Employers' Handbook on ILO Standards-related Activities

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LOOKING AHEAD – CHALLENGES AND OPPORTUNITIES FOR ILS Trade and labour standards In the run-up to the Ministerial Meeting of the World Trade Organisation (WTO) in Singapore in December 1996, trade unions and other non-governmental organizations (NGOs), mainly from industrialized countries, called for a “social clause” which should provide for the enforcement of basic labour standards by means of trade sanctions within the WTO system. The supporters of the “social clause” claimed that labour standards did not receive adequate attention in the globalization process. In particular, the ILS system was not functioning satisfactorily as it had “no teeth”. Therefore, in their view, a more effective means of enforcement was needed, such as trade sanctions. These claims met with the determined opposition of the majority of WTO members, in particular the developing countries, who suspected (hidden) protectionist motives behind the calls for a “social clause”. As a result, the Singapore meeting concluded on a compromise emphasizing the competence of the ILO in labour standards matters while allowing for some cooperation between ILO and WTO (see box below). “We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration”. Final Document, WTO Ministerial Conference, Singapore, December 1996. On the occasion of the WTO Ministerial Meeting in Seattle, November/December 1999, it was proposed to establish a stronger social dimension within the WTO in the form of a WTO Working Group on Trade and Labour (USA) or a joint ILO/WTO Standing Working Forum on trade globalization and labour issues (EU). Trade unions and NGOs from developed countries repeated their demand to enforce labour standards through the WTO system. Again, these demands were opposed by the developing countries. As a result, no Ministerial Declaration was adopted and no further steps towards liberalizing world trade were taken either (a new opportunity to do this may be provided by the next WTO ministerial meeting in Dohu, Qatar, in November 2001). Against the background of these failed attempts to establish a link between trade and labour standards in the WTO trade regime, there has been a tendency to incorporate “social clauses” into bilateral trade agreements. Trade agreements proposed by the US or the EU to smaller developing countries link special trade preferences to the observance of basic labour standards. The employers in the ILO have made it clear that they oppose a linkage between trade and labour standards in the form of a “social clause”, especially within the WTO, for the following reasons: 65
66 EMPLOYERS’ HANDBOOK ON ILO STANDARDS-RELATED ACTIVITIES l It is more than doubtful that social policy objectives could be achieved by means of trade sanctions or the threat of sanctions. l Introducing trade sanctions would disturb the balanced ILO approach in promoting ILS and could, as a result, weaken the impact of ILS. l A “social clause” in the WTO rules could reinforce existing protectionist tendencies and thus damage the world trade regime. As a consequence, economic growth, which is the basis for social progress, would be impaired. l There is no need for a “social clause”, as the ILO has taken important steps in recent years to make its means of action more efficient and relevant. A case in point is the adoption of the “Declaration on Fundamental Principles and Rights at Work and its Follow-up”. In addition, the GB has set up a Working Party to examine and propose research on the social dimension of trade, including the relationship between trade and labour standards (since March 2000 the Working Party’s mandate has been extended to cover the social dimension of globalization). Finally, the ILO has recently embarked on a substantial review of its ILS system with a view to making it more effective (see Chapter IX). For more detail, see: l IOE: Statement on trade and labour standards for the WTO Ministerial Meeting, Seattle, 30 Nov. - 3 Dec. 1999. l OECD: International trade and core labour standards (Paris, 2000). “Private” standard-setting initiatives Challenges and opportunities for ILS also arise from the development of “private” standard-setting initiatives in recent years. More and more internationally active enterprises or sectors of industry are adopting policies and rules on labour standards which sometimes take the form of codes of conduct. Some companies have formulated and implemented their own standards, whereas others have cooperated with NGOs or trade unions in this regard. Yet others have relied on the help of commercial agencies offering model codes of conduct, including control and certification. At the very origin of these “private” standard-setting activities has been the belief, voiced in particular by NGOs, that, in the process of globalization, governments have lost some of their power to set and enforce labour regulations and have left a vacuum in this respect. NGOs claim that, as a consequence of this vacuum, labour standards are not observed in many countries, particularly in developing nations. As a remedy, they have called upon internationally active enterprises to ensure the application and effective control of labour standards, in their own operations as well as in the operations of their suppliers, contractors and licencees. In order to give weight to their demands, NGOs have encouraged consumers in developed countries to boycott goods which, in their view, have been produced under unacceptable conditions. The employers in the ILO have acknowledged that enterprises are, of course, obliged to respect and apply national labour laws. They have stated that, in addition,
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ILS AND EMPLOYERS Apart from that,
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