EU-LDC Themes - Social, Environmental & Welfare
aspects of Trade - Policy
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Labour standards – Policy Background
Most countries recognise the International
Labour Organisation (ILO) as the most competent organisation
to deal with core labour standards at the international level. They
have signed up to the ILO Conventions. However, signing the ILO
Conventions is voluntary and since the ILO does not have an enforcement
mechanism, several countries, which are signatories of the ILO Conventions,
are not willing or able to ensure compliance. Therefore some countries,
the rich nations in particular, identify a need for other instruments
to promote compliance with core labour standards. They suggest that
linking labour standards to trade is one of the means to stimulate
respect for labour rights throughout the world. Developing countries
disagree with this suggestion. They fear that developed countries
will use labour standards for protectionist purposes. Furthermore,
they argue that if developing countries will have to comply with
international labour standards, their costs of production will increase
which in turn limits their economic development. To improve labour
conditions, promotion of economic development will be more beneficial
than linking labour standards to trade.
The European Union is one of the supporters of linking trade to
labour standards. During the Nice Summit in December 2000 the member
states confirmed the European Union’s aim to promote the integration
of fundamental rights (including labour rights) in all policies
of the European Union. This includes external policies such as trade
and development co-operation. In 2001 the European Commission presented
a Communication in which it describes how it can promote core labour
standards and social governance. The Commission recognised the ILO
as the main body for the promotion of labour standards. However,
since there are limits in the effectiveness of measures within the
ILO, the EC document outlined how the issue of labour standards
can be integrated into policies such as trade and aid policies.
This section discusses aspects of the following Commission’s policy
options:
Labour standards in the
WTO
During the WTO Ministerial Meeting in Seattle in 1999 the European
Union was hoping to establish a Joint ILO/WTO Standing Working Forum
on the relation between trade, globalisation and labour. The European
Commission argues that the WTO can play a role in promoting compliance
with core labour rights, for example through positive incentives.
Other developed countries had similar ideas, but developing countries
resisted these wishes of the rich nations as they feared that labour
standards might be used as protectionist measures. The WTO Ministerial
Meeting in Seattle failed, which was partly the result of disagreement
on the issue of labour standards.
For the following Ministerial Meeting in Doha in 2001, the European
Union basically did not change its position on labour standards
in WTO negotiations. The European Union proposed enhanced co-operation
between the ILO and the WTO. It advocated support for the ILO as
an observer in the WTO negotiations. The European Union also underlined
that it is firmly against the use of sanctions-based approaches,
as these might result in the abuse of labour rights issues for protectionist
purposes. As in Seattle, the European Union favoured the establishment
of a Joint ILO/WTO Standing Working Forum. Also in Doha, developing
countries were successfully resisting these demands from the European
Union and other developed countries. The Doha Round of negotiations
was launched while excluding labour issues.
Making
globalisation work for people: Development and workers’ rights at
the 4th WTO conference, Lamy, P., EU Trade Commissioner,
SPEECH/01/522, Doha, 2001
EU Trade Commissioner Lamy addressed this speech to the participants
the International Confederation of Free Trade Unions (ICFTU) conference
which was coincided with the Doha WTO Ministerial Meeting in 2001
Trade
and labour standards: A difficult issue for many WTO member governments,
WTO, Doha WTO Ministerial 2001: Briefing Notes, Geneva, 2001
This website provides information on the WTO discussions concerning
labour issues.
For more information on the discussions on labour standards in
the WTO also visit the research
section on Labour standards.
Generalised
System of Preferences (GSP)
In the
2001 Communication, the European Commission discusses the possibilities
of including labour issues into the GSP scheme. The reviewed GSP
of 2002 has indeed reinforced the scheme as a promotion instrument
for core labour standards. Compliance with core labour standards
gives developing countries the option to apply for additional tariff
reductions in certain sectors. In addition, the new GSP scheme also
allows the European Commission to temporarily withdraw the preferential
treatment, if a developing country is found to seriously and systematically
infringe core labour standards. This withdrawal affects the complete
GSP scheme and not only the additional preferences regarding labour
standards. Also, the European Commission can request withdrawal
for those countries, which have not applied for the additional preferences.
In some cases, the European Commission
may decide to withdraw the preferences for a certain sector/product
only. The Commission regards the withdrawal as an exceptional measure,
only in case of clearly unacceptable practices. In case the Commission
believes it is necessary to withdraw the preferences for a country,
it will submit a proposal to the European Council for temporary
withdrawal. If by the time of acceptance, the concerned country
has not taken steps to conform to ILO labour standards, the proposal
will enter into force. Usually, the withdrawal takes six months
during which the situation in the country involved is monitored
and evaluated.
The core labour standards used in the EU GSP scheme are related
to eight ILO conventions covering four areas to which the 1998
ILO Declaration on Fundamental Rights and Principles at Work
refers. These areas are:
- forced or compulsory labour (Conventions No. 29 and No. 105)
- freedom of association and the effective recognition of the
right to collective bargaining (No. 87 and No. 98)
- discrimination in respect of employment and occupation (No.
100 and No. 111)
- child labour (No. 138 and No. 182)
The 2001 Communication forecasts
that the next GSP, which will start in 2004, will further refine
the social incentive scheme and the link with ILO convention. The
European Commission is also considering the provision of technical
assistance through development co-operation. This will assist developing
countries in complying with ILO conventions, and therefore help
these countries to become eligible under the additional preferences
of the GSP. Finally, the European Union will seek to promote the
application of similar preference schemes among other industrialised
nations.
User’s
guide to the European Union’s Scheme of Generalised Tariff Preferences,
DG Trade, February 2003
This guide sets out the background and rules of the GSP scheme.
Item 8 of the scheme discusses the special incentives for protection
of labour rights. Item 15 explains clauses on temporarily withdrawal
of the GSP.
Trade agreements
Another EU instrument which helps to promote core labour standards
are trade agreements with third countries. Since 1992, all EU agreements
concluded with non-EU members are including clauses on human rights
such as core labour rights. Like the GSP, the core labour rights
are defined as the eight core conventions of the
ILO. The European Union has also incorporated the declaration
of the Copenhagen World Summit for Social
Development in agreements with third countries concluded after
1995. The Copenhagen World Summit was organised in 1995 by the UN
Department of Economic and Social Affairs. It gathered world leaders
to commit themselves to the fight against poverty, unemployment
and to social integration.
The most important agreement with third countries relevant for
the link between trade and labour is the Cotonou
Agreement, which the EU concluded with 77 ACP countries in 2000.
The 2001 Communication notes that the Cotonou Agreement is an example
on how future agreements should include labour issues. Article 50
specifically mentions ‘Trade and labour standards’. In the agreement,
the EU and the ACP countries commit themselves to respect the eight
ILO Conventions. They agree to enhance co-operation on the formulation,
strengthening and enforcement of labour regulation. The EU and ACP
countries also state in their agreement that labour standards are
not to be used for protectionist trade purposes.
The Cotonou Agreement also includes clauses on social development
as an objective of development assistance (Article 25). The 2001
Communication notes that the promotion of core labour standards
should play a more important role in European Union development
assistance. Ways to do so should be worked out in the Country Strategy
Papers.
Other instruments
The effects of trade agreements with third countries on labour
conditions is included in the Sustainability Impact Assessments
(SIAs). The SIAs, which from 2003 will be conducted gradually with
each major EU trade agreement, need to ensure that the parties have
an insight on the social effects of policy initiatives. More information
on this instrument is available in the separate section
on SIA. Similarly, the section
on Corporate Social Responsibility (CSR) focuses on the policies
of the European Union in promoting core labour standards by influencing
business behaviour.
Links
Copenhagen
World Summit for Social Development, 1995
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