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White Paper on Trade and International Labor Standards
conclusion of the Uruguay Round and soon to be established World Trade
Organization set the stage for a new era in international economic
relations. That a new
organization was needed to manage the results of the Uruguay Round is
just one example of the expansion of the trading system.
The trading system is a work in progress.
positive relationship between trade and the creation of wealth is
universally recognized. Trade
is not however, an end itself, nor is economic growth pursued without a
social vision. Economic
growth cannot be maintained if it generates social turmoil.
Our trade and economic policies must ultimately advance our goals
for a just and prosperous society.
The goal of creating the WTO was not to have more trade for its
own sake, but to raise standards of living around the world.
Opening up new markets and forging interdependence is critical to
fostering global growth and creating jobs--in all countries.
for the purpose of promoting this objective--and not for protectionist
reasons--that the United States seeks multilateral consideration of the
link between internationally recognized labor standards and trade.
objective is recognized in the preamble to the GATT which states:
to maintaining economic growth is by building the middle class in
countries around the globe. Moving
people up from poverty into the middle class ensures that they have the
incomes to buy the products they or workers in other countries produce. Increasing the middle class fosters stability and democracy.
Increasing the middle class should broaden support for an open
treading system because of the greater number of persons having a stake
in the system. Conversely,
if the established middle class sees that its benefits from a liberal
trading system are being eroded, because those benefits are not being
shared equitably in other countries, support will diminish.
equity in growth can be more easily accomplished if workers are afforded
basic rights such as freedom of association, the right to organize, a
prohibition on forced labor, and a minimum age for the employment of
children. Workers should
share in the rewards of their increased productivity.
recognize that many developing countries have a legitimate competitive
advantage based on relatively low labor costs in production of certain
goods. Yet rising levels of
trade and investment link the developed and developing economies more
and more tightly each year. The
accelerating integration of the global economy makes it ever less
possible to wall ourselves off from labor practices abroad.
And some labor practices simply place countries outside the
community of civilized nations. We
must either actively accept some share of responsibility for how our
economic partners conduct their affairs or else passively accept
therefore appropriate that just as the trading system has developed
rules that fostered economic growth through
trade, so now in this age of globalization, it is appropriate for
the trading system to take responsibility for assuring that the gains
from trade are shared equitably.
the implications of globalization make it more important for the trading
community to acknowledge its responsibility
to promote social as well as economic progress, the concept of
linking trade to social conditions dates back to the early part of this
century. The Treaty of
Versailles, which formed the basis of the ILO charter in 1919, calls
upon members to endeavor to secure "fair and humane conditions of
labour" both at home and "in all countries to which their
commercial and industrial relations extend."
The ILO is now celebrating its 75th anniversary and is again
calling for members to reassess how it addresses the social consequences
of international economic trends. The charter for the International Trade Organization, written
in 1946-48, stated that the members...
believes that what was true then is even more vital today and that the
newly created World Trade Organization should take steps to achieve the
above objectives of its early predecessor organization.
We seek agreement in the WTO on a program of work that will
examine the relationship of trade to internationally recognized labor
standards. The Prepcom
should consider how this work should be organized, the relevant
questions to be addressed and make recommendations to ministers for
consideration upon entry into force of the WTO.
are the labor standards to be addressed?
(Note: The ILO does not recognize the term "internationally recognized labor standards" and other critics are also questioning this term)
United States realizes that many countries fear that folding labor
standards into the world trade context will expose their exports to
protectionism and eliminate their comparative advantage.
This is not what the United States contemplates.
We have led the effort to liberalize world trade and have
continuously rejected protectionism.
What we are seeking is to define, through multilateral
negotiations, agreement on a core set of standards that will support a
free and open trading system. Our
vision of a social clause in trade agreements is not one which sets
minimum wages or regulates detailed aspects of any country's labor
standards should comprise this core set of principles?
The United States has no precise prescription to propose.
We would expect that nations should be able to agree that some
labor practices simply place countries outside the community of
civilized nations. We would
expect that any such list will certainly include goods produced by
prison or slave labor. Some
forms of child labor--such as work by very young children--will also be
found to violate universal norms, even in the poorest countries.
Nor is poverty a valid pretext for repressively restricting
freedom of association and organization.
done by the ILO and other UN agencies, as well as some prominent
proposals on this issue have identified the following human rights based
standards that we believe should be considered. (Question: Do we want to
describe these in general terms?)
Beyond a core list of standards which are so fundamental as not to even depend on level of development, consideration needs to be given to other standards which may be relevant to our objective of assuring that the benefits of expanded trade and economic growth are shared by workers.
It would be inappropriate to for the global community to try to develop uniform levels of working hours, minimum wages, benefits or health and safety standards. The developing countries' insistence that they must grow richer in order in order to afford American or European labor standards--and that they must trade if they are to grow richer, is essentially correct. Yet this observation contains within it an implicit acknowledgement that standards should not be static, that a country's ability to offer its citizens better working lives rises with development, and that international expectations may properly rise as well.
The challenge for the global trading community is to develop a framework of standards that leads to improved labor conditions as economies grow. Rather than set absolutes, one approach might be to consider evaluating results or trends. For example, as economies expand, one could expect that workers should become better off, not worse off. The gap between rich and poor should tend to narrow with development, not widen. Improvements in workplace health and safety standards might be reflected in a country's health and mortality statistics. Compulsory education requirements or increases in the average level of educational attainment could be considered indicative of a country's determination to promote the interests of children and youths. Alternatively, the existence of mechanisms which allow participation by the workers and society to set standards such as those related to wages or health and safety might help assure that labor standards rise commensurately with growth.
of the ILO
The United States would be remiss if it did not contemplate full participation by the ILO in the pursuit of improved conditions for labor globally. The Preamble to the ILO Constitution states that "the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions of their own countries". However, while the text clearly shows that the founders of the ILO did not want states engaged in social reform to be at a disadvantage in international competition, these same framers of the ILO Constitution deliberately discarded all forms of coercion. Rather, the ILO seeks to promote social progress through its tripartite processes and procedures designed to identify areas of concern in the labor and social field, adopt appropriate international standards, provide technical assistance to achieve those standards and measure performance toward compliance.
are 174 ILO Conventions. Some
concern fundamental human rights, others are more technical in nature,
covering a variety of issues relating to employment conditions and
national labor and social policy. Some
conventions set forth minimum standards, others are
"promotional" in nature, that is, they establish a goal to
attained over time.
United States has only ratified 11 ILO Conventions.
Nevertheless, the United States stands ready to defend its law
and practice in the labor field. It
has been our view, that the political act of ratification is less
important than the implementation of the spirit of the Conventions. In recognition of the emphasis placed by others on
ratification, we are however, accelerating our review of the basic human
rights convention on non-discrimination in employment and a technical
convention on labor administration.
It is a major goal of this Administration to make sure that U.S.
progress toward ratification of ILO standards cannot be used by other
countries as a pretext to challenge the credibility of our interest in
improving respect for worker rights in the world community.
Director General, Michel Hansenne, in his report to the 75th anniversary
conference of the ILO states that the ILO's mandate requires it to be a
party to the current debate regarding international labor standards and
raises questions as to just what that role should be.
Hansenne outlines several possible alternatives for strengthening
the effectiveness of ILO standard setting activities for use in
conjunction with the regulation of international trade, while at the
same time safeguarding the voluntary nature of ILO standards.
The United States is ready to cooperate with the Director General
and the tri-partite members of the ILO to further develop the ideas
contained in the report, and to explore how the ILO and the WTO together
can best work together to pursue their mutual objectives.
We should not miss the opportunity of this 75th anniversary to
pursue the objective of ensuring that the exploitation of workers does
not distort international competition, but rather that the benefits of
expanded trade and economic growth are shared by workers.
The United States calls on all representatives to the ILO to give
that organization a clear mandate in this endeavor.
Analytical work by the OECD will also be useful in furthering understanding of the relationship between labor standards, economic growth and trade. While we would not want this to be considered a developed country forum, that organization could advance the discussion through a dispassionate analysis of the questions involved. Several committees of the OECD have already initiated work in this area.
Trade Agreement Programs and Labor Standards
NAFTA debate in the United States demonstrates the vital role that labor
standards plays in U.S. trade policy.
The supplemental labor agreement--the North American Agreement on
Labor Cooperation is the first U.S. agreement that links implementation
of agreed labor standards to possible trade sanctions.
The U.S. anticipates that labor standards will be an integral
element of any future trade arrangements with our North American
neighbors--or any other country or group of countries.
of workers rights is already a component of several U.S. programs which
provide trade and investment benefits for developing countries.
Examples include the Caribbean Basin Initiative, the Generalized
System of Preferences (GSP), the Overseas Private Investment Corporation
(OPIC), the Andean Trade Preferences program, the Multilateral
Investment Guarantee Agency (MIGA), and U.S. foreign assistance
programs. Only the GSP
program, and to some extent OPIC, have a an active review process for
implementing worker rights conditionality.
Consequently, GSP has been the focal point for discussions of
worker rights issues.
grants zero duty tariffs to eligible articles from beneficiary
developing countries. The
GSP Renewal Act of 1984 requires that beneficiary developing countries
must be taking or have taken steps to promote internationally recognized
worker rights. An identical
or nearly identical standard exists for the other programs listed above.
Some critics argue that the worker rights standard leads to
interference in domestic affairs of foreign countries and detracts from
the program's objective of promoting economic development.
The United believes, on the other hand, that the worker rights criteria have promoted broad-based economic development worldwide and ensured that exports under GSP are not based on the exploitation of workers. Our objective in implementing the GSP worker rights statute has always been to encourage higher labor standards rather than to limit GSP benefits. We would argue that the worker rights conditionality has provided one useful lever to raise living standards and promote worker rights. For example, Costa Rica and Paraguay enacted major labor code reform shortly after a GSP review was initiated. A number of countries in Latin America subject to GSP reviews--e.g., the Dominican Republic, Panama, Guatemala, El Salvador--have enacted labor code reform to varying degrees.
of an Agreement on Trade and Labor Standards
be premature for the U.S. to table a specific proposal for an agreement
on trade and labor standards. What
we seek is for the international community to examine the issues and
formulate recommendations. Only
through this type of consideration, where all points of view can be
expressed and taken into account, can we expect to reach agreement.
However, other organizations have made proposals which illustrate
various approaches that might be taken.
the most detailed proposal for a social clause is that put forth by the
International Confederation of Free Trade Unions (ICFTU).
The ICFTU plan would establish a GATT/ILO Advisory Body to
specify a list of minimum standards and oversee implementation of the
clause. ILO standards on
freedom of association and the right to collective bargaining, the
minimum age for employment, discrimination, equal remuneration and
forced labour are referenced in the proposal because they are among the
most widely ratified ILO conventions.
The ILO and GATT would review systematically and on the basis of
specific complaints the extent to which GATT contracting parties are
meeting their obligations under the social clause and make
recommendations. When a country was found to be falling short of its
obligations, the Advisory Body would recommend measures to be taken by
the government within a specified period of time to improve performance. Technical assistance, perhaps funded through a social fund,
could be provided. At the
end of a given period, say two years, a further report would be prepared
on the effect given to the earlier recommendations.
If a country had failed to make adequate efforts to implement the
GATT/ILO recommendations trade sanctions would applied.
According to the ICFTU, "These sanctions should probably be
increased tariffs to be levied by all GATT members on the offending
United States, statements by AFL-CIO officials have suggested an
approach similar to that taken in Uruguay Round negotiations of the
TRIPS agreement where WIPO standards were embedded in a agreement which
would be enforced through the WTO dispute settlement mechanism.
AFL-CIO Secretary Treasurer Tom Donahue told an April 25
conference that, .."we need to bring into place a joint mechanism
between the ILO and the GATT or World Trade Organization, a committee
first to examine these issues and to make available to the GATT the
expertise of the ILO . . .
but a judgment and an enforcement mechanism, triggered on a
complaint basis, needs to be established in the World Trade
indicated earlier, ILO Director General Hansenne discusses several
approaches based on ILO principles and procedures for the members to
consider at their 1994 75th anniversary Conference.
Other private sector and academic proposals are also in
stands out about these proposals is that none calls for a European Union
type social charter harmonizing specific labor practices and laws across
borders. There is no call
for an international minimum wage nor explicit health and safety
emphasize promoting and advancing labor standards, not restricting
above discussion also illustrates the types of questions that must be
areas should agreed standards cover and how should they be defined?
can implementation be monitored, promoted and assured?
type of dispute settlement mechanism needs to be in place?
should be the respective roles of the GATT and the ILO?
should be the link to trade, both in terms of actionablility and
matter how these questions are answered, the end result must certainly
include safeguards against protectionist application.
There must be:
process allowing all parties to participate
-- Multilateral review and agreement
-- Emphasis on progressive improvement not rash response
opportunity for any alleged violator to take steps to improve
assistance available if appropriate
-- Responses appropriate to the circumstances and only at the end of
the day if there are persistent patterns of abuse, e.g. sectorial or
general trade sanctions, loss of GSP, ineligibility for international
grant and loan programs, sun- shine to highlight abuses.
Private Sector Support
Raising labor standards globally cannot be accomplished by governments alone. Corporations, especially through their multinational operations, can play a positive role internationally in promoting respect for the rights of worker. Several voluntary codes of conduct establish sets of fair labor standards that U.S. corporations either commit to apply to their operations in foreign countries or, in some cases, require foreign subcontractors or suppliers to apply in their home countries. The Sullivan Principles and the MacBride Principles, for example, deal primarily with labor standards. Others such as the Slepak principles, the Miller Principles, the Maquiladora Standards of Conduct, and the Levi Strauss and Company's Business Partner Terms of Engagement, deal with a broader set of issues of which labor standards is a significant component. These types of codes are to be encouraged. The United States would hope that more and more companies would commit themselves to set positive examples of good corporate labor policies through their foreign operations.
conduct for multinational corporations sponsored by international
organizations also address labor standards.
The ILO Tripartite Declaration of Principles concerning
Multinational Enterprises and Social Policy and the OECD Guidelines for
Multinational Enterprises both aim to encourage multinational
enterprises to make positive contributions to the economic and social
progress of their host country. While both emphasize the need to operate within the framework
of national law and practice, the guidelines they proscribe both include
sections on industrial relations based on ILO principles related to
freedom of association and the right to organize and bargain
collectively, and discrimination. The
ILO Declaration also covers safety and health and wages and working
conditions. The United
States will encourage the ILO and OECD to examine the operation of their
respective guidelines with a view to ensuring their effectiveness in
advancing basic labor standards.
Organized labor in all countries also has a responsibility to make sure that policies and practices they espouse for their membership also promote the broader interests of workers generally.
time for the international community to seriously address the
relationship between trade and labor standards.
The U.S. stands ready to cooperate in any and all fora to begin