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WTO: The battle over labour standards

By Martin Khor, Director of the Third World Network, 13 January 1997

The World Trade Organisation's (WTO) first Ministerial Conference in Singapore on 9 -13 December 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. (This is part of a special series on the WTO Ministerial Conference).

The WTO Ministerial Conference is over. But the battles over exactly what the Ministers agreed to at the Singapore meeting have just begun.

Just after the Conference closed, governments were already giving conflicting views of what had taken place, what was agreed on and how to follow up.

The differences, which emerged at press conferences and interviews after the closing ceremony, are a foretaste of the battles of interpretation when the WTO resumes its meetings in Geneva.

Singapore Trade Minister and Conference Chairman, Yeo Cheow Tong, told delegates at the closing, 'I am very proud to say that we have delivered.' 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 the Europeran Union (EU) were also triumphant. At a press conference, Acting US Trade Representative Charlene Barshefsky was happy that the US had achieved its goals of an Information Technology Agreement.

EU Commission Vice President Sir Leon Brittan called the Conference a 'huge international success'. Having campaigned vigorously for the investment issue to enter the WTO, he now considered this the WTO's future top priority.

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

The Star (Malaysia) 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.'

After the meeting ended, 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 'damage control' they had achieved in face of the fierce Northern onslaught on new issues.

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

India, Malaysia, Indonesia, Egypt, Tanzania, Ghana, Uganda and Haiti had objected to the Declaration agreeing to start an examination of trade and investment in the WTO. Several other countries also objected to the issues of competition policy and government procurement, whilst a vast majority of developing countries were against labour standards entering the WTO.

They felt that integrating these new issues in the WTO would allow the rich countries to gain unfair advantage over the South and open the door for them to link non-trade issues to the WTO, dictate the South's domestic policies, and use the threat of trade penalties to ensure compliance.

They feared that even a decision to 'study' or 'examine' these issues would allow them to enter into the WTO's area of competence, and provide an opening to negotiations and legally-binding agreements.

Their demands to exclude the new issues from the WTO were turned down by the WTO Director-General, who brought the issues to the Singapore meeting via a letter to Conference Chairman, Yeo Cheow Tong, of Singapore.

Together they convened a small informal group of 30 countries, whose work on the new issues consumed most of the real negotiating energy of the Conference.

As a result, the supposed priority issues of review of the Uruguay Round and problems of implementation faced by developing countries were ignored in the Conference's business sessions.

The expected resistance of the core group of developing countries opposing the 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' the original position of the resisting developing countries, and became a talking point in 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 in the Declaration, to how they should be worded.

On labour standards, developing countries managed to get their views and principles into the text. They believe this to be a major victory, as it would prevent future attempts by the North to make protectionist use of the issue.

On other new issues (investment, competition, government procurement), damage control replaced damage prevention as the strategy.

From initially arguing on principle against including these issues in the WTO, developing countries shifted to accepting discussions in the WTO but attempting to yield as little as possible and building in safeguards in the terms of reference of the future discussions.

Of all the new issues, the developing countries did best in protecting their interests in labour standards.

They established in the Declaration (para 4) that the Ministers 'renew our commitment to the observance of internationally recognised core labour standards', but included the following points reflecting their interests:

• the ILO is the competent body to set and deal with labour standards;
• the use of labour standards for protectionist purposes is rejected;
• the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question; and
• the WTO and ILO secretariats will continue their existing collaboration.

Some developing countries felt the text should not be in the Declaration as it gave an opportunity for bringing the issue 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 his closing Chairman's statement, Singapore Trade Minister, Yeo Cheow Tong, interpreted the paragraph to mean that 'there is no authorisation 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 had persuaded other developing countries to include the paragraph in the Declaration, saw it as a big achievement: 'There will be no more talk of labour standards in the WTO. Nobody will in future make us discuss labour standards here.'

Indian Commerce Minister B.B. Ramaiah said, 'India's position (on labour standards) has been reflected in the Declaration.'

The main proponents of labour standards in the WTO appeared to see the outcome differently. As the Business Times (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 briefing, said that Yeo's closing Chairman's statement was his own opinion, and that the binding statement on this issue was in the Declaration.

'No one wants to question genuine comparative advantage, but we recognise the collaboration between the ILO and WTO now and in future,' she said. 'We must recognise that issues of workers' welfare and worker rights are absolutely part of the trade debate, whether we like it or not ideologically...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 recognised labour standards as essential human rights...This dialogue must now be taken further.'

The International Confederation of Free Trade Unions (ICFTU), that had campaigned hard at Singapore for a trade link to labour standards, said, '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".'

To sum up, developing countries, supported by some developed countries like the UK and Australia, have succeeded in placing the issue of labour standards within a non-protectionist context and located it in the ILO instead of the WTO.

But the post-conference statements 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 developing countries may have won the battle of principles at Singapore but have to guard against a resumption of the war at a later date. - Third World Network Features.

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About the writer: Martin Khor is the Director of the Third World Network

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