Labour Rights and the Trade Policy of the EU (Dan Gallin, 1999)

Let us take as a point of departure the position of the EU with respect to the Millennium Round – the negotiations at the WTO in Seattle.

The EU declares to have “been at the forefront of efforts to launch a Millennium Round for trade negotiations in 2000” and to have “led this initiative from the start”. It further makes social claims on behalf the the ”Millennium Round”:

“A comprehensive trade round, offering a balance of benefits to all WTO members, will reconcile the competing demands of economic growth, better integration of developing countries, environmental protection and social development and will strengthen further the rules-based trading system. Pursuing any one of these at the expense of the other two will inevitably lead to an unbalanced approach.” (1)

At the same time, the EU has stated its “firm attachment to core labour standards”, as part of its commitment to the promotion of democracy, the respect of human rights and the rule of law.

It claims that this attachment to core labour standards (as defined in the ILO conventions on child labour, forced labour, freedom of association, the right to collective bargaining and non discrimination) “extends not only to its internal policies but also to its external and development policies”.

With respect to the WTO, the EU claims to have “consistently supported the promotion of core labour standards” and to have developed a specific strategy to promote WTO support for better respect of core labour standards.

This strategy, according to the EU, comprises five points:

  • enhancing the cooperation between WTO and ILO;
  • supporting the request of the ILO for observer status in the WTO;
  • convening a joint WTO/ILO high level meeting on trade globalization and labour issues;
  • encouraging improvement of labour rights through positive incentives;
  • continuing the dialogue with its trading partners and its own civil society on these issues.

The international trade union movement, represented in this instance by the International Confederation of Free Trade Unions (ICFTU) and the European Trade Union Confederation (ETUC), has critically reviewed these claims. (2)

On the first strategy point, regarding WTO/ILO cooperation, the ETUC has noted that although the WTO Singapore Declaration stated that “the WTO and ILO secretariats will continue their existing collaboration”, in practice this collaboration has failed to occur. Progress on this issue is unlikely unless and until the ILO is granted observer status at the WTO, which the EU supports.

However, as the ETUC has also pointed out, the Commission, in its own draft policy paper for Seattle (3), seriously risks weakening its human rights objectives by giving ground on the issue of establishing a working group in the WTO to consider the issue of core labour standards and international trade, a proposal which the EU defended at the Singapore Conference in 1996. It now says that “the working group idea has failed within the WTO”.

The ETUC comments: “In effect, the Commission has proposed to start what we recognize will inevitably be a negotiation process on how labour standards should be respected, not from a principled position but from a tactical one, and from one that has already conceded ground to that of the opponents of a social clause.”

The EU, having abandoned the idea of a working group, now calls for the establishment of a “Joint ILO/WTO Standing Working Forum” on trade, globalization and labour issues. As the ETUC General Secretary has pointed out (4), the notion of a “working group” is well understood within the WTO structures: its terms of reference enable it to have an impact on future negotiations. On the other hand, a “forum” is still a vague and untested notion.

Should such a “forum” be established, the ETUC General Secretary added, it should be formal and permanent body, located within WTO structures, with clear terms of reference and a defined work program.

Against the background of the EU being apparently prepared to give ground even before negotiations have started, the ETUC expresses understanding for “the concerns of many non-governmental organizations that as the agenda of successive rounds (of WTO negotiations) has broadened, so the dangers have increased that in the final ‘multiple trade-off’ issues of concern to consumer, environmental or other specific interest groups might be seen as peripheral or non-essential, and thus be disregarded or even undercut.”

The conditionalities surrounding the Commission’s promotion of core labour standards also give grounds for concern. Its draft paper notes that “many developing countries saw such support as unwarranted interference in their internal affairs and a disguised form of protectionism.” It therefore strenuously insists that the issue should not “be used as a pretext for trade protectionism”, that promotion should take place through “incentives and dialogue” and not through restrictive trade practices (i.e. sanctions) which would prove “counter-productive”. It notes that the adoption of the ILO Declaration on Fundamental Principles and Rights at Work was made possible by the ”recognition that labour standards should not be used for protectionist trade purposes or to compromise or call into question the comparative advantage of any country.”

This concern disregards the fact that the most vocal opposition against the promotion of core labour standards – as much as against the concept of the universality of human rights in general – does not come from “developing countries” but from their governments, a significant number of which are authoritarian dictatorships without democratic legitimacy. This is obviously true for countries like China, Vietnam, Burma or Indonesia before the fall of Suharto but also for formally democratic governments which are not prepared to tolerate independent and democratic trade union movements, like Egypt or Tunisia.

There are various shadings of authoritarianism. What they have in common is that they do not speak for the people of the countries they control but for corrupt and repressive elites. It is now a recognized international principle that violations of human rights are not “internal affairs” of any country, and that workers’ rights are human rights. The oppression and exploitation of workers can never be a legitimate “comparative advantage”.

No worker in Africa, Asia or Latin America, not the disenfranchised and exploited young women in the free trade zones around the world (some 850 FTZs at the last count employing 27m workers), not the homeworkes at the bottom of the subcontracting chains, not the landless rural workers in near slavery conditions, nor indeed any of the organized workers whose unions are systematically repressed by employers with the toleration or active participation of the State, nor any of the people whose living environment is being destroyed by oil companies or by megalomaniac dam building projects (Nigeria, China, India, Malaysia) will accept, if anyone asked them, that their disenfranchisement is a “comparative trade advantage” necessary to the “development” of their countries as defined by their rulers. What these rulers mean by “development” is the increase of their own wealth and power.

The weakness of the EU in defending the human rights issues it ostensibly champions is understandable. The policies of governments are always the result and reflection of the balance of power of social forces in the societies they govern. The same is true for intergovernmental bodies like the EU. The political reality in the EU is that business interests prevail. Globalization, by increasing the mobility of capital, has immensely increased the power of transnational corporations to blackmail governments as well as other social actors operating at national level, such as trade unions. The political repercussions in the EU are obvious.

Although 13 out of the 15 EU countries have social-democratic governments (as the governing party or in coalition), all of them are under pressure from business interests. Indeed, some of the leading governments, making a virtue out of a necessity, have declared themselves to be “business friendly”, actively promoting the interests of business. The contradictions of such policies become quickly apparent. The Blair/Schröder idyll, promoting the “Third Way/Neue Mitte” policy as the way forward for international social-democracy, did not survive the first hostile take-over bid of a British against a German transnational corporation. Nevertheless, notwithstanding contradictions, on the whole business determines the EU agenda.

The ETUC is no match – as yet, one might add in an optimistic perspective – for the European Roundtable of Industrialists (ERT), composed of forty-five representatives of the leading transnational corporations based in Europe (5). The ERT demands the unconditional and total liberalization of trade, including investments, opposes protective social and environmental clauses, demands deregulation of industry and of the labour market, promotes the expansion of road transport and opposes any tax on energy or on CO2 emissions. Collectively, the ERT represents a turnover of 550 billion ECUs and three million employees world-wide. Its representatives have an easy and permanent access to the Commission and obviously influence Commission policy.

The EU’s “attachment to core labour standards”, contrary to its claims, is not even evident in its “internal policies”. The history of the directive on European Works Councils, where trade unions are no longer mentioned as formally recognized “social partners” (in contrast to the original Vredeling proposals) is an illustration of the power of business to impose its agenda. Unions, in Europe as elsewhere, are discovering that they do not have “social partners”. They have social counterparts, which is not the same thing.

Another illustration is the fact that solidarity strikes are severely restricted if not altogether outlawed in most EU countries. The right to strike is a basic human right recognized in the Universal Declaration of the UN and, implicitly, in ILO Convention 98 on the right to collective bargaining. These statements of basic principle do not distinguish between different qualities of this right. However, and significantly, one of the aspects of this basic human right, namely to strike in solidarity with other workers involved in a conflict, be it in the same country or another country, is not recognized by many European governments.

So, it would appear that some basic human rights are more basic than others, also in Europe. There is no indication that any of the European social-democratic governments are prepared to change their country’s legislation to liberalize and deregulate this right. In fact, the British Labour government has explicitly refused to do so, to protect its “business friendly” credentials. At the same time, the globalization of the economy and the rising power of the transnational corporations increasingly make this right a necessity to go some way towards correcting the huge imbalance of power that has developed between business and labour.

If the EU is as weak as it is on labour rights in its “internal policies”, one may have doubts about the strength of its political will when it comes to its “external and development policies”.

The discussion about “coherence” should therefore not come as a surprise. It is interesting in itself that the EU should recognize that its policies are incoherent in many respects, and that this problem warranted the inclusion of a special paragraph in the Maastricht Treaty (Article 130 V), carried over into the Amsterdam Treaty. This “coherence article” was meant to address the contradictions between the development policies of the EU and other policies, in particular trade policies.

In article 130 V, the goals of EU development cooperation are stated as follows:

(a) the sustainable economic and social development of the developing countries;
(b) their “smooth and gradual integration into the world economy”; and
(c) the campaign against poverty.

The most obvious source of inconsistency with these objectives has been the Common Agricultural Policy and the trade policies deriving from it, as has been very clearly documented in the “Eurostep Dossier on CAP and Coherence” (6). But the CAP is only one part of the problem. As the ICFTU has pointed out in its position paper on the Seattle meeting:

Nowadays, trade policy can no longer be made in isolation from its wider context. Negotiations that may be started in areas like trade in services, government procurement, competition policy and investments – as well as the WTO’s classic agenda of tariff reduction – all stand to have a profound impact on the labour market, working conditions and the environment in all countries around the world. Issues of employment; equity; public provisions of basic services like education and health; gender impact assessments; and, of course, respect for core labour standards, must all be taken duly into account by trade negotiators. … Any negotiations must provide for countries to retain the right to legitimately declare sectors as being non-tradable public services.”

In fact, all trade policies have an impact on labour rights, which are in turn a condition for achieving the stated goals of EU development policy. Neither the “sustainable economic and social development of the developing countries”, nor their “smooth and gradual integration into the world economy” and much less the “eradication of poverty” are conceivable as an automatic result of trade mechanisms (7) nor as the benevolent gift of governments, European or others, to their peoples. These goals can only be achieved if the peoples of the so-called developing countries, and the workers in particular, are able to organize to vigorously and independently defend their interests and have a say in determining development priorities.

The ICFTU position paper states:

Any new WTO round must address the concern that the present model of trade liberalization is exacerbating development inequalities, environmental degradation, workers’ exploitation and gender imbalances. These realities must be priority issues.”

The impact of the CAP on labour rights is illustrated by some of the case studies in the Eurostep Dossier. One example is the South African canning industry. In 1997, the EU spent 144m Euro on subsidizing the processing of fruits. The same year, the South African government, in the name of trade liberalization, dismantled its own subsidy scheme which had enabled the South African canning industry to compete with EU exporters in third markets. As a result, one of the major canning firms closed its plant in the Western Cape, resulting in the loss of 2,000 seasonal and 400 permanent jobs, and a great many associated jobs under threat. These workers, mostly women, many with families depending on their jobs, are organized in a union, the Food and Allied Workers’ Union, and their union rights are not under challenge from the State. But what labour rights can their union defend when the plant closes because of unfair competition from the EU? South Africa has a critically high rate of unemployment. The effect of EU policy in this instance has been to undermine workers’ rights and to increase unemployment – and poverty – in a country it is ostensibly committed to help develop.

Other cases illustrate the severe damage done to fishers, farmers – many of whom are women – as well as workers, in developing and transition countries. We can understand the case for the “multifunctional” character of agriculture, for example in protecting the environment and the social fabric in regions where farming is difficult for natural causes (such as in mountainous or arid regions). This case does not apply to the mass production of subsidized food products that swamp the international markets. Eurostep rightly calls for “immediate action to ensure that the CAP no longer damages the production capacity and marketing of developing countries, including the countries in transition in Eastern and Central Europe.”

The movement representing popular interests in Seattle, essentially public interest NGOs and trade unions, has been divided between those advocating a moratorium on any further liberalization negotiations (and a comprehensive review of the existing agreements), and those who do not oppose a new round of negotiations but demand that it include and address development, environmental and social issues. There are unions and NGOs on both sides of this division and these two strands of opinion might now come together.

The ICFTU position paper concludes:

Whatever the outcome at Seattle, the Ministers meeting there must pay heed to the world-wide concern of civil society about the impact of trade on labour, development, environment, social and gender issues. These concerns will not go away. They are growing, and they must be addressed. That must be done sooner rather than later because in addressing these challenges the Seattle Conference can help ensure that trade liberalization does what it is supposed to do: to help make people’s lives better. By doing so, the WTO could gain the public support it badly needs and begin to achieve the goals in the WTO statutes of increasing living standards, raising employment and achieving sustainable growth. The Seattle Conference must therefore make a decisive move towards shaping the process of globalization to take development goals and social and environmental issues fully into account.”

We now know that such a “decisive move” has, at the very least, been indefinitely postponed.

Whether these are realistic expectations in the first place, given the nature of the WTO, remains to be seen. It would require the acceptance of significant limitations on the principle of free trade, not only by taking on board labour rights requirements but also by addressing the priority concerns of developing countries, affirming the right of governments to regulate the entry of foreign investment and the terms on which it operates, declaring essential public services as non-tradable, affirming the precedence of international treaties on environment protection over WTO rules, protecting biodiversity and food security, protecting cultural expression, etc.

In general, the same considerations apply to the re-negotiation of the EU-ACP agreement scheduled for February next year. (8) All aspects of EU trade policy must remain under permanent critical review. The outcome of such a review, however, depends on the ability of the principal actors of civil society to make a significant impact on policy. This, in turn, depends on their capacity to create serious inconveniences to governments, and to transnational capital which drives most government policies at present, if their views are ignored. We are not dealing here with academic discussions but with power relations. In concrete terms, everything depends on the continuation of the alliance between organized labour and progressive NGOs, on the strengthening and deepening of this alliance, on developing mechanisms to ensure its continuity over the long term, to create a global popular and social movement capable of imposing its agenda on all future negotiations that will shape the world we live in.

What we should expect from the EU as a minimum is deregulation of the right to strike and full respect of core labour standards within the EU itself as well as active promotion of basic labour rights in its relations with its trading partners and in its development policies.

(1) “The EU and the Millennium Round: More Trade Based on Better Rules”, EU, Brussels, October 1999, 8 p.
(2) “Coherence in the World Trade Agenda – The Challenge for the WTO: ICFTU Comments on Preparations for the 3rd Ministerial Conference of the World Trade Organisation (WTO), Seattle, 30 November – 3 December 1999”, ICFTU, Brussels, n.d. 4 p. and: “The Seattle Ministerial Meeting of the WTO”, ETUC, Brussels, September 23, 1999, 9 p.
(3) Communication from the Commission to the Council and to the European Parliament: The EU Approach to the Millennium Round, EU, Brussels, n.d., 20 p.
(4) Letter by Emilio Gabaglio, ETUC General Secretary, to Ms. Tarja Halonen, Minister of Foreign Affairs, Finland, October 8, 1999
(5) See: Europe Inc., Corporate European Observatory, c/o A-SEED, P.O. Box 92066, NL-1090 AB Amsterdam, e-mail:, 1997, 72 p.
(6) Eurostep Dossier on CAP & Coherence: Coherence in EU Policies Towards Developing Countries, Brussels/The Hague, April 1999, 20 p. (e-mail:
(7) Contrary to the EU’s statement that: “Economic growth through trade liberalisation is in itself a major factor in proving social conditions world-wide, a key element of sustainable development.” (from: “The EU and the Millennium Round, etc.” – see endnote (1)).
(8) See: Civil Society Participation in a new EU-ACP Partnership, (Report on a workshop, Amsterdam, January 11-12, 1999) by Bram Posthumus, George Huggins and Youssouf Cissé, INZET Association, March 1999, 72 p. (INZET Association, Keizersgracht 132, NL – 1015 CW Amsterdam, fax: (+31 20) 627 38 39, e-mail:

The Finnish Service Center for Development Cooperation (KEPA) and the Finnish platform of development NGOs organized a seminar on “sustainable trade relations and incoherence of EU policies” on December 4, 1999, as part of a larger NGO Forum “Citizens’ Agenda 2000” in Tampere. The forum was the main NGO event of the Finnish EU presidency and brought together some 1,400 participants from all sectors of civil society in Europe. Dan Gallin was invited to speak at the seminar on labour rights within the framework of EU trade policies.