WTO WTO ________

IMF – World BankIMF – World Bank

INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin (Italy)(Italy)

26 November 200326 November 2003

(Fons Vannieuwenhuyse – ICFTU)(Fons Vannieuwenhuyse – ICFTU)

WTOWTO

What it is, what it does What it is, what it does andand

why we don’t always like itwhy we don’t always like it

What is it?What is it?

The World trade Organisation (WTO) is The World trade Organisation (WTO) is an organisation that deals with the an organisation that deals with the rules of traderules of trade between nations at a between nations at a global level.global level.

A set of AgreementsA set of Agreements

The WTO The WTO agreements are at the coreagreements are at the core of the of the WTO. WTO. They are the result of negotiations by the They are the result of negotiations by the different members inside the WTO. different members inside the WTO.

These agreements are These agreements are negotiatednegotiated, , agreed by agreed by consensusconsensus, and signed by the members. (the , and signed by the members. (the bulk of the world’s countries)bulk of the world’s countries)

The agreements provide the The agreements provide the legal ground-rules legal ground-rules for international commercefor international commerce..

They are essentially contracts – or promises that They are essentially contracts – or promises that governments have to respect.governments have to respect.

Who’s there?Who’s there?

The WTO members are the governments of 148 The WTO members are the governments of 148 countries. countries.

Over Over ¾ are developing countries and countries in ¾ are developing countries and countries in transition to market economies.transition to market economies.

It’s members resolve to abide by its rules by It’s members resolve to abide by its rules by becoming a member.becoming a member.

(Regional trade agreements are exempted and (Regional trade agreements are exempted and fall outside the scope of the WTO)fall outside the scope of the WTO)

Companies and employers’ organisations do not Companies and employers’ organisations do not have a have a direct influencedirect influence at the WTO. at the WTO.(the same applies to trade unions and NGO’s.)(the same applies to trade unions and NGO’s.)

However, their indirect influence is considerable. However, their indirect influence is considerable.

As large and powerful organisations, multinational As large and powerful organisations, multinational companies (and their employer organisations)companies (and their employer organisations) have have large lobbying powerslarge lobbying powers with their governments; with their governments; Have Have great interestgreat interest at what happens at the WTO. at what happens at the WTO.

Also, as multinational companies and governments Also, as multinational companies and governments have common interests (more international have common interests (more international trade), trade), governmentsgovernments, to a large extent, will - de , to a large extent, will - de facto - facto - defend the some of the interests of defend the some of the interests of multinational companiesmultinational companies..

HistoryHistory Already in 1948, there was a failed Already in 1948, there was a failed

attempt to create an “International Trade attempt to create an “International Trade Organisation”.Organisation”.

From 1948 to 1994, the GATT (General From 1948 to 1994, the GATT (General Agreement on Tariffs and Trade) provided Agreement on Tariffs and Trade) provided the rules for world trade. the rules for world trade.

GATTGATT was a was a provisional agreementprovisional agreement and and organisation under whose umbrella organisation under whose umbrella ‘negotiation rounds’ were held. ‘negotiation rounds’ were held.

From 1948 to 1995, there have been From 1948 to 1995, there have been 8 8 trade roundstrade rounds. .

At first, the rounds focussed on lowering At first, the rounds focussed on lowering tariffs (customs duties) on imported goods. tariffs (customs duties) on imported goods.

As each round had more countries involved, As each round had more countries involved, it also discussed more issues (e.g. anti-it also discussed more issues (e.g. anti-dumping measures, specific sector dumping measures, specific sector agreements, services, problem solving,…).agreements, services, problem solving,…).

The most comprehensive round was the The most comprehensive round was the Uruguay roundUruguay round (1986 - 1994). 123 (1986 - 1994). 123 countries took part in the discussions.countries took part in the discussions.

One of the results was 22.500 pages One of the results was 22.500 pages listing commitments by countries on listing commitments by countries on specific categories of goods and specific categories of goods and services.services.

A ninth round, the ‘A ninth round, the ‘Doha Development Doha Development agendaagenda’ is currently ongoing. ’ is currently ongoing.

Start of the WTOStart of the WTO

The WTO, as an organisation, was The WTO, as an organisation, was established on 1 January 1995. established on 1 January 1995.

It is based in Geneva.It is based in Geneva.

It has a staff of about 550 and is It has a staff of about 550 and is headed by a director-general, headed by a director-general, Supachai Panitchpakdi. Supachai Panitchpakdi.

Who does what?Who does what?

The WTO has a very limited staff at its The WTO has a very limited staff at its headquarters. It largely headquarters. It largely consists of consists of technical stafftechnical staff..

The ‘The ‘General CouncilGeneral Council’ (i.e. the ’ (i.e. the ambassadorsambassadors of the different of the different countries) is in charge of the day-to-countries) is in charge of the day-to-day work at the WTO.day work at the WTO.

Negotiations are undertaken by Negotiations are undertaken by ‘‘expertsexperts’.’.

In the end, the ministers (representing their In the end, the ministers (representing their governments) adopt the results of the governments) adopt the results of the negotiations.negotiations.

This takes place at the ‘This takes place at the ‘WTO ministerialsWTO ministerials’ ’ which is the highest authority.which is the highest authority.

‘‘WTO Ministerial meetings’ are held every WTO Ministerial meetings’ are held every two years. two years. Some of them got famous (for example Some of them got famous (for example Seattle in 1999).Seattle in 1999).

The last ministerial was in Cancun (Mexico) The last ministerial was in Cancun (Mexico) in September.in September.

Democratic deficit at the Democratic deficit at the WTOWTO

Even thoughEven though

The WTO structure is relatively more democratic than the The WTO structure is relatively more democratic than the IMF or the World bank (IMF or the World bank (one country – one voteone country – one vote vs vs one one dollar – one votedollar – one vote))

The WTO agreements include numerous provisions giving The WTO agreements include numerous provisions giving developing and least-developed countries special rights or developing and least-developed countries special rights or extra leniency – (known as ‘extra leniency – (known as ‘special and differential special and differential treatmenttreatment’).’).

For example, the WTO provides some technical assistance. For example, the WTO provides some technical assistance. Also, special provisions include: Also, special provisions include:

extra time to abide by WTO rulesextra time to abide by WTO rules more possibilities to use subsidiesmore possibilities to use subsidies being allowed to keep higher custom being allowed to keep higher custom

duties -tariffsduties -tariffs

StillStill,, the WTO negotiating system has some the WTO negotiating system has some built-in advantages for the richer and larger built-in advantages for the richer and larger countriescountries..

As the markets of the richer and/or larger countries As the markets of the richer and/or larger countries are of much larger value, these countries can much are of much larger value, these countries can much more easily get what they want.more easily get what they want.

For a small and poor country, it’s important For a small and poor country, it’s important to get access to the major markets, so they to get access to the major markets, so they have to accept whatever is being offeredhave to accept whatever is being offered..

For the large markets, the opposite applies: they For the large markets, the opposite applies: they can continue to negotiate until they have an can continue to negotiate until they have an agreement they like.agreement they like.

A large number of developing countries have A large number of developing countries have already liberalisedalready liberalised their markets as a result of their markets as a result of the IMF and World Bank policies. the IMF and World Bank policies.

They therefore have They therefore have less left to bargainless left to bargain with with than they would want to.than they would want to.

Decision are taken by consensus.Decision are taken by consensus.

In practice, as there are In practice, as there are almost 150 countriesalmost 150 countries, an , an alternative “system” exist.alternative “system” exist.

The ‘real’ decisions are often taken in ‘The ‘real’ decisions are often taken in ‘green green roomsrooms’ –small meeting with only a few countries ’ –small meeting with only a few countries present. present. These are - most of the time - the larger and/or These are - most of the time - the larger and/or richer countries: EU, US, Canada, China, Japan, richer countries: EU, US, Canada, China, Japan, Australia, New Zealand, Switzerland, Brazil, Australia, New Zealand, Switzerland, Brazil, Argentina, India, Pakistan, Egypt, South- Korea, Argentina, India, Pakistan, Egypt, South- Korea, South- Africa.South- Africa.

The The budget of many developing budget of many developing countriescountries is so is so limitedlimited they do not have the they do not have the possibilities to participate in many of the possibilities to participate in many of the meetings or to provide policy documents. meetings or to provide policy documents.

(There are about 50 WTO-related meetings (There are about 50 WTO-related meetings each week in Geneva – there are about each week in Geneva – there are about 150.000 official documents on the WTO site)150.000 official documents on the WTO site)

The system of consensus dictates that you The system of consensus dictates that you have to say ‘no’ to block something. Those have to say ‘no’ to block something. Those that aren’t there can’t block anything.that aren’t there can’t block anything.

Only about one third of the least-developed countries in the WTO have permanent offices in Geneva, and they cover other United Nations activities as well as the WTO.

Many other countries have a representation Many other countries have a representation of one person to the WTO.of one person to the WTO.

The The complexity of the documentscomplexity of the documents is is another problem: many countries – even another problem: many countries – even where they have staff – do not have the where they have staff – do not have the expertise.expertise.

Democratic deficit – cont.Democratic deficit – cont.The actions of the WTO The actions of the WTO need more coherence with need more coherence with

other organisationsother organisations..

And, not only with the IMF and World Bank.And, not only with the IMF and World Bank.

The WTO also needs to co-operate more closely with The WTO also needs to co-operate more closely with the relevant agencies of the United Nations system the relevant agencies of the United Nations system and be coherent with the decisions reached at the and be coherent with the decisions reached at the World Summit for Sustainable Development (WSSD) World Summit for Sustainable Development (WSSD) in 2002. in 2002.

The WTO should endorse the Conclusions of the The WTO should endorse the Conclusions of the WSSD, in order that sustainable development is fully WSSD, in order that sustainable development is fully incorporated into the work of the WTO.incorporated into the work of the WTO.

The WTO should strengthen the WTO’s collaboration The WTO should strengthen the WTO’s collaboration with – amongst others - UNCTAD, the ILO and the with – amongst others - UNCTAD, the ILO and the WHO.WHO.

Philosophy and Philosophy and principles of the principles of the

WTOWTO

LiberalisationLiberalisation

The WTO is The WTO is an organisation for an organisation for liberalising tradeliberalising trade..

It’s overriding purpose is to help trade It’s overriding purpose is to help trade flow as freely as possible – flow as freely as possible – “so long “so long as there are no undesirable side-as there are no undesirable side-effects”.effects”.

Even though the WTO agreements are Even though the WTO agreements are lengthy and complex - because they lengthy and complex - because they are legal texts covering a wide range are legal texts covering a wide range of activities - there are of activities - there are two two principlesprinciples at the foundation of the at the foundation of the trading system:trading system:

The Most-Favoured-Nation PrincipleThe Most-Favoured-Nation Principle The National treatment principleThe National treatment principle

The The “Most-Favoured-Nation Principle”“Most-Favoured-Nation Principle”

It means: It means: treating all others equallytreating all others equally..

Countries can Countries can not discriminatenot discriminate betweenbetween their their trading partnerstrading partners. .

To grant on country a special favour (such as To grant on country a special favour (such as lowering customs duty rate for one of their lowering customs duty rate for one of their products) requires to do the same for all other products) requires to do the same for all other WTO members.WTO members.

MFN means that every time a country lowers a MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so trade barrier or opens up a market, it has to do so for the same goods or services from all its trading for the same goods or services from all its trading partners.partners.

The The “National treatment principle”“National treatment principle”

Which means: Which means: treating foreigners treating foreigners and locals equallyand locals equally..

Imported and locally-produced Imported and locally-produced goodsgoods should be should be treated equallytreated equally (at (at least after the foreign goods have least after the foreign goods have entered the market). The same applies entered the market). The same applies to foreign and domestic services, and to foreign and domestic services, and to foreign and local trademarks, to foreign and local trademarks, copyrights and patents.copyrights and patents.

Many different Many different WTO WTO

AgreementsAgreements

The WTO agreements cover three broad The WTO agreements cover three broad areas: areas: goodsgoods, , servicesservices and and intellectual intellectual propertyproperty..

For each of these, there is ‘For each of these, there is ‘main main agreementagreement’ (containing broad principles):’ (containing broad principles):

Goods: the General agreement on tariffs and Goods: the General agreement on tariffs and Trade (Trade (GATTGATT))

Services: the General Agreements on Trade Services: the General Agreements on Trade in Services (in Services (GATSGATS))

Intellectual property: Trade Related Aspects Intellectual property: Trade Related Aspects of Intellectual property Rights (of Intellectual property Rights (TRIPSTRIPS) )

Under each of these broad agreements, there Under each of these broad agreements, there are are extra extra ((sub-sub-))agreementsagreements and annexes and annexes dealing with dealing with specific sectors or issuesspecific sectors or issues..

E.g. there are agreements on agriculture or E.g. there are agreements on agriculture or textiles as part of the GATT agreement textiles as part of the GATT agreement (goods).(goods).

Finally, there are the detailed and lengthy schedules (or lists) of commitments made by individual countries allowing specific foreign products or service-providers access to their markets.

AgricultureAgriculture

The Uruguay Round produced the first multilateral agreement dedicated to the sector (under GATS).

The new rules and commitments apply to:

market access: tariffs, … domestic support: subsidies and other

programmes. export subsidies and other methods used to

make exports artificially competitive suffered.

As of 1995, developed countries cut the tariffs by an average of 36%, in equal steps over six years. Developing countries made 24% cuts over 10 years. Least-developed countries do not have to cut their tariffs.

The problem is that The problem is that subsidies are subsidies are allowed to continueallowed to continue..

Domestic supportDomestic support

Amber boxAmber box: : Domestic policies that have a direct effect on production and trade (trade distorting) have to be cut back – reduced (between 13 – 20 %), not eliminated.

Green box and blue box: Measures with minimal impact on trade can be used freely.

They include: Government services such as research, infrastructure and food security.

Payments made directly to farmers that do not stimulate production, such as certain forms of direct income support.

Also permitted are certain direct payments to farmers where the farmers are required to limit production.

Export subsidiesExport subsidies

The Agriculture Agreement prohibits export subsidies on agricultural products unless the subsidies are specified in a members lists of commitments.

Here as well, countries agreed to reduce these subsidies, not eliminate.

The The agricultural sector of the agricultural sector of the developing countriesdeveloping countries - (the most - (the most important sector for many of them) - important sector for many of them) - is is losing groundlosing ground because of the cheap because of the cheap (subsidised) products entering the (subsidised) products entering the market, produced by developed market, produced by developed countries.countries.

On average, 70% of the workers in On average, 70% of the workers in developing countries work in agriculture.developing countries work in agriculture.

What’s wrong hereWhat’s wrong here

The EU The EU exports wheat at two-thirds of exports wheat at two-thirds of its production costits production cost, and , and sugar at only sugar at only 25%.25%. The EU The EU subsidises subsidises each coweach cow by by more than US$2 per daymore than US$2 per day while 3 while 3 billion people in developing billion people in developing countries have to survive on less countries have to survive on less than this amount.than this amount.

The US’ annual subsidies of US$ 4 billion The US’ annual subsidies of US$ 4 billion for its cotton production cause a for its cotton production cause a reduction in world prices of 26%, directly reduction in world prices of 26%, directly affecting the income of the more than 10 affecting the income of the more than 10 million people in West and Central Africa million people in West and Central Africa dependant on cotton production.dependant on cotton production.

The agriculture discussions were The agriculture discussions were one of one of the mainthe main reasons for the failurereasons for the failure of the of the ministerial in Cancunministerial in Cancun..

At the centre of the debate are the At the centre of the debate are the discussions on subsidies by (mainly) the discussions on subsidies by (mainly) the United States and the European Union.United States and the European Union.

One of the main point of dispute was that One of the main point of dispute was that the developing countries wanted the the developing countries wanted the developed countries to agree to developed countries to agree to lower lower (and/or eliminate) their agricultural (and/or eliminate) their agricultural export subsidiesexport subsidies, as well as the , as well as the domestic support for their agricultural domestic support for their agricultural sector. sector.

According to Global Unions, According to Global Unions, the WTO the WTO needs to end all agricultural needs to end all agricultural export subsidiesexport subsidies and and reduce and reduce and reorient other agricultural reorient other agricultural subsidiessubsidies (e.g. price support) to (e.g. price support) to social and environmental objectives. social and environmental objectives.

TextilesTextiles

From 1974 until the end of the Uruguay Round, the textile sector was governed by the Multifibre Arrangement.

Since 1995, the WTO’s Agreement on Textiles and Clothing has taken over. By 1 January 2005, the sector is to be fully integrated into normal GATT rules. In particular, the quotas will come to an end, and importing countries will no longer be able to discriminate between exporters.

What’s wrong here?What’s wrong here?

Serious difficultiesSerious difficulties are arising for exports are arising for exports and employment all over the world, and and employment all over the world, and particularly particularly in many developing in many developing countriescountries, as a result of the phase-out of , as a result of the phase-out of the Agreement on Textiles and Clothing.the Agreement on Textiles and Clothing.

With the end of the quota’s, With the end of the quota’s, many many companies are shifting from one companies are shifting from one country to another, often leaving country to another, often leaving behind a social disasterbehind a social disaster..

For example, the ITGLWF estimates that For example, the ITGLWF estimates that about about one millionone million jobs will disappear in jobs will disappear in BangladeshBangladesh..

Another problem is that Another problem is that a lot of these a lot of these jobs go jobs go to Chinato China, where free trade unions do not exist. , where free trade unions do not exist.

Global Unions are therefore calling for Global Unions are therefore calling for

an urgent review for the situation (employment an urgent review for the situation (employment and working conditions in that sector) andand working conditions in that sector) and

measures to assist emerging and fragile textile measures to assist emerging and fragile textile and clothing industries - so that they can meet and clothing industries - so that they can meet the challenges posed by unregulated the challenges posed by unregulated competition. competition.

ServicesServices

The The inclusion of services is relatively inclusion of services is relatively new in the WTOnew in the WTO..

Services represent the fastest growing sector of the global economy and account for 60% of global output, 30% of global employment and nearly 20% of global trade.

The General Agreement on Trade in Services (GATS) covers all internationally-traded services. For example, banking, telecommunications, tourism, professional services, …

The ongoing negotiations (for extra and The ongoing negotiations (for extra and more agreements as part of the GATS more agreements as part of the GATS discussions) are discussions) are part of the ongoing part of the ongoing Doha agendaDoha agenda..

They They differ a littlediffer a little from the overall from the overall practice of the WTO.practice of the WTO.

They start as They start as bilateralbilateral (country to (country to country) country) negotiationsnegotiations first. first.

However, the principle still applies that However, the principle still applies that one favour to one country applies to all one favour to one country applies to all other WTO countries as well other WTO countries as well (with some possible (with some possible exceptions in the beginning).exceptions in the beginning).

Countries can decide which Countries can decide which sectors they want to open and to sectors they want to open and to what extentwhat extent (e.g. whether there are (e.g. whether there are any restrictions on foreign ownership any restrictions on foreign ownership of companies).of companies).

Governmental services are taken out of the GATS agreements.

What’s wrong hereWhat’s wrong here Privatisation exercisesPrivatisation exercises in the service in the service

sector have ‘sector have ‘not always beennot always been met with met with much much successsuccess’.’.

There are more than enough examples of There are more than enough examples of ‘privatisations gone bad’‘privatisations gone bad’ For a large number of countries, the For a large number of countries, the waterwater

privatisations, where large multinationals have privatisations, where large multinationals have taken over public services, have been a taken over public services, have been a disaster (not only for the workers, but also disaster (not only for the workers, but also often for both the company and the public)often for both the company and the public)

The privatisation of the The privatisation of the railwayrailway system in the system in the UK has not worked well.UK has not worked well.

According to the WTO, nothing forces According to the WTO, nothing forces countries to open up sensitive sectors, such countries to open up sensitive sectors, such as public services. as public services.

While that is correct, While that is correct, nothing preventsnothing prevents themthem from opening these sectorsfrom opening these sectors either. either.

It increases the pressure to It increases the pressure to deregulatederegulate..

At this current GATS At this current GATS negotiations phasenegotiations phase, , the negotiations are the negotiations are secretsecret, the ‘offers’ are , the ‘offers’ are not disclosed. not disclosed. (it is not known officially which countries (it is not known officially which countries want to open up which sectors and to what want to open up which sectors and to what extent).extent).

Global UnionsGlobal Unions are are worriedworried that the result that the result of the GATS negotiations may be that of the GATS negotiations may be that a lot a lot of service sectors will be privatised of service sectors will be privatised that should not bethat should not be. .

One of the main demands of the One of the main demands of the international trade unions movement is to international trade unions movement is to build in safeguards so that this can not build in safeguards so that this can not happen. happen.

Particular examples are the Particular examples are the educational educational sector, the health sector end culturesector, the health sector end culture..

Intellectual propertyIntellectual property

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) introduced intellectual property rules into the multilateral trading system for the first time.

Creators are given the right to prevent others from using their inventions, designs or other creations and to use that right to negotiate payment in return for others using them. These are ‘intellectual property rights’.

It relates to issues such asIt relates to issues such as

Copyright (books, CD’s, film)Copyright (books, CD’s, film) Trademarks (logo’s, brand name Trademarks (logo’s, brand name

clothing)clothing) Geographical indications (Champagne)Geographical indications (Champagne) Industrial designsIndustrial designs Patents (medicines)Patents (medicines) Lay-out designsLay-out designs

An recent problem in this area is how to make sure medicines are available in developing countries that badly need them, in particular for HIV/AIDS.

The WTO ministers in 2001 decided that

the TRIPS Agreement does not and should not prevent members from taking measures to protect public health.

Exceptionally, countries can produce medicines in such cases. However, that only solved the problem for countries which have the capacity to make the medicines themselves.

Just prior to the Cancun meeting in Just prior to the Cancun meeting in September 2003, an September 2003, an agreement was agreement was reachedreached that developing countries could that developing countries could also import such “compulsory licensed” also import such “compulsory licensed” medicines.medicines.

However, this must take place However, this must take place under under strict conditionsstrict conditions – to avoid imports of – to avoid imports of such medicines elsewhere.such medicines elsewhere.

The current situation is one where it is The current situation is one where it is feared that the rules and regulations for feared that the rules and regulations for those imports are so strict and regulated, those imports are so strict and regulated, that the end result may be that a large of that the end result may be that a large of poor people may still not have access poor people may still not have access to life-saving medicinesto life-saving medicines..

Remaining issuesRemaining issues

In addition to continuing (or adding extra) In addition to continuing (or adding extra) discussions on topics where previous discussions on topics where previous agreements already exist (market access, agreements already exist (market access, agriculture, services, …), the Doha agriculture, services, …), the Doha Development Agenda also includes new Development Agenda also includes new issues.issues.

E.g. the E.g. the Singapore issuesSingapore issues:: Trade and investmentTrade and investment Competition issuesCompetition issues (monopoly issues, …) (monopoly issues, …) Public procurementPublic procurement (governments buying (governments buying

things)things) Trade facilitationTrade facilitation (cutting red-tape) (cutting red-tape)

It is not clear if discussions on these issues will It is not clear if discussions on these issues will continue following the failure at Cancun.continue following the failure at Cancun.

Of these issues, the Of these issues, the investment issue investment issue probably is the probably is the most importantmost important..

With the increase in Foreign Direct With the increase in Foreign Direct Investment over the last decades, Investment over the last decades, investment has become a very important investment has become a very important issue.issue.

In 2002, In 2002, FDIFDI continued to be continued to be more more important than tradeimportant than trade in delivering in delivering goods and services abroad: goods and services abroad:

global sales by TNCs reached US$18 trillion, as global sales by TNCs reached US$18 trillion, as compared with world exports of US$8 trillion in compared with world exports of US$8 trillion in 2002. 2002.

TNCs employed more than 53 million people TNCs employed more than 53 million people abroad.” abroad.”

An agreement on investment could have An agreement on investment could have enormous consequences given what is at enormous consequences given what is at stake.stake.

This would definitely be so This would definitely be so if workers’ if workers’ rights are not part of the agreementrights are not part of the agreement..

It is obvious that a situation should be It is obvious that a situation should be avoided where multinational enterprises can avoided where multinational enterprises can come and go, without governments or trade come and go, without governments or trade unions being able to take measures related unions being able to take measures related to the respect of the basic rights of the to the respect of the basic rights of the company’s personnel.company’s personnel.

It might become much It might become much easier for multinationals easier for multinationals to enter another countries market and ‘take to enter another countries market and ‘take overover’.’.

Many countries (and their companies) lack the Many countries (and their companies) lack the ability to defend themselves against some of the ability to defend themselves against some of the larger world-wide companies. larger world-wide companies. These large enterprises often have the expertise, These large enterprises often have the expertise, financials means and a large operating chain to financials means and a large operating chain to back up their operations.back up their operations.

While While somesome of these multinationals behave in a of these multinationals behave in a responsibleresponsible manner, manner, not allnot all do. do.

And, as they are not obliged to respect rights, And, as they are not obliged to respect rights, they may feel the obligation to violate them, ‘they may feel the obligation to violate them, ‘as as other may do it tooother may do it too’.’.

None of the other ‘Singapore issues’ are None of the other ‘Singapore issues’ are acceptable to the Global Unions as acceptable to the Global Unions as proposed.proposed.

CompetitionCompetition: might be favourable if, for : might be favourable if, for example, workers’ interests were example, workers’ interests were integrated as a part of rules for ‘mergers’.integrated as a part of rules for ‘mergers’.

Trade facilitationTrade facilitation: could be favourable : could be favourable But runs the risk of being to expensive for But runs the risk of being to expensive for developing countries.developing countries.

Public procurementPublic procurement: fighting corruption : fighting corruption is a good thing – the prohibition of using is a good thing – the prohibition of using non-economic factors isn’t.non-economic factors isn’t.

Trade policy reviews

The WTO conducts regular reviews of individual countries trade policies.

The ICFTU publishes an “internationally recognised core labour standards” report simultaneously for those countries under review.

The report discusses the issues the WTO “leaves out”: the trade union rights of workers, child labour, forced labour and discrimination.

Settling Settling disputesdisputes

WTO members have agreed that if they believe fellow-members are violating trade rules (breaking WTO agreements or failing to live up to obligations), they will use the multilateral system of settling disputes instead of taking action unilaterally.

A procedure was set up, which is a structured process with clearly defined stages and a fixed timetable.

It normally does not take longer than 12 months – 15 in case of an appeal – before a ruling is finalised.

The procedureThe procedure

Once a case is introduced, there is a 60-Once a case is introduced, there is a 60-day period of consultation between the day period of consultation between the countries.countries.

After which, if there is no solution, the After which, if there is no solution, the ‘‘panelpanel’ stage begins.’ stage begins.

The Dispute Settlement Body (the WTO General Council) establishes panels of experts to consider the case.

The panel, in turn, comes back with a report.

This panel is This panel is extremely powerfulextremely powerful because because the panel’s report can only be rejected by consensus in the Dispute Settlement Body.

Its conclusions are very difficult to overturn.

Both sides can appeal the reportBoth sides can appeal the report

Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body.

This appeal body has even more wider ranging powers as their decision is final.

If the country that is the target of the complaint loses, it must follow the recommendations of the panel or the appeal.

If no satisfactory compensation is agreed, or action taken, the complaining side may ask the Dispute Settlement Body for permission to impose limited trade sanctions against the other side.

What’s wrong hereWhat’s wrong here The procedures of the settlement dispute The procedures of the settlement dispute

mechanism are mechanism are ‘‘closed door’ proceduresclosed door’ procedures..

Trade Unions, NGOs or otherTrade Unions, NGOs or other interested interested parties don’t have the possibility to bring parties don’t have the possibility to bring forward any argumentsforward any arguments..

As experts judge the arguments from countries As experts judge the arguments from countries and experts, and experts, larger countries havelarger countries have – again – – again – the advantagethe advantage..

These These decisions can overrule any democratic decisions can overrule any democratic national lawsnational laws that – according to the WTO - that – according to the WTO - violate trade agreements. They can not be violate trade agreements. They can not be challenged by other courts.challenged by other courts.

Core labour Core labour standardsstandards

The Global unions have an ongoing campaign The Global unions have an ongoing campaign to to link workers’ rights with trade link workers’ rights with trade agreementsagreements. .

Linking core labour standards to the WTO has Linking core labour standards to the WTO has been the been the focal pointfocal point of the Global Unions of the Global Unions campaign.campaign.

The Core labour standards are on The Core labour standards are on

Freedom of association and collective bargaining Freedom of association and collective bargaining Child labourChild labour Forced labourForced labour DiscriminationDiscrimination

The 1996 Singapore ministerial declaration says on core labour standards:

“We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them.”

Sadly, the commitments did not go much beyond words.

There is There is currently no direct linkcurrently no direct link between the WTO agreements and the ILO between the WTO agreements and the ILO labour standards, labour standards, nor is there any nor is there any ongoing workongoing work..

It is officially ‘not part of the Doha It is officially ‘not part of the Doha agenda’.agenda’.

Nothing is included concerning the Nothing is included concerning the obligations of multinational companies obligations of multinational companies with regard to the fundamental rights of with regard to the fundamental rights of their workers.their workers.

This means that – This means that – as far as the WTO as far as the WTO rules are concernedrules are concerned – – countries countries can violate workers’ rightscan violate workers’ rights. .

Countries trying to gain Countries trying to gain unfair unfair advantage through the advantage through the exploitation of workersexploitation of workers and the and the violation of their most fundamental violation of their most fundamental rights – and therefore can offer rights – and therefore can offer cheaper products – are cheaper products – are allowedallowed to do to do so.so.

Many developing countries have been arguing Many developing countries have been arguing against the incorporation of workers’ rights against the incorporation of workers’ rights in the WTO agreements, on the basis that it in the WTO agreements, on the basis that it would constitute would constitute protectionismprotectionism..

Trade unionsTrade unions everywhere do everywhere do not agreenot agree with this view, including trade unions from with this view, including trade unions from developing countries. developing countries.

As there is more and more use of the ‘unfair As there is more and more use of the ‘unfair advantage of abusing workers’ rights’ – advantage of abusing workers’ rights’ – developing countries are also starting developing countries are also starting to lose business to other developing to lose business to other developing countriescountries – the views on the protectionism – the views on the protectionism argument are slowly changing.argument are slowly changing.

Even though it could conceivably be Even though it could conceivably be abused as ‘protectionism’, there are many abused as ‘protectionism’, there are many more WTO rules that could be seen as more WTO rules that could be seen as such.such.

Also, Also, workers’ rights are human rights workers’ rights are human rights that apply universallythat apply universally. .

It should not be a point for discussion.It should not be a point for discussion.

It should be the basic starting point.It should be the basic starting point.

Shooting your business competitor Shooting your business competitor may also make ‘economic sense’ – may also make ‘economic sense’ – that doesn’t make it a good ideathat doesn’t make it a good idea..

SafetySafety Article 20 of the General Agreement on

Tariffs and Trade (GATT) allows governments to act on trade in order to protect human, animal or plant life or health, provided they do not discriminate or use this as disguised protectionism.

A separate agreement on food safety and animal and plant health standards sets out the basic rules. It allows countries to set their own standards. But it also says regulations must be based on science.

The environmentThe environmentThe WTO has no specific agreement dealing with the

environment (only a Trade and Environment Committee).

“The WTO is only competent to deal with trade.

In other words, in environmental issues its only task is to study questions that arise when environmental policies have a significant impact on trade. The WTO is not an environmental agency.”

“If the committee does identify problems, its solutions must continue to uphold the principles of the WTO trading system.”

The WTO’s committee says the most effective way to deal with international environmental problems is through the (already existing) environmental agreements.

The IFI’sThe IFI’s(International Financial (International Financial

Institutions)Institutions)

IMF and World BankIMF and World Bank

The World Bank (WB) and International The World Bank (WB) and International Monetary Fund (IMF) were Monetary Fund (IMF) were foundedfounded in in 1944 in 1944 in Bretton Woods, USABretton Woods, USA..

They were created as They were created as companion companion organisationsorganisations to the United Nations to the United Nations..

The IFIs are meant to The IFIs are meant to contribute to contribute to financial stability and economic financial stability and economic growthgrowth, leading to , leading to a more stable and a more stable and prosperous global economy.prosperous global economy.

What do they do?What do they do?

IMFIMF

The IMF The IMF main responsibilitiesmain responsibilities::

international monetary co-operation;international monetary co-operation;

growth of international trade;growth of international trade;

Exchange rate stability;Exchange rate stability;

establishment of a multilateral system of payments; andestablishment of a multilateral system of payments; and

making its resources available (under adequate safeguards) to making its resources available (under adequate safeguards) to members experiencing balance of payments difficulties. members experiencing balance of payments difficulties.

The main functions of the IMFThe main functions of the IMF

SurveillanceSurveillance: :

Regular dialogue and policy adviceRegular dialogue and policy advice

““The IMF discusses with country’s authorities (usually annually) The IMF discusses with country’s authorities (usually annually) the policies that are most conducive to stable exchange rates the policies that are most conducive to stable exchange rates and a growing and prosperous economy.”and a growing and prosperous economy.”

Technical assistanceTechnical assistance: :

Offered in several areas, includingOffered in several areas, including

fiscal policyfiscal policy monetary and exchange rate policies, monetary and exchange rate policies, banking and financial system supervision and regulation andbanking and financial system supervision and regulation and statisticsstatistics

Financial assistanceFinancial assistance

“Available to give member countries the “Available to give member countries the breathing room they need to correct balance of breathing room they need to correct balance of payments problems”payments problems”

Continued financial support is conditional on Continued financial support is conditional on effective implementation of this programme.effective implementation of this programme.

Reducing povertyReducing poverty

The IMF provides financial support through its The IMF provides financial support through its concessional lending facility, the concessional lending facility, the Poverty Poverty Reduction and Growth FacilityReduction and Growth Facility (PRGF) and (PRGF) and through the HIPC (through the HIPC (Heavily Indebted Poor Heavily Indebted Poor CountriesCountries) initiative.) initiative.

World BankWorld Bank

““The World Bank promotes The World Bank promotes long-term economic developmentlong-term economic development and and poverty reductionpoverty reduction””

““It It provides technical and financial provides technical and financial supportsupport to to help countries reform help countries reform particular sectors or implement particular sectors or implement specific projectsspecific projects.”.”

For example, building schools and health For example, building schools and health centres, providing water and electricity, centres, providing water and electricity, fighting disease, and protecting the fighting disease, and protecting the environment. environment.

The different divisions of The different divisions of the World bankthe World bank

One group - Five agencies One group - Five agencies

IBRDIBRD (The International Bank For (The International Bank For Reconstruction and Reconstruction and Development):Development): provides provides loans and development loans and development assistance to middle-income countriesassistance to middle-income countries

IDAIDA ((International Development Agency): International Development Agency): IInterest free loans and grants to nterest free loans and grants to poorest countriespoorest countries

IFCIFC (International Finance Corporation): (International Finance Corporation): Financing Financing private sector investments private sector investments and technical assistanceand technical assistance to to governments and businessgovernments and business

MIGA MIGA ((Multilateral Investment Multilateral Investment Guarantee Agency): Guarantee Agency): Provides Provides guarantees to foreign investorsguarantees to foreign investors – – also technical assistance to help also technical assistance to help developing countries promote investmentdeveloping countries promote investment

ICSIDICSID (International Centre for the (International Centre for the Settlement of Investment Disputes)Settlement of Investment Disputes)

Co-operation and overlapCo-operation and overlapIMF – World BankIMF – World Bank

There is a lot of co-operation between the There is a lot of co-operation between the IMF and the World Bank as there are many IMF and the World Bank as there are many areas of overlapping responsibilities.areas of overlapping responsibilities.

There are many joint-meetings and There are many joint-meetings and missions.missions.(E.g. the annual meeting of the boards of (E.g. the annual meeting of the boards of governors of the IMF and the World Bank)governors of the IMF and the World Bank)

The membership of both organisation is The membership of both organisation is the same.the same.

Joint initiativesJoint initiatives The IMF and World Bank have jointly launched two The IMF and World Bank have jointly launched two

major initiatives to help poor countries. major initiatives to help poor countries.

In 1996, the IMF and the World Bank introduced the In 1996, the IMF and the World Bank introduced the Heavily Indebted poor Countries (HIPC)Heavily Indebted poor Countries (HIPC) initiativeinitiative ““reduce the external debtreduce the external debt burdens of the burdens of the

most heavily indebted poor countries”.most heavily indebted poor countries”.

In 1999, the IMF and the World Bank initiated the In 1999, the IMF and the World Bank initiated the Poverty Reduction Strategy Paper (PRSP)Poverty Reduction Strategy Paper (PRSP) approachapproach ““a a country-led strategycountry-led strategy for linking national for linking national

policies, donor support, and the development policies, donor support, and the development outcomes needed to reduce poverty in low-outcomes needed to reduce poverty in low-income countries”.income countries”.

Structural Adjustment Programmes Structural Adjustment Programmes (SAPs) as loan conditions(SAPs) as loan conditions

Starting in early 1980s, IMF, WB and regional Starting in early 1980s, IMF, WB and regional development banks development banks required the application of required the application of Structural Adjustment Programs (SAPs) as loan Structural Adjustment Programs (SAPs) as loan conditionsconditions..

SAP: SAP: program for reforming an entire sector or economic program for reforming an entire sector or economic structure of a countrystructure of a country..

During the During the 1980s, more than 70 developing countries 1980s, more than 70 developing countries apply SAPsapply SAPs designed by the IFIs on the pretext of designed by the IFIs on the pretext of reducing or avoiding indebtedness.reducing or avoiding indebtedness.

During the 1990s, most of former centrally-planned During the 1990s, most of former centrally-planned economies apply SAPseconomies apply SAPs recommended by IFIs, claimed recommended by IFIs, claimed to be necessary steps for building a market economy.to be necessary steps for building a market economy.

PhilosophyPhilosophy

Reduction of role of the state will lead to Reduction of role of the state will lead to countries countries attracting more private investmentattracting more private investment into the economy.into the economy.

The liberalisation of trade and investment will The liberalisation of trade and investment will reduce prices, increase productivity and reduce prices, increase productivity and stimulate economic growthstimulate economic growth..

Reduction of labour costs will Reduction of labour costs will increase job increase job creation, and reduce unemployment and creation, and reduce unemployment and povertypoverty..

The failure of the philosophyThe failure of the philosophy

The IFIs have The IFIs have not succeeded in preventing an not succeeded in preventing an increase of poverty and inequalityincrease of poverty and inequality..

In general, there has been In general, there has been slower growthslower growth and and more more inequalityinequality after the introduction of SAPs in the 1980s. after the introduction of SAPs in the 1980s.

During the 1990s, the number of people living in During the 1990s, the number of people living in extreme poverty has increased in all regions except extreme poverty has increased in all regions except AsiaAsia..

In most developing/transition countries, In most developing/transition countries, real wages real wages have fallenhave fallen..

The main problems of the IFI The main problems of the IFI ‘structural reform’ proposals ‘structural reform’ proposals

PrivatisationPrivatisationPrivatisation of state-owned enterprisesPrivatisation of state-owned enterprises is often is often

included as part of specific IFI included as part of specific IFI loan conditionsloan conditions..

Privatisation often Privatisation often leads to: leads to: reduced access to services for the poorreduced access to services for the poor job losses job losses decline in working conditionsdecline in working conditions

All proposedAll proposed privatisations must be subject to consultationsprivatisations must be subject to consultations and and a social impact analysis.a social impact analysis.

Government and IFIs must accept toGovernment and IFIs must accept to negotiate with unions.negotiate with unions.

Government and IFIs must accept toGovernment and IFIs must accept to examine alternatives examine alternatives to to privatisation, including IFI assistance for improved public services.privatisation, including IFI assistance for improved public services.

Labour Market FlexibilityLabour Market Flexibility

IFI-sponsored reforms often include:IFI-sponsored reforms often include: reducing or freezing wagesreducing or freezing wages eliminating job security provisionseliminating job security provisions eliminating limits on working hourseliminating limits on working hours restricting collective bargaining rightsrestricting collective bargaining rights

All these measuresAll these measures can reduce living standards of working can reduce living standards of working peoplepeople andand increase poverty. increase poverty.

Government and IFIsGovernment and IFIs must must recognize good labour standardsrecognize good labour standards as as part and parcel of a poverty-reducing development strategy.part and parcel of a poverty-reducing development strategy.

Government and IFIs must agree toGovernment and IFIs must agree to promote respect of promote respect of fundamental workers’ rightsfundamental workers’ rights, i.e. the ILO’s core conventions., i.e. the ILO’s core conventions.

Liberalization of Trade and Capital FlowsLiberalization of Trade and Capital Flows

IFI-sponsored reforms often includeIFI-sponsored reforms often include

reduction or elimination of import tariffsreduction or elimination of import tariffs other restrictions on imports and capital flows.other restrictions on imports and capital flows.

Such reductionsSuch reductions can harm domestic agriculture and can harm domestic agriculture and industryindustry and and lead to job loss, foreign control of lead to job loss, foreign control of assets, rapid outflow of capitalassets, rapid outflow of capital..

Change Change of trade and investment regime must beof trade and investment regime must be subject subject to consultation, to consultation, social and economic impact analysis.social and economic impact analysis.

Market Liberalisation and DeregulationMarket Liberalisation and Deregulation

Reforms often includeReforms often include

eliminating price controlseliminating price controls eliminatingeliminatingprice subsidiesprice subsidies eliminatingeliminatinggovernment as buyer and sellergovernment as buyer and seller reducing private sector regulationreducing private sector regulation price increases of essential goodsprice increases of essential goods imposition of user fees on public servicesimposition of user fees on public services..

Market liberalisation and deregulation Market liberalisation and deregulation must be subject to must be subject to consultationconsultation and an analysis of its social impact. and an analysis of its social impact.

IfIf they play an they play an importantimportant role in reducing inequality, role in reducing inequality, price price restrictions or subsidies should be maintainedrestrictions or subsidies should be maintained or replaced by or replaced by other social protection measures.other social protection measures.

Pension ReformPension Reform

Reforms often include partial or total Reforms often include partial or total privatisation of old-age pension systems.privatisation of old-age pension systems.

These These pension reforms often result in pension reforms often result in reduced pensions or pension securityreduced pensions or pension security..

Government should examine ways to Government should examine ways to fix public fix public pension systempension system, if one exists, , if one exists, rather than rather than privatiseprivatise as the only option. as the only option.

Fiscal and Monetary PolicyFiscal and Monetary Policy

In order to reduce the government deficit, reforms In order to reduce the government deficit, reforms often includes pressure to often includes pressure to increase taxes increase taxes or or reduce public expendituresreduce public expenditures raise interest rates raise interest rates - try to sustain the value - try to sustain the value

of the currency, in order toof the currency, in order to control inflation.control inflation.

The choices made on such issues have The choices made on such issues have profound implications for levels of employment profound implications for levels of employment and living standards.and living standards.

Growing Resistance Against IFI PoliciesGrowing Resistance Against IFI Policies

Many recent meetings of the IMF and WB have been Many recent meetings of the IMF and WB have been met by met by large demonstrationslarge demonstrations or other condemnations. or other condemnations.

Massive strikesMassive strikes or demonstrationsor demonstrations against structural against structural adjustment or austerity policies recommended by the adjustment or austerity policies recommended by the IFIs took place IFIs took place in many developing countriesin many developing countries..

In general, it can be said that the IFIs are currently in a In general, it can be said that the IFIs are currently in a crisis of legitimacycrisis of legitimacy, with a large part of the world public , with a large part of the world public opinion questioning their purposes or even their opinion questioning their purposes or even their existence.existence.

How the IFIs Have Reacted to the Crisis of LegitimacyHow the IFIs Have Reacted to the Crisis of Legitimacy

The IFIs have adopted The IFIs have adopted new transparency policiesnew transparency policies, , releasing project documents and agreements previously releasing project documents and agreements previously kept secret.kept secret.

The IFIs have The IFIs have increased consultations with unions increased consultations with unions and NGOsand NGOs..

The IFIs have The IFIs have accepted to reduce the debtaccepted to reduce the debt of many poor of many poor countries and declare poverty reduction their countries and declare poverty reduction their “overarching goal”.“overarching goal”.

WB has WB has accepted to promote the Core Labour accepted to promote the Core Labour StandardsStandards (CLS). (CLS).

Basic Demands Made by Global UnionsBasic Demands Made by Global Unions

Stop requiring SAPsStop requiring SAPs (as presently constituted)(as presently constituted) as loan conditions. as loan conditions.

Accept to Accept to provide financing of public services and state-run provide financing of public services and state-run pensions pensions without without demanding their privatisationdemanding their privatisation..

Support labour reforms only when they Support labour reforms only when they respect ILO conventionsrespect ILO conventions and and require that WB-financed projects abide by CLS.require that WB-financed projects abide by CLS.

Extend Extend debt relief to a greater numberdebt relief to a greater number of countries of countries..

Allow countries to use capital controlsAllow countries to use capital controls and apply debt payment and apply debt payment moratoria when in difficulty.moratoria when in difficulty.

To end with some good To end with some good newsnews

The World Bank has shown some signs of improvement lately.The World Bank has shown some signs of improvement lately.

In February 2003, the Bank has released a In February 2003, the Bank has released a reportreport in which it in which it said that, in general, said that, in general, trade unions had a positive trade unions had a positive impact on the development of an economyimpact on the development of an economy. .

A high degree of union affiliation often links to A high degree of union affiliation often links to more income equalitymore income equality less wage discrimination against women and minority less wage discrimination against women and minority

workersworkers an improved economic performancean improved economic performance..

The report also said that the positive impacts of unionisation The report also said that the positive impacts of unionisation tends to be greater in countries with highly coordinated tends to be greater in countries with highly coordinated collective bargaining than in countries where the labour collective bargaining than in countries where the labour movement is more fragmented.movement is more fragmented.

In a report form June 2003, the World Bank In a report form June 2003, the World Bank recommended to the governments of recommended to the governments of Asia to Asia to improve their track record on core labour improve their track record on core labour standardsstandards..

The report stated that econometric evidence The report stated that econometric evidence shows that, instead of being a threat, stronger shows that, instead of being a threat, stronger labour rights are associated with higher export labour rights are associated with higher export performance in East Asia.performance in East Asia.

In other words: labour standards are good for the In other words: labour standards are good for the economyeconomy. .

In September 2003, the Bank indicated that the In September 2003, the Bank indicated that the International Finance Corporation (IFC) International Finance Corporation (IFC) would include the respect for workers’ rights would include the respect for workers’ rights as a condition in their future loan as a condition in their future loan agreementsagreements..

In all cases when unions dealing with IFIs encounter difficulties, In all cases when unions dealing with IFIs encounter difficulties, require information, or seek advice, please contact:require information, or seek advice, please contact:

Global Unions - Washington OfficeGlobal Unions - Washington Office

Peter Bakvis, DirectorPeter Bakvis, Director

E-mail: pbakvis@earthlink.netE-mail: pbakvis@earthlink.net

Fax: 1-202-463-8564; Phone: 1-202-463-8573Fax: 1-202-463-8564; Phone: 1-202-463-8573