LABOUR ISSUES IN APEC
TIM HARCOURT1
RESEARCH OFFICER
AUSTRALIAN COUNCIL OF TRADE UNIONS (ACTU)
393 SWANSTON STREET
MELBOURNE VIC 3000
A PAPER FOR THE AUSTRALIAN APEC STUDY CENTRE
1This paper does not represent the views of the ACTU or the Australian APEC Study Centre. The author would like to thank Alan Matheson and Jane Howard for their assistance in its preparation. Copies can be required from Labour Information Network, ACTU House, 393 Swanston Street, Melbourne 3000 Australia [internet address:
D No. 21/1997
LABOUR ISSUES IN APEC
1.Introduction - What are the Key Issues?...... 2
1.1The APEC Process...... 2
1.2What will APEC Do?...... 3
1.3Labour's Role in APEC...... 4
2.Background - Trade Policy Institutions...... 7
2.1Introduction...... 7
2.2GATT/WTO...... 7
2.3Other Trade Measures...... 11
2.3.1Generalised System of Preferences (GSP)...... 11
2.3.2European Union's Social Charter...... 12
2.3.3North American Agreement on Labor Cooperation (NAALC)....12
2.4APEC - A New Trade Forum for Labour?...... 13
2.5Summary...... 14
3.The Economic Debate - Trade and Labour Standards...... 16
3.1Introduction - The Economic Debate...... 16
3.2'Does Trade Hurt Workers?...... 16
3.3'Do Workers Hurt Trade?...... 22
3.4Summary...... 25
4.Summary - Implications for Labour in APEC...... 27
References...... 28
Attachment
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1INTRODUCTION - WHAT ARE THE KEY ISSUES?
1.1The APEC Process
One of the main challenges facing governments, business and the community in the 1990s has been the integration of the fast-growing economies of the Asia Pacific region. This has been highlighted formally by the recent summits of the national political leaders of the region under the Asia Pacific Economic Cooperation (APEC) banner. Whilst the APEC summits have been considered important (and indeed prestigious) diplomatic events in recent international affairs the analysis of the economic and social effects of APEC is still in its infancy. All groups in society that have an interest in the APEC process are attempting to understand the implications of economic integration and what APEC can or should do for national economies.
Whilst APEC summits have concentrated on trade liberalisation (including the implementation of the Bogor Declaration) and investment issues, there has been to date no discussion of labour issues or income distribution questions. Labour movements around the region have not been widely involved (and in most cases not invited) to the APEC Leaders' Summits, Ministerial Meetings, Senior Officials Meetings, Economic Committee, Committee on Trade and Investment, Working Groups etc. To date non-government organisations (NGOs) and community groups also have had little involvement. However, it is clear that the APEC leaders are keen to have business input through the APEC Business Advisory Council (ABAC) which continues the work of the APEC Pacific Business Forum (PBF).
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The International Confederation of Free Trade Unions (ICFTU) - the international trade union confederation to which the ACTU is affiliated - has taken steps to have a labour-type forum initiated along the same lines as business groups at APEC. A labour delegation from APEC countries, for example, met the Japanese Prime Minister at the 1995 Leaders' meeting and the Philippines President at the 1996 meeting. However, whilst the host leaders met the delegations on each occasion there was no plan to issue formal invitations to labour or community groups to future APEC Leaders' meetings. Labour and NGO groups were more like "gate-crashers" than formal invitees at the Osaka and Subic Bay summits.
1.2What Will APEC Do?
Whilst there has been some debate about what form APEC may take i.e. whether it be an Organisation for Economic Co-operation and Development (OECD) for the Asia Pacific region, or a trade liberalisation type organisation like the World Trade Organisation (WTO) for the region, there has been little analysis of the economic and social impact of APEC. Some of the views from all quarters - business, union, government, communities - have been positive and upbeat, whilst others have been negative and suspicious of APEC (in the same vein as the scepticism generated about the GATT, WTO, UN and other international organisations).
The positive views of APEC include several a priori assumptions that:
- the integration of the world's most influential economies must be a positive thing in terms of economic growth, employment, wealth and living standards for the citizens of APEC economies;
- the APEC process will assist the already considerable economic dynamism of the region;
- integration of trade and investment in APEC will assist economic development and enable APEC economies to provide a more equitable distribution of income, particularly in the poorer APEC economies.
On the other hand, there have also been some negative views of the APEC agenda. These consist of the following assumptions:
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- That economic integration will lead to a 'race to the bottom' in terms of environmental standards in all APEC economies;
- That economic integration will lead to a 'race to the bottom' in terms of social policies, labour standards and human rights in all APEC economies;
- That APEC will do nothing to improve income distribution and associated social and political stability in APEC economies, particularly in the poorer countries;
- That APEC gives capital major advantages, but gives labour and the community no advantages or any means of defending its hard won gains.
It is important, however, that certain aspects of the APEC process be analysed rigorously rather than relying on a priori views that are either positive or negative.
1.3Labour's Role in APEC
In terms of labour's role in APEC, the Asia Pacific labour movement has several issues to focus on.
First, it is important to understand APEC and how it will affect workers' employment opportunities, job security, wages, incomes, labour standards, health and safety etc. Analysis of trade and wages has played an important role in economic literature (see section 3). But APEC is not just about trade, it is also about investment flows, customs procedures, standards and conformance, government procurements, rules of origin, intellectual property etc. These issues also have potential labour implications.
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Secondly, it is important to make a decision about labour's role in the APEC process. For example, do international union bodies become involved in the process formally or do national union centres simply lobby their own national Governments in the lead up to APEC summits ? Do individual unions involve their resources in the formulation of individual action plans (IAPs) - for example ? Do unions negotiate with employers on industry lines based on product market considerations or do they negotiate on a cross-industry collective basis ?
There is also a question of how best to use the union movements' scarce resources (relative to those of business and government) by focussing on key parts of the APEC process. For example, the Human Resource Development Working Group would be an appropriate part of the APEC process for union contributions. How APEC economies can improve productivity through investment in human capital by education and training is a key issue in economic development and growth. Unions typically have a good grasp of skills and training issues and could make an important contribution to skill and human resource development.
Thirdly, there is the much more complicated question of social integration in APEC to accompany economic integration. What is the best means of improving living standards in APEC economies? What are the mechanisms by which freer trade and investment lead to improved real wages and living standards for workers and their families? There is also the related question of how global economies have become. If business considers the economy to be 'global' and capital mobile then surely labour issues will take on a more 'global' perspective too. How do we integrate different national labour systems at the same time as capital becomes more mobile and integrated and competition policy becomes international? If we really are serious about having integrated economies, our approaches to workplace issues must also be included in the discussion. Integration should be harnessed to improved living standards and social considerations as well as improving business opportunities and economic expansion.
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Fourthly, the labour movement should be aware of the human development/social development aspect of the APEC agenda. The "APEC Economic Leaders' Declaration from Vision to Action" (The Subic Declaration) developed at the 1996 summit in the Philippines recognised that liberalised trade should contribute "...to sustainable growth and equitable development and to a reduction in economic disparities" [Leaders' declaration, point 15].The declaration also recognised that the principles for economic and technical co-operation should be "giving a human face to development" [point 16]. The social agenda of APEC includes labour-related issues such as human resource development as well as questions of income distribution and community development. The question is how the labour movement can position itself on the social agenda of the APEC process.
This paper is an introduction to what will be a series of detailed studies on APEC from the labour perspective. It covers the background to labour involvement in trade policy, the economic debate over trade and labour conditions, and some brief suggestions on labour movement strategies for the region. It is intended as a discussion paper only - and has no formal status in the labour movement in Australia or elsewhere in the Asia Pacific.
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2BACKGROUND - TRADE POLICY INSTITUTIONS
2.1Introduction
There are a number of trade policy institutions governing trade and investment rules in the international economy. These include the major multilateral arrangements such as the General Agreement on Tariffs and Trade (GATT), now administered by the WTO, regional agreements such as the North American Free Trade Agreement (NAFTA) or the ASEAN Free Trade Area (AFTA). There are also unilateral measures that countries use such as the Generalised System of Preferences (GSP) used by the US Government and the European Union (EU). This section looks at efforts by the labour movement and governments to use various trade policy institutions to protect workers' rights and labour conditions.
2.2GATT/WTO
In the lead-up to the signing of the GATT in Marrakesh, Morocco in April 1994, the negotiating parties were divided over the linkage between international trade and labour standards. The United States, along with some European nations, strongly supported an incorporation of labour issues in the GATT, whilst other nations saw labour issues as a protectionist mechanism for developed economies to harm developing countries' comparative advantage in low-cost labour. The vigorous debate at the eleventh hour of the signing of the GATT brought into focus the problem of labour issues in a global economy, and how trade policy institutions can or should be used to ameliorate poor working conditions and problems of poverty and income distribution in general.
The debate has continued since the formation of the World Trade Organisation (WTO) at Marrakesh in 1994. The WTO, which was formed to administer the GATT, met at ministerial level in Singapore in December 1996. At the Singapore Ministerial Meeting the WTO again came under pressure to deal with labour issues.
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Despite the recent prominence of labour issues in the WTO, the question of trade and labour linkages is not new in terms of the history of trade policy institutions. For example, in 1948 when the GATT was first formulated as one of the international policy institutions set up at Bretton Wood, a parallel agreement was being drawn up for an International Trade Organisation (ITO) to administer the GATT. The parallel agreement was known as the 'Havana Charter'. The Commonwealth Governments' Report on Labour Standards in the Asia-Pacific Region' (also known as 'the Duffy Report' see Commonwealth of Australia (1996)) has summarised the role of the Havana Charter and the GATT (at page 9). The Charter never came into force because of opposition from the US Congress.
Included in the Charter's chapter on "Employment and Economic Activity" was an article on "Fair Labour Standards". The draft charter noted that:
"All countries have a common interest in the maintenance of fair labour standards, particularly in the case of production for export, since otherwise one country's product may be undercut by those of another in which labour is unfairly exploited. Labour standards, cannot, of course, be uniform in all countries, but must be related to national productivity. But there was wide support for the view that governments should agree to take whatever action might be appropriate and feasible to eliminate sub-standard conditions of labour in their production for export and generally throughout their economies."
[Duffy Report, p.9]
The International Confederation of Free Trade Unions (ICFTU), which was the major non-communist international trade union peak council at the time [and since the end of the cold war is the major international labour movement body] was vigorous in the debate over the Havana Charter at the time.
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Whilst the Havana Charter was never implemented, and the ITO never formed, some provisions with regard to prison-made labour and other 'non-trade' issues were incorporated in the GATT.
As the Duffy report notes:
54.The GATT incorporates certain non-trade considerations in tis provisions through general exceptions to its rules and obligations, such as provisions on public morals, human life and health and trade controls taken pursuant to obligations under the UN Charter for the maintenance of international peace and security. Article XX(e) of the GATT provides an exception to allow adoptions and enforcement of measures relating to the products of prison labour. It does not itself restraint trade in prison made goods, but allows Members to impose unilateral prohibitions if they so wish."
[Duffy Report, p.8-9]
The USA continued to advocate the incorporation of fair labour standards in the multilateral trading system.
As noted by the ILO (1994):
"Since 1953 the US has made several attempts to take up the issue of fair labour standards in the GATT. The US legislation providing negotiating authority for both the Tokyo Round and the Uruguay Round specially directed the President to seek an agreement on labour standards as part of the negotiations. The Omnibus Trade and Competitiveness Act of 1988, in particular, stated that the principal negotiating objectives of the United States in the Uruguay Round regarding labour standards, or "worker rights" as they are defined in that legislation, are:
(a)to promote respect for internationally-recognised worker rights;
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(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.
However, each of these initiatives were unsuccessful in obtaining necessary support from other GATT members. In part, these efforts foundered on differences over which internationally recognised labour standards were relevant to world trade."
[ILO (1994), p.1-2]
Under both Republican and Democratic Administrations the USA has attempted to set up a Working Party to consider the issue of a possible relationship between internationally-recognised labour standards and the international trade system. This has occurred throughout the most recent GATT negotiations, the signing at Marrakesh, and at the WTO Ministerial Meeting in Singapore.
The WTO meeting in Singapore ended with the following section of labour standards in the Singapore Ministerial Declaration:
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"[4]We review our commitment to the observance of internationally recognised core labour standards. The International Labour Organisation (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalisation contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration."
[WTO, Singapore Ministerial Declaration, 9-13 December, 1996, p.2]
The significance of the wording has been interpreted differently by different nations but it is clear that the ICFTU vigorously lobbied the WTO Director General, Renato Ruggiero. This occurred despite the exclusion of the ILO Director General, Michael Hausenne from a ICFTU Conference which was preliminary to the WTO meetings. There is still sensitivity, particularly from several ASEAN leaders, concerning the role of the ILO in trade-type matters.