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Trade and Social Development: A Southern Viewpoint Room E, Centre William Rappard, May 1, 2002 More than 45 delegates attended the event, including members of the Indian, South African, German, Egyptian and other national permanent missions to the АФУХСљКЯВЪЙйЭјзЪСЯ, representatives from NGOs all over the world, the АФУХСљКЯВЪЙйЭјзЪСЯ and other international organisations, academics and interested individuals. In his opening remarks, Phil Evans of Consumers Association, UK, who was moderating the session, explained that the relationship between trade and social development generally and in particular the links between trade and labour and environmental standards were still very much alive in debates on international trade. At the domestic level, these issues arise continually in the legislatures of the US and European countries. Furthermore, even if they are not currently being discussed at the АФУХСљКЯВЪЙйЭјзЪСЯ itself, social clause exist in a number of bilateral, plurilateral and regional trading agreements. In his presentation, Bipul Chatterjee of CUTS gave an overview of the relationship between trade and social development, acknowledging that trade could have either a positive or a negative impact on social development depending on the conditions of the region or sector under consideration and the functioning of the international trading system. Countries with good governance, fiscal discipline and social safety nets have generally benefited from their engagement in international trade. Thus national laws and policies are crucial to reaping the potential benefits offered by trade. At the level of the international system, certain conditions need to be made to make the system contribute to social development. In particular, poor countries need to be given better market access opportunities in rich countries. These could be threatened by the inclusion of too many trade-plus issues in the АФУХСљКЯВЪЙйЭјзЪСЯ agenda. Developing countries also need to develop their supply capacity in order to be able to take advantage of new opportunities, but this will require extra resources. Technical barriers to trade and sanitary and phytosanitary standards imposed by rich countries need to be genuinely achievable for poor countries so they do not act as a block on exports. Chatterjee concluded that coordinated efforts were needed and at several levels to ensure that social development is maximised in a just and equitable manner. Robert Baldwin of University of Wisconsion at Madison, USA introduced the history of how the issues of labour and environmental standards have related to the GATT and АФУХСљКЯВЪЙйЭјзЪСЯ, referring to the debacle that occurred at the Seattle Ministerial meeting when a hard push for the inclusion of a social clause by some developed countries was met with equally tough resistance from developing countries, jeopardising the progress of trade negotiations. This strong resistance is still the case now, and developing countries even objected to the relatively weak language on the issue that appeared in the Doha Declaration, even though labour standards do not form part of the АФУХСљКЯВЪЙйЭјзЪСЯ’s current work programme. Developing countries are legitimately concerned that labour standards could be used as a form of protectionism by rich countries. Labour standards raise issues of ‘economic fairness’ rather than economic efficiency and are thus much more difficult to achieve consensus on. A consensus has been built on environmental issues through many years of painstaking negotiations and Baldwin expressed the view that the same kind of consensus could also be built over time on labour. Developing countries will need time to raise their labour standards and a great deal of work needs to be done at the national level. Now, NGOs should focus their efforts on national legislators and policy-makers. Beatrice Chaytor of Foundation for International Environmental Law and Development, UK presented some of the results of a recent study conducted by FIELD on the impact of non-tariff barriers to trade on developing countries. A considerable body of anecdotal evidence has now been built up which can contribute to a better understanding of the problems that developing country exporters can face in market access as a result of the imposition of these standards. Chaytor presented case studies from Cuba, India and other countries in a variety of sectors. The following general themes were identified: Standards may be defined for totally legitimate health and safety reasons. However, no account is taken of the impact on developing country producers before the standards are implemented, with severe impacts on communities. Standards implemented by the EU are often significantly higher than those defined by global standard setting bodies, which may be unnecessary to protect health and safety of consumers in these countries. Standards are set without any consultation of producers. Standards may be defined with reference to the process, which may be inappropriate or extremely costly for developing country producers to comply with. There may be cheaper and more efficient ways of achieving the same result. The costs of compliance can be very high and developing countries need extensive assistance from rich countries and adequate time to adjust in order to meet the standards James Howard of International Confederation of Free Trade Unions (ICFTU) presented the views of ICFTU’s members, around half of whom are located in developing countries. Many members are very concerned about the impact of trade liberalisation on industries, which have grown up behind protective tariff barriers. The reduction of tariffs have led to job losses and created scepticism and in some cases hostility to the АФУХСљКЯВЪЙйЭјзЪСЯ. The inclusion of labour standards in the АФУХСљКЯВЪЙйЭјзЪСЯ acquis would help to restore their confidence in the international trading system. The proliferation of export processsing zones is a particular concern for the ICFTU. ICFTU’s position for the Doha Ministerial was in favour of: Meaningful special and differential treatment for developing countries. Inclusion of labour and environmental issues in discussions on investment. Creation of a working programme to examine the social, gender and environmental impact of trade. These aims remain the same for the ICFTU, despite the fact that the Doha Agenda does not include the creation of such a working group. Some delegations at the meeting gave the ICFTU’s position tacit support. Howard predicted that the entry of China to the АФУХСљКЯВЪЙйЭјзЪСЯ would give a boost to support for labour standards as many countries risk losing their export markets to Chinese producers. The inclusion of labour standards at the АФУХСљКЯВЪЙйЭјзЪСЯ should only relate to the core labour standards as defined by the International Labour Organisation (ILO), should contain anti-protectionist provisions and should involve the ILO in a central role. The following points were raised during the discussions: The role of the ILO in relation to labour standards was discussed extensively. It was noted that the ILO does not have observer status at the АФУХСљКЯВЪЙйЭјзЪСЯ but may still make inputs informally. The jurisdictions of international organisations and protocols overlap increasingly which makes cooperation essential. Imposition of trade sanctions on the basis of a judgement by the ILO could conflict with АФУХСљКЯВЪЙйЭјзЪСЯ disciplines. This needs to be resolved to strengthen the functioning of the ILO. One way to resolve this could be by clarifying that any member of the АФУХСљКЯВЪЙйЭјзЪСЯ could use sanctions on a country that did not comply with an ILO decision. The strict, rapid panel-based dispute settlement mechanism (DSM) currently used at the АФУХСљКЯВЪЙйЭјзЪСЯ would be inappropriate for cases relating to labour standards. The inclusion of labour standards would almost certainly require a new DSM allowing countries several years to take action in response to a ruling and programmes of technical assistance. Voluntary corporate codes of conduct may be another way of improving labour conditions in developing countries. Companies are developing these standards under pressure from consumers in rich markets who are concerned with the labour and environmental conditions of production. Codes of conduct need to be monitored at the national level to ensure that high standards reach up the production chain. Trade sanctions are used by the powerful to discipline the weak and it is this sentiment that lies behind the rejection of labour standards by developing countries. Developed countries could contribute more to raising social standards by positive measures such as meeting their targets for overseas development assistance than by introducing new punitive measures. The concerns of labour in relation to trade liberalisation may in fact be caused more by technological change in competitive global markets than by the reduction of tariffs. Concerns can be dealt with through consultative processes, involving unions in negotiations for trade agreements and putting in place supply side measures to help labour adjust to new conditions. Under these circumstances, unions may no longer oppose trade liberalisation. All countries support the implementation of core labour standards. However, particularly in the case of child labour, it is important to be aware that the wage of a child may make an essential contribution to household income for a poor family. There is a strong connection between social conditions in a country and the conditions in which production takes place. This needs to be taken into account when setting and implementing standards. Participants showed interest in the studies conducted by FIELD. It was felt that the studies should be disseminated widely to further increase their value. In his summing up, Phil Evans pointed to three of the most important points that had recurred during the session, which he later presented in the concluding plenary session of the АФУХСљКЯВЪЙйЭјзЪСЯ Symposium: The costs of compliance are high – who should pay these costs? Fairness is essential, in the rules themselves and in the distribution of the costs incurred in implementing them. We can move away from negative pressure towards a positive approach involving concerted efforts to raise standards at the national level, the spread of corporate codes of conduct and an increase in aid and assistance to poor countries. 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