After Singapore, the battle of interpretations begin: Labour Standards

The WTO Ministerial Conference saw dramatic battles over attempts by the rich nations to introduce new issues that developing nations felt would threaten their economic future. Now that the Conference is over, the battles will begin anew in Geneva, with the different parties having different interpretations of the Ministerial Declaration. This article looks at how the labour standards issue was resolved.

by Martin Khor

SINGAPORE: Hardly had the cheers and loud acclamations of success died down at the WTO Conference, then a new battle began: that of interpreting what had happened.

The differences on what had been agreed on came out sharply at press conferences and interviews after the closing session, and are a foretaste of the battles of interpretation, when the WTO resumes its meetings in Geneva and follows up on the post- Singapore agenda.

Expectedly, the host government and local media proclaimed the Conference a great success. "I am very happy and satisfied that we have managed to get a strong Ministerial Declaration," Singapore Trade Minister and Conference Chairman, Yeo Cheow Tong, told delegates at the closing. "I am very proud to say that we have delivered."

The nature of that Declaration, and what was delivered (and to which party), is already a bone of contention.

The WTO Director-General, Renato Ruggiero was beaming. "This was a very difficult Conference," he said. "But practically, we have got from this Conference all the objectives that we wanted to achieve."

The US and European Union (EU) were also triumphant. At a press conference, Acting US Trade Representative Charlene Barshefsky was happy that the US had achieved its goal of an Information Technology Agreement and was also encouraged by progress on basic telecommunications.

She emphasized, yet again, that "we must recognize issues of workers' welfare and worker rights are absolutely part of the trade debate, whether we like it or not ideologically."

EU Commission Vice-President, Sir Leon Brittan called the Conference a "huge international success." For Brittan, who has been campaigning vigorously for the past two years for a multilateral investment agreement (MIA) in the WTO, the greatest achievement for the EU at Singapore was the setting up of a new working group in the WTO to examine "the relationship between trade and investment".

"On investment, the most important theme of all for the future of the world economy, we have at last put WTO on the map," he said in a statement. "Investment indeed seems to me the top priority for WTO in the years ahead."

Delegations of many developing countries were much less upbeat in their comments.

"The South being sidelined"

In an article entitled "Developing nations feel they are being sidelined", the Malaysian daily, The Star, reported that "developing countries feel they have been sidelined at the WTO meeting, with some of the delegates accusing the rich nations of hijacking the Conference to push for new agendas."

It quoted Zimbabwe's Secretary for Industry and Commerce, K. Nkomani, as saying: "Most developing countries are already having difficulties in reconciling their legal, administrative and economic systems to conform to the Uruguay Round. And here in Singapore we are being asked to take on new issues, some of which are not even trade-related."

Kenya's Assistant Minister for Commerce and Industry, Joel F.K. Barmasai, said the WTO should not be "overstretched" through the introduction of further new issues. "Instead the focus should be on the timely implementation of what we already have."

The Star added that: "Agriculture and textiles are among the sectors which developing countries are most interested in, and in these two areas there is little movement beyond what has been agreed to in the Uruguay Round." It reported Colombian Ambassador to the WTO, Nestor Osorio, expressing concern over backsliding by developed countries from the Uruguay Round. "There is generally a lack of political will by the developed countries to implement the provisions of the textile and agriculture treaties," he said.

"Damage control"

After the meeting's conclusion, delegates from many developing countries remained subdued. Although some publicly said they were "satisfied" with the Conference outcome, in private, their assessments were in terms of the degrees of the "damage control" they had achieved in face of the fierce Northern onslaught on new issues, and not in terms of any gains in promoting their own interests.

Some developing countries had come with the intention of blocking the inclusion of any new issue in the Declaration, continuing the strenuous efforts taken by their diplomats in the gruelling preparatory talks in Geneva, of the past year.

These countries, including India, Malaysia, Indonesia, Egypt, Tanzania, Ghana, Uganda and Haiti, had objected to the mention of investment in the Declaration. Several other countries also objected to competition policy and government procurement, whilst a vast majority of developing countries (supported by some developed countries) were against labour standards.

They felt that integrating these areas in the WTO would allow the rich countries to gain an unfair advantage over the South and open the door for them to link non-trade issues to the WTO and its dispute settlement system, including trade penalties for non-compliance.

They feared that even a decision to "study" or "examine" these issues would already be accepting the principle and concept of the new issues being within the WTO's competence, and constitute a dangerous opening for full-scale negotiations and eventual binding agreements.

These developing countries fought to exclude the divisive issues from being included in the draft Declaration, on the grounds that there was an absence of consensus. They argued that in the reports of the various Councils and committees, only points where there were consensus were included, and this general principle should also be used for the draft Declaration.

They also argued that otherwise, the WTO Conference's main aim of reviewing the Uruguay Round results and the problems of implementation faced especially by developing countries would be derailed.

This request was over-ruled by the WTO Director-General, who brought the divisive "new issues" to the Singapore Conference via a letter to Conference Chairman, Yeo Cheow Tong of Singapore. Together, they convened small informal groups of 20 to 30 countries on the unresolved new issues, whose work consumed most of the real negotiating energy of the Conference.

Issues of review and implementation ignored

As a result, the supposed priority issues of review and implementation were ignored, with Ministers making prepared speeches to an empty hall in most of the formal proceedings, and no opportunity given for an exchange of views on these issues.

The expected resistance of the core group of developing countries opposing the acceptance of new issues softened considerably in the first days itself.

According to most sources, the break came when early in the negotiations, Malaysia, which had previously been seen as one of the toughest of the resisting countries, took a lead in suggesting changes to the texts of the new issues.

This had the effect of softening or dampening the position, which the original group of resistant developing countries had started with, of not wanting a mention of the new issues in the Declaration at all. The "softening" of Malaysia became a talking point in the media and diplomatic circles at the Conference.

Following this, more and more countries shifted their position and the negotiations changed from whether or not the new issues should be included, to how they should be worded. Damage control replaced damage prevention.

From initially arguing against the principle of including the new issues in the WTO (at least, at this stage), developing countries shifted to an acceptance of starting discussions in the WTO on these issues and attempting to yield as little as possible and building in safeguards in the terms of reference of the future discussions on the issues.

Of all the new issues, the developing countries did best in protecting their interests in labour standards. The Director- General's original draft Declaration, carried over from Geneva, had not in any case, placed labour standards as an item for a future work programme (unlike the other new issues), but in an early part of the Declaration as a general statement.

Thus the negotiations in Singapore was not about a work programme on labour standards, but how to word the text and whether it should be included in the Declaration (or in a less binding Chairman's closing statement).

The labour standards formulation

Whilst a few developed countries (mainly, the US and France) made a play for harder language for the WTO to have a larger say on the issue, developing countries in the end succeeded in establishing in the Declaration (para 4) that the Ministers "renew our commitment to the observance of internationally recognized core labour standards", and that (i) the ILO is the competent body to set and deal with labour standards; (ii) growth and development promotes these standards; (iii) the use of labour standards for protectionist purposes is rejected; (iv) the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question; and (v) in this regard, the WTO and ILO secretariats will continue their existing collaboration.

Some developing countries took the position that the text should not be in the Declaration as there was a possibility it still gave an opportunity for bringing labour standards into the WTO. Others argued that putting these principles in the Declaration would settle the way the WTO would look at the issue once and for all.

The latter position prevailed in the end.

In his closing Chairman's statement, Singapore Trade Minister Yeo Cheow Tong interpreted the paragraph to mean that "it does not inscribe the relationship between trade and core labour standards on the WTO agenda" and that "there is no authorization in the text for any new work on this issue."

He also said: "Some delegations 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."

Malaysian Trade and Industry Minister Rafidah Aziz, who was instrumental in persuading other developing countries to take the second course (inclusion in the Declaration) gave the same interpretation as follows: "There will be no more talk of labour standards in the WTO. No way, no discussions, no continuing work, nothing."

Indian Commerce Minister B.B. Ramaiah, in a press statement after the Conference ended, said it was "a matter of reassurance" that Ministers stated the ILO is the competent body to deal with labour standards, had rejected the use of labour standards for protectionist purposes and that developing countries' comparative advantage should not be questioned in any way. "Thus, India's position has been reflected in the Declaration."

The WTO-ILO link

The main proponents of labour standards in the WTO appeared to see the outcome differently. As the Business Times of Malaysia put it: "Some delegations chose to interpret the Declaration on core labour issues as meaning that there will be a link between WTO and the ILO regarding core labour standards."

The French Trade Minister Yves Galland told the press: "The major debate of labour standards is here to stay in the WTO. It will never go away."

Acting US Trade Representative Charlene Barshefsky, at a post- Conference press conference, noted Singapore Minister Yeo's closing Chairman's statement that labour standards would not be in the WTO's future agenda. According to her, in a heads of delegations plenary meeting held before the official closing ceremony, Yeo had made it clear his statement was his own, and that thus the binding statement on this issue was in the Declaration. She added that for the US, the issue is not being used for protectionism but to "maximize workers' welfare in trade agreements."

She said the long negotiations centred on "what was the proper role of the WTO as a trade institution with respect to core labour standards."

"Some wanted to avoid the linkage between workers' issues and trade agreements. It is an ideological debate. So we agreed to principles. No one wants to question genuine comparative advantage, but we recognize the collaboration between the ILO and WTO now and in future... We must recognize issues of workers' welfare and worker rights are absolutely part of the trade debate, whether we like it or not ideologically."

To a further question on the link between WTO and ILO on this issue, she said that "core labour standards are set in the ILO and there is no desire on the part of WTO members to define labour standards in the world body," but hastened to add that "when we have such an important subject, it will always remain an important subject in the WTO."

European Commission Vice President Sir Leon Brittan said: "We respect the competence of the ILO to set and deal with labour standards. But we have made equally clear that we regard core internationally recognized labour standards as essential human rights...The EC believes this agreement marks a breakthrough in world-wide dialogue on this delicate but vital subject. This dialogue must now be taken further so we can promote greater respect of core labour rights in all our countries."

The International Confederation of Free Trade Unions (ICFTU), an umbrella body for trade unions in 126 countries, that had campaigned hard at Singapore for a trade link to labour standards, in a statement welcomed the Declaration, saying: "For the first time the trade ministers have committed the WTO to core labour standards."

It promised to "continue to challenge governments and employers to live up to the basic labour standards" and added: "We will expose abuses wherever we find them and ensure that consumers know that they can choose not to buy products that carry the `label of repression'."

Thus, developing countries, supported by some developed countries like UK and Australia, have succeeded in placing the issue of labour standards within a non-protectionist context in the WTO.

However, the post-Conference statements, though these may of course be aimed largely at the labour constituencies in their respective countries, also indicate that the US and some European countries might want to revive the issue in the WTO at a future date and in doing so make use of the paragraph in the Declaration.

The battle of interpretations may thus continue. (SUNS3893)

Martin Khor is the Director of Third World Network. The above first appeared in the SUNS of which Chakravarthi Raghavan is the Chief Editor.