8:20 AM Apr 22, 1997


Geneva 22 Apr (Chakravarthi Raghavan) -- A global system of "social labelling" -- ILO award of "overall social label" to countries complying with core labour standards and agreeing to an international supervisory mechanism -- to promote and enable "consumer choice" is advocated by ILO Director-General Michael Hansenne.

This latest twist to the international trade-social clause link debates is in the ILO Director-General Michael Hansenne's report to the forthcoming 85th session of the International Labour Conference.

An ILO press release describes the Hansenne initiative as a "new attempt to reconcile the issues of international trade and adherence to labour rights" and as proposals to the ILO's 174 member-states to ensure social progress and humane conditions proceed apace with trade liberalization in a globalizing world economy.

The report addresses the issue of ILO role in standard setting and maintaining the momentum and relevance of the ILO in a situation of a world economy which is rapidly globalizing, and in promoting adherence to and observance of the core labour standards that are often described as universal respect for fundamental human rights.

But in the public eye, both of the Northern-controlled international workers organizations and in the media and consumer groups, as well as in developing countries where his views have come to be looked at warily, it will be Hansenne's proposal for an "overall social label" and its possible use or link to trade and trade sanctions that will grab attention and create controversies.

At a press conference to introduce his report, Hansenne ducked the question that these and other initiatives avoided the main issue of globalization, namely a globalization that promotes neo-liberalism and to end the role and powers of the state in favour of corporations.

Last week, the International Union of Food and Allied Workers (IUF), at its Congress here, placed the ills of globalization at the doors of its "neo-liberal form" and in effect blamed those trying to tackle it through such moves as a trade/social-clause link.

Hansenne at his press conference was asked about this and whether his own proposals would deal with this real issue? He was also asked why, if such labelling and governmental actions to promote it among consumers could be justified on the ground of ensuring sharing of benefits of trade liberalization and globalization, other initiatives such as governmental campaigns in poor countries against conspicuous and luxurious consumption (of imported products) by elites should not be allowed?

The ILO chief did not answer these questions, speaking however of problems of globalization that could not be solely resolved via ILO standards, but that he was firmly convinced that globalization of the world economy had to be accompanied by respect on the part of all players for certain minimum social rules. There was little chance of benefit of trade liberalization for workers without protection for workers rights, he argued.

The process of globalization, he said, involved a whole range of different actors and policies and the ILO wanted to be involved in these. The President of the World Bank, Mr Wolfensohn would be coming to the annual ILO Conference, and would also have a dialogue with a tripartite group, Hansenne added.

The World Bank, the IMF and the WTO are at the forefront of promoting the neo-liberal view of globalization and norms to promote them. But it was not clear from Hansenne's response whether he saw the dialogue with Wolfensohn at the ILO as one to address the globalization/neo-liberalism links and issues.

The latest Hansenne proposals on globalization, trade and social standards, has moved considerable distance from his earlier views when soon after Marrakesh he brought up at the Labour Conference the trade-social standards issue and seemed to suggest ILO's passing judgement on observance of labour standards by countries and the use of WTO trade sanctions to promote observance.

The considerable public and private debates on the pros and cons of this idea since then -- inside the governing body of the ILO, among trade and labour protagonists, and the non-governmental community -- has clearly influenced Hansenne's (and the tripartite International Labour Office's) thinking.

While still promoting the view that adherence to an ILO social label scheme, involving adherence to a Convention and accepting on the spot monitoring by the ILO about compliance, would be voluntary and thus not violate either the ILO charter or the WTO rules, the Hansenne report clearly envisages teeth to the scheme through consumer groups and wholesalers/retailers of the developed countries to promote it through boycott of goods not having such labels.

"The debate on the social clause is now closed and there is no point in trying to resurrect it; let us leave it in its grave," Hansenne said at the press conference, in suggesting that his proposals have nothing to do with the trade/social clause concept.

He sought to present his idea of an ILO "overall social label" as in the interests of the Third World countries so as to ensure some multilateral and objective process for such labelling (by a country that accepts the core labour standards and ILO supervision over its observance), rather than the currently proliferating consumer, industry and even individual government sponsored labels like the most recent Clinton administration's voluntary standards (and labels) by the clothing industry and US importers/retailers for clothing products.

The question over the ILO labelling proposal, he said, was whether the initiative should be with the industrial countries and allow a proliferation of various initiatives or would the developing countries have a say and control (through the ILO machinery), Hansenne asked.

The Hansenne proposals envisage a strengthened (ILO) intergovernmental process to set universal standards of labour rights and peer pressures to ensure their acceptance buttressed by supervisory mechanism about compliance, and a complimentary process of using consumer power in the market-place to promote observance of labour standards, without falling foul of WTO rules like those on technical barriers to trade (TBT).

The report suggests that many ingredients of a final product are taken into account in setting and accepting the standards of a product for final sale in the market, and thus taking the labour standards in the production of the product into account would be a similar exercise.

However there is already some controversy within the WTO trading system on use of the TBT to set standards based on "process production methods" to ensure that exporting countries adopt same or similar (environmental) process methods that the importing countries have, and thus ensure "fair competitivity" between domestic and imported products.

Also, to the extent that governments, by themselves, or through the ILO intergovernmental process and conventions, will be involved in promoting particular standards and labelling, and consumer choices based on them, the question could arise whether a similar logic could not apply when governments promote "voluntary" consumer actions in their own countries in making choices between domestic and foreign goods, and essential or conspicuous luxury consumption.

The Hansenne proposals involve an ILO declaration that would affirm

* universal respect for fundamental human rights in the workplace, as defined by seven ILO core conventions on freedom of association and collective bargaining, forced labour, non-discrimination and minimum age;

* strengthened supervisory mechanism to promote these principles and monitor universal compliance;

* the International Labour Office undertaking and publishing periodic reports on efforts made by each country to translate economic development resulting from liberalization of trade into genuine social progress;

* award of "overall social label" to products of a country entering international trade, but based on compliance with labour standards on production of goods and services entering domestic market and international markets; and

* use of such labels to enable and promote adoption of charters or codes of practices for producers and of labels guaranteeing conditions under which consumer articles are manufactured and consumer choice.

The Hansenne report argues that "social progress is no longer only a matter for States (but) is increasingly a matter for other actors, in particular manufacturing enterprises, wholesalers and retailers, and consumers". The report cites the "growing awareness" among transnational enterprises of the social and environmental repercussions of their activities and among consumers in developed countries of the consequences of their purchasing decisions.

The convergence of these concerns, Hansenne says, is leading to a proliferation of voluntary charters, codes of practice, and labels of different sorts purporting to guarantee the manufacturer's or distributor's respect for a given set of criteria.

While "in some instances" these have proven to be useful in promotion of desirable social ends, Hansenne warns that such labelling may, "risk being arbitrary, singling out a particular right or product or being put to improper use."

For example, he says, such labels may be directed only to export sectors, thus abandoning workers in domestically traded sectors. And improper or selective use could prompt boycotts, leading to job losses rather than production improvements in targeted industries.

In emphasizing the ILO's role in standard setting, and adopting new standards in line with the international environment, Hansenne said in his report that standards were not an end but a means to promote the ILO's objectives and putting them into practice.

But the ILO cannot hope to renew and strengthen the consensus on the standard setting without considering the impact of the new international environment both on the actors of social progress and on the values of those standards themselves.

While standard setting had to be done by States, the economic interdependency created by trade in goods, services and capital, "conveniently known as globalization" called for a global and universal approach.

Answers to the ILO questionnaire on social dimensions of trade liberalization, showed that globalization had forced many States to carry out legislative reforms to cope with international competitiveness as best as they could, and that the relative decline in ratification rate of Conventions might atleast partly be due to a reticence in making long-term international commitments.

Globalization might also in an indirect way make it more difficult for States to assume their roles in standard setting, since it encouraged establishment of fairly autonomous economic blocs that undertake these tasks.

Also, globalization had ushered onto the scene a host of new social actors than the traditional ILO's non-governmental partners (the unions) who put forward their own independent demands for standards along with States.

While implicit in the ILO charter is the notion of social justice in the context of each State, globalization has destroyed this framework by placing greater emphasis on comparisons between workers in the same trade or industrial group and not only within the same country.

"With deepening inequalities in the developed countries, there is danger that globalization might increasingly make this principle seem a threat rather than a promise."

While there is no proof that globalization is the direct cause of inequalities, "it is highly likely that public opinion will continue to believe widely that globalization inevitably implies a downward levelling of pay for jobs of equal (low) skills in a market in which goods and capital can freely circulate."

The end of ideological, social and political confrontation in the world (after the fall of the Berlin wall), combined with globalization, was ushering in a new Weltenschauung where globalization was becoming an end in itself. And ironically this new age was no longer expected to occur with the (Marxian concept of) end of class struggle and the withering away of the State, but by the State being stripped of its social and economic prerogatives and the emergence of a global society answerable only to the laws of economic rationality.

"This new form of the ideology of progress persists in affirming, like all that have preceded it, that human progress is more important than human beings, and it might well, as the same causes engender the same effects, result in the same disillusion."

One of the two limits on ILO's standard-setting action, in the context of globalization, was that its interlocutors were member-states whose will and capacity to follow guidelines were affected by international competition. This was because capital had become mobile, while this was not true of workers - and even less so for workers in member states.

Social progress is no longer only a matter for States; it is increasingly a matter for other actors -- manufacturing enterprises, wholesalers and retailers, and consumers.

This could be attributed to two closely interlinked factors.

The first is a growing awareness among large and medium enterprises of social or environmental repercussions of their activities. The second is the growing awareness among consumers and their organizations, especially in developed countries, of the responsibilities they undertake in making a choice in the market place.

This two-pronged converging movement can lead to the signing of charters or codes of practice for producers and of labels.

So long as these voluntary arrangements do not become technical barriers to trade, they seemed to be free from criticism or condemnation levelled at social clauses on account of their protectionist connotations in international trade.

But developing countries were perplexed by thee multiplying labels and are sometimes afraid of this type of decentralized solutions which could be used against them in a discriminatory way for protectionist or political purposes.

While the objectives of this private labelling movement and those of the ILO seem to be the same, depending on its origin or methods used, labelling movements risk being arbitrary.

Indeed there is a danger of:

* singling out a particular fundamental right which has more of an emotional appeal amongst general public, at risk of overlooking other equally essential aspects such as freedom and safety under which a product is manufactured;

* singling out selected results by addressing a problem through a particular product or sector designed for export, thus overlooking the fate of workers, often the majority, producing or working exclusively for the domestic market;

* having negative repercussions as the labelling movement is not always accompanied by measures to protect workers who may lose jobs as a result of boycott of their goods;

* being put to improper use if there are no sufficient means to adequately control the origin or conditions of production; and

* undermining the prerogative of each state to enforce its own legislation, through its own inspection services.

Hansenne conceded that his own ideas need to be looked into in depth and said the competent services within the ILO have scarcely begun their task.

As far as the ILO is concerned, its labelling should aim at promoting law and practice meeting demands of fundamental standards, but also benefiting workers whose products are not identifiable or exported.

Labels should encourage or reward countries whose legislation is in line with a predetermined set of fundamental principles or rights.

To have any credibility, the labels must guarantee the laws have been complied with in actual practice. But the ILO could provide no such guarantee without an on-the-spot international inspection, which is both reliable and legally independent.

Such a system could be provided through an ILO Convention which, because of its voluntary nature, could allow each State to decide freely whether to give an overall social level to all goods produced on its territory - provided it accepted obligations inherent in the Convention and agrees to have monitoring on the spot.

Even if the Convention had an obligation to promote the label, it would remain voluntary since, like other conventions, adherence to it would be an entirely free choice.

Granting a label would not also imply any trade discrimination against "unlabelled" products, Hansenne argued, side-stepping the effect of consumer (and wholesale and retail marketers') choice as between labelled and unlabelled products.

From the standpoint of international law, members of the WTO not wishing to adhere to the Convention would find it difficult to criticise the principle - as it would aim to promote ILO objectives to which they are also committed.

And the approach would still leave room for charters or codes of conduct for manufacturers or distributors not wishing to see their products bear the stigma of coming from countries which do not put themselves in a position to grant the social labels.