LABOUR: SHARP DIVISIONS ON SOCIAL CLAUSE-TRADE LINKS

6:50 AM Jun 20, 1994

LABOUR: SHARP DIVISIONS ON SOCIAL CLAUSE-TRADE LINKS
Geneva 17 Jun (Chakravarthi Raghavan) -- Not unexpectedly, the general debate at the on-going International Labour Conference has brought out some sharply differing views among governments, employers and workers over proposals for a 'social clause' in international trade agreements and for ILO and the World Trade Organization acting in tandem to police and enforce this.

The issue, posed in the report of Michael Hansenne, Director-General of the International Labour Office, has figured in most of the speeches in the plenary general debate.

Representatives of international workers organizations and national workers groups of the North, have supported such a link. Workers delegates from the South did not touch on the issue or in a few cases like that of the Philippines workers delegate, supported such a link in the WTO and other international trade agreements.

Few governments from the South came out in support of a link -- an exception perhaps being the Labour Minister of Nicaragua -- though several did not touch on it, even when they spoke about the ILO and its standards setting role.

Many South governments while supporting need to ensure observance of international labour standards, cautioned against trade-labour standards linkages because of the potential for trade protectionism.

Apart from the general debate, there is a separate resolution before the conference, tabled by the ASEAN governments, calling on the ILO to resist any trade-social standards link, and for an ILO review of existing standards to update them and make them more flexible.

But the resolution is unlikely to be discussed and voted upon at the Conference. In secret balloting it has been pushed to the fourth place in the order in which resolutions will be taken up and discussed and thus cannot get time for discussion.

The Hansenne report seemed to rule out any social clause-trade links that would deny the developing countries comparative advantage by setting uniform wage standards -- though some of his speeches and presentations elsewhere have been atleast ambivalent. The ILO head is however for an international convention by which developing countries would pledge to accept and improve labour standards (with ILO supervision of these) in return for developed countries agreeing to give up unilateral trade actions on this ground.

But since such sanctions would be illegal in the future WTO, it has not been clear what the compromise would mean and what the developing countries would get.

The speeches in the general debate, with their varying nuances, suggest that those asking for linking international labour standards and WTO or other trade agreements are themselves not united in defining what areas of ILO standards would be covered.

Some, including some of the central labour organizations, attempted to 'allay' fears of the South governments by referring only to the conventions on freedom of association, freedom of collective bargaining, non-discrimination and abolition of child labour, and to link their non-observance to trade sanctions.

Others made references, though in a vaguer way, to other social security as also the right for 'minimum wage' which they have hastened to explain does not mean same wages everywhere.

In firing the opening salvo in this debate, as President of the Conference, the US worker delegate Charles Grey (AFL-CIO), called for linking trade and credit relationships by social clauses and said while minimum wage in Indonesia could not be similar to that in Sweden or Kuwait, nevertheless the principle of minimum wage as a workers' right must be recognized. The ILO, he said, also had to consider how minimum wages could be respected in practice -- how to develop appropriate tools to ensure their application in the context of globalization, growing economic and social diversity and in many cases social conflict and poverty.

The US, France, EC Commission and several others viewed the summing up by the Chairman of the Trade Negotiations Committee at Marrakesh, as a decision in favour of the WTO to deal with the international labour standards issue.

US Labour Secretary Robert Reich suggested varying yardsticks to judge whether low wages and poor working conditions in a country were due to poor economic conditions or due to political choices. He advocated in such cases 'authorized and multilateral' menu of responses: technical assistance to secure improvement, "sunshine" provisions to highlight abuses, and ineligibility for international aid and loan programmes and targeted trade measures.

French Labour Minister Michel Giraud wanted the basic core standards to become "the reference point" for the future work of the WTO ... and establish a "permanent, firm and unswerving pressure brought to bear...."

These statements, by the two leading industrial countries pushing for trade-related labour standards in the WTO, suggested that they were trying to establish the validity of the trade-labour standards linkages, taking the 'core' standards to begin with, but talking vaguely about others, thus leaving themselves leeway to bring in others later.

Neil Kearney of the International Textile, Garment and Leather Workers' Federation characterized as "lies" suggestions from governments that trade unions want to impose international minimum wage or use social clause as a protectionist measure.

Linking trade and workers' rights, he said, had nothing to do with establishing standard minimum wage but everything to do with application of ILO's core conventions ensuring that workers "whether in Geneva or Guatemala City, Gabarone or Guangzhou, should be able at the end of a working period to feed and clothe themselves and their families and provide a roof over their heads, a basic education for their children and medical care when ill." But since the cost of these varied from country to country, they should be determined by time-honoured methods of collective bargaining, which required workers being able to organize in trade unions and bargain collectively with employers.

The case against such trade-labour standards linkages, but with varying emphasis, was forcefully put forward by India, the ASEAN, and several other developing country government delegates. All of them opposed the linkage with trade and possibility of trade sanctions, but some supported the application of Conventions and ILO supervision, and persuasion and peer pressure to secure compliance. Others, particularly the ASEAN, viewed the economic problems of the North as due to high standards and labour market rigidities and argued for more flexible labour standards.

Indian Labour Minister P.A. Sangma felt that ILO's tripartite supervisory machinery should be used to monitor application of labour standards and this should be the ILO's weapon for labour protection. Any other formalized multilateral mechanisms or institutions forged for monitoring and enforcing labour protection, involving such outside players as the WTO, could unintentionally become an instrument of coercion.

He saw no merit whatsoever in attempts to force trade-labour standards linkages and warned that trade policy could not be the arbiter of all concerns: it should be confined to concerns it could address efficiently on basis of generally shared perceptions and considerations. "Trade-triggered compulsory equalization of costs in the name of labour standards could only result in the counter-productive and sad denial of the very opportunities for development expected to be opened up by freer world trade".

Singapore Labour Minister Goh Chee Wee referred to a recent OECD report calling for easing of labour laws to help promote economic growth and job creation and asked why, if rigid labour laws and policies were indeed causes of serious economic woes and unemployment crises in the industrialized countries, social clauses based on such laws and policies should be imposed on developing countries? Goh feared that beginning with basic workers rights, it will soon lead to imposition of other standards and practices based on values and norms set by the western industrialized countries.

Imposition of trade restrictions in the guise of non-compliance with labour standards would adversely affect the economies of developing countries and take away jobs and inflict hardships on people rather than raising their living standards. The linking of labour standards with trade would negate GATT's efforts to promote free trade for the benefit of all, would be counter productive and be a regressive step against the larger interests of trade liberalization, economic development and job creation.

The other ASEAN Ministers adopted a similar argument.

Malaysian Labour Minister Dato Lim said that when ILO standards could not guarantee jobs for millions of unemployed or solve the structural adjustment problems would new conditionality of linking social clause with market access and free trade help? Developed countries had created problems for themselves by inflexible labour markets and now wanted to export these standards to developing countries to erode their competition, he charged.

Indonesia coupled its criticism of attempts to condition market access with labour standards, but was took a conciliatory stance over complaints of its denial of trade union rights and collective bargaining -- inviting an ILO direct contact mission, within the framework of Convention 98 (Right to Organize and Collective Bargaining Convention) to advise Indonesia on how best this is to be implemented in the case of workers with low level of education. The procedure of direct contact missions, in place since 1968, enables a representative of the D.G. to examine with the government concerned how best to overcome difficulties in applying a ratified convention or a constitutional obligation.

Colombian government delegate, Melo Acosta, argued that while it was appropriate that conditions of work were improved and social justice was promoted, any social clause should not permit introduction of obstacles to trade and converted into another trade barrier against developing countries.

Guyana's government delegate Henry Jeffrey said measures to equalize application of labour standards should go alongside measures to equalize Third World access to investment capital and tackling unemployment and poverty in the Third World.

But Nicaraguan labour Minister, Rosales Arguello, argued in favour of the ILO fighting within the UN and the WTO to ensure that the ILO administered and implemented a social clause, in the event of its being adopted. But it would depend on labour ministries, employers and workers fighting in their own countries so that foreign and finance ministers at the World Social Summit give full support to the ILO and give it a mandate for implementing the social clause included in the trade agreement.

Tanzania's Labour Minister, A.H.Diria noted subtle pressures from some industrial countries to compel developing countries to raise existing labour standards particularly in area of wages and said while the fight for better wages and working conditions was a legitimate one, the ILO should work in the usual tripartite practice with governments, workers and public organizations to improve working conditions including wages,, social security etc.

Peter Core, Australian government delegate noted that for pragmatic reasons economic and political sanctions had never been adopted by the ILO which recognized there were no simple answers to these complex problems. But one thing was clear: free trade promoted economic development and provided the means to create jobs and improve working conditions. The substantial comparative advantage derived by developing countries from their lower wage rates should not be blunted by attempts to introduce minimum wages into the debate on workers rights.

Among the employers, Mr. Kapartis of the International Organization of Employers saw the ILO head's views on social clause "plausible", but said many questions surrounding the issue needed replies and even investigation. "Unless these questions are properly answered and consensus is achieved, officials of the ILO should be asked to refrain from expressing from official platforms pieces of their own personal intellect", he said in remarks clearly aimed at Hansenne.

Mr Pavel Prior, representing Czech employers said cost of labour was one of the factors contributing to the competitive strength of an enterprise and the very high wage levels in many West European countries should not be taken as a yardstick to measure standards in other countries. This is not only a problem of countries of Central and Eastern Europe who are now being blamed for "social dumping" but also a problem primarily concerning all Third World countries. The DG's proposal for a "soft social clause" and introduction of a system involving ILO's supervisory machinery could weaken rather strengthen international trade and would lead to protectionist tendencies.

Steve Marshall, Employers delegate from New Zealand said different countries were at different stages of development and this called for very different attitudes and approaches from institutions like ILO and recognition of the maturity of the ILO's constituents and their cultural diversity. There was no place for colonial imposition of one set of standards. While the world and its peoples would accept desirability of universal standards, they would not accept right of international institutions to stipulate only one way of achieving those standards.

Despite development of a competitive world economy, stimulated by the recent GATT outcome, it was ironic, he said, that consideration was now being given for imposed international standards in the areas of labour, environment and conservation in the context of international trade. Old barriers to free trade, such as imposition of tariffs, should not be replaced with new ones as a means of providing continued protection from competitive pressures for the developed nations. It would be very wrong, both from a moral standpoint and economically, to even consider application of ILO principles or standards in the context of trade until they themselves have been substantially reviewed and reorientated to the new global environment. Even then no direct link should be made between labour standards and trade.

Park, Workers delegate from S.Korea said ILO discussions on inclusion of a social clause in the WTO should focus on ways of promoting workers' interests and protecting their rights by preventing social dumping through the strengthening of international effectiveness of standard-setting in the globalization of the economy. But one must exercise due caution in the face of trade hegemony and maximisation of national self-interest.

South Korean vice-labour minister Bong-Kyun Kang said while sympathetic to the legitimate complaint of developing countries about their difficulty in accepting high labour standards prevalent in developed countries, Korea also believed developing countries should move actively to abolish labour practices infringing on basic human rights and atleast institutionally guarantee fundamental labour rights. But in looking at linkage of labour practices with international trade, the ILO had to bear in mind that social justice pursued by the ILO was not "for the workers of a few countries but for workers of all countries".

Finland's Labour Minister Kanerva felt that while the ILO Chief's proposal, in extreme cases, for use of trade sanctions should be carefully studied, cross-sectoral retaliation would be a novelty in the ILO and might lead to "unwanted consequences in terms of increased protectionism if modalities are not carefully drafted".

The Mexican Labour Minister Mrs. Gonzalez Martinez said it was not the role of ILO to advocate trade restrictions or compulsory equalization of costs. Mexico was concerned about measures in industrial nations which restrict trade through arguments of environmental protection or labour rights. standards.

Japan's Parliamentary Vice-Minister Kawakami said ILO's effort to expedite progress should be made not by force but by cooperation and should avoid restricting international trade or equalizing social costs. These were sensitive matters since internationally recognized concepts of labour standards were not necessarily clear and such a situation might lead to talk about trade protectionism. Careful note should be taken of the issues so as to maintain the free trade system and discuss matters from an objective point of view.