti-union discrimination, for protection of workers' and employers' organisations against acts of interference by each other and for measures to promote collective bargaining.

ii. C onvention 29 requires the suppression of forced or compulsory labour in all its forms. It permits certain exceptions such as military service, convict labour properly supervised, and emergencies such as wars, fires and earthquakes. Convention 105 prohibits the use of any form of forced or compulsory labour as a means of political coercion or education, punishment for the expression of political or ideological views, workforce mobilisation, labour discipline and punishment for participation in strikes or discrimination.

iii. C onvention 100 provides for equal pay for work of equal value without discrimination based on sex. Convention 111 calls on the signatory governments to declare and pursue a national policy designed to promote equality of opportunity and treatment in respect of employment and occupation. It calls for the elimination of any form of job discrimination based on race, colour, sex, religion, political opinion, national extraction or social origin.

iv. Convention 138 establishes a minimum age for work. It states that children should not enter the labour market before completion of compulsory education or before having reached the age of 15. In case of work that is unhealthy or dangerous, the Convention sets a minimum age of 18. These provisions are waived in relation to work undertaken in training institutions. Likewise, light work by children aged from 13 to 15 years may be allowed so long as it is not prejudicial to their educational activities. Developing countries may lower the minimum age of employment to 14 years and of light work to 12 years. Convention 182, which came into existence as recently as 1999, abolishes child slavery, child prostitution and pornography, use of children for illicit activities (e.g., drug trafficking), and any work which is likely to harm the health, safety or morals of children. Included in the last category is the work that exposes children to abuse, work with dangerous machines and equipment, work involving heavy loads, work in unhealthy environments, work for long hours or during the night and work involving unreasonable confinement at the employer’s premises. In the context of the rights of children, it is important to mention the United Nations Convention on the Welfare of the Child, 1989. This Convention is the most comprehensive instrument pertaining to the protection of children. It is distinguished from ILO Convention 138 in that it focuses on 'child welfare' rather than on 'child labour'. The UN Convention states that children have the right to survival, protection, care, development and participation. In Article 32, it stipulates that children shall be protected from economic exploitation and from work likely to be hazardous or harmful to their health, or to interfere with their education. Interestingly, the UN Convention does not stipulate a uniform minimum age for work. While many developing countries have ratified the Convention, the United States has not done so.

A2. The Millennium Development Goals

The Millennium Development Goals (MDGs) are grounded in the agreements and resolutions of world conferences organised by the United Nations. In September 2000, they were endorsed by all 189 United Nations states. The means to achieve them were addressed at the Monterrey conference. The MDGs symbolise a focus on results. They enshrine poverty reduction as the overarching mission of development. Hunger eradication, empowerment of women, improvement of maternal and child health, prevention and cure of contagious diseases, and promotion of environmental sustainability represent complementary objectives that electorates in rich and poor countries alike can readily grasp (box 1).

Unfortunately, they appear to be out of reach for many poor countries. Nevertheless, they should help make the efforts of the development community more coherent and effective and help enlist public opinion in the global fight against poverty.

Box 1

Goals

Targets

Goal 1. Eradicate extreme poverty and hunger

Target 1. Halve, between 1990 and 2015, the proportion of people whose income is less than US$1 a day.

 

Target 2. Halve, between 1990 and 2015, the proportion of people who suffer from hunger.

Goal 2. Achieve universal primary education

Target 3. Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling.

Goal 3. Promote gender equality and empower women

Target 4. Eliminate gender disparity in primary and secondary education, preferably by 2005, and to all levels of education no later than 2015.

Goal 4. Reduce child mortality

Target 5. Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate.

Goal 5. Improve maternal health

Target 6. Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio.

Goal 6. Combat HIV/AIDS, malaria, and other diseases

Target 7. Have halted by 2015 and begun to reverse the spread of HIV/AIDS.

 

Target 8. Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases.

Goal 7. Ensure environmental sustainability

Target 9. Integrate the principles of sustainable development into country policies and programmes and reverse the losses of environmental resources.

 

Target 10. Halve by 2015 the proportion of people without sustainable access to safe drinking water.

 

Target 11. By 2020 to have achieved a significant improvement in the lives of at least 100 million slum dwellers.

Goal 8. Develop a Global Partnership for Development

Target 12. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system.

 

Target 13. Address the special needs of the least-developed countries.

 

Target 14. Address the special needs of landlocked countries and small island developing states.

 

Target 15. Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.

 

Target 16. In cooperation with developing countries, develop and implement strategies for decent and productive work for youth.

 

Target 17. In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.

 

Target 18. In cooperation with the private sector, make available the benefits of new technologies, especially information and communications.

Source: Millennium Development Goals 2002, World Bank.

A3. The GATT trade rounds

Year

Place/name

Subjects covered

Number of
countries

 

1947
1949
1951
1956
1960-61

Geneva
Annecy
Torquay
Geneva
Geneva
(Dillon Round)

Tariffs
Tariffs
Tariffs
Tariffs
Tariffs

12
13
38
26
26

1964-67

Geneva
(Kennedy Round)

Tariffs and anti-dumping measures

62

1973-79

Geneva
(Tokyo Round)

Tariffs, non-tariff measures, "framework" agreements

102

1986-94

Geneva
(Uruguay Round)

Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlements, textiles, agriculture, CREATION OF WTO

123

A4. Ministerial Conferences of The World Trade Organisation & Doha Round

1. Singapore (9-13 December 1996) Four Singapore issues, (i) trade and foreign investment, (ii) trade and competition, (iii) transparency in government procurement and (iv) trade facilitation.

2. Geneva (18-20 May, 1998) Singapore issues

3. Seattle (30 November to 3 December, 1999) Singapore issues & trade and core labour standards - debate on the role of ILO in trade agreements

DOHA ROUND (144 participant countries)

4. Doha (9-13 November 2001) Hard bargaining was required for participants to reach a consensus on the scope of negotiations. Objectives in key areas are highlighted below, but they do not prejudge the outcome.

• Agriculture: substantially improve market access; reduce all forms of export subsidies, with a view to phasing them out; and substantially reduce trade-distorting domestic support.

• Services: further liberalise all categories of services and modes of supply.

• Industrial goods: further reduce tariffs, including tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, particularly on products of export interest to developing countries.

• Anti-dumping measures and subsidies: clarify and improve disciplines, while preserving the basic concepts, principles, and effectiveness of these agreements and their instruments and objectives.

• Regional trade agreements: clarify and improve disciplines and procedures under existing WTO rules applying to regional trading agreements.

• TRIPS: establish a multilateral system of notification and registration of geographical indications for wines and spirits. Protection of geographical indications of other products addressed under review of implementation of TRIPS agreement.

• Dispute settlement mechanism: improve the implementation of rulings and participation of the developing countries.

• The environment: negotiations limited to the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements and to the reduction or elimination of tariff and non-tariff barriers to environmental goods and services.

• Possible negotiations on Singapore issues: (investment, competition policy, transparency in government procurement, and trade facilitation) subject to a decision on the negotiating modalities at the Fifth Ministerial Conference, in 2003.

 

5. Cancún (10-14 September 2003). The causae causantes of setback in Cancún were disagreements among the 146 participating members of the WTO in two areas of international trade: agriculture, which is an age old question and the so-called Singapore issues. Preceding the Third Ministerial Conference and débâcle in Seattle, disagreements among the WTO members were all around, that is, they took north-south, east-west, north-north and south-south axes (Das, 2001). This time the disagreements among the members took a clear north-south axis. Possibility of a north-south divide was apprehended well before the Fifth Ministerial started in Cancún. The divergence in positions of developing and industrial economies existed on several significant issues. It included:

(i) negotiating "modalities" (discussed in the following Section),

(ii) launching of negotiations on the Singapore issue, which was decided in 1996, and their scope

(iii) addressing the old issue of highly illiberal trade in agriculture;

(iv) modalities for strengthening the present WTO provisions on special and differential treatment (SDT) for developing economies, and;

(v) addressing the implementation problem of developing economies which were not able to put in place the recommendations of the Uruguay Round.

Progress in negotiations during the Doha Round was spasmodic. It missed important self-imposed deadlines, in some cases, like agriculture, repeatedly. All the difficult political decisions were being continuously put off, which overburdened the Cancún conference. However, not all the developments in Cancún - and in negotiations that were undertaken before the beginning of the Fifth Ministerial Conference - were negative. Movements were made in reaching partially agreed positions and a formula-based approach in trade support to agricultural sector and market access in both agricultural and non-agricultural sectors, and addressing some of the most trade distorting policies in the areas of export subsidies and tariff peaks. In addition, two areas in which a bridge could be built - albeit uneasily - between positions of developing and industrial economies were Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health related issues. Thus viewed, not the entire negations scenario was bleak and bereft of progress. Officially, the negotiations were not abandoned after failure to reach an agreement in Cancún on 14 September, but the members decided to continue them in Geneva with a formal meeting to be scheduled within three months of the Cancún failure.

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