SOUTH COUNTRIES OPPOSE SOCIAL CLAUSE AT WTO

11:26 AM Jun 21, 1996

SOUTH COUNTRIES OPPOSE SOCIAL CLAUSE AT WTO
Geneva 20 Jun (Chakravarthi Raghavan) -- Third World countries, at an informal Heads of Delegations (HOD) meeting Thursday opposed attempts of the United States and Norway to bring the issue of a 'social clause' on the agenda of the World Trade Organization (WTO) at the first Ministerial meeting of the WTO at Singapore this December.

The informal HOD meeting chaired by the WTO Director-General, Mr. Renato Ruggiero is going through the various proposals of countries on the new issues that should figure on the future trade agenda.

The US proposal in a non-paper, for a Ministerial Declaration at Singapore, leading later to a working party of the WTO, as well as a separate Norwegian non-paper were reportedly opposed among others by the ASEAN countries, Pakistan, Argentina, Brazil and India.

The views of Uruguay and Tunisia, though not lending support to the proposal, were however reportedly interpreted by the US and Norway as more favourable, with both delegations being complimented for showing 'understanding'.

The European Communities (among whose member-states there is division on this issue) is reported to have told the meeting that the EU has not taken a decision, but saw its importance and need for care, while Japan was reportedly ready to support a US call for a Ministerial Declaration at Singapore, but not a working party.

Ruggiero at the end reportedly said the issue should be discussed further at a future HOD meeting. He has scheduled a series of such meetings in July.

The US, EU and other industrial nations are trying to canvass support for the social clause on the basis that some action at the WTO, to demonstrate its concerns over labour issues was needed, to satisfy their domestic political constituencies and to meet demands of organized labour in order to stave off protectionist demands.

Some Third World delegations said that though the idea of a Ministerial Declaration is being presented as something 'innocuous', without any implications other than a political statement, they saw no need for it.

If it has no trade implications, in terms of the trade rules and the system, but a political and exhortatory statement of governments, there is no need for it at the WTO and it should be dealt with at the ILO, the relevant international organization, one Third World diplomat said. Trade Ministers, or their representatives here, or the WTO and its officials should shed the idea that they are a kind of overall authority to supervise and discipline governments.

Another third world diplomat noted that given the nature of the power relations in the world, and the way the WTO system and the secretariat are sought to be used to further the interests of the dominant parties and their domestic agendas, even an innocent sounding Declaration of good intentions and appeals would be used against the South.

The official noted in this connection the original efforts of the GATT secretariat in the Uruguay Round, under the plea of promoting global coherence in the areas of money, finance and trade, to get empowerment for the heads of GATT/IMF/World Bank to cooperate and oversee the economic policies of developing countries, with the GATT providing technical advice to the IMF and World Bank for their structural adjustment policies and conditionalities in the trade area.

This met with much resistance from the developing world and was shot down, and finally resulted in the Marrakesh Ministerial declaration about cooperation among the WTO, IMF and World Bank on coherence.

But with the IMF and the World Bank having now no power or influence over the industrial world, but only the developing countries and economies in transition, the Marrakesh call for cooperation for coherence was now being turned into a cooperation agreement among the three which would look into the developing country domestic policies to promote coherence -- rather than the original intention of global coherence, the official noted.

Another trade diplomat noted that at the moment, the US officials are presenting the proposals for a Declaration as needed to satisfy Congress and their domestic constituencies (in an election year).

But, he said, one or two years later, the US would come back with the argument that its Congress is wanting to know about the implementation of the Declaration, and WTO members should do something to avoid the danger of administration being forced to take unilateral actions.

The US 'non-paper' of 15 May has suggested that an 'agreement' on the social clause issue at Singapore, with a multilateral policy statement that would not by itself create any new or enforceable WTO rights or obligations, and could be on the model of the Marrakesh Declaration on Coherence in Global Economic Policy-making.

In the US an agreement at Singapore should recall the objectives of the multilateral trading system and desirability or promoting internationally-recognized labour standards and note that promotion of 'core' labour standards would strengthen the long-term economic performance of all countries and strengthen and develop support for the trading system.

At the same time, in the US proposal, the WTO would reiterate support for an open, non-discriminatory trading system, pledge to seek further trade liberalization and avoid protectionist actions that call into question the legitimate comparative advantage of WTO members.

The Singapore Declaration would be strictly related to the 'core' labour standards -- freedom of association, right to organize and bargain collectively, prohibition on forced labour, elimination of exploitative forms of child labour and non-discrimination in employment or occupation.

Limiting the labour standards, in the US view, should ease concerns of WTO members that addressing this issue could lead to an economic discussion of wage rate differentials.

The agreement at Singapore, the US has said, should set in motion a follow-on examination in the WTO, in a working party, to identify linkages between objectives and provisions of the WTO and core labour standards, related work in other organizations primarily the ILO, and ways in which the WTO might cooperate further in this area with other institutions.

The results of the working party, the US has said, should be taken up at a subsequent Ministerial meeting with a view to considering how the WTO could contribute to furthering the observance of core labour standards and define modalities for such action.

The Norwegian non-paper speaks of globalization of the economy and a more open and dynamic international trading system having contributed to a renewed focus on labour standards in the context of trade -- which Norway says is both a means to improve standards through trade-led economic growth and an area of international interaction based on a common obligation to respect and promote basic human rights, of which labour rights are an integral part.

Norway, according to its approach paper, foresees a WTO discussion to clarify issues and identify possible linkages to be addressed within the WTO's area of competence. But Norway also recognizes importance of avoiding introduction of unilateral trade measures and suggests that a discussion in WTO could embrace efforts to improve the labour standards as an integral part of a strategy for economic growth and increased trade and contribute to demystifying beliefs that low labour standards bring trade benefits.

There should be a 'non-confrontational dialogue', involving all parties and take into account all effective means to assist countries to improve labour standards gradually. This would have the best chance of success in raising standards globally. The WTO should examine how the multilateral trading system could contribute to achieving these goals.

In other HOD consultations this week, the US brought up its proposal to deal with bribery and corruption, through an interim arrangement for notification and transparency on all government procurement in WTO members (now governed only by a plurilateral agreement applicable to its signatories) and working towards multilateralising the present plurilateral government procurement agreement.

Though, it got little or no support, and several developing countries apparently spoke explaining that government procurement in their countries had varying national policies and practices and their inability to agree to the US proposal, the WTO head reportedly saw wide support for the US proposal and for future HOD meetings to pursue it.

This summing-up reportedly resulted in some laughter among participants.

Meanwhile, Ruggiero's idea of a WTO summit meeting in 1997, to observe the 50th anniversary of the (aborted) Havana Charter and the GATT 1947, has been mooted in a proposal by one of WTO's youngest member - Ecuador.

Ruggiero has privately canvassed holding such a meeting, complaining that regional trade gatherings meet at summit levels and attract wide attention and commitment of leaders while the WTO has only ministerial meetings once in two years.

But there has been very little support for his idea of a WTO summit level meeting. Some wonder why a meeting for the 50th anniversary of the Havana Charter and the GATT, should be held in Washington, when it was Washington that had sunk the Havana Charter.