By
Anupam Malik
The WTO was established at Marrakesh in 1994 at the conclusion of the Uruguay Round to provide an institution to administer the General Agreement on Tariffs and Trade (GATT) and other Uruguay Round agreements as well as to provide a more effective dispute resolution mechanism than existed under GATT. The subject of a social clause was discussed at Marrakesh, but no decision was taken on the subject. While a Committee on Trade and Environment was set up as a result of pressure from developed countries, no WTO committee or working group was created on labour standards and trade. The only mention of the subject at Marrakesh was a brief reference in the Chairman's lengthy list of issues that could eventually be considered in the WTO work programme.
In December 1996, the first Ministerial Conference of the newly created World Trade Organization (WTO) was held in Singapore. The Conference attracted considerable attention, particularly the negotiations concerning the controversial issue of the `social clause' - the linking of labour standards with trade liberalization. A compromise on the issue resulted in a paragraph on labour standards in the final Declaration of the Conference, the first time that a reference to such standards was included in a WTO official document. At first blush, the paragraph appears to close the door to further consideration of the link of trade with labour standards within the WTO, but this is unlikely to be the case. The efforts to examine the link between labour standards and trade within the WTO will continue after Singapore. The Ministerial Conference meets every two years and is the highest WTO authority.
The controversy over the social clause arose early in the Conference when an officers' invitation to Michel Hansenne, Director-General of the International Labour Organisation (ILO), to address the ministers was withdrawn due to objections from developing countries who wanted no discussion of labour issues at the meeting. The linking of trade and labour standards within WTO was urged most strongly by the United States, France and some other developed countries, and opposed by a substantial number of developing countries (and the United Kingdom). A compromise between the proponents and opponents resulted in the inclusion of the following paragraph in the final Ministerial Declaration (which has already been given differing interpretations):
“We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organisation (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.”
What is the significance of this statement for the future work of the WTO and trade/labour standards linkages? In one sense, it is a breakthrough for those promoting a link since labour standards are finally mentioned in an official WTO document. In addition, it is a clear statement of support for core labour standards by WTO membership - in other words, support as WTO members and not only as members of the ILO. Nevertheless, it appears to lay at rest the addition of an explicit social clause to WTO agreements, which would permit member states to refuse trade benefits to states violating core labour standards. The Declaration emphasizes that the ILO, and not the WTO, is the competent body to set and deal with labour standards, thus rejecting suggestions that the WTO itself might take the lead in setting and enforcing labour standards.
But the Declaration does not mark the end of efforts to raise the subject of the link between labour standards and trade at the WTO. While an explicit social clause is no longer (if it ever was) a viable option within GATT/WTO, the broader problematique of the link between trade and labour standards as an issue within the WTO was not put to rest at Singapore, despite the Concluding Remarks of Mr Yeo Cheow Tong, Chairman of the Conference. He stated,
There is no authorization in the text for any new work on this issue.... Some delegates had expressed the concern that this text may lead the WTO to acquire a competence to undertake further work in the relationship between trade and core labour standards. I want to assure these delegations that this text will not permit such a development.
The US threatened to refuse to sign the Declaration if it did not refer to labour standards. The Dutch and Scandinavian Ministers also supported WTO consideration of labour standards. Speaking for the European Union, Sir Leon Brittan gave mild support, hindered from a stronger endorsement by the opposition of the United Kingdom. Developing countries, most notably Malaysia and Egypt, argued strongly against consideration of labour standards by the WTO, reiterating contentions that the trade/labour standards link was a reflection of protectionist tendencies and was aimed at limiting the comparative advantages of developing countries.
The failure of the Ministerial Declaration to close the door explicitly on any further consideration of the topic leaves open the likelihood that the issue will surface in other work of the WTO concerning, for example, labelling and investment. The movement for the labelling of goods to indicate conformity with core labour standards - particularly the prohibition of extreme forms of child labour - is spreading in the United States and Europe. In Germany and other Western countries a campaign for the use of the label `Rugmark' to indicate that children have not produced the carpets in question has been relatively successful. The WTO will be concerned that labelling not be used by countries as a means of forbidding imports in violation of WTO agreements. The ILO is currently undertaking research relating to labelling, and collaboration between the WTO and ILO on labelling issues can be predicted.
It is obvious that the issue of Social Clause in the WTO on labour standards is here to stay in some form or the other. There is a hair thin difference between actual concern for the social cause against exploitation of labour and misuse of this issue for protectionist purpose by a country. It is easy to understand that the calorific needs are different in different climates / cultures / countries and hence the need for corresponding income levels but the fact remains that the intellectual freedom to organize or bargain collectively or basic needs of hygiene cannot be ignored. To settle the issue to a realistic and practical level the core labour standards have been crystallized to nine major issues based on the eleven conventions of the International Labour Organization, the UN’s Universal Declaration of Human Rights and the Convention on Rights of the Child.
The nine issues of core labour standards are –
No workers under the age of 15; minimum lowered to 14 for countries operating under the ILO Convention 138 developing-country exception; remediation of any child found to be working.
No forced labor, including prison or debt bondage labor; no lodging of deposits or identity papers by employers or outside recruiters.
Provide a safe and healthy work environment; take steps to prevent injuries; regular health and safety worker training; system to detect threats to health and safety; access to bathrooms and potable water.
Respect the right to form and join trade unions and bargain collectively; where law prohibits these freedoms, facilitate parallel means of association and bargaining.
No discrimination based on race, caste, origin, religion, disability, gender, sexual orientation, union or political affiliation, or age; no sexual harassment.
No corporal punishment, mental or physical coercion or verbal abuse.
Comply with the applicable law but, in any event, no more than 48 hours per week with at least one day off for every seven day period; voluntary overtime paid at a premium rate and not to exceed 12 hours per week on a regular basis; overtime may be mandatory if part of a collective bargaining agreement.
Wages paid for a standard work week must meet the legal and industry standards and be sufficient to meet the basic need of workers and their families; no disciplinary deductions.
Facilities seeking to gain and maintain certification must go beyond simple compliance to integrate the standard into their management systems and practices.
These nine issues have been brought out for practical use for assessing the labour standards in a format like the ISO standardization. The standards based on these issues are called the SA 8000 Standards. It is not necessary to explain the simple implications - legal and moral for following proper standards on these issues. If an organization has to do business on the global scale then it is not only necessary to follow the standards but is also necessary to genuinely ensure such good management practices so that these issues become secondary or only a base for the harmonious working of an organization. Of course it is also necessary to ward off Non Tariff Trade Barriers by following good labour standards in the work place.