Reframing the Issue of Globalization and Labor Rights

Robert J.S. Ross, Ph.D.

Professor of Sociology

Clark University

950 Main Street

Worcester, MA 01610

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Fax: 508 303 1908

Anita Chan, Ph.D.

Australian National University

Revised from Presentation at the Political Economy of World-Systems 2002 Conference, University of California at Riverside

Preface

As global capital creates a scaffold of world institutions it is reasonable to attribute the architecture of those institutions to the interests of its dominant class or class fractions, or to a dominant, hegemonic nation. If that group or nation finds its position eroding, it is reasonable to attribute part of its strategic behavior to a motive to restore or maintain power. One way to understand the erection of the World Trade Organization, and the interventionist role of the IMF/World Bank complex is that act as arenas in which eroding U.S. economic dominance is ameliorated by its politically dominant role in these institutions.

But what of the workers within core or hegemonic nations in their relations to other workers? What shall we make of contentions among different fractions of the world working class? This paper addresses one such contention and the attribution of motive to parts of the global working class. The international labor movement, especially in the core or high income countries, and sometimes supported by Western governments, have proposed including labor standards conditionality in World Trace Organization and other trade agreements. The proposal is referred to in general as putting a “social clause” in trade related agreements.

It is often and widely said that labor rights/labor standards issues put forward in institutions like the World Trade Organization (WTO) are attempts by rich country workers (through their unions) to maintain their privilege. Mahathir bin Mohammed of Malaysia has put it this way: "Western countries openly propose to eliminate the competitive edge of East Asia... professed concern about workers’ welfare is motivated by selfish interest.” (as quoted in Freeman 1998)

Logically, the bloc of “Northern” unions and labor advocates could not be defending a specifically U.S. hegemony, because the leaders of the social clause effort have been the European unions and the International Confederation of Free Trade Unions (ICFTU) within which they are dominant. This neither excludes the possibility that the social clause proposal is a defense of a general Northern privilege, nor does it logically exclude versions of the hegemonic decline thesis in which an American-European consortium succeeds U.S. hegemony. In this paper I show that there are strong reasons and evidence to reject the thesis that the social clause is merely a defense of privilege or Northern hegemony of some sort. This work did not begin with the problem of hegemonic decline but its conclusion is relevant to the question. The emerging struggle for global labor standards is part of the broad process of working class response to the globalization of capital, rather than a particular instance of the loss hegemony by the U.S.

Introduction

Protesters in the streets of Seattle in 1999 called on the World Trade Organization (WTO) to include environmental and labor issues in its trade negotiations. They also showed a new kind of solidarity, including youth movements, environmental and labor movements. The protestors also reached out to allies in developing countries. When the Ministerial conference failed to adopt an agenda for another round of trade negotiations, many among the “Turtles and Teamsters” coalition claimed their movement had accomplished that. While protestors were in the streets, though, government trade ministers in conference rooms were acting out conflicts among the WTO signatories.

Developing nation governments, particularly those from Asia, put up strong resistance to a proposal by developed countries led by the United States to link environmental and labor standards with trade by inserting a “social clause” into WTO agreements.[1] Arguing that a social clause is a protectionist ploy used by rich nations to protect their own workers’ jobs from competition by developing countries, the staunch resistance of developing countries met lukewarm advocacy from the older industrial countries and the former prevailed.

There is in this juxtaposition a strange disjuncture. In the United States, and elsewhere in developed country labor movement circles, critics of corporate globalization and the neoliberal market regime associated with it tend to assume that social considerations, including labor and environmental standards, are part of the broad critique that makes the World Trade Organization (WTO) and the other International Financial Institutions (IFIs) so controversial around the world. While there are points of contact in the worldwide critique of global capitalism, incorporating labor rights into trade agreements is not one of the consensual points. In fact, it is widely understood to be a basic divide between labor movements and people’s movements in the Global North and Global South.

This practical gulf between the developed and developing world dissident movements has been caused by and is part of a larger frame within which world issues are now perceived: that the global divide in competition in world trade is a North-South affair.

This paper aims to provide a corrective to this image. First I will show that the global competition in the production of goodsin particular, labor-intensive commoditiesis not a simple, clear-cut North-South matter. That competition is today as much South-South as it is North-South. Using apparel manufacturing in China and Mexico as case studies, the paper shows that in the absence of a social clause setting minimal labor standards, these two countries are engaged in a race to the bottom in wages and labor standards. A potential cataclysm for labor standards looms in 2005 after the expiration of the last remnants of the Multi-Fiber Agreement that governs trade in apparel and textiles.

I begin at the beginning – the creation of a world made safe for capitalism, Anglo-American style.

The Social Clause and the WTO

Following World War II, a Euro-American vision of a world free of barriers to foreign, i.e., developed country investors gradually prevailed on the world stage. Through the next three decades, Europe moved from the construction of the European Coal and Steel Community to the European Union (EU), while both Europe and the U.S. moved from Keynesian and social democratic national regulation of economic life to neo-liberal globalization. In North America, the North American Free Trade Agreement (NAFTA) likewise opened Mexico’s economy to U.S. investment in dramatic ways, even as it simplified the entrance (already large previously) of Mexican manufactured goods to the U.S. and Canada. At the heart of these regional trade blocs and worldwide trade facilitating agreements is, as the supporters of the WTO put it, the idea and the growing reality of a “rules-based” regime for world trade.

U.S. President Bill Clinton expressed this view most clearly, in the wake of the 1999 protests in Seattle:

I think we have got to reaffirm unambiguously that open markets and rules-based trade are the best engine we know of to lift living standards, reduce environmental destruction and build shared prosperity. This is true whether you're in Detroit, Davos, Dacca or Dakar. (Clinton 2000).

The WTO enforces its rules by a process that ultimately, but only ultimately, can result in trade sanctions. These sanctions, or punishments, might allow, for example, the nations who have successfully claimed a rule has been broken to invoke tariffs on the products of the rule breaker. This rules-based dimension of the WTO implies a global governance system – a constitution for law-making and (economic) law enforcement at the international level.

The emerging constitutional structure of the WTO has a striking asymmetry. The WTO rules protect only firms and their products (including, gradually, services) from discriminatory treatment as they move across international boundaries. Workers who engage in production for this system of international exchanges have no similar standing in the treaties. Indeed, the WTO explicitly rejects such standing.

“Currently, labor standards are not subject to WTO rules and disciplines.” (WTO 1999) The official WTO position was articulated by then Director General Ruggierio in 1998. He said:

“At the WTO's first Ministerial Conference in Singapore, we emerged from a difficult debate with a clear and strong consensus on the issues of labor standards - a consensus first, that members were committed to the observance of core labor standards; second, that the ILO was the relevant body to address these issues; third, that standards are best promoted by growth and development, fostered by trade liberalization; and fourth, that labor standards should in no way be used for protectionist purposes or put into question the comparative advantage of countries.” (Ruggiero 1998)

From the outset, labor unions and labor advocates, especially in Europe and North America criticized the WTO. Their argument was that countries that did not allow workers the rights necessary to defend themselves were gaining investment at the expense of workers who had such rights. The low cost of labor in low-income countries was artificially perpetuated by workers’ lack of rights in law or practice.

Although American labor unions make this argument, they also know that the effective labor rights of workers in the U.S. are not models for international emulation. This may surprise some observers from developing countries. If a rules-based international regime including labor standards gave governments and workers in other nations the right to complain about labor laws and standards in the U.S., they would have good causes of action. As Lance Compa has put it:

“Human rights cannot flourish where workers' rights are not enforced. Researching workers' exercise of these rights in different industries, occupations, and regions of the United States… Human Rights Watch found that freedom of association is a right under severe, often buckling pressure when workers in the United States try to exercise it. …[Core labor rights are systematically violated in the United States (Compa 2000).

Returning to the WTO, when it is criticized about the lack of regard evinced for labor rights under the various the GATT treaties, officials respond most usually by citing the affirmation, by member governments, of the ILO “core labor rights”. These rights, distilled from the 86 year-long stream of internationally agreed labor standards promulgated by this arm of the United Nations, are:

(a)Freedom of association and the effective recognition of the right to collective bargaining;

(b)the elimination of all forms of forced or compulsory labor;

(c)the effective abolition of child labor; and

(d)the elimination of discrimination in respect of employment and occupation[2] (International Labor Organization 1998)

The ILO statement of labor rights is procedural not substantive: an individual or a given community of workers could exercise these formal rights and still experience, at the hands of a powerful employer in a nation dominated by the interests of powerful employers as a class, a wage below subsistence with no social protection. Note also that affirming these rights is quite different from enforcing them. Although many in the world labor rights movement would like to include standards such as a locally defined “living wage”, the “social clause” discourse occurs mainly procedural rights such as these.

The second leg of the WTO circuit around this issue is the assertion that the ILO, not the WTO is the “relevant” body to which concerns about labor rights issues should be addressed. The translated form of this sentence is: we affirm these rights, but transgressions of them should be addressed elsewhere.

The next assertion is that promotion of labor rights, i.e., correction of deficiencies in their enjoyment by workers, is “best promoted by growth and development”. In this fashion the entire history of the attainment of labor standards embodying, or approximating these rights – the history of labor movements and labor parties, the arduous struggles for both procedural (legalization of unions) and substantive (social protections) rights by workers in both rich and poor countries is made invisible by the proposition that economic growth takes care of everything. No need to have laws or unions: economic growth will magically lift the humble and restrain the haughty.

Finally, the WTO position makes the ILO the appropriate forum for labor standards issues. While the international labor movement agrees that the ILO is competent to inspect, and train local governments to inspect, workplaces concerning compliance with labor rights, it has no enforcement powers whatsoever. That appears to be heart of the WTO position.

Countries, as a matter of national policy, or enterprises within them, as a matter of practice, may abuse labor rights, and thereby cheapen labor or make it more docile and attractive to investors. In this fashion, nations or firms may gain competitive, so-called comparative, advantages over others. The WTO paragraph in question asserts that this comparative advantage, even if gained by abusing labor rights, is not to be hindered: “labor standards should in no way be used for protectionist purposes or put into question the comparative advantage of countries.”

As the 1999 Ministerial Meeting approached, the position of the international trade union movements, led by Western, particularly European trade union leadership, articulated a direct programmatic demand for the WTO. This position had two parts: first, and most controversially, access to the trade concessions embodied in the WTO should be ultimately conditional on respect for the core workers’ rights. Second, the ILO should be the competent body to make determinations of the status of these rights in any given place.

In a pronouncement that surprised many, U.S. President Bill Clinton appeared to support some such general approach to a social clause. As the demonstrations disrupted the WTO conference, Clinton said:

“I think what we ought to do, first of all, is to adopt the United States position on having a working group on labor within the WTO. And then that working group should develop these core labor standards, and then they ought to be a part of every trade agreement. And ultimately, I would favor a system in which sanctions would come for violating any provision of a trade agreement. But we've got to do this in steps.” (Clinton 1999)

President Clinton was well aware that the general proposition of including an enforceable social clause in the WTO structure would be unpopular with developing country governments in the short run. They did not disappoint: the American President’s tentative initiative was roundly condemned by governments that feared it would justify protectionist exclusion of developing country exports to rich country markets. (Jonquieres De 1999) The unsuccessful end of the Seattle talks and the change of American Administrations have now appeared to remove the inclusion of a social clause from the WTO agenda in the immediate or immediately foreseeable future.

Although American media were not very interested, the international labor movement made, once again, an effort to force this issue on the WTO agenda at Dohar, and it was, once again unsuccessful.(Alden 2001; International Confederation of Free Trade Unions 2001)

The question is still very much alive in the global labor movement, however. As recently as this past January, for example, a conference in Beijing, including Chinese labor officials and researchers, and labor rights and trade union researchers from the West and from Asia debated the issue for three days.

The Labor and NGO Positions on The Social Clause: breaking up the stereotype

It would be somewhat odd if there were a worldwide agreement between developing country governments and their unions about labor rights issues. I asked a distinguished American labor relations expert, former Secretary of Labor John Dunlop, was asked about the difference between some labor union confederation support for a social clause in trade agreements, and their governments’ opposition to it. Dunlop said: “It is not surprising when unions and governments disagree.”

Among the claims made by those who oppose the inclusion of labor rights as a condition of full partnership in international trade agreements is the proposition that these rights depend on culturally relative, specifically Western conceptions: freedom of association and the derived right to join a union and to collective bargaining. This claim was addressed in an ILO document written by Hoe Lim (2001):

“ Arguments of cultural relativism tend to be made by economic and political elites. The very same elites who raise culture as a defense against external criticisms based on universal human rights often ruthlessly suppress inconvenient local customs, whether of the majority or the minority.

“For the most part, in undemocratic or closed political systems, it is only the views of the ruling elite which are given wide recognition. This should not be mistaken for an unchallenged consensus.”

ICFTU – the International Confederation of Free Trade Unions-- has long advocated for the social clause. At least insofar as ICFTU and its Global Unions partners are concerned, the WTO should create a