Global Policy Forum

By Yash Tandon

The issue of labour standards as a negotiable matter within the World Trade Organisation (WTO) has been a contentious issue ever since the First Ministerial Conference of the Organisation in Singapore in November 1996. It was then made a subject of further study by the WTO and the International Labour Organisation (ILO). The matter is still under study.

At the Fourth WTO Ministerial at Doha in November 2001, the Conference took note of the study under way and recognised the significance of the core labour standards. But the matter of its negotiability was put on a slow burner.

There are many organisations, especially among the trade union movement, that want the WTO to take on board the labour issue. Within the African region, the Congress of South African Trade Unions (Cosatu), among others, has been a strong advocate of this position. (Cosatu, we understand, is considering reviewing, or at least revisiting, its position).

Besides trade unions, many non-governmental organisations, especially those advancing the cause of human and workers' rights, have also been advocating this position. These two sets of organisations have bona fide reasons for wanting to provide a better mechanism for the observance of workers' core labour standards than provided for by the voluntarist ILO.

Workers and rights-based organisations, in other words, have the welfare of the workers at heart, and they genuinely (but mistakenly, as we shall see) believe that placing labour on to the WTO would further their cause.

These two sets of organisations share this platform with governments and sections of the private sector whose motivation, however, is rather suspect. They, especially those representing corporate interests in the developed countries, want the enforcement of labour standards by the WTO because they would then use this as a means of keeping out 'cheap imports' from the developing countries, that threaten their industries and jobs. In other words, theirs is a protectionist ploy.

In fact, the argument can be used by any high cost producing country against any other low cost producing country. It could be used, for example, by a South Africa-based textile manufacturer against say Zambia, the argument being that the Zambian producer is not keeping up labour standards and thus has an 'unfair advantage' over the South African producer.

Indeed, this is one of the attractions of taking the matter to the WTO. It is argued that the WTO, through its sanctions mechanism, would force countries like Zambia (or China or Thailand) to maintain labour standards so that 'cheap exports' become a thing of the past. Through the route of the WTO, the South African manufacturer, as well the union of workers, hope to protect their industry and jobs against 'unfair competition' from say Zambia or Zimbabwe or whoever.

The protectionist argument, however, is a double-edged sword. It cuts both ways. Whilst South Africa could use the argument against say Zambia, then by the same token, Europe or the United States could use it against South Africa.

Indeed, the protectionist argument is a distraction from the real issue at stake, the issue that the human rights and workers' organisations legitimately raise. Their case deserves serious attention.

One of their arguments arises from what the ICFTU and the Public Service International have called the 'missing link' between trade/WTO and the core labour standards. The issue of labour rights cannot, they say, be de-linked from trade.

Production is the prior condition to trade. And labour is the very essence of production. Hence the rights of labour ought to be enforceable under a trading system.

The problem, they say, is that the pressure applied by the ILO is not enough to get governments to comply with the labour standards to which they have agreed by signing the various labour conventions. By bringing the matter to the WTO, their objective is to link governments' commitment to certain labour standards with rights in the trading system, guaranteed by the WTO's system of dispute settlement. The WTO has teeth; the ILO does not. The WTO thus can enforce compliance with labour standards that has eluded the ILO. The WTO, they say, should not set standards (which is the job of the ILO), but ultimately be involved in enforcing these after the ILO procedures have been exhausted.

The rights-based organisations support the unions on this issue. They say that they are not in favour of labour standards being used as a protectionist ruse, nor are they interested in increasing the power and mandate of the WTO. All they are interested in is to integrate the rights of workers with trade, in an arrangement in which the issue of human rights predominate over that of trade. In other words, they aspire for the WTO to be human rights sensitive rather than have rights subjected to the trading dictates of the WTO.

This, however, is where the problem begins. The case of the unions and the rights-based organisations is genuine, but it is based on a double misunderstanding. The first is a misunderstanding about the character of the WTO and its disputes settlement mechanism. The second is a misunderstanding of the political economy of the relations between labour and capital.

The WTO is first and foremost a rule-setting body on trade matters. Trade is its raison detre. Anything that is brought within its purview becomes a trade issue, and negotiable as a trade issue. This is where the environmentalists have also gone wrong. They, too, were allured by the sanctions bearing function of the WTO. They used the same arguments as the labour standards advocates.

Bring the environment under the purview of the WTO, they said, and the trading nations will be forced to conform to international environmental standards. Nothing of the kind has happened. On the contrary, the WTO's Committee on Environment is mired by several contentious issues, one of which is whether the sanctions power should be with the WTO or with the individual Multilateral Environmental Agencies (MEAs).

Still on the WTO, there is also a misunderstanding about the sanctions power of the organisation. It is not as neutral as it appears on first sight. The Disputes Settlement Body is a judicial body. It is lawyers and judges who drive the process. Lawyers charge fees, and in the case of the WTO, exorbitant fees. Few small countries can afford the fees, even with the newly created subsidised service for them.

In litigation, the power of money does matter. Furthermore, when the panel of judges reaches decisions, there is no collective mechanism to enforce them. Thereafter each country is on its own. If, say, Zimbabwe wins the case against the United States of America, for example, it is then up to Zimbabwe to impose sanctions on the USA.

So the whole argument of trying to 'benefit' from the sanctions bearing facility of the WTO to enforce labour standards is based on confusion about the WTO and its dispute settling mechanism. The WTO is not what the workers' unions or the rights-based organisations think it is. Whether the WTO should or should not become a rights-based organisation is quite another matter. What it should become is not the same thing as what the WTO actually is in reality.

The second misunderstanding in the case of trying to bring labour standards into the WTO arises out of confusion over the political economy of the relations between labour and capital. To be sure, there is a 'link' between trade and labour standards (the 'missing link' argument of the ICFTU).

But high labour standards are a function of growth and distribution of national wealth, and not a function of trade. There is a methodological problem here. It is a problem of misplaced context. If the living standard of the ordinary worker in Sweden is so much higher than of the worker in South Africa, it is because of essentially two factors - the higher productivity and per capita income in Sweden, and the successful struggle of the Swedish workers to a more equitable distribution of the national wealth.

In other words, the workers gain higher benefits as a result of their struggles at the level of the enterprise, and at the national level. There is no real substitute for struggle. This is not to say that international agencies are irrelevant.

The ILO is an important medium for the workers to get recognition of their rights at the international level. But it cannot be a substitute for workers' struggles at the national level. They can help but not substitute.

Take the United States, for example. Its moral posturing about bringing labour standards into the WTO is hollow. Why? Because the USA is one of the few developed countries that have not ratified some of the key labour conventions. Even the right to form unions is considered in the United States as a 'distortion' of the market. Unionisation in the USA is only 15 percent of the workforce, compared to, for example, 40 percent in Korea.

As for 'child labour', the USA allows recruitment of under-fifteens in the army. It also allows prison labour. The point of the argument is that high labour standards are primarily an outcome of the struggles of the working class in a growing economy. Though agencies like the ILO are very important for workers struggles at the international level, high labour standards cannot be imposed from the outside.

Conclusion: Yes, it is important to recognise workers' rights as human rights. Yes, it is true that the ILO does not have teeth to impose internationally recognised core labour standards. Yes, also, that the subject of 'cheap labour' will not go away; the media in the West constantly raise the spectre of 'yellow peril' or 'brown peril' as sources of cheap labour that, allegedly, will drown the wages and jobs of the workers in the rich countries. But the answer to all these matters is not to take the issue of labour standards over to the WTO. That would be an egregious error.

Already, globalisation has shifted bargaining power in favour of capital and against labour. This is well recognised in the literature. Third World countries can compete in the world market primarily because of their access to 'cheap' labour. This, like it or not, is their 'comparative' advantage.

Give the WTO the power to impose sanctions against them on the grounds that they export products of cheap labour, and the position of the workers in the Third World would become even worse than before. They could be without jobs altogether.

Therefore, the matter of taking labour standards to the WTO is not such a simple matter as it might appear at first sight. There is no easy way for the workers to attain their rights. There is no substitute for struggle at the enterprise and national levels.

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