1

International Labour Standards relevant to

employment security and closure of business in the

context of post-MFA

Tim De MeyerSpecialist on International Labour Standards

& Labour Law, Subregional Office for East Asia (SRO Bangkok) – Thailand

Part IThe Situation

3

Need for “Re-adjustment” ?

IMF, so far available information exports from China/India have increased sharply exports from low-income Asian countries (Bangladesh,

Cambodia, Sri Lanka, Viet Nam) have increased as producers hedge against bilateral quota’s imposed on China

consistent with anecdotal evidence from Cambodia and Mongolia

prices are falling by 12 – 50 %, squeezing the profits of low-income countries

U.S. Commerce Department predicts that the number of countries from which major items will be sourced will drop by 50 % in 2005 and to 25 % of current levels by 2010

i.e. from the current 50 to about 12 Chinese investors are prospecting Bangladeshi EPZs

Labour Standards & Competitiveness

5

Labour Standards Post MFA

Fair Labour Association (FLA) is is a non-profit organization combining the efforts of industry, NGOs & universities to promote adherence to international labour standards and improve working conditions worldwide

conducts independent monitoring & verification of factories to ensure that the FLA’s Workplace Standards are upheld

public reporting: FLA provides consumers/shareholders with credible information to make responsible buying decisions

FLA urge accredited companies to ensure that “they fulfill their commitment to manage shifts in sourcing in a manner consistent with the FLA Charter, Code and national law”, in the light of “attempts by some governments to remain competitive by de-regulating and lowering labor standards”.

adopting laws that guarantee decent working conditions (e.g. hours of work) represent a value to buyers (and failure to adopt such laws an indirect cost): assuring conscious consumers that the products they are buying have been produced by decently treated workers

6

World Bank Buyers’ Survey Cambodia 04

labour standards = a top priority in their decision to source from a country and considered Cambodia to have an advantage over Bangladesh, Thailand, Vietnam and China.

ILO’s presence in Cambodia means independent and transparent monitoring is happening in the country

e.g. GAP stated that the ILO’s presence was an important factor in its decision to stay in the country.

80% of buyers considered auditing of labour standards critical in the wake of the end of MFA quotas, given high marks to the ILO’s monitoring.

45% of buyers said they intended to increase or maintain current sourcing levels even after the MFA expires

> 60% of buyers said that factories’ compliance with labour standards was of equal or greater importance to them than price, quality and lead-time to market.

Buyers stated that improved labour standards have a positive effect on accident rates, workplace productivity, product quality, worker turnover and absenteeism.

9

Labour Standards and Market Access

Labour standards will play a role in the competitiveness of the A/T/G industry as

observance affects the stability of a country and thus its reputation (e.g. CALPERS), as well as labour quality necessary to move into “niches”

observance determines access in particular to unilateral or bilateral preferential trading (tariff reductions)

private buyers feel the need not to tarnish their reputations And are perceived as such …

Viet Nam, WTO access and ILO forced labour Conventions Mongolia, EU GSP preferences and ILO forced labour C. Singapore, US FTA (labour cooperation) and ILO C. 138 Thailand, EU GSP and “Thai Labour Standards” Thailand, US FTA and labour inspection (law enforcement) Pakistan, C. 138 and the Ministry of Commerce (!!) Sri Lanka, EU GSP and application of principles on freedom of association

and collective bargaining in Free Trade Zones trade-related character maybe gleaned from the fact that, for example,

for ASEAN, ILO has registered 4 x more ratifications of (one of the 8) fundamental Conventions since 1995 than any other Convention (less known)

10

Challenges are big Protective labour legislation is

widespread, but the fine-tuning through more flexible

collective agreements is embryonic (working time)

coordination with employment policy and other countries is absent

enforcement is lacking independent unions stifled role of labour inspection underappreciated labour law expertise at all levels is inadequate

(if not ridiculized)

11

Labour Standards Post MFA

T&C is an entry-level industry for unpaid women workers in household and farms unskilled (im)migrant workers

It is expected that brands will consolidate their supply chains so that it will become easier to rationalize and to better monitor labour standards.

Competition does not always play out on costs, but on lead time and quality

Emphasis on timely delivery of quality products implies that employers can ill afford delays and disruptions in production, whatever the cause of such disruptions. The flip side of that coin is that lead firms can be reluctant to enter into contracts in the first place with firms that are located in areas known for frequent labour unrest.

Low wages and working conditions can reflect poor distribution of excessive profits

binding minimum wages and working conditions are an appropriate strategy high non-labour costs due to factors outside the control of the firm

may well create new barriers to the companies in question and job losses - in such cases, policy should rather focus on reducing non-labour costs.

Part IIILS Relevant to the Post-

ATC Restructuring

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ILS relevant to post-ATC restructuring

“Representatives of the persons affected by the measures to be taken, and in particular representatives of employers and workers, shall be consulted concerning employment policies, with a view to taking fully into account their experience and views and securing their full co-operation in formulating and enlisting support for such policies” (Employment Policy Convention, 1964 (No. 122))

i.e. before a Govt. takes any decision affecting employment in T&C (e.g. as a result of trade liberalization), it must consult E & unions in good faith

A worker whose employment is terminated is entitled to a justification a (reasonable) opportunity to defend him or herself an opportunity to appeal against termination advance notice severance allowance or some other form of income protection pre-retrenchment consultations and notification of the

competent authority(Termination of Employment Convention, 1982 (No. 158))

14

ILS relevant to post-ATC restructuring

With regard to retrenchments, it is also recommended that

no efforts are spared to avert, minimize or ultimately mitigate termination for reasons of an economic, technological, structural or similar nature (and that the Govt. promotes solutions)

restriction of hiring, spreading the workforce reduction over a certain period of time to permit natural reduction of the workforce, internal transfers, training and retraining, voluntary early retirement with appropriate income protection, restriction of overtime and reduction of normal hours of work

temporary reduction of hours with compensation for loss of income

alternative employment, (re)training with compensation for loss of income and expenditure

unions/workers’ representatives are consulted in good time about major changes planned in the undertaking on the basis of relevant information

criteria for termination are pre-determined and priority for rehiring is established (when desired)

(Termination of Employment Recommendation, 1982 (No. 166))

15

ILS relevant to post-ATC restructuring – C 95

In the event of the bankruptcy or judicial liquidation of an undertaking, the workers employed therein shall be treated as privileged creditors either as regards wages due to them for service rendered prior to the bankruptcy or judicial liquidation (possibly subject to certain limitations)

Wages constituting a privileged debt shall be paid in full before ordinary creditors may establish any claim to a share of the assets

(Protection of Wages Convention, 1949 (No. 95))

16

ILS relevant to post-ATC restructuring – C. 173/R. 180

In the event of an employer's insolvency, workers have the right to be paid out of the assets of the insolvent employer before non-privileged creditors can be paid their share for

claims for wage arrears of at least 3 months claims for holiday pay for at least the insolvency year and the preceding

year; claims for amounts due in respect of other types of paid absence (for at

least 3 months) claims for severance pay(recommended) wages, overtime pay, commissions and other forms of remuneration

relating to work performed during a prescribed period prior to the insolvency or prior to termination of the employment. This period should not be less than 12 months;

holiday pay for at least the insolvency year and the preceding year; amounts due in respect of other types of paid absence, end-of-year and

other bonuses relating to a prescribed period (not less than 12 months) payments due in lieu of notice of termination of employment; severance pay, compensation for unfair dismissal and other payments

due to workers upon termination of their employment; compensation payable directly by the employer in respect of

occupational accidents and disease(Protection of Workers’ Claims (Employers Insolvency) Convention, 1992

(No. 173) and Recommendation (No. 180))

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ILS relevant to post-ATC restructuring – C. 173/R. 180

(recommend to extend this further to) contributions due in respect of national statutory social security

schemes, where failure to pay adversely affects workers' entitlements;

contributions due in respect of private, occupational, inter-occupational or enterprise social protection schemes independent of national statutory social security schemes, where failure to pay adversely affects workers' entitlements;

benefits to which the workers were entitled prior to the insolvency by virtue of their participation in enterprise social protection schemes and which are payable by the employer.

The same system should apply(a) where the enterprise has closed down or ceased its activities or

is voluntarily wound up;(b) where the amount of the employer's assets is insufficient to

justify the opening of insolvency proceedings;(c) where, in the course of proceedings to recover a worker's claim

arising out of employment, it is found that the employer has no assets or that these are insufficient to pay the debt in question;

(d) where the employer has died and his or her assets have been placed in the hands of an administrator and the amounts due cannot be paid out of the estate.

18

ILS relevant to post-ATC restructuring – C. 173/R. 180

Even better is when workers’ claims are guaranteed by a guarantee institution independent from the employer (public institution or insurance company)

claims may then be limited to a prescribed amount, but not below a socially acceptable level

where the claims protected are limited, the prescribed amount must be adjusted so as to maintain its value

Operating Principles for Guarantee institutions they should be administratively, financially and legally

independent of the employer; employers should contribute to financing these institutions, unless

this is fully covered by the public authorities; they should assume their obligations vis-à-vis protected workers

irrespective of whether any obligation the employer may have of contributing to their financing has been met;

they should assume a subsidiary responsibility for the liabilities of insolvent employers and should, by way of subrogation, be able to act in place of the workers to whom they have made payments;

the funds managed by guarantee institutions, other than those from general revenues, may only be used for the purpose for which they were collected.

Part IIIILO Fundamental

Principles and Rights at Work

Adopted No. Title Ratifications

1930 29 Forced labour (168)

1948 87 Freedom of Association and Protection

of the Right to Organise (144)

1949 98 Right to Organise and Collective Bargaining (154)

1951 100 Equal Remuneration (162)

1957 105 Abolition of Forced Labour (165)

1958 111 Discrimination (Employment & Occupation) (163)

1973 138 Minimum Age (141)

1999 182 Worst Forms of Child Labour (156)

As of 1 September 2005 - ILO = 178 Member States

Percentage of Asian Pacific countries having ratified fundamental ILO Conventions: 1 September 2005

0% 20% 40% 60% 80% 100%

C. 87 48%

C. 98 58%

C. 29 74%

C. 105 58%

C. 138 58%

C. 182 68%

C. 100 74%

C. 111 58%

22

Freedom of Association C. 87

Employers and Workers must be free to defend and further their work-related interests

through organizations independent from both Government and employers

to select the type of organization they think is appropriate for the representation of their interests

to elect competent representatives to join national / international federations not to see their organizations dissolved than by an

independent judicial authority on the basis of a specific legal provision

to have their organizations protected against any arbitrary application of law and order

to organize the activities of their organizations (including going on strike, when considered necessary)

23

Collective bargaining C. 98

the law must protect workers against acts of anti-union discrimination by employers

the law must protect workers against acts of interference by employers

the Government must operate machinery to ensure that the protection is effective

the Government must promote collective bargaining to determine terms and conditions of work (wages, working time, leave, …)

24

Collective bargaining C. 98 States must promote voluntary collective

bargaining to regulate terms and conditions of employment by means of collective agreements i.e. the State must facilitate the negotiating

process, not the outcome of the negotiations CB = freedom to trade on the labour market

under +/- equal conditions of strength wages and what an employer gets in return (e.g.

hours of work) must be determined on the basis of only 2 considerations

what the employer thinks is affordable what the workers thinks is a fair share of the wealth they

are generating Further standards are laid down in the

Collective Bargaining Convention (No. 154), 1981

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FLA Benchmarks on FoA/CB

Workers will have the right to establish and, subject only to the rules of the organization concerned, to join organizations of their own choosing without previous authorization. The right to freedom of association begins at the time that a worker seeks employment, and continues through the course of employment.

The employer will not interfere, to the detriment of worker’s organizations, with government registration requirements regarding the formation of workers’ organizations.

The employer will not dismiss, discipline, or otherwise coerce or threaten workers seeking to form, join or participate in workers’ organizations.

The employer will not interfere with workers’ exercise of the right to freedom of association through intimidation, including illegal or unreasonable searches.

The employer will not use force, or the presence of police or military, to intimidate workers, or to prevent peaceful organizing or assembly.

26

FLA Benchmarks on FoA/CB

The employer will not interfere with the right to freedom of association by controlling workers’ organizations or favouring one workers’ organization over another.

The employer will not discriminate against workers who seek to exercise their right to organize and bargain collectively.

In cases where a single union represents workers, the employer will not interfere in any way in workers’ ability to form other organizations that represent workers.

Employers will comply with all national and local laws and regulations concerning collective bargaining and free association. Where conflicts are known to exist, employers will use the standard that provides the greatest protection for workers.

The employer will not shift production or close a factory for the direct purpose of retaliating against workers who have formed or are attempting to form a union.

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FLA Benchmarks on FoA/CB

Workers’ organizations have the right to elect their representatives and conduct their activities without employer interference.

The employer will not dismiss, discipline, or otherwise coerce or threaten workers because of their exercise of the right to freedom of association. When union officers are dismissed, demoted or otherwise suffer a loss of rights at work, a monitor should look with special attention at the possibility of anti-union discrimination.

Employers will negotiate in good faith with any union that has been recognized, by law or agreement between the employer and that union, as a bargaining agent for some or all of its employees.

Employers and employees will honor in good faith, for the term of the agreement. the terms of any collective bargaining agreement they sign. Employees shall be able to raise issues regarding CBA compliance by the employer without retaliation

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FLA Benchmarks on FoA/CB

In any case where the industrial relations system specifies certain unions as the exclusive bargaining agent, employers will not be required to engage in collective bargaining with other worker groups or organizations on matters covered by the collective agreement.

Trade unions not recognized as bargaining agent of some or all of the workers in a facility should have the means for defending the occupational interests of their members, including making representations on their behalf and representing them in cases of individual grievances, within limits established by applicable law. Workers' representatives should have the facilities necessary for the proper exercise of their functions, including access to workplaces.

Employers will not use blacklists of any kind. Employers shall not offer or use severance pay (or “

indemnicization” in Latin America) as a means of restricting union formation or union operations.

29

Forced Labour - C. 29 Defined in C. 29, identical for C. 29 / C. 105

does not cover one specific situation, but potentially every working (or even non-working) relationship

people work because they want to, because they think it will be of benefit to them, not because someone else forces them to

Contains three elements “all work or service … … which is exacted from any person under the

menace of any penalty … … and for which the said person has not offered

himself voluntarily”

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Is NOT Forced Labour - C. 29

compulsory military service for work of a purely military character

minor communal services normal civic obligations prison labour: work or service exacted as

a result of a conviction in a court of law … provided the convict is not forcibly

employed for any private interest emergency

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No Forced Labour, never - C. 105

Forced labour for political “mainstreaming” Forced labour for purposes of economic

development “as a means of labour discipline” “as a punishment for having participated in

a strike” “as a means of racial, social, national or

religious discrimination”

32

Equal Remuneration - C. 100

1. To bring member States to promote and to ensure equal remuneration for men and women workers for work of equal value

2. To promote acceptance that the contents of the job, and not the sex of the worker, is the correct basis for judging the value of a person’s work

33

Equal Remuneration C. 100

C. 100 requires action & acknowledgement that indirect and direct discrimination does

occur against women, because the burden of child-bearing and family care is

not borne by society (as it should be), but by women because of other pre-existing inequalities (lower

educational attainment, emerging access to the labour market, lower health care…)

because of bias that discrimination must be eliminated, and that the correction entails an analysis of

pay systems and establishment of corrective mechanisms

34

Equality at Work C. 111 States must declare & pursue a national policy designed to

promote equality of opportunity & treatment in employment & occupation

Promoting equality at work means promoting the idea that people’s potential and performance must be judged and rewarded on the basis of objective criteria, without interference of criteria irrelevant to potential or performance (e.g. sex, religion …)

Employment & occupation essentially means the sphere of economic activity

access to vocational training access to credit access to employment or occupation conditions of employment remuneration for work of equal value career progression in accordance with experience, ability job security

35

Equality at Work C. 111

Purpose of this policy is to eliminate discrimination based on race, colour, sex, religion, political opinion, national extraction or social origin

Discrimination is not a distinction, exclusion or preference if it is based on

inherent requirements of the job justifiable suspicion of activities threatening the security of

the State (provided the suspect can defend him or herself) special measures of protection or assistance provided for in

other Conventions “affirmative” measures for persons who, for reasons such as

sex, age, disablement, family responsibilities or social or cultural status, are generally recognized to require special protection or assistance

36

Minimum Age System C. 138

Commitment towards gradual, but total elimination of child labour

Enactment and enforcement of a system of minimum ages Compulsory Schooling General Light Work Hazardous Work

C. 138 – Minimum Ages

General Minimum Age(Article 2)

Light Work

(Article 7)

HazardousWork

(Article 3)

Normally

End of compulsory schooling (minimum

15)

1318

(16 as an exception)

Developing

Countries14 12

18(16 as an exception)

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Priority for Worst Forms C. 182

Give priority to the prohibition & elimination of the worst forms of child labour

slave-like work (including trafficking) sexual exploitation illicit activities (e.g. drugs trafficking) hazardous work (to be determined)

Action must not only include law and its enforcement, but also

monitoring mechanisms (e.g. data collection) programmes of action time-bound measures in three categories

prevention withdrawal rehabilitation

special attention for girls & the vulnerable (e.g. ethnic minorities)

international cooperation

Part IVInternational Labour

Standards as Emerging Market-Access Requirements

40

“Non-Tariff Barriers” Trade between countries is traditionally

hampered by “tariff barriers” … taxes levied upon or as a result of import (“tariffs”) taxes levied after import weighing more heavily on

products not traditionally produced in the country (“measures equivalent to tariffs” / “beer-wine syndrom”)

… and “non-tariff barriers” quota’s (“quantitative restrictions”) measures equivalent to quota’s : regulations

governing a public concern (public health, public safety (e.g. electricity), public morals, equality/dignity of workers, maintenance of a particular competitive environment…) but effectively prevent the marketing of goods/services that have not been produced in conformity with those regulations

41

What are International LS ?

The only coherent set of LS, globally agreed upon by G, E & W in the ILO

Designed to be universally applicable, i.e. leaving much concrete application to national authorities in consultation with the social partners

Take the form of Conventions (to be ratified) and Recommendations (not to be ratified, but equally authoritative)

42

What are MARLS ? « Market access requirements related to

labour standards » (MARLS) are positive or negative measures that target a certain level of respect for labour standards by a producer (or service provider) as a condition for the producer/provider to sell goods or services, particularly on foreign markets conditionality can extend to the ability of

the producer to raise capital (e.g. CalPERS) or sustain intangible assets (e.g. reputation)

43

(1) 19 USC 1307 - Dong Fang

On November 28, 2000, U.S. Customs issued a detention order against a Chinese-owned company in Mongolia, Dong Fang International, for the alleged use of forced child labour in the manufacture of textiles. Charges included employing workers as young as 14, requiring employees to work 14-hour shifts 7 days a week, deducting unreasonable sums from paychecks for miscellaneous expenses, and requiring 16- to 18-year-old workers to work excessive hours. However, the detention order was quietly revoked on 23 July 2001, indicating that conclusive evidence was not found. There are approximately 10 large factories in Mongolia and 30 small operations. Overtime compensation is not always correctly paid.

44

(2) Debt bondage in Taiwan

An article in the Danish daily Jyllandsposten (6 June 2004) reveals that a number of Danish companies use suppliers from Taiwan, who use bonded labour. Asian guest workers from e.g. the Philippines and Thailand pay agents money, sometimes amounting to around DKK 40,000, to receive a job. With interest rates of more than 40% per year, the workers are forced to work for several years in order to repay their debts and to begin to earn some money for themselves and their families. In addition, workers often have to pay high amounts of money for housing and food provided by the employer. For many workers, the only way out of the debt trap is to work overtime for extensive periods of time.

Interestingly, the majority of the Danish companies confronted with the issue were not aware of the fact that the problem existed at all. Therefore, they had no overview of the situation, among other things because this parameter was not included in their criteria for selecting suppliers.

45

(3) CalPERS and China The California Public Employees Retirement System

(CalPERS) is among the largest investment funds in the world, with a portfolio (Aug 04) of USD 165.3 billion

Investment policy is to manage risk by choosing international equity markets in function of

financial criteria (“market factors”) … market liquidity and volatility market regulation and investor protections capital market openness settlement proficiency transaction costs, as well as

… but also “stability” criteria (“country factors”) political stability financial transparency labor standards

Wilshire (a US-based pension consultant) puts together an Overall Scoring Framework of permissible equity markets

46

(3) CalPERS and China In 2000, CalPERS contracted with US-based Verité “to provide a

quantitative ranking of 27 countries based on labour conditions, adherence to United Nations’ standards and governmental efforts to address problems in the following five areas:

Freedom of Association and Collective Bargaining Forced Labour Child Labor Equality/Discrimination Conditions of Work”

“Verité is an independent, non-profit social auditing and research organization established in 1995. Our mission is to ensure that people worldwide work under safe, fair and legal working conditions. Where Verité auditors identify exploitation of workers or health and safety violations in the workplace, we develop concrete steps to correct them through a combination of trainings for management and workers, education programs and remediation programs.”

Factors (1) (2) (3) (4) (5) (6) (7)Weights 17% 16% 17% 12.5% 12.5% 12.5% 12.5% 100%

Subtotal Weights 50% 50% 100%

Political Stability Transparency

Productive Labor

Practices

Market Liquidity and

Volatility

Market Regulation/ Legal System/

Investor Protection

Capital Market

Openness

Settlement Proficiency/

Transaction Costs Revised PreviousScore Score Score Score Score Score Score Score Score

1 Israel 2 3 3 3 3 3 3 2.83 2.832 Poland 2 3 3 3 3 3 3 2.83 3.003 Czech Republic 3 3 3 2 2 3 3 2.75 2.634 South Korea 3 3 3 3 3 2 2 2.75 2.755 Chile 3 3 3 2 2 3 2 2.63 2.636 South Africa 3 3 3 3 2 3 1 2.63 2.637 Taiwan 3 3 2 3 3 2 2 2.58 2.588 Hungary 3 3 3 1 2 3 1 2.38 2.389 Mexico 2 3 1 3 2 3 3 2.37 2.37

10 Jordan 2 2 2 3 1 3 3 2.25 2.0011 India 2 3 1 3 3 1 3 2.24 1.9912 Malaysia 2 3 1 3 2 1 3 2.12 2.1213 Philippines 1 3 2 2 3 2 2 2.12 1.8714 Peru 1 2 2 2 2 3 3 2.08 1.9615 Brazil 2 3 2 1 2 1 3 2.04 2.0416 Thailand 2 3 1 3 2 1 2 1.99 1.9917 Turkey 1 3 2 2 1 2 3 1.99 1.9918 Argentina 1 2 3 2 2 1 2 1.88 1.8819 Colombia 1 2 2 1 2 3 2 1.83 1.8320 Russia 1 3 1 2 2 1 3 1.82 1.5721 Indonesia 1 3 1 2 2 1 2 1.70 1.5722 China 2 1 1 3 2 1 2 1.67 1.6723 Morocco 2 1 1 1 2 2 3 1.67 1.6724 Sri Lanka 1 2 2 1 2 2 1 1.58 1.5825 Venezuela 1 2 2 1 1 1 3 1.58 1.5826 Egypt 1 1 1 3 1 1 3 1.50 1.5027 Pakistan 1 1 1 2 2 1 3 1.50 1.50

Permissible Equity Markets Investment AnalysisApril 19, 2004

Overall Summary: Scenario 1

Country Factors Market Factors

Verite 03 Overall Rank

Verite 03 - Category Scores

50

(4) US S. 301 - China Petition

In March 2004, the AFL-CIO (US ICFTU affiliate) petitioned the USTR, charging that “China’s brutal repression of internationally recognized workers’ rights constitutes an unfair trade practice under Section 301(d) of the Trade Act, and that such repression “burdens or restricts U.S. commerce””

More specifically, the petition claimed that China suppresses freedom of association and the right to bargain collectively.

“China prohibits strikes, and relentlessly represses attempts to organize unions that are independent of the All-China Federation of Trade Unions (ACFTU)”

that China encourages forced labour. “Most of the workers in China’s export sector are temporary migrants from the countryside. They work under bonded labour, a form of forced labour. China enforces a system of internal passports that deprives migrant workers of the most fundamental civil, legal, and political rights when they work temporarily in factory towns and cities. Upon arrival to the factories from their rural villages, migrant workers become heavily indebted in order to pay large “deposits” and other fees to their employers. They lose the deposit if they quit without the employer’s consent. They are thereby turned into bonded labourers.”

that China does not enforce its own laws with respect to wages, hours, and occupational safety and health

that these practices give China manufacturing a cost advantage of between 10 - 77 percent, and deplace 727,000 US jobs

The petition requested trade remedies commensurate with the cost advantage … to be laid down in a binding agreement no new trade agreements until WTO can enforce workers’ rights

51

Typology of MARLS

Multilateral GATT Art. XX (e) (prison labour)

Bilateral US – Viet Nam Textile Agreement

Unilateral EU Generalized System of Preferences

(GSP) Private - Corporate Social

Responsibility SA8000

52

Multilateral MARLS Global controversy as to whether it should be

possible to restrict international trade to sanction non-respect for LS (exc. prison labour goods)

Global consensus that fundamental LS are essential to translate economic

growth into social justice (ILO Declaration on Fundamental Principles and Rights at Work)

that ILS must be positively promoted through ILO that LS must « not be used for protectionist trade

purposes », and that « the comparative advantage of any country should in no way be called into question »

ILO World Commission on the Social Dimensions of Globalization has shaped the debate in early 2004 : « labour standards will not go away »

53

Bilateral MARLS - US US – Cambodia Textile Agreement : larger import

quota’s for Cambodia’s garments if apparel sector complies with Cambodian labour law and core ILS

US – Viet Nam Textile Agreement ‘ 01 - ‘ 03 : about export quota ’s from VN, tariffs on imports of textile and apparel into Viet Nam, MFN status

Vietnam reaffirms its ILO commitments and agrees to further cooperation with the ILO. Vietnam agrees to support the implementation of codes of corporate social responsibility. The US DoL & VN MOLISA pledge to implement a November 2000 MOU and to meet to review progress toward the goal of improving working conditions in the textile sector in Vietnam.

54

Bilateral MARLS - US Omnibus Trade and Competitiveness Act 1988

lists as principal US trade negotiating objectives (A) to promote respect for worker rights; (B) to secure a review of the relationship of worker

rights to GATT articles, objectives, and related instruments with a view to ensuring that the benefits of the trading system are available to all workers; and

(C) to adopt, as a principle of the GATT, that the denial of worker rights should not be a means for a country or its industries to gain competitive advantage in international trade.

55

Bilateral EU EU Council conclusion (2003) to seek to

include specific provisions in bilateral agreements on core labour standards (with back-up from development and cooperation programmes) Cotonou agreement (2000) : cooperation with ACP

to aim at « encouraging the promotion of participatory methods of social dialogue (and) respect of basic social rights »

Exchange of information on legislation and work regulation Formulation and strengthening of legislation Educational and awareness-raising programmes Enforcement of adherence to national legislation and work

regulation Cotonou : no use of LS for protectionist purposes

56

Bilateral EU

EU Commission (2001) aims to base future trade agreements on Sustainable Impact Assessments to promote the positive impact of trade reform on social development, in particular FLS and social regulation

Premised on « rejection of protectionism and of a sanctions-based approach to the promotion of CLS as well as its strong support for an incentive-based approach to this issue »

57

Unilateral US (examples) 19 USC 1307 bans imports of prison labour

products (unless US consumptive demand requires otherwise) Amended in 1997 to include forced / indentured

labour Amended in 2000 to include forced / indentured

child labour S. 301 of Trade Act 1974 (since 1988)

authorizes retaliation for « unreasonable, unfair, or discriminatory » trade practices, including denial of internationally recognized worker rights

58

Unilateral US (examples) GSP : among the mandatory criteria to

qualify for GSP is recognizing “internationally recognized worker rights” under the laws of beneficiary countries Freedom of association; Freedom to bargain

collectively; Prohibition of forced labour; Prohibition of child labour; Protections for decent working conditions, including a minimum wage, maximum hours of work and occupational safety and health standards.

Anti-dumping and « voluntary restraint agreements »

59

Unilateral EU EU Generalized System of Preferences

(GSP) Scheme provides preferential access to the EU market for developing countries

178 developing countries are beneficiaries of the EU's GSP regime. In 2002 EU imports benefiting from GSP preferences amounted to € 52 billion

60

Unilateral EU « Special incentive arrangement for the protection of labour rights »

provides for an additional 5 % reduction in customs duties for products from countries of which national legislation incorporates provisions of fundamental ILO Conv’s (http://europa.eu.int/comm/trade/issues/global/gsp/gspguide.htm)

The special arrangements for the protection of labour rights are available upon request. Requests have to include the laws of the requesting country incorporating the substance of the eight ILO Conventions as well as the measures taken in order to implement those laws. It is not required that the country has signed and ratified those Conventions. It is sufficient that the substance of the standards concerned is incorporated in the domestic legislation.

In its request, a country may exclude certain sectors in which the requirements are not fulfilled. The requesting country has to commit itself to monitor the application of the special incentive arrangements and to provide the necessary administrative co-operation. It also has to certify compliance with the requirements under those arrangements for individual shipments.

The examination of requests is carried out by the Commission. Upon receipt of a request, the Commission publishes a notice in the Official Journal of the European Communities inviting interested parties to submit their comments and to share any relevant information. The examination takes into account, in particular, reports of the relevant organizations and agencies (ILO, international trade unions etc). The authorities of the requesting country are involved in the examination at all stages and provided with any possibility to participate.

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Unilateral EU Tariff preferences (i.e. not only the 5 % incentive)

may be withdrawn in the case of practice of any form of slavery or forced labour; serious and systematic violation of fundamental social

rights and principles of labour law (freedom of association, collective bargaining, child labour, etc.);

export of goods made by prison labour ... GSP scheme is modified as from the start of 2006

General scheme: preferences can be applied for with respect to 300 additional products (7,200 products in total) mostly in the agriculture and fishery sectors

A new ‘GSP Plus’ scheme for countries with poorly diversified economies. Around 7200 products can enter the EU duty free, BUT

the beneficiaries must ratify & effectively apply 27 international conventions on sustainable development and good governance

the EU will not supervise the application itself but rely on the established mechanisms, e.g. the supervisory system for ILO Conventions

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EU GSP+ The following 27 conventions have to be ratified by the beneficiary

countries by 31 December 2008 Human Rights

International Covenant on Civil and Political Rights International Covenant on Economic Social and Cultural Rights International Convention on the Elimination of All Forms of Racial

Discrimination Convention on the Elimination of All Forms of Discrimination Against Women Convention Against Torture and other Cruel, Inhuman or Degrading Treatment

or Punishment Convention on the Rights of the Child Convention on the Prevention and Punishment of the Crime of Genocide

ILO Fundamental Conventions Minimum Age for Admission to Employment (N° 138) Prohibition and Immediate Action for the Elimination of the Worst Forms of

Child Labour (N° 182) Abolition of Forced Labour Convention (N° 105) Forced Compulsory Labour Convention (N° 29) Equal Remuneration of Men and Women Workers for Work of Equal Value

Convention (N° 100) Discrimination in Respect of Employment and Occupation Convention (N° 111) Freedom of Association and Protection of the Right to Organise Convention (N°

87) Application of the Principles of the Right to Organise and to Bargain

Collectively Convention (N°98)

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EU GSP+ Environment and Governance

International Convention on the Suppression and Punishment of the Crime of Apartheid.

Montreal Protocol on Substances that deplete the Ozone Layer

Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal

Stockholm Convention on Persistent Organic Pollutants Convention on International Trade in Endangered Species Convention on Biological Diversity Cartagena Protocol on Biosafety Kyoto Protocol to the UN Framework Convention on Climate

Change UN Single Convention on Narcotic Drugs (1961) UN Convention on Psychotropic Substances (1971) UN Convention against Illicit Traffic in Narcotic Drugs and

Psychotropic Substances (1988) Mexico UN Convention Against Corruption.

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Private - Corporate Social Responsibility - General

A wide range of economic, social and environmental initiatives by enterprises that go beyond legal requirements, and are mostly voluntary in nature

Rests on a variety of philosophical underpinnings

Deals with a variety of issues labour and employment, but also bribery

and corruption, human rights impacts, community involvement and environmental practices

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CSR General (con’d) Takes a variety of forms

Workplace initiatives (corporate codes of conduct) Kenyan Flower Council incorporating provisions of buyer

codes Ethical Trading Initiative (sharing experiences)

Accreditation and certification schemes, monitoring and inspection initiatives (e.g. Fair Labor Association)

Framework agreements (e.g. IKEA / IFBWW) Reporting initiatives (e.g. Global Reporting Initiative) Management frameworks (e.g. SA8000) Intergovernmental : Belgium passed a law introducing

a product label that would certify compliance with core labour standards

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WB : Key Challenges to CSR

Key Challenge 1: The Plethora of Individual Buyer Codes Is Now Generating Inefficiencies and Confusion

Key Challenge 2: An Increasing Number of Buyers Are Recognizing That Traditional Top-Down CSR Strategies Are Not Achieving Improved CSR Implementation

Key Challenge 3: Insufficient Understanding of the Business Case

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SA8000 by SAI Social Accountability International (SAI) is a human

rights organization founded in 1996 that seeks to improve workplaces and communities around the world by developing and implementing socially responsible standards. To fulfill its mission, SAI convenes all key sectors, including workers and trade unions, companies, government, non-governmental organizations, socially responsible investors and consumers, to operate consensus-based voluntary standards; accredits qualified organizations to verify compliance; and, promotes understanding and implementation of such standards worldwide. SAI systems feature certification of compliance at the facility level and support for companies seeking to implement our standards. SAI leverages the power of responsible consumers and investors by identifying companies and other organizations that adopt and implement our standards.

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SA8000 : the “Standards”

Child Labor – no workers under the age of 15; minimum lowered to 14 for countries operating under the ILO Convention 138 developing-country exception; remediation of any child found to be working

Forced Labor – no forced labour, including prison or debt bondage labor; no lodging of deposits or identity papers by employers or outside recruiters

Health and Safety – provide a safe and healthy work environment; take steps to prevent injuries; regular health and safety worker training; system to detect threats to health and safety; access to bathrooms and potable water

Freedom of Association and Right to Collective Bargaining – respect the right to form and join trade unions and bargain collectively; where law prohibits these freedoms, facilitate parallel means of association and bargaining

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SA8000 : the “Standards” Discrimination – no discrimination based on race, caste, origin,

religion, disability, gender, sexual orientation, union or political affiliation, or age; no sexual harassment

Discipline – no corporal punishment, mental or physical coercion or verbal abuse

Working Hours – comply with the applicable law but, in any event, no more than 48 hours per week with at least one day off for every seven day period; voluntary overtime paid at a premium rate and not to exceed 12 hours per week on a regular basis; overtime may be mandatory if part of a collective bargaining agreement

Compensation – wages paid for a standard work week must meet the legal and industry standards and be sufficient to meet the basic need of workers and their families; no disciplinary deductions

Management Systems – facilities seeking to gain and maintain certification must go beyond simple compliance to integrate the standard into their management systems and practices