4.1. The Social Clause and Workers' Rights

The most contentious aspects of the coming into force of the WTO has been the intellectual property rights and trade related investments issues. Less intense scrutiny has been applied to the social dimensions of the WTO agreements. It was not until the end-point of the long and protracted period of the negotiation that a vital and missing element was brought to the front of the debate, that is the link between trade liberalization and workers' rights. Since then, the potential impact of WTO on labor and the implications for wages, workers health and safely have been raised in a number of for a by labor organizers, the ILO and some northern governments, mainly the US and France.

The issue of the appropriateness or inappropriateness of incorporating a multilateral social clause within the framework of the multilateral trade agreement is a long standing historical debate whose roots extends back to the discussion leading to the founding of the International labor Organization (ILO) [The Generalized system of preferences (GSP) a system whereby the developed countries permit duty-free entry of selected products from developing countries.]

Social clauses mean varied things to varied groups and institutions. The working definition adopted here is the one subscribed to by the ILO wherein a (multilateral) social clause encompasses the "idea of imposing a certain uniform basis of social protection as a condition of participating in the multilateral trading system (Van Liemt 1994). The issue of the level of social protection, its range and scope and its enforcement has been rather divisive even among its most ardent supporters.

Within the context of existing ILO framework, the level of social protection must involve some minimum workers' rights, including but not limited to: ban on child labor or a minimum age rule (ILO convention 138); ban on forced labor (ILO conventions 29, 105); fair pay convention right of association (ILO 87); right of collective bargain (98); freedom of discrimination such as race, sex and religion (1ll); and occupational safety and health. (ILO 1994).

From the perspective of human rights, fairness and equity there are no apparent disadvantages to a multilateral social clause. But at an operational and political level there are serious limitations.

First, the WTO system of dispute settlement only allows for trade retaliation and is specific to trade related activities. This presents two problems: (1) it would legitimate the (inherently) protectionist application of multilateral social clause to block exports and thereby competition from developing countries; and (2) it would greatly increase the unequal treatment of workers within a country. Since the MSC would only apply to trade related activities there is no automatic extension of such rights to workers in the non-trade sectors of the economy. This is particularly relevant for developing countries economies where there already exist economic dualism. As pointed out by Van Liemt (1994) MSC focuses only on export such as manufacturing sector, but these may not be the areas most in need of improvement. Van Liemt among others contend that MSC may tend to heighten disparities between urban and rural workers in a country. Edregn (1979), for example, argues that the worst offenses of exploitation and deprivation may be in plantation, mines, construction industry, small service firms working for the domestic market, a point reinforced by (Van Liemt 1994).

A second problem has to do with the power relations between the South and the North. Securing worker's rights by WTO dispute settlement mechanisms (DSM) grants northern governments greater control over southern countries. The DSM and WTO are not noted for transparency and accountability. WTO is not subject to same kind of democratic control processes as many UN agencies that are under the auspices of the wider UN system which would provide developing countries more opportunities for redress.

The rather tattered and worn historical legacy of social clauses in the international economy shows that it is possible for social clauses to be an integral part of the international trade environment; but by itself, it does not necessarily lead to widespread improvement. As such, social clauses are a only a starting point. Historical examples of the use of social clauses include the rubber agreement of 1979, the tin agreement in 1981, the sugar agreement of 1987.

Currently (1995) the debate over the inclusion of a social clause within WTO is effectively comatose. A pessimist would be resuscitated. Resuscitation over the inclusion of social clause within WTO is effectively say it is a dead issue. However, this does not mean that it will not if aid when it does occurs will be along clearly drawn battle lines.

The European Union led by France is very adamant about incorporating a multilateral social clause into WTO, even though poorer members, such as Portugal, are very wary of too strict and too far reaching restrictions on such issues as child labor. As the ILO reports point out, European firms who face severe competition from Eastern Europe, Southeast Asia and Latin America in the textile and clothing industries see themselves as "victims of social dumping".** They therefore push the hardest for social clause. As European unemployment problems persist, there will be greater incentive to push for the extension of some version of the EC social charter that covers wage disparities, labor rights and the ideal that workers rights must never be sacrificed in trade agreements. *[See in particular commitment 8(d): "Reinforce the social development components of all adjustment policies and programmes, including those resulting form the globalization of markets and rapid technological change, by designing policies to promote more equitable and enhanced access to income and resources"; and programme of Action 26 (a) "Place people at the centre of development and direct our economies to meet human needs more effectively." (WSSD 1995)]

The US advocacy for workers' rights provision in the WTO is tempered by the fact that it does not have Europe's unemployment problem. It does, however, have a problem of declining real wages and rising income inequality. The Clinton administration also has a very troubling credibility gap with the labor unions, one of the Democratic Party's major constituent base. Thus the Clinton's administration schizoprehenic wavering between free and managed trade is bound to become more pronounced. Caught between the need for WTO to have at least the appearance of consistency with the provision of the US trade law of 1988 which required that "workers rights be one of the principle of trade negotiation of GATT" and the need to reduce friction with the US labor movement, the US has been leading a rather anemic struggle over the globalization of workers nights. Thus the US mantra is that "denial of workers rights should not be a means for a country or its industries to use low wages to attract industry and thereby gain competitive advantage in international trade."

Weighing on the negative side of the multilateral social clause debate are the developing countries, led by the newly industrializing countries. As a group, the NICs justifiably argue that the current web of regulation that constitute the WTO is directed entirely at them. And as such is meant to install a break on their advances into areas (such as high technology and services, banking, finance, etc.) that northern governments seek to protect. In this regard the IPR and TRIMs provision were rammed down their collective throats. They therefore view incorporation of multilateral social clauses as another potential noose around their necks. For them the MSC is a "devious protectionist too" to further reduce their international competitiveness. This is certainly the views held by India, Malaysia and Singapore.

Likewise, the US position is no less disingenuous. It seek to mollify American labor and ease the tension and strain of the NAFTA debacle in which the Clinton administration alienated large segments of the labor community by paying lip service to the discourse.

Because of the inherently contradictory nature of the positions by its advocates, workers' rights issues never made substantial inroad into the Uruguay round discussions. Thus giving one pause to wonder about the seriousness of the attempt by Northern governments to push this effort It could be argued that the major obstacles to the inclusion of a social clause into WTO was the developing countries' governments who instantly labeled it as a protectionist measure. But this is not the main reason why it did not make. The fact is that workers' rights and/or a social clause was not a key component of the corporate agenda. In fact it is inimical to their interests. The developing countries as a group were entirely opposed to intellectual property rights and to the wholesale inclusion of services. Yet there was never any question that these measures would, without substantial alterations, be adopted in the final text. The only major pressing issues that have been postponed for future discussion are the issues of workers rights and a social clause.

In fact, despite US avowed intentions regarding workers' rights, it would appear that American negotiators did not work very hard to secure the incorporation of theses measures into an agreement. The US trade negotiator, Carla Hills, who was in charge of the US negotiating team during the key negotiations, period 1986-1991, has publicly argued that the GATT only establishes a free trade zone and is not a common market; hence a social charter is inappropriate. "We", she argues, "want to abolish the rights of nations to impose health and safety standards more stringent than a minimal uniform world standard". (Environmental News Network 1994) Though American government officials, in particular, Labor Secretary Reich, argue in favor of a list of global labor rules -- a core list of international labor standards -- there has yet to be an institutional mechanisms for enforcing or establishing such standards within the WTO.

At the same time most arguments used by developing countries are themselves suspicious, hypocritical and self-serving. Many developing countries argue that the issue of labor standards and practices (a) is "based on values and norms set by western nations and (b) impinges on issues of national sovereignty." Both are specious arguments. In the first case, the very economic system, the investment priorities, the monetary and fiscal policies in force in these countries are wholesale adoptions of western models and includes all their values, bias and presumptions. With regard to the question of national sovereignty many of these nations who are highly indebted or dependent on foreign capital cannot make national policies that are not consistent with the views and dictates of the International Monetary Fund, the World Bank or the international capital markets. It is only on matters of gender equity, workers rights and environmental protection that these government are willing to wave sovereignty.

The real issue is not ultimately about national sovereignty norms but about the ability of locally entrenched interests to continue to the workforce the flag of national or western values or exploit and subjugate. At the crossroads of the intransigent position of the South and the half-hearted, wavering position of the North, sits the International Labor Organization (ILO), itself mired in internal struggles over the MSC and the WTO.

In a recent paper by its Governing Body, the Working Party on the Social Dimensions of the Liberalization of World Trade (one faction within the ILO led by Michael Hensenne, Director General of the ILO), sought to provide a social dimension for the international trade system by pushing for the incorporation into WTO of a minimum set of ILO conventions. The paper argues that it is important that the ILO work with the WTO on this issue. The ILO would be the body that judges violation of labor rights as it relates to trade. The key mechanisms of enforcement of the core workers rights would be the social dumping argument with resort to countervailing duties and WTO dispute settlement mechanism (article XXIII).

An alternative (one is tempted to say, fundamentalist) position within the ILO argues for sticking to the basic fundamentals of ILO founding principles and thereby rejects the idea or the incorporation of MSC into the WTO. This group believes that the basis for workers' rights should continue to be the cooperation and non-coercion model enshrined within the ILO system. To proceed beyond this threshold, they argue, is not only inappropriate, but might be injurious to the to the ultimate goal of social progress if it impacts negatively on the process of economic growth, which is crucially dependent on an efficient trading system.

What the OECD countries, the developing countries and the ILO camps ignore are the more fundamental questions of social justice dimension of globalization and trade liberalization and the implicit assumption governing both. What are the possibilities of creating meaningful social protection in a system that assumes people are inputs into the production process? In this value system importance is placed on the final output, the cost of the production, its prices and not on how the output was produced. There is a fundamental contradiction and hence a real limitation on making the system responsive to social goals, when there is no commitment to treating individual as moral ends but as parameters of productivity and efficiency.

Discussion of the relevance or usefulness of a social clause in WTO tends to remain at the level of issues of child labor, forced labor and so on. Undergirding most argument is the believe that some minimal level of international labor standards is necessary so that the exploitation of workers do not become "an instrument of competition." It is with this perspective in mind that ILO and others promote the idea of basic workers rights. Still others support a social clause out of their analysis of (and belief in) the severe limitations of the benefits of internationalization and globalization.

Fundamental to all this, and missing from most all discussion, is the gendered nature of globalization and the resulting imbalance and asymmetric of rewards and responsibility between the sexes. There is widespread recognition that globalization and hence trade liberalization is proceeding along two interconnected lines the flexibilization of production and the feminization of the global labor force. Increasingly the cheap labor that is being exploited is female labor but not male labor. How then do you build in a social clause without accounting for gender inequality and gender discrimination as the basic starting point?

Underpinning these positions are a number of important questions rarely dealt with (some of which were raised in the ILO report). Does social progress depends on the liberalization of trade? Does trade liberalization not require some minimum level of social harmonization? And if so, what is a normal level of social protection, how does this take into account women's double burden? What is an abnormal level of social protection? Who determines this? And how can it be fixed at the level of the individual nation, by unilateral action or by multilateral action? Should normality/abnormality be defined in terms of fundamental rights of person or in terms of gendered relations or in terms of the market approach of negotiations and contract? In other words, can it be left to the market's notion of supply and demand in the labor market and the level of development of a country to determine the basic social ground rules? How do you make a system subscribe to social ground rules when the very premise of globalization and trade liberalization is based on disparities in wages, sexual health and safety standards and disparities in environmental conditions and sexual inequality. The objectives of every machinery of the twin processes of globalization and trade liberalization is to allow transnational corporations to maximize profits by exploiting these disparities while at the same time de-legitimizes attempts to harmonize standards in a upwardly direction.