INTERNATIONAL LABOUR STANDARDS AND TRADE

AN ANTI-PROTECTIONIST MECHANISM FOR PROMOTING BASIC WORKERS’ RIGHTS IN THE GLOBAL MARKET

ICFTU Discussion Paper for the First Ministerial meeting of the World Trade Organisation, Singapore 9-13 December 1996

International Confederation of Free Trade Unions

The Relationship between Workers’ Rights and Trade

1. The continuing expansion of the global market for goods and services is causing serious concern that intensified competition is undermining basic workers’ rights. These fundamental human rights at work are defined in seven highly ratified, "core" Conventions of the International Labour Organisation and are aimed at preventing repression, discrimination and the gross exploitation of working women and men. They are in essence enabling rights which establish workers’ freedom to organise and bargain collectively, freedom from forced labour, freedom from discrimination and a minimum age for employment.

2. Endorsed by the United Nations Summit for Social Development (Copenhagen 1995), the universal observance of these core standards would mark a major step forward in ensuring that all workers have the opportunity to benefit from the potential that an open trading system offers for growth and improved living standards. At their meeting in Singapore, trade ministers should therefore decide to establish a Working Party on International Labour Standards and Trade to examine how the WTO, in collaboration with the ILO, can contribute to improving the observance of basic labour standards.

3. Successive rounds of trade liberalisation have gone a long way towards creating a global market. In a growing world economy, competition helps to ensure a constant improvement in the efficiency of production, the quality of goods and services and a rapid pace of innovation. A sustained high rate of growth of trade stimulates increased job opportunities and can create the conditions for the reduction of poverty and unemployment, and an increase in the purchasing power of wages. However, the emergence of a global market is also causing a widening of social disparities in many countries and a growing sense of insecurity which is increasing tensions between those who feel left behind by rapid change and those who are benefiting, sometimes disproportionately, from the prosperity that increasing trade can bring.

Note The International Confederation of Free Trade Unions consists of nearly 200 national centres of independent and democratic trade unions in 136 countries and territories with a total membership of 124 million working men and women. Its World Congress meets every four years, most recently in Brussels in June 1996. A statement on International Labour Standards and Trade adopted by the Congress is available on request from the ICFTU’s world headquarters at the following address:

Mr. Bill Jordan, General Secretary, International Confederation of Free Trade Unions

Boulevard Emile Jacqmain 155, B-1210 Brussels, Belgium

Tel (32 2) 224 0211 Fax (32 2) 201 5815 E-mail ICFTU@geo2.poptel.org.uk

4. For all these reasons the international trade union movement has supported the lowering of trade barriers and opposed protectionism, while stressing that adherence to basic labour standards coupled with active labour market policies are needed to help both workers and employers to adapt to changes in the structure of employment and the skills of the workforce. The effects of the current pattern of trade growth are imbalanced and need to be remedied by a range of national and international policies that will enable a much larger part of the world’s population to have a voice in deciding how our societies respond to the challenge of the global market.

5. In a world in which there continue to be very large differences in average income per capita between countries, the level of wages and of productivity vary enormously. This will continue to be the case for the foreseeable future, and therefore the level of wages and other benefits, including minimum wages, should be determined by bargaining that takes account of national considerations. Respect for basic human rights at work does not alter comparative labour costs but it does enable working men and women to have a voice in how the gains from improved trade performance are shared and how to raise productivity and competitiveness.

Emerging Areas of Consensus

6. The debate about whether and, if so, how to encourage the parallel improvement of basic workers rights and the opening up of global markets is not new. It was a major topic of discussion and agreement in 1947 in Havana at the first post-war international conference on trade. It gained significance since the signing of the Uruguay Round agreements in 1994 in Marrakech. The ILO, UNCTAD, the World Bank, the OECD, and the G7 Summit have discussed the issue extensively and a number of serious studies have been produced. There are some signs of an emerging, if partial, consensus upon which trade ministers meeting in Singapore can build.

7. Firstly, there is widespread agreement on the ICFTU’s proposals for the following seven core ILO standards as points of reference:

· Conventions 29 and 105 on the abolition of forced labour;

· Conventions 87 and 98 on the rights to freedom of association and to bargain collectively;

· Conventions 111 and 100 on the prevention of discrimination in employment and equal pay for work of equal value; and

· Convention 138 on the minimum age for employment (child labour).

8. These standards are amongst the most highly ratified of the ILO. Over 100 states have ratified at least six of the seven. They are not industrialised country standards; they constitute the most accepted standards in the world for the following reasons:

· they assert the right of workers to form and join unions and to negotiate conditions of employment that are fair and appropriate for their country's level of development;

· they outlaw forced labour or slave labour, which prevent workers from having any say in where they work or in the terms of their employment;

· they seek to end discrimination in employment which stops particular groups of workers such as women or migrant workers, from benefiting from trade growth; and

· they seek to end the commercial exploitation of children, and will lay the foundation for a programme of aid aimed at communities and families who presently depend on child labour to survive.

9. Adherence to the seven basic ILO standards would prevent the most extreme forms of exploitation and cut-throat competition. It would not end developing countries' comparative advantage, but it would establish a process by which conditions of employment could gradually be improved as trade increases. This would encourage the growth of consumer markets, stimulating both domestic and foreign investment and, most importantly, jobs.

10. This would help to ensure a more balanced expansion of world trade and a smoother process of adjustment to changes in the global division of labour. At the Copenhagen Social Development Summit in 1995 there was a very broad consensus that these are core labour rights to which all countries should and can commit themselves. Furthermore, as stated in the Programme of Action adopted at the Summit (paragraph 6), "...social progress will not be realized simply through the free interaction of market forces. Public policies are necessary to correct market failures, to complement market mechanisms, to maintain social stability and to create a national and international environment that promotes sustainable growth on a global scale."

11. A second point of consensus is that all countries should aim for progressively more and more open trade. The global market is thus set to enlarge and affect significantly an ever increasing number of workers. The intensification of competition is already causing trade tensions to rise between states. This calls for a much closer interaction between trade policy and policies in such fields as the environment, foreign direct investment, business practices and labour. The WTO therefore must adapt to these pressures and increase its collaboration with other agencies, such as the ILO.

12. The third area of consensus is that the international community should exert pressure on countries that violate basic standards not only out of concern for basic human rights but also because such violations call into question the legitimacy of a trading system that allows unscrupulous companies to gain short-term competitive advantage by abusing fundamental workers’ freedoms. Already a number of governments and some socially aware companies and trade associations are responding to such concerns by introducing workers’ rights provisions into national or regional trade laws and codes of conduct. However such actions cannot provide a general solution. It is high time for the WTO, together with the ILO, to create a pro-active multilateral framework to stave off the danger that even well intentioned unilateral measures could be used for protectionist purposes.

13. A fourth area of common ground is that fears that core labour standards could negatively affect economic performance are unfounded. Studies of the relationship between trade liberalisation and labour standards show a positive two-way relationship over time in which improved observance of basic workers’ rights acts as an incentive to raise productivity through investment, especially in education and training, and helps to create a more stable social framework attractive to foreign direct investment. Nevertheless efforts to extend basic labour standards can be undermined by governments which seek to gain a short-term advantage by suppressing labour rights, typically in Export Processing Zones. The countries most at risk from such behaviour are typically developing countries with similar levels of labour productivity and which are consequently under pressure to weaken established workers’ rights. International action is therefore needed to promote adherence to basic standards and prevent destructive competition which is damaging both for the country and the workers concerned as well as the international system.

14. These four areas, upon which a large number of both governmental and non-governmental protagonists in the debate about labour standards and trade would agree, are important. However, there are also grave anxieties that pursuit of improved workers’ rights through the WTO could create a tool for protectionists to reduce developing countries’ market access to key industrial country markets, and indeed that this is in fact the intention of some of the advocates of a linkage between workers’ rights and trade. The ICFTU fully recognises these concerns. We have therefore sought to develop proposals for a procedure, involving both the International Labour Organisation and the WTO, which would prevent such dangers of protectionist abuse and firmly place the operation of a workers’ rights and trade mechanism in a rule-driven, transparent, multilateral system.

The Importance of Procedure

15. Briefly, what the ICFTU proposes for the WTO is:-

· a review of all WTO members’ observance of basic labour standards at regular intervals, for example to coincide with the WTO’s existing reviews of countries’ trade policy, or on the basis of well-founded complaints. The reviews, to be conducted by ILO experts, should conclude, if necessary, with recommendations on how to resolve any problems;

· if problems are found a period of dialogue should then follow to find ways to meet the principles in the standards, followed by a further review of progress - say two years later;

· if progress is being made a date for a further review should be fixed, but if there is an adamant refusal to cooperate with the WTO and the ILO, a warning would be given that the issue will be referred to the WTO Council if within a reasonable period changes are not put in place; and

· if at this point there was still no cooperation, the WTO would determine the appropriate multilateral trade response.

16. There is clearly a need for further dialogue. The ICFTU and its affiliates have had extensive discussions with governments, international organisations, employers and many other interested experts and non-governmental organisations. These have revealed widespread recognition that a problem exists and that practical solutions need to be found which reinforce the integrity of the open trading system and improve the observance of basic workers’ rights. We are convinced that the elements of consensus that are emerging could be enlarged through a deeper and more considered examination of the options and in particular the procedural mechanisms for cooperation between the ILO and the WTO.

17. Developing countries working to improve the rights of their citizens at work at the same time as increasing their participation in the global market have most to gain from a reinforcement of basic workers’ rights. Responsible business, that recognises that the security and productivity of their investments ultimately depends on the degree to which the system in which they operate produces social justice, would also benefit. Support could also be expected from industrial country governments that are trying to adapt to a new global world economy and stave off the dangers of a protectionist backlash. And workers everywhere would be able to face rapid and sometimes intimidating changes with a greater degree of confidence. The potential consensus includes all the major social and political adherents of what is known as the free world. This basis of support was and remains vital to the GATT system and for the future of the WTO.

18. The ICFTU, for its part, is more than ready to participate in an open dialogue with all concerned. What is needed is an organized forum for such discussions so that by the time ministers or heads of state and government next meet to agree on the agenda for the WTO for the 21st century, they can examine specific policy options for the international community. A WTO Working Party should therefore be set up in Singapore with a remit to study and report on how the Organisation can contribute to furthering the observance of basic international labour standards in an open trading system with well-defined non-discriminatory mechanisms for action.

An Opportunity to Make Progress

19. The promotion of trade and enabling workers to exercise their basic rights are mutually reinforcing. There is no evidence that respect for workers’ rights weakens the competitive position of developing countries, indeed by laying the foundations for cooperation between workers and employers, core labour standards contribute positively to trade and development. A workers’ rights provision would strengthen the political authority of the WTO and break, rather than build, barriers to world trade. It would provide a means of solving disputes that, if allowed to persist, might increase pressures for protectionism. And it would serve to reinforce the case for enlarged access for developing countries to world export markets. A workers’ rights provision in the WTO would need to be backed up, where necessary, by international financial and technical assistance through the ILO, particularly to fund programmes designed to eliminate child labour through the expansion of education facilities and increased income-generating opportunities of the poorest families.

20. The Singapore Trade Ministers Meeting is an opportunity to move on the process of finding a way forward on a issue which threatens to provoke serious disagreement. What is required is a cool objective examination of how the WTO, working closely with the ILO, can take action to improve the likelihood that the benefits of trade growth will be more broadly spread within and between countries, thus widening the constituency of support for trade liberalisation. Such an initiative is vital to ensuring a non-protectionist means for securing basic workers’ rights in an increasingly competitive world market.