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International Labour Standards relevant to employment security and closure of business in the context of post-MFA

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Title: International Labour Standards relevant to employment security and closure of business in the context of post-MFA


1
International Labour Standards relevant to
employment security and closure of business in
the context of post-MFA
  • Tim De Meyer
  • Specialist on International Labour Standards
    Labour Law, Subregional Office for East Asia (SRO
    Bangkok) Thailand

2
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
    quotas 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

4
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 FLAs Workplace
    Standards are upheld
  • public reporting FLA provides consumers/sharehold
    ers 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.
  • ILOs presence in Cambodia means independent and
    transparent monitoring is happening in the
    country
  • e.g. GAP stated that the ILOs 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 ILOs monitoring.
  • 45 of buyers said they intended to increase or
    maintain current sourcing levels even after the
    MFA expires
  • gt 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.

7
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8
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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
  • TC 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.

12
Part IIILS Relevant to the Post-ATC Restructuring
13
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 TC (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))

17
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.

19
Part IIIILO Fundamental Principles and Rights at
Work
20
As of 1 September 2005 - ILO 178 Member States
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)
21
Percentage of Asian Pacific countries having
ratified fundamental ILO Conventions 1 September
2005
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

25
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 workers 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.

27
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

28
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

30
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

31
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 persons
    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 peoples 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

37
C. 138 Minimum Ages
38
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

39
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
  • quotas (quantitative restrictions)
  • measures equivalent to quotas 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.

47
(No Transcript)
48
Verite 03 Overall Rank
49
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 Chinas
    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 Chinas 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 employers
    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
    quotas for Cambodias 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 Convs (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.

61
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

62
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
    (N98)

63
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.

64
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

65
CSR General (cond)
  • 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

66
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

67
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.

68
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

69
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
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