Social clauses, social resistance
Denis Horman* The demand to incorporate social, environmental and democratic clauses into international trade relations has been put forward, particularly in the north, by employers' associations and States as well as by trade union, social and nongovernmental organizations. The elements feeding the debate over social clauses basically fall into two categories. Firstly, we have the notion of "social dumping" (so-called unfair competition), which is related to the difference in labor costs between certain geographical zones. To the extent that countries in the south and east benefit from unjustified competitive advantages because of low wages and less advanced social protection systems, it would be fair to implement a tax aimed at eliminating all or part of this unjust "advantage"
Some are quick to identify "social dumping" as a major cause of the development of unemployment in industrialized nations. the employers' world of the north, the sectors most vulnerable to imports of products manutactured at extremely low labor costs (e.g. textiles, clothing and leather) are most likely to advocate social clauses.
Trade union and humanitarian organizations that back social clauses aim above all to impose the obligation of guaranteeing the fundamental social rights (trade union rights, the abolition of child labor etc.) defined by the International Labor Organization (ILO). Developing countries are, in fact, the first to be targeted by the demand for social clauses.
The International Confederation of Free Trade Unions (ICFTU) nonetheless insists upon the dual objective of the social clause: to impose respect for fundamental human rights and to prevent unscrupulous companies from obtaining competitive advantages.
The "environmental clause" plays exactly the same role. The implementation of this type of clause is intended to block the trading of goods and services whose components or manufacturing processes are incompatible with the sustainable management of the environment.
In the wake of those two comes the democratic clause, which punishes countries that fail to respect the most basic rules on human rights, placing them on trial in the international market.
Union and humanitarian organizations, which are more particularly sensitive to the intolerable situation of child labor prevailing in the world, propose the creation of an international social fund or a solidarity bank. These would be fed by customs taxes imposed on countries that violate the norms established by the International Labor Organization, and the money would be refunded to those same countries for use on development programs.
Since the ILO has no system of sanctions whereby it can oblige countries to respect its conventions, international trade union organizations have suggested the creation of a joint consultation system involving the ILO and the WTO, which would be capable, where necessary, imposing retaliatory trade measures on recalcitrant nations.
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* social clauses The Fundamental Questions
There are clearly a number of questions underlying the debate of and proposals linked to social clauses. This is particularly true for those operating within a process of international solidarity, social transformation and a response to the common interests of workers and populations in the north, south and east of the planet.
How are we to battle against unemployment and the relocation of businesses? How are we to preserve and strengthen the basic social rights, freedom of association and negotiation and the prohibition of child labor...?
Would the application of trade sanctions - aimed primarily at Third World nations - under the aegis of the World Trade Organization contribute to achieving a fair, equitable and adequate
Within the framework of today's global power relations, is there not a risk that the introduction of social, environmental and democratic clauses would weigh more heavily on the workers and the people?
The real debate here is about intervention and conditionality. The right to intervention or protectionism for social ends is some trade organizations vis-à-vis states in the and east that tolerate social dumping and the failure to respect ILO
But might not such a measure risk obscuring who is truly responsible for unemployment and poverty in the the east and the Third World? That is, the powerful financial and economic groups (particularly transnational companies: TNCs) that operate worldwide. Might we not unwittingly be guaranteeing the reinforcement of economic protectionism to detriment of the so-called developing nations?
Would we not also risk covering up the overwhelming responsibility of institutions in the north - be they financial (IMF; World Bank), economic (WTO) or political (G7) — for widespread poverty in the Third World?
Finally, does not such an attitude tend to place workers from different sectors, regions and countries at loggerheads with one another by provoking or exacerbating competition between them?
The debate over social clauses to some extent returns us to the basic question: how, today, are we to strengthen solidarity among workers, unions, social organizations and the populations of north and south? What should be our purpose in developing this solidarity? Social Dumping
Social dumping, which is associated with low labor costs, must be considered with reference to unit labor costs and, therefore, to productivity.
It would be hazardous to talk about competition" difference in wage costs among local producers in the south and east (but also the north) is combined with much lower productivity levels than those achieved by multinationals or their sub-contrac-
In the case of local businesses, low wages essentially reflect a difference in productivity levels and any tariff measures (customs taxes) or non-tariff measures (cap on import quotas) would merely serve to reduce the sales of southern nations, possibly wiping them out entirely in the event of an acrossthe-board leveling in wage costs.
On the other hand, if Nike and Adidas out-source 99% of their production to Asia, it is clearly because the pitiful wages paid to Asian workers easily balance out high productivity. Relations between multinationals and their sub-contractors particularly in the Third World- highlight the responsibility of those companies for social dumping. The sub-contractors must answer for production risks and are systematically forced to seek out the lowest costs. That causes the frequent displacement and relocation • of production, and, at the same time, multinationals are more than willing to resort to blackmail, intimidation and the repression of trade union activities.
Sub-contractors are, likewise, forced to violate local legislation and ILO norms, despite the "codes of good conduct" adopted by Nike and other global companies.
Any debate of social, environmental and democratic clauses must consider the economic, political and institutional context; it cannot occur outside the context of the globalization of capital — of "excluding" globalization. This is characterized above all by cutthroat
competition among the great industrial groups, first and foremost the transnational companies of the Triad nations (the European Union, North America and Japan). One way or another TNC's, particularly the top 200, control more than 70% of global trade and investment. Globalization is largely conducted via a selective integration process in a globalized world market. The Protectionism of the Rich
"Transnational companies and firms in the Triad countries are interested only in selective relations applying to a limited number of Third World
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countries. Some nations are still, now and again, required as sources (although this is less and less frequently the case). Others -largely because of the concentration of trade capital - are attractive as bases for relocated sub-contracting involving very low wage costs. A very small number of other countries are targeted for their potentially enormous domestic market (China, for example). Nonetheless, excluding these specific cases, Triad companies need markets and absolutely do not require major industrial competitors...
The social clause that is advanced under the guise of good intentions and aims to stop social dumping can, in fact, serve to justify the worst form of protectionism: the protectionism of the
This protectionism is already alive and well. Indeed, the United Nations Development (UNDP) denounced it in the clearest possible terms in a 1992 report. "20 out of 24 industrialized nations are generally more protectionist than they were ten years ago and their protectionism is exercised largely to the detriment of developing countries... Overall, we can estimate that world market restrictions cost developing countries approximately US$500 billion a year. Those $500bn in losses are equivalent to around 20% of the global GDP of developing countries and represent seven times the amount such nations currently allocate to spending priorities related to human develop-
If there are social, ecological and democratic clauses to be applied, if we are to adopt retaliatory measures to combat unfair competition and the excessive exploitation of labor, these should first and foremost be applied to transnational companies. Why? Because it is they who control more than 70% of global trade and investment, they who constantly relocate from one place to another, they who systematically force their sub-contractors to seek out the lowest production costs, they who practice trade union repression in industrial free zones. Social Clauses and Fundamental Social Rights
Trade union, social and humanitarian organizations advocate social clauses mainly on the basis of fundamental human rights and are concerned about obtaining effective tools and constraints that would make it possible to impose respect for fundamental social norms. Those include ILO conventions, freedom of association and negotiation, the prohibition of child and slave labor and the elimination of discrimination on the grounds of race, sex, religion or political opinion etc.
At this point, it is important to draw a distinction between social norms and social clauses. The WTO and Social Clauses
Social clauses are related to trade agreements and, by extension, involve
292U613 the competence of international bodies like the World Trade Organization (WTO).
In a joint declaration the three international union organizations (ICPTU, CMT and CES) proposed the establishment of a joint ILO and WTO consultation committee to implement social clauses. If, as the ICFTU document emphasizes, a country proves unwilling to respect the principles enshrined in ILO norms then "The WTO may decide upon an appropriate multilateral trade response". 3
This poses the problem of the function, role and legitimacy of the WTO as a guarantor of fundamental social rights.
How can the WTO - the executive arm of liberal dogma → do both one thing and its opposite? How can it, on the one hand, attack all obstacles blocking "the free play of competition" and at the same time regulate that very matter?
How can it consider the economic, social and cultural rights of individuals and peoples when all the "logic" of competition (including competition International Viewpoint #317-318 January 2000 25
* social clauses between workers) and competitiveness runs counter to those rights?
International union organizations and some humanitarian bodies favor a cooperation that involves not just the ILO and the WTO, but other international institutions such as the World Bank and the IMF.
But how can one advocate social, environmental and humanitarian clauses intended to impose respect for fundamental social norms and the rights of Man without considering the degree to which the IMF and the World Bank are responsible for challenging those fundamental rights? The Rights of Man
Macroeconomic reforms advocated by the IMF and the WB run counter to economic, social, cultural and political rights.
The globalization of the capitalist economy is guided by a reorganization of direct investments controlled by leading multinationals, which exploit the liberalization of financial markets. These direct investments entirely reorganize labor, adjusting it to the global scale and placing each social system and each productive unit in competition, in rivalry. The IMF's structural adjustment policies involve an adjustment to precisely that reality. The IMF's "regulatory" role is not intended to limit the power of speculative financial markets, but rather to oversee the financial policies of developing nations.
It is common knowledge that, since the Mexican debt crisis of 1982, the function of the IMF and the World Bank has been to place debtor nations in the south and east under tutelage - in other words to deny their sovereignty.
Structural adjustment programs (SAPs) involve the adjustment ot poor countries to rich countries' demands. More precisely, they involve the adjustment of poor populations in poor countries to the demands of the reorganization of direct investments controlled by major international economic groups.
This adjustment also occurs within poor countries, where the poor or pauperized strata are obliged to adjust to the demands of the well-to-do classes that benefit from this new dependency.
This adjustment occurs in a context where entire sections of the world economy are becoming disengaged from the program of exchange; within a context of excluding globalization.
The same mechanisms operate to some extent throughout the world. In the north, south and east alike they translate into lower standards of living, 26 International Viewpoint #317-318 January 2000 higher unemployment, deteriorated living conditions and social exclusion.
established this analytical framework, we can go on to decode the relationship between SAPs and the rights of man.
We can pinpoint four generations of the rights of man, or of human beings - for the emergence of the rights of man at a conceptual and then constitutional level initially excluded the rights of women. The first generation addressed the civil and political rights of individuals. The second referred to social, cultural and economic rights (the latter being the right to employment, income, housing, education and health, etc.), which were enshrined in social legislation in the period following the Second World War.
The third generation emerged in the 60's and was symbolically baptized by UN resolution 1514 against colonialism -at which point the right to the self-determination of peoples became a right of man. After 1968 came a new series of UN resolutions addressing new rights for both individuals and social groups. These included conventions against racism and for the rights of women, children, etc. The last generation to appear was a kind of right of humanity: the right to survival. This type of right refers not just to food and energy but also to broader, so-called ecological issues. The Rio Summit - for all its official hypocrisy- formalized the recognition of this new type of right.
These four generations of rights cannot be dissociated from one another. "Structural Adjustment" and Respect for the Human Person
If we measure the SAPs implemented by the IMF (in coordination with the WB) against the yardstick of these different generations of rights of the human person, we rapidly notice an intrinsic contradiction between respect for those rights and the policies spearheaded by the two specialist UN
One by one, these rights are demolished as a result of the direct and indirect effects of macroeconomic "models" proposed by the IMF and applied under the constraint of conditional loans. (The application of SAPs is among the conditions required in order to obtain access to IMF and WB loans).
First and foremost, it is vital to observe that in the discourse of the IMF, the WB and indeed G7 (the group of the world's seven most powerful nations) there is a separation between individual rights (freedom of expression, association, elections etc) and social rights.
The concept of "good governance" that is among the stipulations for obtaining access to loans in fact relates to the priority of respect for individual rights - a respect that is, moreover, completely superficial. "Free" elections, for example, are supposed to give concrete expression to this type of right. Social rights, in contrast, are ends to be achieved at some non-specified date, or once the SAPs have been properly
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With regard to individual rights, it is interesting to note that both the IMF and the WB function on a poll-tax style system. Their internal functioning (decision-making power) is based on the financial contributions of member countries, where "one dollar equals one vote". As a result, 49 African states jointly account for a lower percentage of votes than the 5% or so controlled by Belgium. Nine countries — the most industrialized nations — wield 56% of voting rights within the IME's group of 24 administrators. The United States, the world's most indebted nation, controls around 20% of votes in the IMF and the WB.
This type of system is, therefore, a negation of the right to self-determination; a third-generation right that enjoys UN recognition. In addition, this regime implies that SAP managers are not responsible; that, in other words, the IMF and the WB are in no way answerable to countries that are placed under structural adjustment. The two institutions are even less likely to be called into question since their prog rams and projects are not subject to independent auditing or critical assessment.
The socio-economic effects of SAPs mean that excluding globalization leads to the brutal marginalization of entire strata of the population, which are, de facto, excluded from exercising civic and political rights.
The existence of one billion illiterate people, of whom 840 million are Third World adults (2/3 of them women) indicates that civil and civic
International Viewpoint rights are under direct attack. The entire policy of SAPs also runs counter to rights. The suppression of subsidies on basic goods, budgetary policies dictated by the IMF that lead to the destruction of public services, the policy of exporting everything in order to service debt... all these different measures unleash mechanisms of impoverishment and absolute pauperization while simultaneously ensuring the improved status of some intermediate and privileged strata.
One of the most serious aspects — directly related to the third generation of human rights — refers to the rights of children. It is common to hear about malnutrition and even the World Bank recognizes its existence. This, the same organization that talks about "safety nets" to curb the impoverishment provoked by structural adjustment "nets" that are by and large ineffective.
Still more seriously, under-nourishment or malnutrition that lasts for a period of three or four years has a longintergenerational effect. The most elementary right to future existence is threatened by the loss of capacity at all levels that is inflicted on malnourished children. The effects are cumulative and long-term in nature. But what IMF official will be called before a rights tribunal to answer for this attack on the rights of children?
SAPs also influence the environment and urbanization and this implies an attack on the final generation of the rights of man, of humanity: the right to survival.
Structural adjustment programs set up by the IMF and the WB have added to the constraints weighing upon already fragile eco-systems. The heavy loans of the 70s financed vast and ecologically damaging projects. When the bill fell due, particularly after the 1982 debt crisis, even greater quantities of natural resources were wiped out in order to honor the debt. In global terms, 43% of original forest-land in developing nations has already been lost beyond recall.
"The destruction of forests in the Third World is therefore responsible for around a fifth of the general climatic change that threatens us, while the rate of greenhouse gas emissions resulting from deforestation has risen around 50% in just ten years". s
The relationship between SAPs and the rights of man casts the Generalized System of Preferences advocated by the European Union in an interesting light. The system aims to subordinate the granting of supplementary trade advantages to respect for some of the ILO's fundamental social norms. These are, to a certain degree, social clauses aimed at encouraging southern nations to include in their legislation measures that address social protection, respect for the environment and the abolition of slave labor.
Even the good intentions that provide the basis for this type of measure cannot, however, obscure the overwhelming responsibility of international financial and economic institutions, multinationals and neo-liberal politicians for the violation of fundamental social rights. Social Norms, Mobilization and Legislation
Efforts to impose respect for the ILO's social norms or to try and protect employment by implementing clauses halt price for all new readers!
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International Viewpoint #317-318 January 2000
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* social clauses that involve trade sanctions are not necessarily the fairest, most equitable and most suitable solution. It is a brief step from "protectionism for social ends" to a tactical alliance with bosses to defend "our" businesses, and sooner or later that can only lead to even greater social regression in our own countries.
Similarly, boycotting measures or sanctions imposed on southern or eastern nations risk affecting only the populations of those countries.
Clearly, we cannot entirely exclude the option of boycotting or sanctioning countries or indeed companies. The main point here is that these measures should be decided upon and implemented in response to demands by trade union and social protagonists within the affected companies and nations. There are no magic short cuts: social and legal advances in the south, east and north alike will be achieved first and foremost through social mobilization.
In a largely internationalized economic system, any social regression in one place is exploited by the dominant players and frequently brings with it a generalized retreat, which is justified by the drive for competitiveness - and there's no knowing where that race will
What we do know, however, is that it bears the logic of war: "If you are not competitive enough there will always be someone else who will do your job for a lower wage, with more flexible hours and under more wretched working conditions.
The well being of some is based on the misery of enforcement of competition in fact leads to an overall deterioration. Any social advance - be it in a business, a sector or a country - that addresses wages and working conditions, trade union freedom or the minimum age of workers can only benefit workers in other businesses and other sectors, as well as people in other countries. It can only help bring about a shift from power relations to cooperative relations.
These social advances imply the freedom of organization of workers and social movements; international solidarity between social and humanitarian movements; a coordination of actions between democratic progressive organizations. Mobilizations are very closely linked to legal and legislative advances, with the former frequently providing the base for the latter.
If it is important to encode the fundamental rights of people and 28 International Viewpoint #317-318 January 2000
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G.5 peoples in international charters and agreements, it is still more important for progressive, political, trade union and social organizations to arm themselves with autonomous and independent tools for exercising genuine social control.
The issue here is the possibility of a counter-power that could conduct factfinding missions, denounce situations of injustice and mobilize to impose the application fundamental rights. For example, a denunciation of the orientation and practices of the IMF and the WB could take on an immense mobilizing power if it drew on facts, investigations and evaluations provided by an independent supported by organizations of social resistance. International solidarity associations bear a particularly heavy responsibility for the establishment of this counterpower in terms of the demand for transparency and the exercise of Paving the Way for Durable Development
As the 20th century ends, our societies boast the technical, scientific, financial and human capacity to ensure the minimal and indispensable well being of all of the planet's inhabitants. Nonetheless, the capitalist economy -for all its self-proclaimed victory- daily fails to satisfy the most elementary needs of humanity, is unable to make all the potentialities of technical progress bear fruit.
The aim is to achieve a society based, not on private profit, but on the satisfaction of basic needs. There are no magic short cuts to achieving this end. We have to break with neo-liberalism, implementation preparation anc starting with the proposals and alternative routes.
We could begin to pave the way for durable development, for example, by demanding the cancellation of Third World debt, by ending the "structural adjustment" programs and by allowing poor nations a minimal disengagement from the world market. We could use the Tobin tax applied to vast fortunes to feed a development fund, we could shore up social movements by way of genuine agricultural reform.
It goes without saying that that this will require the establishment of a new relationship with the south; relationship based on solidarity, social justice and the interests of local populations.
This implies that union and social movements in the north must engage themselves fully in the responsibility of undermining this region's neo-liberal citadels. * *Denis Horman, is a journalist and economist whose major publications include; World Trade, a Social Clause for Employment and Fundamental Rights?, Ed. Luc Pir-CETIM, 1996; and Globalization and Social Rights, The Social Clause under Debate, GRESEA (Groupe de recherche pour une stratégie économiquealternative), 1997.1997. 1. F. Chenais, La mondialisation de capital, 1994 2. UNDP, 1992 Report, pp 69 and 74. 3. ICFTU Working document for the first ministerial meeting of the WTO, Singapore, Dee. 9-13, 1996. 4. UNDP, 1997 Report, p. 26. 5. Susan George, The Debt Boomerang, 1992
against the general interest of capitalism — for example, it can reduce the capacity for technical innovation.
So, your question touches on one of the system's great contradictions, between the interests of each individual and the general interests of capital.
ODI
• 25 years ago capitalism seemed far less ideologically monolithic than nowadays. How can we explain the triumph of neoliberalism, its absolutely dominant position in mainstream political and economic thought? Since the turning point in the system around the early 1970s we have seen an enormous offensive from capital. It is on the back of this offenseive that the neoliberal idea has come to dominate. Earlier there were different schools of economic thought. But today, if you call yourself Keynesian, considered almost a revolutionary. You're marginalised, in the universities
The neoliberal school existed long before it became popular. It was eclipsed during the Great Depression, when interventionism came back into fashion. But during those years of marginalisation, thinkers like Hayek and Friedman, the "Chicago school" people and the Montpelerin Society, continued their work in preparation for the counter-offensive they knew would come. With the reversals of the 1970s, and above all the victories of Thatcher