Solidarity? What solidarity?
* Social clauses Anke Hintjens THE CONTEXT IN WHICH THE DEMAND FOR "social clauses" is getting so much approval is one of an increasingly global economy. International investments are increasing. International trade is growing faster than global production. World trade in goods amounted to $3,485 b. in 1990. Trade in services, which accounted for $50 b. in 1978, today represents $810 b.
Although developing countries still depend on export of primary commodities, their share of world manufactures exports increased from 4% in 1955 to 19% in 1989.1 At the same time, the industrialised countries are devastated by structural unemployment, and "jobless growth". Unions are trying to find explanations and answers for this situation. Businessmen want to be able to compete without being threatened with competition.
As if by magic, everyone discovers the new term of "social dumping". GATT defines dumping as "exporting goods at a price blow their 'normal' value (for example the price on the internal market)". Hence, "social dumping" is export of goods at a price below their normal price, as a result of low wages and inhuman working conditions which keep production costs low. Scape-goating the Ill World
Many unions in the industrialised countries have come to see "social dumping" as a partial explanation for unemployment in their countries. This scape-goating of the third world is nothing new. In 1881 the US Federation of Organised Trade and Labor which later became the AFL-CIO federation) demanded that the government introduce protectionist measures against competition from low salary countries. The US unions wanted a "cost equalisation" through import taxes.
The foundation agreement of the GATT in 1948 provided for commercial measures against countries which allowed compulsory (forced) labour. The 1984 and 1989 Lomé Agreements between the European Community and its ex-colonies in Africa, the Caribbean and Pacific, included some very general principles on social conditions. But these were not concrete enough to be mean22 International Viewpoint ingful, and the agreements did not establish any means of control.
The new GATT agreement, in operation since January 1995, goes much further: it is a big leap forward in the deepening of global inequalities. This new GATT agreement is the crowning of a process of deregulation of exchange of goods and money. The opening of third world markets and the privatisation programmes which these countries were formerly obliged to apply under IMF structural adjustment programme's are now elevated into binding legislation, through the creation of the World Trade Organisation (WTO).
These negotiations, like any others, started from a certain relationship of forces between the different parties. The dependant countries did not gain. On the contrary. Their weak position led to an odd (if not tragic) situation, where the negotiations on tariff reduction resulted in a 19% reduction on the products which the least developed countries export, whereas tariffs on products important for the other countries were cut by 38%. The import taxes applied against manufactured products from Third world countries are still five times higher than the taxes on their commodities. This is only one of the ways whereby development is made difficult for third world countries.
Agriculture was not covered in former GATT agreements. This is because of its importance for the internal stability of the richest countries. For example, Europe has been transformed from a net importer of food in the fifties into a main exporter in the nineties. The European Community's part in the world market for beef increased from 0% in 1971 to 25% in 1990. For wheat and sugar the situation is comparable. The EC could only obtain this position through spending high amounts of money on subsidies (an average of 60% of EC budgets in this period went to the agricultural sector) and exporting the products beneath their "normal" value i.e... dumping. This had bad consequences on sugar exporting third world countries. which lost income because they lost a part of the sugar market, and because of falling prices on the world market. Countries in the Sahel region of Africa saw their cattle sector destroyed because of dumping of cheap EC beef.
The reduction of export subsidies, as agreed in the GATT, may seem positive for third world agriculture, but the part of the world market that the EC is losing is being taken over by the USA., not by third world countries.
Secondly, the agreement prohibits the cheapest way of defending internal agricultural production in the richest countries - i.e. through controlling imports. GATT now obliges third world countries to import sufficient foodstuffs to cover at least 2% of their internal consumption. Besides the pressure this measure will put on the balance of payments of these countries, it is also a clear attack on internal food production in the third world. What was until now only possible under the flag of food aid will be possible on a continual basis. With the integration of, as the agreement calls it, "trade related investment measures", GATT imposes the totally free circulation of capital, a principle which, in spite of many attempts, was never before accepted by the UN General Assembly. All countries are now forbidden to develop any policy restricting foreign investments. No priorities for local investments, no obligatory transfer of technology. National and foreign investment must be treated in the same way. "Repatriation" of capital has to be "free" And the agreement explicitly states that activities of multinationals (MNO's) should not be controlled. These enterprises control 70% of world trade, and 75% of investments. An incredible 40% of world trade takes place between the different branches of MNO's! Import substitution measures, or any real economic policy at all, becomes impossible.
Instead of being free for general use, science and technology are now strongly protected by patent rights. The firm that is able to register a piece of knowledge can make the others pay. The multinational Grace has patented toothpaste and medicines produced according to techniques which Indian farmers have been using for years to exploit the virtues of the neem tree, This industries Will now be destroyed, because they are not able, and not willing, to pay Grace for the patents to carry on doing what they have always done.
With this GATT agreement any attempt
to construct a new economic world order, as pleaded for in UNCTAD, is buried.
The WTO can take sanctions when a country doesn't respect the rules. And sanctions can be taken against any sector of the country targeted. If India doesn't pay the
Grace multinational its patent rights on neem tree products, the WTO can decide to take sanctions against the Indian export of towels.
Or pencils.
Trade is an unequal fight. The GATT instruments serves the strong. Who will take reprisals against the European Union if they don't stop their dumping of beef in Northern
Africa? No-one. This GATT agreement makes inequality into law. Workers' organisations and movements in solidarity with the third world should have fought with all their might against this agreement. But they didn't. Discovering unfair competition
Since the formation of the present international "division of labour," people in third world countries are subject to cruel exploitation. Nicaraguan plantation workers are sprayed with insecticides at the same time as the bananas. The word for coffee still used in south-west Uganda, "Chiboko" means the whip! As long as this was confined to the commodity sector, little protest from unions in the north was heard.
It's not an accident that the northern textile workers' unions are the first to be asking their governments to include "social clauses" in international trade agreements. Textiles is one of the rare sectors, (beside leather, iron, steel and chemicals) where some third world countries have been able to gain some competitiveness.
Normally, free trade "logic" would support the abolition of the 1974 Multi Fibre Agreement (MFA). This imposed quotas on textile exporting countries of the south and the east. The agreement affected at least 50% of the world trade in textile. The explicit aim was to give the industrialised countries the possibility to adapt their industry to the increasing competition of developing countries. Quotas for third world exports to the imperialist countries were only to be allowed to increase by 6% every year.
Although textile and clothing are important in the export earnings of some southern countries (India 22%, Sri Lanka 31%, Pakistan and Bangladesh 67%), only 18% of the commercialised clothes and 5% of textile in the EC comes from developing countries.2
Some researchers say that without the MFA, developing countries would have exported 82% more textile and 93% more clothing. No surprise, then, that the GATT agreement prolongs the MFA for another 10 years! Textile remains one of the most protected sectors of the industry of the developed countries. and the fear of losing this privilege is great.
In 1993, as the GATT negotiations came into their final phase, the French Union of advertisement campaign against child labour in the textile industry in the developing countries. In October 1993, Belgian textile workers' unions and employers organised a joint demonstration, against child labour. Bosses and the unions joined together to ask consumers to buy Belgian goods, to save the children and the Belgian textile industry. In February 1994, the European Parliament asked for social clauses to be added to international agreements. At the same time, the three international trade union federations (ICFTU, WCL and ETUC) also asked for social clauses to be introduced into trade agreements, although some of the southern branches of these federations had questions on this strategy to fight for better working conditions. This opposition was particularly strong at the world congress of the WCL, where the unions of northern countries had to use all their influence to get the resolution
The federations effectively accept GATT and the WTO, and the idea that trade brings welfare and jobs. This is not a new point of view. European trade unions had the same attitude towards the unification of Europe. They believed, or tried to make us believe, that unification would bring us lots of jobs. The reality shows the contrary. This may be
Social clauses evident to revolutionary Marxists, but it is important to keep reminding people about this serious mistake, in the debates that go on in our movement about other international organisations, particularly those concerned with "free" trade.
The northern countries protect themselves twice as hard against imports from the south than from other "developed" countries. 3
Protectionism through tariffs has gradually decreased, but non-tariff protectionism increased by 20% between 1987 and 1990. Import taxes against the manufactured products of the third world are five times as high as those applied against their primary commodities. Industrialisation of the third world is hampered by this protectionism, which costs these countries some $500 billion every year.4
DONT BUY
CHILDREWS
International Viewpoint 23
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* BLOOD
* Social clauses Unemployment
One element in the increase of wages is the unionising of workers and the struggles they win. An other element is the industrialisation of labour. As long as wages are an important element in the cost structure of products, higher wages are difficult to obtain. Brand & Hoffmann argue that when the progression of wages exceeds the progression of productivity, the competitiveness of the II world country would decrease and with it the rhythm of development itself."
Martin Khor supposes that social clauses would lead to loss of jobs. "If... wages and other labour costs are forced up, far above the country's prevailing general level of incomes, and in a situation of large labour surplus or high unemployment, the result would be a loss of jobs in the companies, industries or sectors concerned, which would no longer be competitive against other domestically located firms or imports or other countries as an investment location. In other words, there is a correlation between labour costs and the "number of jobs." 6 Stopping child labour?
The ILO estimates that in the developing countries 18% of children between 10 and 14 years old work regularly. There is a general agreement that these children should be at school. But, since children work mostly in the informal sector and only very rarely in enterprises which produce for export, this phenomenon can not be combated by an instrument that, by its definition, only applies to the exporting industries. It is also important to note that the ILO convention on the prohibition of child labour not is ratified by one third of the European countries. These include Denmark, Great Britain, Portugal, and Austria. Other industrialised countries which didn't ratify this convention are the USA, Canada, Switzerland, Australia, New Zealand and Japan. The Belgian example
In Belgium the first demand for social clauses came from the textile trade union. The textile sector is in big problems. Since 24 International Viewpoint
1980 there is an annual loss of 115.000 jobs inside Europe. The textile unions are desperately seeking an explanation for this situation. Trapped in the capitalist logic and not willing to organise the workers to defend their jobs, they have "discovered" a scapegoat - the third world countries. Third world countries, in the social clause logic, are not only responsible for their own misery. They are now also responsible for the misery in the industrialised world!
In reality, the import of textiles from Asia into Belgium has risen only 0.3% since 1980. The cause of increasing unemployment does not lie in higher imports from developing countries. Neither are the much-discussed "run-away" factories responsible unemployment in the "developed countries. Only 16% of implantation of Belgian enterprises in other countries are real de-localisation ie. leading to a stop or a decrease of their activities in Belgium. And not less then 51% of such implantations take place in other European countries. 16% go to central Europe, 15% to the far-east and 7% to North Africa. Only 5% of Belgian direct investment goes to "runaway" countries. 80% goes to other European countries.
According to the World Bank, the three most important reasons for this situation are: • the increase in productivity: 48 Belgian workers can now produce the same quantity as 100 workers back in 1975. • competition between industrialised countries. • reduction of demand.
After such arguments became better known, the textile union adapted its discourse. They now agreed that social clauses wouldn't save jobs in Belgian industry. But they went on pleading for them in the name of international solidarity with the exploited workers of the developing countries! What kind of solidarity?
This might not seem such a bad consequence of the social clause debate. But when discussing a strategy to fight something, it's important to see where the causes lie. A recent phenomenon that significantly aggravated the social situation of the people in the south is the question of the third world debt. Debt service made the financial flow from south to north since 1983 bigger than the total resources the south receives in investments, credit and public aid together. Austerity measures imposed by the multilateral organisations made it impossible for third world parents to continue paying their children's school fees. Structural adjustment programs make developing countries export more, against ever decreasing prices. To attract more foreign investments special "Free trade zones" are created. Research shows that workers' rights in these zones are less respected than in the rest of the country?
Since the explosion of the debt crisis, the wages in the non-agricultural sectors of Latin America decreased by 45%. High time for the unions to fight for the cancellation of the third world debt! Perhaps the international federations could sign the international appeal against the policy of the Bretton Woods institutions?
In 1992, textile workers in India went on strike for higher pay. At the end of 1993 the (female) workers of Thai Durable Textile in Thailand went on strike and occupied their factory to protest the sacking of 376 workers. They won their cause. Where was the solidarity from European textile unions?
The demand for social clause is the consequence of a negative balance-sheet of the solidarity of the unions of the industrialised world with those of the south. We didn't mobilise enough. We are starting to see our fellow workers as our competitors. With the social clauses our unions want international institutions to do the job for them.
There is no short way to international solidarity. Sometimes it can be useful to boycott factories violating workers' rights. But only on the demand of popular organisations of the south. And a boycott is under our own control as consumers, and far more effective for the cultivation of public opinion. * Notes For a more exhaustive explanation on the consequences of GATT on the third world countries, see International Viewpoint, issue 258 July 1994 1. Lang and Hines, The new protectionism, Earthscan, p.17. 2. UNCTAD, Handbook of international trade and development statistics, 1988. 3. UNDP Rapport annuel sur le développement humain, 1993. 4. UNDP estimate. 5. Brand and Hoffmann, op. cit. p. 7. 6. Khor Martin, in Third World Resurgence No 45, p.32. 7. Brand and Hoffmann, op.cit. p. 8