International Trade in Services.pdf - DSpace at Khazar University

Market Structure, Liberalization, and Trade 163
programs cover foreign subsidiaries, franchisees, and suppliers and include rules
on the condition of goods entering distribution chains and transport operations.
The labor conditions covered in these programs may include working hours, minimum
wage levels, physical working conditions, and bans on child labor. Such
programs gradually achieve greater coordination and consistency. They will usually
be more inclusive than similar programs in the poorer developing countries
and can form the basis for technology transfers, staff training, and product quality
improvements. By complying with corporate social responsibility standards,
suppliers in developing countries are more likely to boost exports.
However, there is an absence of regulations governing the ways independent
auditors assess social and environmental issues in the context of company reporting,
and there is little opportunity for workers to contribute to the process other
than through internal corporate structures. The governments of developing countries
could urge multinationals, whether foreign or locally owned, to institute and
implement corporate social responsibility policies, though, ultimately, these are
voluntary even if they include regional or international standards.
Government Flanking Measures to Mitigate
the Adverse Effects of Liberalization
Enhance the competitiveness of domestic companies in the
distribution sector
While the liberalization of the distribution sector may produce positive economic
effects arising from improved structural efficiency, the governments of developing
countries will need to take various measures to mitigate adverse effects. The main
focus should be on direct social and environmental impacts and also on the indirect
effects arising from changes in patterns of supply inevitably driven by consumer
demand. This will no doubt involve the phasing-in of liberalization, taking
into account social and economic priorities and the quality of governance and
regulatory capacity to the extent feasible in the national context. This would
include the following:
• Requirements for joint ventures between foreign and domestic companies
• Controls on the outward transfer of funds by foreign distribution companies
• Requirements for foreign companies to train national employees
• Government equity stakes in large companies that might crowd out small
companies
• Reductions in the dominance of state-owned enterprises
• Removal of monopoly rights over certain products whether exercised by public
or private companies