9:06 AM Mar 6, 1996


the International Labour Organization by member-governments to bring about trade liberalization under conditions of fair competition through social progress in all countries.

Hansenne speaking in London at a conference on 'Liberalising World Trade and Prospects for the Singapore Ministerial Meeting', was focusing on 'Trade and Labour Standards: Can Common rules be Agreed'.

The text of his speech was released here by the ILO office.

The ILO head noted that the idea of a social clause in the trading system did not get very far at the Marrakesh Ministerial meeting for concluding the Uruguay Round, and he did not anticipate "any formal links can be forged in the near future" on this question.

Those who anticipate inclusion of a social clause in the next trade round should not expect this to be done quickly or easily, but those who opposed should not assume it would fade away, Hansenne said.

If there is no international agreement on "a few rules of the game", some players would make their own rules and unilateral trade sanctions by powerful individual countries or trading blocs, restrictions on development aid or financial flows and consumer boycotts would be hard to avoid, nor could renewed protectionism be discounted, he declared.

While discounting prospects of action on a social clause in the trading system, Hansenne suggested there was however scope for parallel actions at the ILO and the WTO to ensure trade liberalisation to take place along with social progress.

Hansenne situated his arguments for competition on the basis of playing the game of social progress fairly in conditions of globalization of the world economy and the ensuing intensified international competition in a more rugged environment.

But the weakness of his arguments, as those of others in the North, about social conditions as an 'unfair comparative advantage' in international competition to be corrected through 'rules of the game', lies in their failure to address the other production factors like capital and technology, whose terms of availability not only differ, but have 'rules of the game' of the international economic system which accentuate the advantages for the North and its corporations and the protagonists of transnational 'globalization'.

The ILO head said that the narrow focus given to the discussions over a possible link between labour standards and international trade, by reducing it to a single issue of trade sanctions as an enforcement weapon for respect for a given level of labour standards had led to "predictably sterile" confrontations.

He would therefore put aside the sanctions issue "for the moment", Hansenne said, and went on to explain the ILO's tripartite structure, its standard setting role and the elaborate machinery for supervising application of the ratified Conventions.

All these he said showed that the ILO had a well-developed normative framework for deciding what constituted fair or decent labour practices and that it had a tried and proven mechanism for checking and promoting compliance with obligations accepted by a State in the Conventions, which it was free to decide on acceptance or not, but once accepted, it must fully comply.

This voluntary process, Hansenne said, had been almost surprisingly effective, but there were now calls to go beyond their limits.

The acceptance virtually everywhere of the market economy, liberalization of trade and internationalization of economic exchanges -- the globalization of the economy -- had led to intensified international competition in a more rugged economic environment and fears had arisen that the pressure of competition might turn the 'virtuous circle' of social progress in a race to the bottom.

With the prospect of even fiercer competition after the completion of the Uruguay Round, some had revived the idea - considered by the founders of the ILO but rejected by generality of governments then -- to give mandatory dimension to protection of internationally recognized labour rights, and including this as a commitment inherent in the WTO membership.

This mandatory dimension involved two propositions -- that all countries engaged in international trade should have legal obligation to observe certain workers' rights (irrespective of ratifications of particular conventions) and this should be enforceable through trade sanctions.

This idea had resulted in an immediate and sharp polarization of debate, oversimplified into allegations of unfair competition through 'social dumping' on the one side and disguised protectionism on the other.

Referring to the ILO discussions, since Marrakesh, Hansenne said these discussions had been marked by the 'vigorous restatement of conflicting views'. But while agreement on whether or not a social clause was desirable in trade agreements remained as remote as ever, he believed some progress had been made at the ILO.

The terms of the debate had however been better clarified and defined.

The international trade unions and governments promoting a social clause had stressed that they were not calling for a global minimum wage or uniform working conditions, but that the content of the social clause would be limited to "the very basic workers' rights" -- freedom of association, collective bargaining, abolition of forced labour and child labour, and that developing countries had a legitimate right to pursue economic growth by making full use of their legitimate comparative advantages.

Countries opposing the social clause had reaffirmed their own recognition of the validity of these basic workers rights and commitment to improve social conditions as development proceeds.

Hansenne said that though the fears and suspicions on both sides had by no means been dispelled, the temperature of the ILO debate had unquestionably gone down and he was reasonably optimistic that it would be possible to agree on a number of common rules, "though these common rules may be a far cry from the kind of social clause originally proposed".

It was not ILO's role, Hansenne declared, to put right distortions in international competition arising from different levels of protection that countries offered their workers.

"This problem, if such it is, is more the domain of the WTO", he said.

The liberalization of trade was ILO's concern only in so far as it might affect both the ability and will of States to pursue social objectives of the ILO, and how to find effective means of ensuring social progress went hand in hand with liberalization of trade and the globalization of the economy.

"In other words," Hansenne said, "the challenge is how to ensure that all the members of the WTO, who are also members of the ILO, 'play the game' of social progress fairly, despite the constraints and temptations of fierce competition."

Hansenne defined 'play the game fairly', as meaning that countries must abide by certain "fundamental rules" (core labour rights) which applied to all countries irrespective of their level of development and, given the new opportunities afforded by economic development that liberalization generates, "they must endeavour in good faith to improve the lot of the workers.... they must guarantee that to some extent at least the economic progress that liberalized trade produces will go hand in hand with social progress.

The ban on forced labour, the recognition of freedom of association, the right to engage in collective bargaining and protection against discrimination were conditions that must be fulfilled for labour markets to function optimally and were logical extensions to the labour market of the principles of liberalization of the market in products and services.

The elimination of child labour, though fundamental, did not however fit easily into the category of core standards -- and pursuing it needed both political will and economic and social development. While it attracted the greatest public attention, it was also a problem most difficult to overcome.

While there was thus broad agreement on fundamental workers' rights to form the 'rules of the game', there was the issue of implementation.

Incorporating them into the WTO, and opening up possibility of trade sanctions, was for the WTO membership to decide, Hansenne said which seemed to imply that he was not ruling it out.

He however added that the political and technical difficulties of incorporating them into the international trading system should not be under-estimated. But if there was such a decision, the ILO standards should be the basis for defining the rights concerned.

But whatever happened in the WTO, other routes within the ILO should be explored.

Noting that the right to freedom of association as a fundamental commitment was implicit in ILO membership and there was a special procedure to hear complaints on this, whether or not a country had accepted that Convention, Hansenne wondered whether this concept could not be extended to other fundamental rights.

He referred in this connection to the offer of the workers group in the ILO governing body to suspend their demand for mandatory trade sanctions linked to a social clause, if this type of special procedure could be introduced on forced labour and discrimination.

Though he governments and employers had not endorsed this idea, Hansenne felt there was still a great deal of scope for pursuing it in the ILO.

As for pursuing the parallel development of trade liberalization and social progress, Hansenne argued that while the voluntary nature of ratification of ILO's Conventions was perfectly justified, ILO members "are not free to ignore the general commitment they have entered into to 'play the game' of social progress fairly -- i.e. to promote social objectives in good faith to the extent their economic means permit".

"This commitment also applies to them as members of the WTO. In other words, they must not only refrain from artificially maintaining inferior social conditions in order to gain an unfair comparative advantage in international competition but, much more positively, they must also endeavour in good faith to distribute the fruits of the liberalization of trade within their societies equitably."

Since such a commitment was inherent in ILO membership, it should be feasible to establish a machinery for examining and comparing the efforts of various members to meet this commitment and to share the benefits and burdens of liberalization, Hansenne argued.

The function of this machinery would not be punitive, but would shed light on any shortcomings, and identify the kind of solutions that enabled members to pursue the twin objectives of liberalization and social progress more effectively.

Such a twin approach to give "more bite" to the rules of the game would pave the way for a standard setting exercise aimed at consolidating the will and ability of States to promote social objectives.

An ILO Convention or Recommendation could in due course codify the principles and practices that member States would be invited to abide by the liberalization process of international trade, and perhaps, more generally, in the development and structural adjustment process. Such an instrument could spell out the standards that should be given priority attention as social progress was achieved -- for e.g. standards for occupational safety and health and social security.

The lack of any explicit social dimension within the trade system did not mean that this dimension did not exist for partners operating within the system and members of the WTO, as also members of the ILO, must take into account in one organization the commitments they have voluntarily entered into in the other.

While he did not anticipate any formal links on trade and social clause to be forged in the near future, and the advocates of this should not think this could be done quickly, those who oppose it should not assume it would fade away, Hansenne said.

Hansenne said: "Taking a long-term global view, the liberalization of trade will no doubt be beneficial. But workers who feel their jobs and livelihoods threatened by the opening of markets will be extremely sensitive to competition they perceive as unfair, as based on exploitation of other workers. And consumers already responsive to environmental concerns, will be increasingly reluctant to purchase goods produced by forced labour or child labour.

"If international agreement cannot be reached on a few rules of the game, some players will make their own rules. Unilateral trade sanctions by powerful individual countries or trading blocs, restrictions on development aid or financial flows, and consumer boycotts will be hard to avoid. The risk of renewed protectionism cannot be discounted either."

Neither a single-minded insistence on trade sanctions nor an inflexible resistance to any form of link between trade and labour standards "offer a realistic prospect of agreement," the ILO head added.