Developing nations reject labour issues in WTO

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Attempts by the US and the EU at the Seattle Ministerial to bring the issue of labour standards within the ambit of the WTO were met with a strong rebuff by the developing countries.

by Chakravarthi Raghavan

KEY developing nations with some differing agendas for any new round of trade negotiations, joined together at the plenary sessions of the WTO Ministerial Conference to reject efforts of the US and the EU to bring the labour-standards issue into the WTO.

Brazil, India and Hong Kong China were among those which spoke up clearly and firmly.

Brazil's Felipe Lampreia was caustic to the point of being politely acidic in noting that developing countries were still exporters of agricultural products and raw materials, and accounted for a very small percentage of the trade in manufactures. Yet they were being accused of causing unemployment and lowering of labour earnings and standards in the North through their exports, and sought to be kept out by a variety of instruments - ranging from high tariffs in the industrial world on agricultural imports and subsidised exports to new demands for trade-linked labour standards and trade-linked environment standards. They must be seen for what they are: protectionist instruments.

Brazil insisted on a mandate for further negotiations in agriculture that would ensure the elimination of export subsidies, domestic support in various guises and high tariffs to keep out imports. In essence, Brazil wanted both industrial and agricultural products and sectors treated alike by the trading system.

India's Murasoli Maran said that while India was committed to the observance of labour standards, had ratified most International Labour Organisation (ILO) conventions and cherished all the values of democracy, workers' rights and good governance, these issues were not under the purview of the WTO.

At Singapore in 1996, the WTO Ministerial had decided once and for all that labour-related issues belonged to the ILO, and 'India resolutely rejects renewed attempts to introduce these in the WTO in one form or another. Any further move will cause deep divisions and distrust that can only harm the formation of a consensus on our future work programme.'

As for NGOs and the keen interest of international civil society in WTO activities, while these have a vital role to play in any democratic polity, said Maran, 'it is really for national governments to deal with civil society within their domestic domain. The responsibility cannot be and should not be transferred to the WTO. What we can and should do is to spread greater global awareness about the WTO's activities.'

Critical gaps

Earlier, Maran stressed that it was India's assessment that the Uruguay Round agreements had not served all the membership well, that there were critical gaps that need to be urgently addressed, and that the asymmetries and inequities in several of the agreements (anti-dumping, subsidies, intellectual property, trade-related investment measures (TRIMs) and non-realisation of expected benefits from agriculture and textiles during implementation) need to be corrected. This was the reason for many developing countries' highlighting the implementation issues and concerns. But some (a reference to the US and the EU) had avoided substantive engagement in finding solutions on the plea that these would involve renegotiations. 'This is a disturbing signal' and only by addressing them up front would an image of fairness and equity in the WTO be ensured. And economic integration cannot advance if the interests of the poor are left behind.

While holding out a carrot (to the US) of 'examining in a constructive role' electronic commerce and information technology in development process, Maran rejected directly or implicitly some of the demands of the US and the EU on new issues. He insisted that the developed countries should eliminate export subsidies and other trade-distortive support. At the same time, future agricultural negotiations should not limit the flexibility of large rural agrarian economies to support and protect domestic production so as to achieve objectives of food security and rural employment. And while India was open to foreign investment, it did not subscribe to the view that a multilateral framework of rules on investment was either necessary or desirable.

Potential to polarise

Hong Kong China warned that the labour-standards issue had the potential to polarise the WTO and could do irreparable damage. As decided at Singapore, the ILO was the competent body to deal with labour issues, and the WTO's support to raising living standards could only be indirect by raising the prosperity of people everywhere through increased trade. That could be the only relationship between trade and labour standards. The WTO should concentrate on its core business of progressive multilateral trade liberalisation and leave labour standards to the ILO.

Earlier Hong Kong China drew attention to the statement of the International Textiles and Clothing Bureau (a group of 23 textile and clothing exporter countries) which had made 'painfully clear' that the progressive liberalisation promised in textiles had not been delivered. 'Developed countries would face an uphill task in carrying the developing world with them into a new round so long as they are seen as so begrudging in liberalising one of the few areas in which poorer countries enjoy comparative advantage and which, contrary to the norms of the multilateral trading system, has been restrained by quotas for 40 years already.'

Singapore said, in a somewhat ambiguous presentation, that discussion by developing countries on the relationship between trade on the one hand, and good governance, environmental protection and core labour standards on the other, was viewed with mixed feelings by developing countries. All of them desired good governance, environmental protection and core labour standards. 'But it cannot be that those who live far away care more for these issues than we ourselves do. The key is to see clearly the motivations behind the proposals. Where the motivations are protectionist, let us recognise them for what they are. Where the motivations are well-intentioned, we should in our own interest listen carefully and adjust our policies.'

Let UN agencies tackle labour and environment, says Annan

Stressing that the developing countries have legitimate and justified fears about the inclusion of labour and environmental issues in the WTO agenda, Kofi Annan has suggested that these issues should be dealt with by the UN agencies.

THE Secretary-General of the United Nations Kofi Annan has said in Seattle on 30 November that labour and environment issues should not be used as pretexts for 'trade restrictions' and they were better dealt with by the specialised UN agencies promoting their cause.

In an address to the WTO Ministerial, Annan justified the current fears of developing countries by recounting the high price they had paid in past attempts to liberalise the world economy.

'In the past, developing countries had been told time and again that they stand to benefit from trade liberalisation, and that they must open up their economies. They have done so, often at great cost. For the poorest countries, the cost of implementing trade commitments can be more than a whole year's budget.'

Annan pointed out that in the last great round of liberalisation - the Uruguay Round - the developing countries cut their tariffs as they were told to do so. 'Even so, they found that rich countries had cut their tariffs less than poor ones. Not surprisingly, many of them feel they were taken for a ride.'

Industrialised countries, it seems, he said, are happy enough to export manufactured goods to each other, but from developing countries they still want only raw materials, not finished products. As a result, their average tariffs on the manufactured products they import from developing countries are now four times higher than the ones they impose on products that come mainly from other industrialised countries.

'Disguised protectionism'

Ever more elaborate ways have been found to exclude Third World imports, the UN Secretary-General said, 'and these protectionist measures bite deepest in areas where developing countries are most competitive, such as textiles, footwear and agriculture.'

'In some industrialised countries, it seems almost as though emerging economies are assumed to be incapable of competing honestly, so that whenever they do produce something at a competitive price they are accused of dumping - and subjected to anti-dumping duties,' he added.

In reality, stated Annan, 'it is the industrialised countries who are dumping their surplus food on world markets - a surplus generated by subsidies worth $250 billion every year - and thereby threatening the livelihood of millions of poor farmers in the developing world, who cannot compete with subsidised imports.'

'So it is hardly surprising if developing countries suspect that arguments for using trade policy to advance various good causes are really yet another form of disguised protectionism,' the UN Secretary-General said.

He also cautioned against using globalisation as a scapegoat for domestic policy failures. 'The industrialised world must not try to solve its own problems at the expense of the poor. It seldom makes sense to use trade restrictions to tackle problems whose origins lie not in trade but in other areas of national and international policy. By aggravating poverty and obstructing development, such restrictions often make the problems they are trying to solve even worse.'

What is needed is not new shackles for world trade, said Annan, but greater determination by governments to tackle social and political issues directly - and to give the institutions that exist for that purpose the funds and the authority they need. 'The United Nations and its specialised agencies are charged with advancing the cause of development, the environment, human rights and labour. We can be part of the solution.'

The UN Secretary-General warned that 'Unless we convince developing countries that globalisation really does benefit them, the backlash against it will become irresistible. That would be a tragedy for the developing world, and indeed for the world as a whole.' - TWN/SUNS4564

In supporting 'comprehensive' negotiations, Singapore argued that for some sectors in developed countries there were strong domestic pressures to protect inefficiencies. This was a political fact that could not be ignored. For this reason, it was important that the new round be broad-based enough for each country to make necessary internal trade-offs, and each country must be able to garner enough supporters for trade liberalisation. But the call for 'comprehensiveness' should not be a cynical way to prolong the negotiations and delay the opening-up of politically sensitive sectors.

But Singapore did not even address the fact that several new sectors were introduced into the Uruguay Round on the same argument of trade-offs (and Singapore had sold this idea in 1986 to the ASEAN (Association of South-East Asian Nations) summit in Tokyo and split the developing-country group), to enable the North to liberalise the textiles and clothing sector and agriculture, with mandated future negotiations, but without achieving any benefits for the developing world. And now developing nations are being asked to do more to provide trade-offs so that the developed nations can carry out their earlier commitments.

The above article first appeared in the South-North Development Monitor (SUNS- issue no. 4564).

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